Corporate DEI initiatives are facing cutbacks and legal attacks

Andrea Hsu

August 19, 2023 / 4:01 am

Just three years after the murder of George Floyd in Minneapolis set off a torrent of hiring of chief diversity officers and other such roles, companies are coming under attack from conservative legal activists who argue that their DEI policies and programs constitute racial discrimination.

The challenges come as companies, faced with an uncertain economy, have already been laying off large numbers of people, including many only recently hired to implement their diversity, equity and inclusion (DEI) strategies.

The one-two punch has legal experts split on what's ahead for these efforts, while longtime diversity advocates argue that companies should take these setbacks as an opportunity to reset.

"We cannot place the reasoning for it on something as subjective as the right thing to do. It has to be the smart thing to do," says Janet Stovall, global head of diversity, equity and inclusion for the NeuroLeadership Institute, a consulting firm focused on culture and leadership.

A surge in hiring, followed by dramatic cuts

In the corporate DEI world, Catalina Colman's story is a familiar one.

In 2020, she was working at a small tech company as a human resources generalist, handling tasks such as employee onboardings and exits.

She had already been thinking about how to help the company grow in a more diverse and equitable way, when in May of that year, George Floyd was murdered. Suddenly, everything accelerated.

"We recognized we just needed to move quickly, and we needed to start implementing things fast," says Colman.

The racial reckoning unfolding across the country unleashed demands for change. Companies scrambled to respond to the moment. According to the jobs site Indeed, job postings with DEI in the title jumped 92% from July 2020 to July 2021.

But the deceleration has also come quickly. Economic pressures have led companies to pull back, cutting DEI jobs including Colman's alongside other human resources roles. Since last July, Indeed has seen DEI job postings drop by 38%.

And then in June, in another blow to diversity advocates, the Supreme Court rejected the use of race-conscious admissions in higher education, setting off predictions that corporate policies around diversity will soon meet the same fate.

Predictions of what's next for corporate DEI

To be clear, the court's decision applies to affirmative action at colleges and universities, not employer efforts to foster diversity in the workplace.

In a statement issued after the ruling, Charlotte Burrows, chair of the Equal Employment Opportunity Commission, wrote, "It remains lawful for employers to implement diversity, equity, inclusion, and accessibility programs that seek to ensure workers of all backgrounds are afforded equal opportunity in the workplace."

But in a Bloomberg opinion piece, Harvard Law professor Noah Feldman cited Justice Neil Gorsuch's concurring opinion, in which "he made it crystal clear that in his view, the court's rule that an educational institution 'may never discriminate based on race' now applies with equal force to employers."

Feldman told NPR the writing is on the wall.

"There's a high probability, a very high probability, that a majority of this current Supreme Court will say the exact same thing," he said in an interview last month.

But other attorneys say such assumptions are premature. Bonnie Levine, founder of the law firm Verse Legal, points out that a day after the affirmative action decision, the Supreme Court ruled that a Christian wedding website designer could refuse to work with same-sex couples.

"The Supreme Court has been very clear about not wanting to infringe on the rights of private parties," says Levine.

Regardless, conservative activists are already waging a new fight.

In early August, Edward Blum, the strategist behind the affirmative action case, filed a lawsuit against the venture capital group Fearless Fund over grants it awards to black female entrepreneurs. Blum argues that the program amounts to "express and intentional racial discrimination in the making of contracts," according to the lawsuit.

Former Trump adviser Stephen Miller has also been busy, asking the EEOC to investigate hiring practices aimed at increasing minority representation at a long list of companies including Kellogg's, Hershey and Alaska Airlines.

"They are bringing these cases to make law. That's why they're bringing them," says Levine.

A moment to get out or double down

Even before this year, corporate diversity, equity and inclusion efforts have come under harsh criticism, including that they're expensive, performative, even a source of division themselves.

At companies where DEI was never a priority, this may be a moment to get out.

"It makes sense that you wouldn't want to just jump into something that is going to be more complicated if you don't feel like you have to," says consultant Stovall.

But for clients who are in it for the long haul, Stovall is doubling down on advice she's always given: Focus on the rationale. Make the business case for bringing on a diversity of backgrounds and experiences.

"Every organization has basically only three goals: make money, save money, achieve a vision," she says. "If you can tie DEI directly to one of those goals, it gets a little bit harder for even those who want to destroy it to argue that they should."

For Catalina Colman, trying to find another DEI job after her layoff in April was disheartening. Positions she applied for were eliminated midway through the interview process.

This summer, she decided to put herself out there as an independent consultant. She's banking on companies wanting to continue the work they started, recognizing a business imperative.