The following post was originally included as part of our recently published memorandum “Selected Issues for Boards of Directors in 2024”.
In June 2023, the U.S. Supreme Court held that Harvard University and the University of North Carolina’s admissions programs, which considered candidates’ race in admission decisions, violated the Fourteenth Amendment of the U.S. Constitution and Title VI of the Civil Rights Act of 1964. While these decisions, known collectively as SFFA, do not apply to a corporation’s employment decisions, language in the Court’s opinion has led many to speculate as to how the precedent could potentially be expanded to this context. The Court’s majority noted that the language of Title VII of the Civil Rights Act, which, broadly speaking, bars discrimination in employment decisions, is almost identical to corresponding language in Title VI. Notably, in writing a concurrence joined by Justice Thomas, Justice Gorsuch observed that Title VII is “[j]ust next door” to Title VI, and noted that the majority opinion tracks the Supreme Court’s prior rulings interpreting “materially identical language in Title VII,” prompting Justice Gorsuch to ask rhetorically whether it makes sense to “read the same words in neighboring provisions of the same statute—enacted at the same time by the same Congress—to mean different things?”
Even before SFFA, so-called “reverse discrimination” claims were being pursued by employees, shareholders and watch-dog groups alleging discriminatory treatment against white, cisgendered male employees based on the defendant companies’ Diversity, Equity and Inclusion (DEI) initiatives. Very soon after the Supreme Court issued SFFA, litigations challenging certain aspects of various corporate DEI programs were filed, asking courts to extend the SFFA majority’s ruling to hold these aspects are also unconstitutional. Companies, and their management teams and boards, should be prepared for increased employment-related litigation including litigation that seeks to hold executive officers and directors personally liable for purported breaches of their fiduciary duties in connection with the corporation’s DEI policies.
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