Affirmative Action One Year Later: What Retailers Need to Know
We're quickly approaching the one-year anniversary of the U.S. Supreme Court’s decision striking down affirmative action in higher education. Although Students for Fair Admissions v. Harvard University and Students for Fair Admissions v. University of North Carolina (Harvard/UNC decision) did not squarely apply to the private sector, corporations have been swept into a nationwide conflict over diversity, equity and inclusion (DEI) initiatives — retailers included.
Legal advocacy groups have filed complaints with the U.S. Equal Employment Opportunity Commission against several big retailers for DEI-related practices, such as bonuses to racially diverse business partners and efforts to increase racial and gender diversity in hiring, training programs and promotions. Such groups have also employed grassroots initiatives, such as boycotts against retail companies, in an effort to curtail retail consumer spending, and they're using social media to publicize their efforts.
Disputes over corporate DEI programs have also arisen in the political arena. Shortly after the Harvard/UNC decision, 13 Republican attorneys general issued a letter warning Fortune 100 companies — including retailers — to cease unlawful race-based principles in employment and contracting practices. Days later, Democratic attorneys general from 20 states and the District of Columbia vowed to defend companies targeted by Republican efforts. The political polarization surrounding DEI programs is expected to increase as the 2024 election season approaches.
Retailers should thus review DEI programs and messaging to assess the risk that any initiatives may pose.
Workforce Diversity Challenges
Many retailers focus on maintaining a diverse workforce to better serve their customers. Retailers should be careful about trying to build a workforce that mirrors its customer base, as the qualifications and experience required to work for the company may often vary from those of its customer base. Any aspirational representation goals should be based on appropriate analyses of the relevant talent pools for the company. Such goals can be targeted by legal advocacy groups that may argue such goals are unlawful quotas and allege that a company used racial preferences in making employment decisions.
Retailers should also review all programming in light of the Supreme Court’s latest decision expanding the scope of employment decisions actionable under Title VII of the Civil Right Act. In Muldrow v. City of St. Louis, Missouri, the Supreme Court held that employees may challenge any “disadvantageous” change in their terms or conditions of employment based on race, gender or other protected characteristic, even if the disadvantage is not considered significant or material. As a result, retailers should review job training as well as internship, mentoring and professional development programs to determine whether any initiatives employ preferences for participation or opportunities based on certain protected traits.
Retailers increasingly rely on algorithms and artificial intelligence (AI) technologies for various tasks, such as hiring, product recommendations, and pricing. However, if these algorithms aren't carefully designed and monitored, they can perpetuate and even exacerbate existing biases.
Addressing these challenges requires a comprehensive approach that involves commitment from leadership, collaboration across departments, and ongoing engagement with employees, customers and external stakeholders.
W. John Lee is a partner with Morgan, Lewis & Bockius LLP and a co-leader of the firm’s DEI Task Force.
Melissa C. Rodriguez is a partner and a co-leader of the firm’s Retail and E-Commerce Team.
Gabriella A. Ravida is a labor and employment associate with the firm.
W. John Lee focuses his practice on complex employment litigation, representing employers in class and collective actions across the United States involving allegations of race and gender discrimination, wage and hour claims, as well as challenges to employer background check practices. He also litigates claims under the Sarbanes-Oxley and Dodd-Frank Acts, as well as state law whistleblower actions, in courts and before the US Department of Labor (DOL).
Melissa C. Rodriguez advises clients on the full spectrum of labor and employment law matters. This includes single-plaintiff, class, and collective action litigation (both wage and hour and discrimination claims); wage and hour and other employment counseling; and internal workplace investigations. In her litigation practice, she represents employers in individual, class, and collective action litigation, and in administrative agency actions concerning federal and state labor and employment statutes. Her clients hail from sectors including the retail, insurance, transportation, food services, and financial services industries.
Gabriella A. Ravida represents clients in a broad range of labor and employment matters, including litigation involving claims of discrimination, harassment, retaliation, and complex benefits-related class action disputes under the Employee Retirement Income Security Act (ERISA). She also works with employers to conduct investigations and establish policies that reduce the risk of litigation. Gabriella counsels clients across an array of industries, including technology, retail and eCommerce, and financial services. She is admitted in Pennsylvania only, and her practice is supervised by DC Bar members.
