Workplace reverse-discrimination claims likely to surge in wake of Supreme Court ruling

Companies and their legal departments should brace for a surge in reverse-discrimination claims, employment attorneys say, as corporate diversity, equity and inclusion programs face heightened scrutiny in the wake of last week’s U.S. Supreme Court ruling ending race-based college admissions policies.

Though the court’s ruling applies only to the education sector, it likely will embolden critics of companies’ increasingly aggressive programs to bolster workplace diversity. Many companies say they remain committed to those efforts and even will escalate them in an effort to avoid losing ground on DEI should the number of minorities receiving college degrees shrink.

“While this decision does not apply to private employers, it will likely have an impact on how those employers implement their voluntary affirmative action plans and DEI initiatives. Those initiatives will undoubtably continue, but private employers will likely take more care in focusing their scope and justifying their nondiscriminatory and remedial purposes,” said Christopher Collins, a labor and employment partner at Sheppard Mullin.

“It is also likely that we will see more reverse-discrimination challenges either to employer programs or individual hiring, promotion and advancement decisions,” Collins said. “We have recently seen an uptick in such challenges, and that trend may well accelerate in light of the Supreme Court’s analysis and the media attention it has received.”

In a 6-3 decision, the court on June 29 found that race-based affirmative action programs at Harvard and the University of North Carolina violate the Equal Protection Clause of the Fourteenth Amendment to the Constitution.

Federal law bars employers from considering race and other protected characteristics in employment decisions. With the ruling, the court is essentially putting higher education on the same legal playing field private employers have had to tread for years, said Raymond Perez, chair of the corporate compliance and governance practice at Fisher & Phillips.

With that victory under their belt, Perez said, affirmative action critics likely will turn their attention to challenging private employer DEI programs under workplace anti-discrimination laws, such as Title VII of the Civil Rights Act.

In a client note, Perez and Fisher & Phillips colleague Sheila Willis said they expect a “potential surge” in reverse-discrimination claims from majority populations alleging diversity efforts resulted in discrimination against them.

Reverse-discrimination claims had been on the wane, according to a USA Today review of Equal Employment Opportunity Commission filings, falling from roughly 4,000 in 2011 to 2,000 in 2021. The newspaper said claims from whites accounted for about 10% of race-based discrimination claims.

In a headline-grabbing reverse-discrimination lawsuit filed in 2019, former Starbucks regional manager Shannon Phillips, who is white, alleged the coffee giant fired her as a “scapegoat” after police were called to remove two Black men from a Philadelphia store

The arrests spawned a storm of negative media coverage and protests. Phillips said Starbucks fired her after forcing her to put a white manager not connected with the incident on administrative leave, a move she opposed. Starbucks later said it needed a regional manager with crisis-management experience in her post.

Last month, a jury in New Jersey awarded $25.6 million to Phillips.

Also scoring big in a reverse-discrimination case was David Duvall, a former senior vice president of the hospital network Novant Health who received a $10 million jury award in  2021.

Duvall said he was fired without notice—despite strong performance reviews—as part of Novant’s efforts to promote diversity in its management ranks. He was replaced by two women—one Black and one white. The suit alleged Novant also fired five other white men and replaced them with minorities or women.

In court, Novant argued that Duvall actually underperformed, though he’d hit some targets, and did not exhibit leadership potential.

“We believe the punitive damages award was a strong message that an employer cannot just fire employees based on their race or gender to create opportunities to achieve diversity targets,” Duvall’s attorney, Luke Largess, told CBS MoneyWatch.

Indeed, in the wake of the Supreme Court ruling companies should review their practices and eliminate potentially discriminatory behavior now, said Scott Shepard, a principal of the National Center for Public Policy Research, a conservative public policy think tank.

Last August, the group filed a lawsuit against Starbucks’ then-CEO, Howard Schultz, along with other officers and directors, saying their programs to promote workplace and supplier diversity—with executive compensation tied to the results—discriminated against white employees.

“Starbucks … crafted and publicized these policies with fanfare, preening over the supposed moral virtue their adoption signaled,” the lawsuit claimed.

Starbucks is seeking the suit’s dismissal on multiple grounds, including that the NCPPR failed to demonstrate it was harmed by Starbucks DEI practices and that the law gives corporate boards wide latitude in how they run their businesses.

Shepard said the Supreme Court’s affirmative action ruling will reverberate through corporate America, serving “as both a fire bell in the night to them and as an opportunity” to make changes.

Andrea Lucas, a Republican EEOC commissioner appointed by President Donald Trump, echoed that sentiment in an interview last week with Fox News.

“I think this is going to be a wake-up call for employers. Today is a time—the best time—for lawyers to really take a look at the lawfulness of their corporate diversity programs,” said Lucas, a former senior associate in the labor and employment practice at Gibson, Dunn & Crutcher.

Lucas warned of “explicitly or implicitly” taking race into decision-making on employment decisions, race-restricted internships or mentoring and race-focused promotion decisions.

“If you are using race as any factor in your decision-making, you’re already violating the law, and I expect that you are going to have a rising amount of challenges as this sort of raises that issue back to people’s attention,” she said.

In a statement, EEOC Chair Charlotte Burrows, a Democrat appointed by President Joe Biden, struck a different tone. “It remains lawful for employers to implement diversity, equity, inclusion and accessibility programs that seek to ensure workers of all backgrounds are afforded equal opportunity in the workplace,” she wrote.

Perez said he expects that the court ruling will prompt employers to review their DEI programs for compliance with Title VII requirements. “I think what the Supreme Court has done is create a greater awareness,” he said.

Read more: Supreme Court makes it easier to sue over denied workplace religious accommodations

Kathleen Nalty, principal of a consultancy that helps employers create inclusive and diverse workplaces, said she’s unfazed by the high court ruling.

“I’m personally not that concerned because the clients that are generally focused on DEI are going to continue to do so. I don’t think this is going to be a major roadblock,” she added.