Navigating the New DEI Landscape

The US Supreme Court ruled on April 17 that any “disadvantageous” change in the “terms and conditions” of employment that is based on race, gender, or another protected characteristic is actionable under Title VII, even if the disadvantage is not considered significant or material. This expansion of the types of employment decisions that can support a Title VII discrimination claim will require employers to more carefully consider the impact of various employment programs and activities, from job transfers to DEI programs.

Last week, three federal courts issued significant decisions impacting the diversity, equity, and inclusion (DEI) legal landscape. Together, the cases demonstrate the rapidly evolving state of the law with respect to DEI.

In preparing for both the 2024 proxy season and publication of inaugural or refreshed corporate social responsibility or sustainability reports, as well as in anticipation of final climate disclosure rules from the SEC as of March 6, public companies should consider closely reviewing their policies, procedures, and disclosures related to diversity, equity, and inclusion (DEI) and environmental, social, and governance (ESG) statements and commitments.

The National Labor Relations Board (NLRB or the Board) recently expanded the types of messaging employees are permitted to display in the workplace when it ruled an employee’s Black Lives Matter uniform marking was protected by labor law—and the Board has signaled that even greater expansion may be coming.

In the run-up of what will be a pivotal election year in the United States and in other global jurisdictions, Morgan Lewis lawyers provide a high-level overview of some major trends and regulatory and legislative developments that are on the horizon.

The US Department of Labor’s Office of Federal Contract Compliance Programs (OFCCP) recently issued a new final rule that will change how the agency investigates and enforces allegations of discrimination against federal contractors subject to EO 11246. The August 4 rule, which goes into effect on September 5, 2023, largely dismantles the policies established by a 2020 rule, which provided detailed notice and evidentiary standards for the agency’s pre-enforcement and conciliation procedures.

The US Small Business Administration (SBA) temporarily suspended new application submissions to its 8(a) Business Development program, and it will require many existing participants to explain why they qualify for the program after a district judge in the US District Court for the Eastern District of Tennessee held that the SBA’s use of a “rebuttable presumption” of social disadvantage for certain minority groups in determining eligibility for the program violated a federal contractor’s Fifth Amendment right to equal protection.

In the wake of the US Supreme Court’s recent decision striking down affirmative action in higher education in Students for Fair Admissions v. Harvard University and Students for Fair Admissions v. University of North Carolina (Harvard/UNC), corporations are being swept into a nationwide conflict over diversity, equity, and inclusion (DEI) initiatives. Corporate boards should consider taking preventive measures now to mitigate litigation risk.

Partner Louise Skinner and associate William Mallin wrote an article for International Employment Lawyer about the UK’s gender pay reporting regime against the backdrop of the EU’s Pay Transparency Directive.

Hawaii Governor Josh Green recently signed into law a requirement that employers in Hawaii include in job listings information on the expected hourly rate or salary range for positions. The July 3, 2023 law is an amendment to Chapter 378, Part I of the Hawaii Revised Statutes regarding pay transparency and equal pay and is scheduled to go into effect on January 1, 2024. The amended law also modifies Hawaii’s existing equal pay law to provide increased protection for a broader range of protected classes.

The US Supreme Court on June 30 sided with a website designer who claimed the First Amendment shielded her from liability under state civil rights laws for refusing to create wedding websites for same-sex couples.

The US Supreme Court’s June 29 decision in Students for Fair Admissions, Inc. v. University of North Carolina and Students for Fair Admissions, Inc. v. Harvard University (the Harvard-UNC cases), which will have a significant, immediate effect in higher education, could also have implications beyond the education industry, including for federal contractors covered by Executive Order (EO) 11246, the principal legal authority enforcing development of equal employment opportunity plans and affirmative action programs by qualifying federal contractors.

The US Supreme Court issued a landmark decision on June 29, 2023 regarding challenges to race-conscious admissions programs at Harvard University and the University of North Carolina (UNC). In a 6–3 decision split along ideological lines (the vote was 6–3 in Students for Fair Admissions, Inc. v. University of North Carolina and 6–2 in Students for Fair Admissions, Inc. v. President & Fellows of Harvard College with Justice Jackson recused), the Supreme Court held that Harvard and UNC’s race-conscious admissions policies fail strict scrutiny and thus violate the Equal Protection Clause of the Fourteenth Amendment to the US Constitution.

March 1, 2023 will mark the third year of the general obligation to publish the gender pay equality index in France. As of this date, all companies that have not reached the objective of 75 points out of 100 at the gender pay equality index could be held liable to a financial penalty of up to 1% of the payroll. As such, it is time to make a first assessment of the situation and to consider the next steps for companies that have not succeeded in making the necessary corrections.

Recent final regulations made a series of 2021 amendments to the Illinois Equal Pay Act effective as of December 22, 2022. The amendments generally require private employers with 100 or more employees in the State of Illinois to obtain an “equal pay registration certificate” from the Illinois Department of Labor and expand certain reporting requirements, making the law one of the most far-reaching state equal pay laws in the United States.

Partner Larry Turner authored a Practical Guidance article discussing an employer’s effort to address diversity and the resulting claim of reverse discrimination.

The US Supreme Court on October 31 debated the legality of race-conscious admission programs used by Harvard University and the University of North Carolina. The decisions in these highly watched cases could have broad consequences for diversity, equity, and inclusion practices in a range of sectors.

Partners Louise Skinner and William Yonge authored an article for Investment Week about the consideration given to the ‘social’ element of environmental, social, and governance (ESG) by private funds and investors.

Partners Erin Martin and Celia Soehner authored an article for Bloomberg Law outlining ways public companies can prepare for an expected move by the US Securities and Exchange Commission (SEC) to take a closer look at human capital disclosures in public company filings. Erin and Celia note important steps for public companies to take to be responsive to the potential regulatory scrutiny and investor demands.

Partners Lesli Ligorner and Louise Skinner authored an article for European Pharmaceutical Review about environmental, social, and governance issues across Asia and Europe, focusing on social inclusion considerations.

Morgan Lewis partners Jocelyn Cuttino, Sharon Masling, and Louise Skinner authored an article for International Employment Lawyer on how employers are actively seeking to increase diversity, equity, and inclusion initiatives at their companies without running afoul of global, federal, and state anti-discrimination statutes.

The Stop WOKE Act prohibits employers from requiring employees to participate in certain types of diversity, equity, and inclusion (DEI) training. The bill was recently passed by the Florida House and Senate; Governor Ron DeSantis is expected to sign it into law shortly.

Please join us for a webinar where lawyers across our education industry will take a closer look at the challenges facing educational institutions.

Partner Diana Cortes participated in a fireside chat with Temple University Beasley School of Law Associate Dean for Academic Affairs Donald P. Harris, who also serves as the school’s diversity, equity, and inclusion liaison. The discussion took place at a Temple Inn of Court meeting about the US Supreme Court’s 2023 affirmative action decision in SFFA v. UNC and SFFA v. Harvard.

Our panelists will discuss the latest trends in disclosure considerations against the backdrop of a continually shifting regulatory and litigation landscape.

Partners Terry Johnson, August Heckman, and Emily Cuneo Desmedt will participate in the panel What Diversity and Inclusion Look Like Under the Current Supreme Court, organized by the New Jersey chapter of the Association of Corporate Counsel (ACC). The ACC is a global bar association that promotes the common professional and business interests of in-house counsel through information, education, networking opportunities, and advocacy initiatives.

Join us for the next installment of our What We’re Seeing webinar series, featuring updates on hot topics and trends designed for individuals operating in the employee benefits space.

Emily DeSmedt led a webinar discussing the recent US Supreme Court decision in SFFA v. UNC and SFFA v. Harvard and how the decision may have a ripple effect on foundations’ and operating nonprofits’ policies and practices, grantmaking guidelines, and more.

Our panelists will discuss how companies can address legal compliance in connection with DEI initiatives, including program design, DEI-related incentive plan goals, and public disclosures.

Emily DeSmedt led a discussion on racial equity for attendees from nonprofits, community-based funds, community development financial institutions, and other funders.

Earlier this year, the US Supreme Court handed down affirmative action decisions that will have far-reaching implications on how employers design their benefits plans.

The American Alliance for Equal Rights filed a race discrimination lawsuit in US District Court in the Northern District of Georgia against entities affiliated with Fearless Fund Management, LLC, an Atlanta-based asset manager. The lawsuit alleges that Fearless’ grant program for Black female business owners violates Section 1981 of the Civil Rights Act of 1866. The organization that filed the Fearless suit is affiliated with Students for Fair Admissions, the organization that sued Harvard and the University of North Carolina in the affirmative action cases the US Supreme Court decided this term.

Join us for a series of webinars assessing the decisions and practical steps going forward.

Join us for a series of webinars assessing the decisions and practical steps going forward.

Over the past several years, business leaders have embraced diversity, equity, and inclusion (DEI) strategies to improve their bottom lines, create safer and more respectful workplaces, and continue nurturing their relationships with the communities they serve.

Morgan Lewis’s labor and employment practice was profiled by Law360 in recognition of its selection as a 2023 Practice Group of the Year. In the profile, practice leader Grace Speights, along with deputy leader David McManus and partners John Ring and Emily Cuneo DeSmedt, discussed the firm’s work and significant victories for clients, which included securing a contract deal with UPS and the International Brotherhood of Teamsters and the dismissal of a high-profile race and defamation case, in addition to diversity, equity, and inclusion (DEI) counseling work before and after the US Supreme Court’s affirmative action decision.

In a Legaltech News feature on potential trends in 2024, partner and DEI Task Force co-leader John Lee said diversity, equity, and inclusion (DEI) will remain a “social, political, and legal hotbed” as organizations weigh the demand for more inclusive practices against potential litigation threats and government action.

Partners Sharon Masling and Ami Wynne wrote an article for Corporate Counsel discussing trends in litigation challenging employment-related diversity, equity, and inclusion (DEI) practices, charitable grantmaking and mission-driven investments, supplier diversity programs, and corporate board governance programs in the wake of the US Supreme Court’s decision in Students for Fair Admissions v. Harvard University and Students for Fair Admissions v. University of North Carolina.

IFLR featured Morgan Lewis in an article discussing how law firms are formulating and integrating environmental, social, and governance (ESG) policy. It notes the firm’s representation of Bank of America in the inaugural “debt-for-nature” transaction in continental Africa. Speaking to IFLR, partner Carl Valenstein said, “We set goals, chart our course, and take action.”

Morgan Lewis is a finalist for Washington, D.C. Litigation Department of the Year: Labor & Employment for The National Law Journal’s 2023 Legal Awards, which highlight the top litigation and appellate work done over the last year. The firm is one of two in the category honoring excellence in the labor and employment specialty.

Partner David Dziengowski and associate Megan Lipsky wrote an article for FEDweek on the implications of the US Supreme Court’s decisions in Students for Fair Admissions, Inc. v. University of North Carolina and Students for Fair Admissions, Inc. v. Harvard University on federal contractors covered by Executive Order 11246, an antidiscrimination directive that serves as the principle legal authority on which contractors’ equal employment opportunity plans and affirmative action programs are based.

Partner Sharon Perley Masling is quoted by Law360 in an article about the impact on employers’ diversity, equity, and inclusion efforts in the wake of state abortion bans and restrictions enacted after the US Supreme Court held there was no constitutional right to abortion.

Partners Sharon Masling, Ami Wynne, Elizabeth Goldberg, and associate Margaret McDowell wrote an article for Reuters noting that employers should contemplate pending decisions in the US Supreme Court addressing affirmative action in college admissions programs and how they may impact their diversity, equity, and inclusion initiatives and environmental, social, and governance commitments.

The Sports Business Journal noted partner Larry Turner’s role as moderator of the How to Lead Transformational Change panel during the publication’s annual All In conference.

Partner Sharon Masling is quoted in a Law360 Employment Authority article about discrimination legislation and regulations to keep an eye on in 2023. Sharon noted that should the US Equal Employment Opportunity Commission develop a Democratic majority, it will likely finalize workplace harassment guidance initially proposed in 2017.

Partner Larry Turner authored a Practical Guidance article discussing an employer’s effort to address diversity and the resulting claim of reverse discrimination.

Partners Ami Wynne, Larry Turner, Sharon Masling, Emily DeSmedt, and John Lee, and of counsel Pierce Blue wrote an article featuring a Morgan Lewis LawFlash for LexisNexis’ Practical Guidance, covering the oral arguments presented before the US Supreme Court debating the legality of race-conscious admission programs used by Harvard University and the University of North Carolina. The article discusses how the decisions in these cases could impact employer diversity, equity, and inclusion programs.

Partners Larry Turner and Ami Wynne were quoted in an article from The Business Journals about the potential impact to corporate diversity, equity, and inclusion programs should the US Supreme Court prohibit the use of affirmative action for college admissions. The US Supreme Court on October 31 debated the legality of race-conscious admission programs used by Harvard University and the University of North Carolina.

HR Magazine quoted partner Larry Turner in an analysis about how two higher education–related affirmative action cases before the Supreme Court could impact diversity programs in the workplace.