On June 29, 2023, in a 6-3 decision authored by Chief Justice Roberts, Students for Fair Admissions, Inc. v. President and Fellows of Harvard College, the U.S. Supreme Court (“Court” or “Supreme Court”) held that college and university race-conscious admission decisions at Harvard University and the University of North Carolina violate the Equal Protection Clause of the 14th Amendment (“the Harvard-UNC Decision”). The specifics of the race-conscious admissions process used by these higher education institutions and the Supreme Court’s opinion is more fully discussed in Husch Blackwell’s recent post, Supreme Court Prohibits Consideration of Race in College Admissions. The majority and concurring opinions, though, have prompted speculation about the decision’s potential impact on federal contractors subject to affirmative action obligations to provide equal employment opportunities to minorities and women under Executive Order 11246 as well as on employers that have voluntarily adopted diversity, equity, and inclusion (DEI) initiatives. While the Harvard-UNC Decision addressed racial preferences as opposed to affirmative action to ensure equal employment opportunities, the decision provides federal contractors and private employers with some guideposts for lawful implementation of affirmative action and DEI practices.

The majority struck down the use of racial preferences

At the outset, it is important to note that the legal analysis in the Harvard-UNC Decision is based on the Equal Protection Clause of the 14th Amendment. Lawsuits were filed against both Universities alleging violation of Title VI of the Civil Rights Act of 1964, while UNC, a public school, was also sued for violation of the Equal Protection Clause of the 14th Amendment. Because Title VI prohibits “the same racial discrimination as the 14th Amendment,” the Court analyzed the race-conscious admission processes at both Universities under the line of cases decided under the 14th Amendment.

Race and ethnic classifications and distinctions of any sort are inherently suspect under the 14th Amendment and are subject to the highest level of judicial scrutiny. Strict judicial scrutiny requires that different or unequal treatment of individuals based on race serve a compelling interest and be narrowly tailored.

Beginning in 1978 with the seminal decision of Regents of University of California v. Bakke and later in 2003, in Grutter v. Bollinger (Grutter), the Supreme Court held that in the context of college admission decisions, racial diversity (and the educational benefits flowing from it) was a compelling interest. The method to accomplish a diverse student body, however, is required to be narrowly tailored to meet the goal so that “there is little or no possibility that the motive for classification was illegitimate racial stereotyping” or to discriminate against non-favored racial groups.

Under those authorities, the requirement to narrowly tailor methods to achieve diversity prohibited use of 1) quotas which are defined as imposing a fixed number or percentage of spaces which must be attained or cannot be exceeded and are reserved for minority groups; 2) placing members of specific racial groups on a separate admission track; or 3) otherwise insulating applicants of certain racial and ethnic groups from competition for admission. Instead, universities were permitted to consider race as a “plus” in any particular applicant file so long as race or ethnicity was not the defining feature in the application.

Grutter also imposed a temporal limit on race-conscious admission decisions, stating that “[a] core purpose of the 14th Amendment was to do away with all governmentally imposed discrimination based on race…Enshrining a permanent justification for racial preferences would offend the fundamental equal protection principle.” The Grutter Court explained that a “termination point assures all citizens that the deviation from the norm of equal treatment of all racial and ethnic groups is a temporary matter, a measure taken in service of the goal of equality itself.” In cases since then, the Supreme Court has continued to narrow the ability of universities to consider race in admission, although the Court’s precedents have continued to permit some consideration of race.

That changed, however, in the Harvard-UNC Decision, in which the Court determined that neither Harvard nor UNC’s college admission programs met the requirements of the strict scrutiny standard.  The Court stated, “[b]oth programs lack sufficiently focused and measurable objectives warranting the use of race, unavoidably employ race in a negative manner, involve racial stereotyping, and lack meaningful end points.”  Although the decision does not expressly overturn the Court’s prior precedent, for all practical purposes, colleges and universities will no longer be able to use race-conscious admission decisions.

Significance of the decision on federal contractors and employers with DEI initiatives

The Supreme Court decision does not directly affect federal contractors.

The UNC-Harvard Decision focuses on racial preferences, which are distinct from federal contractors’ mandatory affirmative action obligations under Executive Order 11246. Executive Order 11246 forbids employment discrimination based on protected characteristics, including race, and requires contractors to proactively take action to ensure that applicants are employed, and employees are treated without regard to race, color, national origin, sex, sexual orientation, gender identity, religion, disability and protected veteran status.

The use of the term “affirmative action” by authors of the concurrences and dissents in the Harvard-UNC Decision is a misnomer that unfortunately will sow conceptual confusion. The race-conscious admission process employed racial preferences to achieve diversity. As federal contractors are aware, contractors subject to the requirement of maintaining written affirmative action programs must develop affirmative action plans to eliminate discrimination in employment by examining utilization of women and minorities, setting placement goals if necessary due to underutilization, assessing recruitment and outreach to ensure equal employment opportunities for qualified women and minorities, and developing action-oriented programs to address problem areas. The applicable regulation promulgated by the Office of Federal Contractor Compliance Programs specifically forbids the use quotas and preferences in affirmative action programs. Specifically, Title 41 C.F.R. 60-2.16(e) provides:

(1) Placement goals may not be rigid and inflexible quotas, which must be met, nor are they to be considered as either a ceiling or a floor for the employment of particular groups. Quotas are expressly forbidden. (2) In all employment decisions, the contractor must make selections in a nondiscriminatory manner. Placement goals do not provide the contractor with a justification to extend a preference to any individual, select an individual, or adversely affect an individual’s employment status, on the basis of that person’s race, color, religion, sex, sexual orientation, gender identity, or national origin. (3) Placement goals do not create set-asides for specific groups, nor are they intended to achieve proportional representation or equal results. (4) Placement goals may not be used to supersede merit selection principles. Affirmative action programs …do not require a contractor to hire a person who lacks qualifications to perform the job successfully, or hire a less qualified person in preference to a more qualified one.

While educational institutions were previously permitted by prior Supreme Court cases to favor racial minorities by providing admission preferences to diversify their student body, private employers and federal contractors are not permitted to favor protected categories based on race, gender or ethnicity. Two exceptions exist when 1) a private employer enters into a voluntary affirmative action plan to eliminate a manifest racial imbalance, and 2) if there is a strong basis in evidence of disparate impact and remedial action is necessary. Absent these two narrow exceptions, private employers, including federal contractors, must not make any employment decision based on race or gender.

The Supreme Court decision serves as a reminder to conduct affirmative action and DEI initiatives lawfully.

  1. Use placement goals as an opportunity to determine the reason for underutilization of minorities or females. Engage the DEI team to identify issues in the recruiting process or in the workplace that may contribute to the underutilization, and to help recruit more qualified minority and female candidates to increase the pool of qualified applicants in job groups with placement goals.
  2. Exercise care and train talent acquisition teams so that efforts to achieve placement goals or to meet diversity initiatives do not result in unlawful de facto quotas or preferences or outright racial balancing or otherwise employ race in a negative manner. Hiring, promotion and personnel decisions must be made on the basis of neutral non-discriminatory reasons and not because of race, ethnicity, or gender.
  3. When collecting DEI data, consider collecting a broad spectrum of data beyond race and gender and protected categories. Not only will expanding the type of information avoid a presumption of stereotyping, which the majority addressed as problematic in the Harvard -UNC Decision, but it will also negate a claim that the employer is only concerned with a certain type of diversity.