The ruling does not have any immediate impact on the legal standards that govern DEI or affirmative action programs because the majority opinion did not directly address employment or contract decision-making by private entities. Additionally, the law had already been that employment and contracting decisions may not rely upon race, color, ethnicity, or other protected characteristics as a selection factor, whereas it was previously permissible in the college admissions context. With that said, private employers' DEI programs have increasingly become a target of judicial oversight, legislative enactments, political hostility, and legal challenges. That focus has now been sharpened. And we have already seen evidence of the sharper focus from the letter issued by thirteen Republican Attorneys Generals to 100 CEOs of the country's largest companies, warning that race may not be used as a factor in employment-related decision-making.

Justice Gorsuch's concurrence highlighted that the current EEO-1 categories are both overinclusive and underinclusive and they do not adequately capture the diversity of the American workforce. Given his statements, we may see action by the EEOC to amend the categories, or alternatively, the EEOC could offer additional guidance clarifying the meaning of the categories.

Additionally, at the top of mind of many companies is how they can maintain a diverse pipeline of potential talent. Because colleges and universities are no longer permitted to consider race as a factor in admissions decisions, there will likely be a ripple effect on the pool of diverse applicants in the workforce.

Yes, definitely. Even prior to the Supreme Court's decision, we had already seen activity on this front. For example, in 2020, a North Carolina jury awarded David Duvall $10 million in punitive damages in a "reverse discrimination" case against his former employer, Novant Health Foundation. Duvall claimed he was fired in a restructuring to further Novant's stated diversity goals. Evidence presented at trial included: that bonuses were paid to executives who achieved certain DEI metrics; that the committee in charge of the DEI program had set targets for the workforce to mirror the community; and that Duvall was told when he was fired that the company was "moving in a different direction." The jury ruled in favor of Duvall and awarded him $10 million in punitive damages. The District Court later reduced the punitive damages to $300,000, but Duvall was awarded $3.89 million in total, including backpay, front pay, attorneys' fees, and punitive damages. Now, with the Supreme Court's ruling, I expect the activity in this area will increase.

As noted above, the Groff decision expanded the extent to which employers must go to accommodate the religious views of their employees. The Supreme Court rejected the prior standard, which permitted an employer to decline a religious accommodation if the accommodation posed more than a "de minimis" hardship on the employer. Justice Alito, writing for the majority, wrote, "[w]hat is most important is that 'undue hardship' in Title VII means what it says, and courts should resolve whether a hardship would be substantial in the context of an employer's business in the commonsense manner that it would use in applying any such test." Notably, however, the Court declined to incorporate the undue hardship test under the Americans With Disabilities Act (ADA), which requires significant difficulty and expense. Thus, there is some confusion around what the exact standard is now.

The Court did say, however, that "[a] good deal of the EEOC's guidance in this area is sensible and will, in all likelihood, be unaffected by the Court's clarifying decision" and noted that "courts must apply the test to take into account all relevant factors in the case at hand, including the particular accommodations at issue and their practical impact in light of the nature, size, and operating cost of an employer." Thus, while the standard is not crystal clear, the Court provided some guidance on how to best tackle the accommodations analysis.