Attention on D&I will continue but not without challenges
Efforts to support and promote diversity will increase, but companies may face hurdles due to the polarized national political divide.
On Jan. 20, within the first few hours of his administration, President Joe Biden signed the “Executive Order on Advancing Racial Equity and Support for Underserved Communities Through the Federal Government,” which states that the government has as a responsibility to affirmatively advance “equity, civil rights, racial justice, and equal opportunity.”
This executive order requires federal agencies to assess “systemic barriers to opportunities and benefits for people of color and underserved groups” in order to develop policies and programs to address such inequities. It also revoked executive orders issued by former President Donald Trump that prohibited certain types of diversity and inclusion training and promoted “patriotic education.”
The prompt action taken in issuing this executive order is an unmistakable sign that the Biden administration will seek to implement and enforce progressive policies in the realm of diversity, equity and inclusion. We have already seen Biden follow up on campaign promises to ensure diversity from the top down. Specifically, according to a Brookings Institution study, Biden’s Cabinet is equivalent to Presidents Barack Obama and Bill Clinton in terms of non-white Cabinet appointments, but includes more women than his six predecessors, in addition to several historic appointments, such as U.S. Rep. Deb Haaland, who, if confirmed, will be the first Native American Cabinet secretary.
Biden’s executive order continues emphasis on diversity
Biden’s expressed commitment to diversity, not to mention the recent global attention garnered by the Black Lives Matter movement and various other social justice issues, has resulted in diversity, equity and inclusion taking center stage with legitimized importance in all sectors of society. Accordingly, it should come as no surprise that efforts to support and promote diversity, such as those from state legislatures, private businesses and employers, will increase, although they may face challenges along the way, particularly due to the polarized national political divide.
Recent state legislative action has been directed at promoting diversity, particularly in California. Specifically, California Assembly Bill (AB) 979, signed into law Sept. 30 of last year, requires California public companies to have at least one director from an underrepresented community on the board by the end of 2021, and, depending on the board’s size, may require additional directors from underrepresented communities by the end of 2022. A “director from an underrepresented community” is defined as “an individual who self-identifies as Black, African American, Hispanic, Latino, Asian, Pacific Islander, Native American, Native Hawaiian, or Alaska Native, or who self-identifies as gay, lesbian, bisexual, or transgender.”
AB 979 was modeled after California Senate Bill (SB) 826, which was enacted in 2018 and requires similar diversity minimums for boards, but based on gender. Both AB 979 and SB 826 were the first of their kind in the United States and may serve as an indicator of how similar laws, from either state or federal government, may be received and the challenges that lay ahead.
Legal challenges ahead
Not surprisingly, both of these laws continue to face legal challenges. Specifically, in Meland v. Padilla, SB 826 was challenged on the basis that it violates the Equal Protection Clause under the 14th Amendment of the U.S. Constitution. Although dismissed for lack of standing, an appeal is currently pending before the U.S. Court of Appeals for the Ninth Circuit. Moreover, in Crest v. Padilla (I and II), filed in August 2019 and September 2020, an activist group, on behalf of taxpayers, sought to enjoin the California secretary of state from implementing and enforcing SB 826 and AB 979, respectively. Both cases are pending in California Superior Court for the County of Los Angeles.
Notwithstanding the challenges to California’s board diversity laws, legislation seeking to promote diversity will likely continue. For instance, since SB 826 was first enacted, approximately a dozen other states, including Washington, Colorado, Maryland, Illinois and New York, have enacted or proposed legislation aimed at increasing board diversity, although unlike the strict requirements and penalties under California’s laws, most of the current legislation encourages diversity through disclosure requirements.
Accordingly, private companies and employers will likely continue taking steps to increase and promote diversity. As the U.S. Supreme Court noted in 2003’s Grutter v. Bollinger, “major American businesses have made clear that the skills needed in today’s increasingly global marketplace can only be developed through exposure to widely diverse people, cultures, ideas, and viewpoints.” Yet, even when a law demands increased diversity, these laws do not explain how to increase diversity without violating the law.
As such, employers and companies who enact initiatives to support or promote diversity may face legal challenges. Specifically, Title VII of the Civil Rights Act of 1964, which prohibits based on race, color, national origin, religion and sex, is not limited to discrimination against traditionally disadvantaged groups. This means that a well-meaning diversity, equity and inclusion policy or program may result in claims of “reverse discrimination.”
Moreover, an employer’s written commitment to diversity, without taking any actual steps to put it into practice, may also result in liability. For instance, in Santiago v. Information Resources, plaintiffs allege that the defendant announced diversity initiatives but did not institute any substantive measures and sought to silence advocates for change. Filed in September 2020, this case is pending in the U.S. District Court for the Southern District of New York.
Although companies and employers may see an increased necessity to address and promote issues of diversity, equity and inclusion, it is important that such initiatives and policies be carefully crafted and implemented with the advice of counsel.
Christina Tellado is a partner and co-head of Holland & Knight’s national wage and hour group. Deisy Castro is a labor and employment associate at the firm.
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