Skip Navigation or Skip to Content
Pay Equity, Diversity Efforts, and Litigation Risks

Many corporate employers throughout the United States have recognized the importance of diversity, equity and inclusion (“DEI”) as a matter of social justice, employee engagement and brand protection. These companies have adopted robust DEI plans, including pay equity efforts, and have publicized those plans internally and externally. However, recent litigation demonstrates that DEI efforts can give rise to significant potential risk. It is likely that upcoming legal developments will increase that risk. As a result, companies would be well served to review their DEI efforts to ensure that they minimize risk as much as possible.

Companies have adopted a variety of DEI plans to improve their hiring, promotion and retention of diverse talent. These plans include increased minority recruiting, efforts to develop and promote diverse talent, increased diversity training, mentorship and retention programs targeted at diverse employees, and pay equity programs.

Unfortunately, companies have begun to see litigation regarding these plans. Over the last two years, a variety of lawsuits have been filed against companies arguing that DEI plans violate federal or state civil rights laws by discriminating against white men based upon race and/or gender. In addition, shareholder lawsuits have been filed alleging that company leadership breached its fiduciary and other obligations to shareholders by adopting DEI plans that violated federal or state law. These lawsuits have been commenced by private litigants, but some state attorneys general have indicated an interest in investigating companies for DEI efforts.

It is likely that efforts to target DEI plans will increase in the future. First, some states have adopted statutes prohibiting diversity training and other aspects of DEI, such as Florida’s “STOP WOKE” Act. Second, the Supreme Court is considering the constitutionality of affirmative action in college admissions programs, and its decision could offer support for plaintiffs arguing that employment diversity efforts violate Title VII of the Civil Rights Act of 1964 or other federal laws.

Given these developments, employers would be well advised to review their DEI plans to minimize risks. In particular, employers should consider the following:

  • avoid any quotas or numeric goals for hiring individuals based upon race or gender;
  • target increased retention or representation, which can be accomplished without violating federal or state laws;
  • focus on fairness and equality rather than explicit preferences based upon race; and
  • ensure that any training programs comply with applicable state laws, including Florida’s restrictions on diversity training.

Employers should continue to monitor new developments in this area so as to minimize DEI litigation related risk.

Scroll to the top of the web page anchor link.