Direct or Disguised

By Jonathan A. Segal
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HR Magazine, October 2003In June, the Supreme Court garnered a great deal of attention when it handed down two decisions regarding affirmative action measures used by the University of Michigan’s undergraduate and law school programs. The high court approved the holistic student admission process employed by the law school, but rejected the point-based process used for undergraduate admissions.​

Some commentators believe these ground-breaking decisions, which generally recognize the importance of student-body diversity in public higher education, provide a green light for employers to consider race and ethnicity for the purpose of achieving a diverse workforce.

However, such an interpretation is probably a mistake. Nothing in the court’s opinions in Grutter v. Bollinger (the law school case) and Gratz v. Bollinger (the undergraduate school case) expressly protects consideration of race, ethnicity or other protected classifications in the private employment context.

In fact, neither the outcomes nor the underlying reasoning of the high court’s decisions applies directly to private employment decisions at all. Under the rules that currently govern discrimination in private employment, employers that directly consider race or other protected factors as part of a non-remedial diversity program remain at risk.

That’s not to say, however, that employers can’t glean something from these decisions. In some instances, the logic and societal values acknowledged in these rulings could apply to the employment context.

This article provides an overview of the Michigan decisions, revisits prior decisions on affirmative action in employment and offers recommendations for tailoring workplace diversity programs within the confines of prevailing case law.

Case Background

To better understand the potential application of the Michigan cases to employment decisions, it’s important to have some background on the two challenged affirmative action plans.

The plan used for undergraduate admissions automatically granted 20 points to certain minorities based on their race. (Applicants who earn 100 points are guaranteed admission.) The university also awarded 20 points for some race-neutral factors, such as attending socioeconomically disadvantaged high schools.

The law school plan did not involve a point system, but sought instead to create a “critical mass” of minority students and considered race as a “plus” along with other race-neutral factors, such as socioeconomic status.

Because the university is a public institution, the plaintiffs challenged the plans under the U.S. Constitution. Specifically, they argued that the affirmative action plans violated the Equal Protection Clause of the 14th Amendment, which provides that no state shall “deny to any person within its jurisdiction the equal protection of the laws.”

Courts analyze such race-based claims by asking two questions:

  • Does the public entity have a “compelling state interest” that supports making distinctions on the basis of race?
  • If so, are the means to achieve that interest narrowly tailored?

In Grutter, six of the nine justices (all except Chief Justice William H. Rehnquist and Justices Antonin Scalia and Clarence Thomas) agreed that diversity can be a compelling state interest for public colleges and universities. However, that majority did not recognize a compelling interest in diversity in general. It upheld only the relatively narrow interest in the “attainment of a diverse student body.”

Reaching the second question, the court struck down the undergraduate program but upheld the law school program. The majority stated generally that a college or university cannot have a quota or set-aside (of slots) for minority applicants, but such an institution may consider race as a “plus” as part of an individualized, holistic determination.

The court found that the Michigan undergraduate program was more like a quota in which certain minorities were awarded 20 percent of the total number of points necessary to guarantee admission. As such, it went too far to pass constitutional muster.

In contrast, the law school awarded no points, but simply made race a plus-factor, similar to certain other factors unrelated to race, in a highly individualized review process designed to achieve a critical mass of minority students. Accordingly, the law school plan was upheld.

Rules for Private Employers

Private employers are governed not by the Constitution, but by Title VII of the Civil Rights Act of 1964, which prohibits discrimination in employment on the basis of race, color, national origin, religion and sex. The compelling interest test applied in the Michigan cases is not directly relevant to Title VII analysis.

A different analysis applies under Title VII, first articulated by the Supreme Court in its 1979 decision in United Steelworkers of America v. Weber. In that case, the court held that Title VII does not prohibit all race-conscious affirmative action plans in private employment. To the contrary, a voluntary affirmative action plan that takes race into account may be lawful, but only if it serves a remedial purpose consistent with Title VII’s goals and does not “unnecessarily trammel” the interests of white employees. (Yet another set of affirmative action rules, outside the scope of this article, applies to federal contractors under Executive Order 11246.)

In upholding the affirmative action plan in Weber, the high court emphasized its characteristics as follows:

  • It mirrored the purposes of Title VII—to break down racial segregation and hierarchy.
  • It did not attempt to achieve a racial balance but only to break down the manifest racial imbalance.
  • It was not indefinite in duration but only a temporary measure.
  • It did not unnecessarily trammel the interests of white employees by either requiring that they be discharged and replaced by black employees or precluding them from consideration from future hiring decisions.

In 1987, the Supreme Court issued its second major decision on workplace affirmative action—Johnson v. Transportation Agency. In Johnson, the court affirmed and further explained Weber in the context of an affirmative action plan involving gender.

The court stated that employers can use voluntary affirmative action to remedy their own prior discriminatory practices or where there is a “manifest imbalance” in “traditionally segregated job categories,” even if there is no arguable violation on the employer’s part. In upholding the affirmative action plan in Johnson, the court emphasized the same factors that supported the plan in Weber.

More specifically, the court noted with approval the following:

  • The plan imposed goals, not quotas.
  • There were no set aside positions—women had to compete for all positions and men were eligible for all positions.
  • Sex was one of numerous factors that went into an individualized assessment.

Taken together, Weber and Johnson allow voluntary affirmative action by an employer to remedy its own past discrimination or where there is a current “manifest imbalance.”

The question that Weber and Johnson arguably left open is whether an employer can use voluntary affirmative action to promote workforce diversity in the absence of a remedial purpose.

In 1996, the 3rd U.S. Circuit Court of Appeals addressed this issue in Taxman v. Board of Education of the Township of Piscataway. There, a school district’s affirmative action plan called for the layoff of white teachers ahead of minority teachers with equal qualifications.

Because black teachers were not underrepresented, the plan did not have a remedial purpose. Rather, the plan served what the court acknowledged was the laudable—but in that context unlawful—goal of having a culturally diverse workforce. The 3rd Circuit held that “there is no congressional recognition of diversity as a Title VII objective requiring accommodation.”

Taxman shows that employers cannot justify considering race, gender or any other protected factors under the general rubric of increasing diversity. Rather, employers can consider protected factors only as part of a remedial effort for their own past discrimination or the effects of past discrimination (manifest imbalance).

The 3rd Circuit is the only federal appeals court to have ruled directly on this issue. However, a few federal trial courts outside the 3rd Circuit have cited Taxman with approval.

Taxman after Michigan

Does the Taxman analysis survive after the Michigan decisions? Or, do the Michigan decisions breathe new life into the argument that an employer can consider diversity consistent with Title VII?

On the one hand, Justice Sandra Day O’Connor’s opinion for the majority in Grutter is replete with language recognizing the importance of diversity in both education and employment. Indeed, the court cited the briefs filed by American businesses in support of affirmative action, which argued that the skills needed in the “global marketplace” can be developed only through “exposure to widely diverse people, cultures, ideas and viewpoints.”

It would be ironic if the law allowed affirmative action in education, at least in part to create a diverse workforce, but then prohibited comparable affirmative action in terms of entering the workforce itself. It could be argued that disallowing affirmative action in employment comparable to that allowed in education would actually undermine affirmative action in education.

On the other hand, the court historically has treated education and employment differently. As noted above, different legal rubrics apply. Recall the narrowness of the diversity interest the court upheld in the Michigan cases: it did not uphold diversity generally, only student-body diversity. By its express terms, this interest is limited to education; it does not apply to employment.

Indeed, the court emphasized the special deference historically afforded to educational institutions to select their student bodies. No comparable deference is afforded to employers in selecting their employees.

So where does that leave employers?

Nothing in the recent Supreme Court opinions protects non-remedial consideration of EEO factors in the employment context. While the majority opinion includes language recognizing the value of diversity, the holding and much of the rationale is limited to education.

What’s more, at least two of the justices who ruled in favor of permitting some affirmative action may be relatively close to retirement. The ideology and jurisprudence of their successors may affect whether the court allows employers to apply the holistic approach approved for educational institutions.

As for today, employers that consider race or other protected factors directly as part of a non-remedial diversity program remain at risk under the Taxman analysis.

Steps Toward Workplace Diversity

Although the Michigan decisions are not directly relevant to the workplace diversity programs for all the reasons discussed earlier, the analysis applied by individual justices may guide employers in fashioning a diversity program that will withstand legal scrutiny if challenged.

Following are 10 recommendations for addressing diversity in the employee selection process in the absence of an affirmative action plan to remedy a manifest imbalance.

Define diversity broadly. In upholding the law school affirmative action plan, Justice O’Connor weighed heavily the fact that diversity was not limited to race and ethnicity but also included non-EEO factors. As a result, employers should define diversity broadly to include not only EEO factors but also non-EEO factors such as experiences, education and interests.

Focus on non-EEO factors. Decision-makers should be instructed not to consider EEO aspects of diversity, but they should be instructed to consider non-EEO aspects of diversity. In other words, you increase EEO diversity by focusing on the non-EEO aspects of diversity.

Avoid specific goals. The University of Michigan decisions draw a distinction between general goals and rigid quotas. Goals are not automatically unlawful, and, indeed, the university’s law school plan had goals.

Nevertheless, goals are red flags that might invite attack, particularly outside of an affirmative action plan. So employers ordinarily are better off avoiding specific statistical goals in their diversity programs.

Make sure theory becomes practice. Michigan’s broad definition of diversity applied not only on paper but also in practice. In other words, if the employer’s definition of diversity is broad it should work not only to the benefit of protected minorities, but also to others. An employer program that defines diversity broadly, but results in a de facto minority quota or set-aside will involve legal risk if challenged.

Avoid the appearance of quotas. In upholding the Michigan law school plan, the Supreme Court majority emphasized that the percentage of minorities enrolling did not match the percentage of minorities applying—which helped show that the law school did not have a quota system.

However, employers may need to consider different statistics to avoid the appearance of a quota. Dissenting Chief Justice Rehnquist argued that colleges and universities cannot control who accepts them, but they can control whom they accept. As a result, he argued that the percentage of minorities applying should be compared to the percentage of minorities who were accepted, not who enrolled.

This argument could apply equally to the employment context. It also has considerable force, which means it could be considered by lower court judges applying a holistic evaluation to an employer’s diversity program.

Accordingly, employers should compare application rates with offer rates on a periodic basis to make sure that there is neither the reality nor the appearance of a set-aside or quota.

Keep statistics away from hiring decision makers. Justice Anthony Kennedy agreed with the majority in Grutter that student body diversity is a compelling state interest, but dissented from upholding the law school plan.

Kennedy was troubled by the law school’s daily review of the racial balance among those accepted under the plan. From this he concluded that the purported holistic, individualized evaluation of those applicants who were not admitted solely on the merits of their academic qualifications came down to race-based decision-making.

The majority rejected Kennedy’s concern based on the clear and unequivocal testimony that race was not improperly considered. However, if the testimony is less clear or credible in another case, a court could come out the other way.

Accordingly, employment decision-makers should not receive regular reports on the EEO background of applicants who are accepted. To the contrary, to the extent this information is gathered to monitor the impact of a diversity program, it is important that those who receive it do not directly decide who is hired or promoted.

Educate about diversity. In a deeply personal opinion, Justice Thomas said that race can never be considered, emphasizing that it stigmatizes its supposed beneficiaries. Thomas likened the value of a racially diverse student body to nothing more than “aesthetics, like the shape of desks and tables in its classroom.”

While this view fails to acknowledge the richness of diversity, Thomas’ opinion provides food for thought. Employers should not assume that all employees understand the business imperatives of diversity.

Top-to-bottom education on this issue may be called for so that diverse candidates are not seen as (or feel as though they are) merely ornamental.

Implement targeted recruiting. Even if employers cannot give race or other EEO factors the nod in making employment decisions (outside of a voluntary affirmative action plan meeting the Supreme Court’s tight standards), employers can and should engage in targeted recruiting to ensure that the applicable pool is diverse along racial, ethnic, gender and other lines.

Targeted recruiting should be undertaken in addition to—not in lieu of—general recruiting. Otherwise, it may exclude “non-minorities” from the applicant pool and be viewed as having a discriminatory intent.

Use diverse teams in the selection process. Sometimes racial and other bias is unconscious. Interviewers sometimes pick people who remind them of themselves. How many white men see themselves when they see a woman of color? Using diverse teams in the selection process can help minimize mirror image decision-making. It’s harder to accuse a diverse team of favoring its mirror image.

Maintain minimum qualification standards. Embracing diversity is essential to ensuring high quality, but only if minimum standards are met before diversity (broadly defined) is considered. While employers may value diversity in perspectives, values and experiences, they must first demand that all applicants meet the essential minimum requirements of the job.

Doing so can help existing employees and all applicants—both those who are accepted and those who are not—recognize that they were treated fairly and that their qualifications were the primary factor considered.

Conclusion

In dissenting from the ruling invalidating the Michigan undergraduate admissions plan, Justice Ruth Bader Ginsberg stated that the court-approved holistic analysis requires colleges and universities to achieve affirmative action “through winks, nods and disguises.”

The same holds true for employers.

In general, it is unclear whether an employer can legally consider race, gender, etc., even in a holistic way, unless as part of a remedial affirmative action program. Accordingly, the safer approach is for employers to achieve their diversity goals more indirectly—through what may feel like winks, nods and disguises—since directly considering diversity may serve only to introduce another player to your workplace: the plaintiffs’ lawyer.

And that’s one diverse perspective we could all do without.

Author’s Note: This article should not be construed as legal advice or as pertaining to specific factual situations.


Jonathan A. Segal, Esq., a contributing editor of HR Magazine, is a partner in the Employment Services Group of WolfBlock LLP, a Philadelphia-based law firm. His practice concentrates on counseling clients, developing policies and strategic plans and training managers to avoid litigation and unionization.
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