Analysis The US Supreme Court has issued two decisions that threaten to upend efforts by tech companies to become more diverse, equitable, and inclusive.
On June 29, 2023, the Supremes ruled [PDF] that the admissions programs at Harvard College and the University of North Carolina violate the 14th Amendment’s equal protection clause by using race as an admission criterion.
The following day, the top court decided [PDF] that the First Amendment forbids Colorado, through its Anti-Discrimination Act, from forcing a web designer to create content expressing a view with which she disagrees – a website for a wedding involving participants other than one man and one woman, per the plaintiff’s religious beliefs. Never mind that no such scenario occurred, it’s now a legal precedent.
Silicon Valley, as has been widely reported, has a problem with diversity, equity, and inclusion, commonly abbreviated as DEI. It’s an expensive problem – lack of support for DEI drives employees away, costing US companies an estimated $16 billion annually in employee replacement costs, according to a 2017 report [PDF] from the Kapor Center for Social Impact.
While there’s debate on whether support for DEI in corporate environments translates to better financial results – some studies suggest so, others not so much – there’s no doubt some of the biggest brands in the world see value in DEI for burnishing their public image at the very least. Most companies prefer not to be perceived as racist, sexist, or otherwise discriminatory, apart from the odd billionaire-run fiefdom that monetizes outrage.
But DEI programs – already under pressure from layoffs and hiring freezes – may become a potential legal risk now that the Supreme Court has indicated that race should not determine school admission in the same way as legacy status and that it’s acceptable to refuse creative services to a protected class of people based on belief.
“I think it will have a profound effect, a profound negative effect,” said Wendy Musell, counsel to employment law firm Levy Vinick Burrell Hyams LLP and a partner of Law Offices of Wendy Musell, in an interview with The Register.
Musell, who specializes in employment discrimination and disability cases in California, said the affirmative action decision has the potential to reshape the employment pipeline of university graduates recruited by tech firms.
“If those institutions are whiter and have less diversity, then the pool of applicants is going to be whiter and have less diversity,” she said.
Musell also believes corporate DEI initiatives will be affected. She cited a passage from Justice Sotomayor’s dissenting opinion: “Equal educational opportunity is a prerequisite to achieving racial equality in our nation.”
“If you are thwarting equal educational opportunity, you are absolutely thwarting equality in workplaces, as well as other areas of power in our country,” she said.
“Companies in tech are already laying off a disproportionate amount of their DEI departments with recent layoffs and I think that they’re reviewing both of these decisions, or their legal departments probably should be reviewing both of these decisions, to see how they impact how they implement their policies and procedures regarding DEI across the workplace and in hiring.”
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Musell said many employers are committed to DEI for a variety of reasons, including support for equal rights, better financial outcomes, and ensuring that their products suit those who use them – which is much easier when those products come from a diverse workforce.
“I think that this is a coordinated legal attack on the concept of diversity in the workplace,” said Musell.
As for the First Amendment case, 303 Creative LLC v. Elenis, Musell expressed frustration with the decision.
“Frankly, I had a hard time with the analysis by the majority in that case,” she said. “I disagreed vehemently with it. I think the contours of that decision are quite unclear. And I would imagine that many business owners are in the same position as I am, evaluating that decision, wondering what the heck do they mean here, where [creating a wedding website for a same-sex couple] is considered speech instead of conduct.
“The Supreme Court says that Ms Smith can literally have a sign that she can put up – which I assume would be on her own website – indicating that she did not have to serve same-sex couples seeking websites related in any way to marriage. That [the Supreme Court found this] perfectly acceptable, I find, frankly, shocking.”
Musell expects that many companies, particularly tech firms, are wondering how the line that the Supreme Court drew between speech and conduct will affect workplace DEI initiatives, such as celebrating diversity, non-discrimination, or gay pride month.
Arguing that the decision errs on equities and unconstitutional premises, Musell said the court’s reasoning fails when applied to another protected class like gender, race, or disability status.
“You have a protected class that you’re saying you don’t have to serve in a public accommodation,” she said. “Prior to last week, I would have said that’s dead in the water [as a matter for litigation].” ®
