On June 29, 2023, the Supreme Court’s decision in Students for Fair Admissions v. Harvard dismantled affirmative action in college admissions. While this ruling did not directly address diversity, equity, and inclusion (DEI) efforts outside of higher education, it quickly sparked debate about its implications for corporate DEI programs. Over the past year, various conservative activist groups have targeted corporate DEI initiatives, leading to a mixed bag of outcomes. Companies must now navigate an uncertain legal landscape regarding their DEI strategies.
Our DC employment lawyers know some legal challenges have made headway. For instance, in the ongoing case American Alliance for Equal Rights v. Fearless Fund, the plaintiff achieved a significant victory. On June 3, 2024, the Eleventh Circuit issued a preliminary injunction against Fearless Fund, a venture capital firm, preventing it from issuing grants through its program aimed exclusively at Black women entrepreneurs.
In other instances, litigation continues or companies have proactively revised their DEI policies to avoid legal disputes. For example, law firm Morrison Foerster was sued over a fellowship program that was limited to students from underrepresented backgrounds. In response, the firm modified the program to allow any student demonstrating a commitment to diversity and inclusion to apply. This move prompted several other law firms to make similar adjustments to their fellowship programs after facing scrutiny from anti-DEI activists.
Nevertheless, many courts have been hesitant to extend the principles from Students for Fair Admissions to the corporate realm. In Do No Harm v. Pfizer, the Second Circuit ruled on March 6, 2024, that Pfizer’s fellowship program, designed to support students and young professionals from Black, Latino, or Native American backgrounds, did not constitute unlawful discrimination. Other companies have also successfully defended their DEI policies against legal challenges.
This evolving legal environment has led companies to adopt varied strategies. Some are preemptively amending their DEI programs to avoid attracting the attention of activist groups, while others continue to promote their existing DEI initiatives openly. Still, some companies are maintaining their DEI efforts but are now listing potential anti-DEI litigation as a risk factor in their SEC filings.
Given the developments of the past year, DEI initiatives that could expose companies to greater risk of legal challenges from activist groups include:
- Fellowship or grant programs targeting specific ethnic groups
- Explicit policies aimed at increasing participation or membership from underrepresented groups
- Policies favoring minority groups in investment decisions
In contrast, DEI programs that broadly promote inclusion or remove barriers without targeting specific groups are less likely to face legal challenges.