Commerce Diversity Bid Stirs Up Debate Over Supreme Court Ruling

Advocates for workplace diversity are clashing with Republican attorneys general who claim best practices proposed by the US Department of Commerce last fall “double down on discrimination” by encouraging racial quotas in corporate America.

The battleground comes in comment letters weighing in on the department’s Business Diversity Principles Initiative. The initiative aims to guide private sector companies on incorporating diversity, equity, inclusion and accessibility into their human resources efforts, workforce development, and supply chains.

The dueling feedback, which was due Feb. 2, debated the legality of such efforts. The debate comes as some companies are scaling back or reshaping their corporate DEI efforts after the Supreme Court’s June decision ending affirmative action in college admissions and in response to political backlash.

The National Association for the Advancement of Colored People’s Legal Defense and Educational Fund and the Lawyers’ Committee for Civil Rights Under Law defended the department’s draft diversity best practices guidance against the 19 red state attorneys general who questioned its legality. The guidance, proposed in late November, includes striving for diverse C-suites and corporate boards, maintaining a diverse talent pipeline, and creating an inclusive supply chain.

The attorneys general had told Commerce in January that the draft diversity principles raise “significant legal defects” because they “appear to advocate for explicitly race-based employment quotas and decision-making.” Their letter—spearheaded by the Kansas, Montana and Tennessee attorneys general—cited the Supreme Court’s decision that race conscious admissions policies at Harvard University and the University of North Carolina were unconstitutional.

The comments mentioning the high court decision were among at least 65 responses the Department of Commerce received on its proposed principles.

The Supreme Court’s ruling “does not directly impact the legality” of programs that focus on mentoring or targeted recruitment in the private sector, the NAACP said in its Feb. 2 comment letter. “Opponents of civil rights have sought to extend” the Supreme Court’s decision to employment, the letter said, “incorrectly arguing that employer efforts to create diverse and inclusive workplaces are categorically unlawful.”

DEI efforts are necessary tools for helping employers meet their legal obligations to “provide employees with a safe work environment free from discrimination, harassment, and intimidation,” the Lawyers’ Committee for Civil Rights Under Law said in its Feb. 2 comment.

The group said the attorneys general “grossly misconstrue” the Supreme Court’s ruling. The department’s business diversity principles “are consistent with longstanding DEIA practices which have not employed racial classifications,” the Lawyers’ Committee said.

The Commerce initiative is “particularly important” amid contention over DEI, which is already having an effect on minority-owned businesses, the US Black Chambers Inc. said in a comment letter.

“These and other attacks on corporate DEI and supplier diversity programs are driving uncertainty and doubt among private sector legal counsel offices, DEI officials, and corporate leadership—resulting in a crippling effect on minority businesses,” the group said.

Speaking about the principles in an email, former Democratic Washington, DC attorney general Karl Racine, now a partner at Hogan Lovells, said the Supreme Court decision “has no application to DEI programs that are entirely focused on attracting, promoting, and retaining the best talent.”

“It is important that DEI programs be reviewed to ensure that they do not contain impermissible quotas and otherwise comport with law,” he said. “While I understand the instinct to not be caught in political crossfire, now is the time for companies to strongly defend the workforce they have and wish to attract in the future.”

Diversity Data

Comment letters also encouraged the Department of Commerce to urge companies to better track diversity efforts.

The department should encourage employers “to rely on evidence-based measures that result in substantive improvements to redress and remove racial barriers within the workforce,” said the NAACP’s Legal Defense and Educational Fund. As examples, the letter said it’s important to have full-time DEI staff or a DEI taskforce, mentoring programs, targeted recruitment programs, and equity audits.

“The Department of Commerce should consider how to spur additional research on which practices actually create more inclusive workplaces and encourage employers to collect their own data on the outcomes of their initiatives,” the letter said.

The Lawyers’ Committee for Civil Rights Under Law said that “reliable data collection and analysis is central to identifying potential organizational barriers to equal opportunity and measuring progress in remedying these barriers and achieving an organization’s DEIA goals.” The letter added that “without ongoing data collection and analysis, discriminatory systems and practices in the workplace may continue to thrive unabated.”

Some in the private sector appeared to agree with the importance of data collection. JPMorgan Chase & Co said the Department of Commerce can support the private sector’s diversity efforts by promoting effective policies and strengthening data measures “for supply chain owners to grow and target underutilized markets.” The department could also “improve data on underserved entrepreneurs’ participation in government supply chains,” the financial institution said.

Salesforce Inc. said in a letter that the proposed diversity principles “are comprehensive,” and pointed to its own internal data about the benefits of diversity efforts. “There’s plenty of research showing that more diverse and inclusive teams perform better—including our own data. At Salesforce, more inclusive sales teams performed 12% better and enabled 27% better use of employees’ skills and abilities,” the company said.

Other comments offered recommendations like focusing on the worker perspective. Commerce’s current draft recognizes the importance of investing in workers and the community, “but they leave out a key ingredient, the importance of including worker voice in the conversation,” said the AFL-CIO Technology Institute in its comment letter.

Some said there’s a long road ahead on diversity.

“None of the DEIA efforts touted by corporations and employees and the general public are quick fixes,” the National Employment Law Project wrote. “Long-term commitment with constant monitoring, accountability, and evaluation are key to lasting change, and the government should support and guide the private sector in these efforts, including sharing best practices, outcomes, and pointing out possible pitfalls.”