DEI is Here to Stay: How to Minimize Risks in the Pursuit of a DEI Workforce

In a rapidly evolving corporate environment, where business ethics must align with societal values, the need for a workplace that embraces the principles of diversity, equity, and inclusivity (DEI) has become a non-negotiable. Diversity has, in recent years, become an undeniable American value. And as workplace cultures and work/life balance are at the core of American employment rhetoric, so too is the conversation surrounding diversity in the workforce. However, some of the conversations and initiatives created for building greater DEI have stirred up legal concerns and questions as to whether or not these practices are sustainable. Despite questions, a closer look at these programs shows that DEI initiatives are legally sound and are also vital to fostering a company culture that reflects the values of the community that it serves.

In June 2023, the SFFA case brought by Students for Fair Admissions resulted in the Supreme Court ending race-based affirmative action in higher education. Though aimed at higher education, this case is one that came with a host of nuances and challenges in the fight for a diverse, equitable, and inclusive workplace, particularly in relation to blind hiring practices. Blind hiring involves blocking out personal information of candidates to reduce potential biases. Things become complex as companies and society as a whole strive for a more diverse and inclusive workforce, begging the question, how will the law shape and impact this critical aspect of progressive society?

The importance of DEI goes far beyond legal compliance. However, as new DEI laws continue to emerge, companies must adapt and evolve. While businesses increasingly acknowledge the importance of diversity for success, a positive work environment, and achieving better outcomes, they will have to ensure compliance with legal requirements related to DEI. In order to keep businesses on track with their diversity efforts, consider the following to help mitigate any potential legal risks.

What makes a DEI program risky?

Identifying risks in DEI programs or hiring practices is typically straightforward—they’re often characterized by preference being placed onto unique or underrepresented groups. Here are some common indicators to watch out for:

• Hiring quotas (“we need our next wave of entry-level hires to be 55% women”)
• Group-specific promotions or internships (offering internships or promotions to specific genders, ages, or races)
• Connecting hiring manager compensation with hitting certain diversity quotas
• Tie-breaker decision making (taking one out of two candidates of equal skillsets because of their gender or race)

Four potential risks to stay ahead of

Discrimination claims are one of the greatest risks associated with DEI initiatives. While the intention behind implementing these kinds of programs is to promote equity and inclusivity, the wrong execution can inadvertently lead to claims of discrimination. If DEI efforts involve preferential or unique treatment of diverse groups (because of race, gender, age), it may lead to allegations of reverse discrimination. Avoid this by creating programs that are open to the entire company, even if it may benefit certain groups more than others.

Hiring for diverse characteristics such as race or gender can cause major complications legally, and otherwise. Instead of considering a candidates background or ethnicity, make sure to keep the playing field leveled, whether you’re hiring for entry level, all the way up to C-suite positions. Similarly, limiting eligibility to members of underrepresented groups can be cause for legal action. Some ways around this can include:

• Blind hiring: the practice of screening for candidates based only on their work experience—not their personal information.
• Training hiring managers to communicate effectively with people of diverse backgrounds
• Consistent hiring criteria and protocols among all applicants
• Assembling a diverse and unbiased hiring panel

Privacy concerns are not uncommon as DEI initiatives often involve collecting personal data related to employee’s demographics and backgrounds. Misuse or mishandling of this data can create the opportunity for regulatory violations. Generally, companies have to adhere to strict data protection laws when collecting information for DEI purposes, and a lack thereof can result in fines or other legal action.

Background checks and screening can be common practices for employers when taking on new hires. And as long as these checks remain lawful and unbiased, there is typically nothing wrong with conducting employee screenings. However, employers need to use caution when considering criminal history, credit reports, or other factors that might disproportionately affect certain groups. Screening practices need to stay consistent among all working individuals and remain job-related.

At LHH, our mission is to achieve a continuously evolving work environment in which all individuals feel valued, supported, and respected. Contact an LHH expert today to learn more about how we can help you achieve your own DEI ambitions.