Corporate America Is Rethinking Diversity Hiring as Legal Challenges Rise

The same conservative activists who helped gut race-related college admissions at the US Supreme Court have now set their sights on corporate diversity programs, barraging airlines, tech giants and law firms with lawsuits and complaints. And they’re already having an effect.

The court’s landmark June ruling against affirmative action on campus didn’t cover businesses, many of which launched diversity, equity and inclusion programs after George Floyd’s 2020 murder by a White Minneapolis police officer. But as the conservative movement targets DEI, some companies have scaled back their efforts.

Law firms Morrison & Foerster LLP and Perkins Coie LLP have eliminated their diversity requirements for fellowship programs, a common tool for recruiting from underrepresented groups. The changes were disclosed after both firms were sued by legal activist Edward Blum, a long-time affirmative action foe who brought the successful Supreme Court suit. Pharmaceutical giant Pfizer Inc. removed race-related requirements from a similar fellowship program after a suit challenging it had been dismissed.

America First Legal — founded by Stephen Miller, a former senior adviser to President Donald Trump — has lodged complaints with the US Equal Employment Opportunity Commission against more than 20 companies, including American Airlines Group Inc., Macy’s Inc., McDonald’s Corp. and Salesforce Inc., arguing that their efforts to hire and promote more women and people of color amount to discrimination. It’s part of a broader conservative-led movement against what some Republican politicians have dubbed “woke capitalism” — corporate policies focused on topics such as diversity, climate change and worker rights.

Longtime affirmative action foe Edward Blum, who successfully challenged race-related college admissions policies at the US Supreme Court, is now pursuing law firms with diversity hiring programs that he calls “racially discriminatory.” 

“Organizations have to ask themselves ‘what is my risk calculus?'” said Samia Kirmani, a co-leader of the corporate diversity practice for employer law firm Jackson Lewis PC. “There is a risk of challenge, risk of liability, the risk of reputational harm.”

The biggest companies that were already committed to diversity initiatives prior to 2020 are more likely to be sticking with their programs, according to interviews with employment lawyers, consultants and diversity executives. Employers that are newer to DEI or haven’t really started are more likely to pull back, they said.

“You should do it because it’s good for your businesses,” said Karen Horne, a former DEI executive at Warner Bros. Discovery Inc. “If you’re doing it just because you want to feel good and check a box, then you’re going to have a reason to not do it when people get ‘fatigued’ from it.”

More than 80% of executives with a role in corporate responsibility have either changed the language they use to talk about their work or cut down on external communications about their efforts, according to a survey released last month by the Association of Corporate Citizenship Professionals. At the same time, 10% said there has been a decrease in their companies’ programs.

Companies have spent less time talking about diversity topics such as race or LGBTQ rights on corporate calls in the wake of the backlash, a Bloomberg analysis has shown. Still, the number of S&P 100 companies that have publicly stated a diversity goal — about half — has remained roughly the same as in October 2020, shortly after renewed Black Lives Matter protests, according to reports from research firm DiversIQ and Bloomberg News.

Morrison & Foerster says it remains committed to diversity and inclusion. The firm said it had begun the process of revising its fellowship program before being sued by Blum’s American Alliance for Equal Rights. The group has since dropped its suit, saying it’s satisfied the firm’s new fellowship will include all law students regardless of race or ethnicity. Perkins Coie, which dropped the diversity requirement from its fellowship after being sued, said it too has a longstanding commitment to building an inclusive workplace.

Blum said in an emailed statement that he has urged other law firms with “similar racially discriminatory programs” to “open their programs to all law students before they are sued in federal court.” His group has sent letters to at least three other firms and sued one of them, Winston & Strawn LLP, over diversity fellowships. Winston & Strawn declined to comment.

“We are in the right legally and morally, and this entire cottage industry of discrimination under the guise of ‘equity’ has created substantial liability for countless major corporations across the United States,” Gene Hamilton, general counsel for America First Legal, said in an emailed statement. “No American should suffer from race or sex based discrimination.”

Some of the companies sued are not backing down. Hello Alice, which helps small businesses get equitable access to capital, has been named in a lawsuit by America First Legal over a program with Progressive Insurance Co. that provides grants to Black-owned commercial vehicle companies. Hello Alice Co-Founder Elizabeth Gore says her company is not breaking the law and doesn’t intend to change its program.

For real estate company Hines Interests LP, the possibility of getting sued is still worth it, said Crystal Castille-Cromedy, senior vice president of talent and chief diversity officer. The Houston-based firm doesn’t plan to alter its Skyline Scholars program, launched last year to help college freshmen and sophomores from underrepresented groups learn more about commercial real estate, she said. Those students are guaranteed a first-round interview for the company’s summer internship program.

“I’ve not been put in a position to feel as though I’m taking a risk, let alone an undue risk,” Castille-Cromedy said. “We at this organization believe first and foremost in meritocracy, but we also know that we have to broaden our reach to understand and to appreciate where talent comes from.”

The risk is that in the current environment, with many companies cutting jobs, some executives will want to rely on people they already know and have worked with in the past, and that makes it less likely those people will be diverse, said Horne, the former Warner Bros. executive.

She lost her job at the entertainment studio in June as part of a reorganization, but she doesn’t consider her layoff a sign that Warner no longer values DEI. Still, she warns that without a firm commitment, companies risk growing “fatigued” with DEI and turning away.

“I actually believe it’s a privilege to be able to say that there’s fatigue, because as a Black woman, I don’t get the opportunity to have fatigue,” she said. “You have to point back to the business benefit of this.”