The Role of General Counsel in Navigating DEI Policies: A Legal Perspective

Introduction

Businesses face a challenging landscape when it comes to crafting and implementing diversity, equity, and inclusion (DEI) policies. Although companies’ efforts to promote diversity and inclusion have been ongoing for years, the current climate presents a uniquely charged and complex context for such initiatives.

In this editorial, we explore the role of general counsel in preparing a company’s board to design or review its DEI policies. We offer insight into key considerations such as the historical context of DEI, the legal implications of implementing DEI policies, as well as diversity and inclusion best practices.

Understanding the Historical Context of DEI

In order to fully comprehend the current climate around DEI policies, it’s important to have a deeper understanding of their historical roots. DEI policies have been in existence for years, but they have only recently emerged as a significant risk issue for companies. Corporations started promising concrete steps to correct the inequities of women and minorities in the workforce over a decade ago. However, the murder of George Floyd in 2020 brought the issue of racial inequality to the forefront of cultural discussions, resulting in a renewed focus on DEI initiatives. Ten years after civil rights groups started pointing out data demonstrating disparities, companies were doubling down on their promises to bring more underrepresented minorities into the workplace and raise awareness about inclusiveness.

However, on June 29th, 2023, the Supreme Court’s decision in Students for Fair Admissions v. President and Fellows of Harvard College invalidated the use of race in college admissions processes, igniting a full-scale backlash against DEI programs. Companies started questioning the benefits, risks, and legality of their current diversity-related efforts, and high-profile lawsuits arose over allegations of “reverse discrimination.”

Despite this, underrepresented groups and employees will likely continue to press companies to demonstrate progress on DEI. Conservative groups, in turn, will pressure companies who pledge to make progress. The moral arc may be long and jagged, but companies can’t afford to stay out of this issue.

Legal Implications of Implementing DEI Policies

A board discussion on DEI-related initiatives likely needs a brief overview of the law as well as the legal protections for employees and potential litigation risks for companies.

The law around private employer hiring has not changed, although the climate has. Discrimination on the basis of race, sex, religion, national origin, and a number of other protected characteristics was unlawful prior to SFFA and remains unlawful. However, some companies’ DEI efforts may have crossed that line, and a pullback in language and hiring practices might be the right course for those companies.

While DEI is not synonymous with discrimination, good DEI efforts may be consistent with a company’s values, effectively serve important company objectives, and align with shareholder interests while withstanding legal scrutiny.

It’s important for general counsels to recognize that each organization is unique, and that DEI won’t necessarily look the same across the board. However, if a company is planning to adopt policies around DEI, it’s important to anticipate that their path may “stand out” to groups on either side of this issue, and invite attention.

DEI Best Practices

There’s no one-size-fits-all DEI program. Each company has a unique mission, values, customers, and employees. Moreover, where they do business and how they do so will shape the role that diversity plays.

General counsels need to partner with other executives and key stakeholders in order to help the board understand where DEI fits into the company’s big picture. They can do so by answering questions such as: What does the company currently spend on DEI? How does DEI fit into the company’s mission and strategic plan? Will it attract and retain current workers, and how will it play a role as the workforce evolves? Can DEI support the company’s brand and the wider business ecosystem? How does it drive short and long-term shareholder value?

Setting DEI policy is likely a board decision, but it’s the general counsel’s job to help the board understand all the ways that DEI impacts the business.

Conclusion

DEI policies are vitally important in today’s business environment. While it’s a complex issue with many legal and ethical considerations, it’s also an area of opportunity for businesses that are proactive and sensitive to the specific needs of their respective stakeholders. As the general counsel, you may not be the decision-maker on how your company’s diversity, equity, and inclusion plan evolves, but your expertise will play a pivotal role in shaping the debate. As the landscape continues to evolve, GCs must stay informed and agile in these issues to ensure their companies remain compliant, competitive and collaborative.

Originally Post From https://news.bloomberglaw.com/us-law-week/how-gcs-should-prepare-the-board-to-decide-deis-next-phase

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