Employers seeking to achieve a diverse workforce will have to rethink their diversity, equity, and inclusion programs—as well as racial affinity groups—to avoid potential legal consequences after the US Supreme Court curtailed the use of race as a factor in college admissions processes.

The court’s decision Thursday specifically concerns race-conscious admissions policies at Harvard University and the University of North Carolina, which the conservative majority said are discriminatory against White and Asian applicants and not necessary to ensure campus diversity.

While the ruling along 6-3 along ideological lines is specific to higher education, both worker- and management-side attorneys told Bloomberg Law that it will have a downstream effect on employers by disrupting their hiring practices and initiatives designed to improve workforce diversity.

Workplace DEI and affirmative action programs are governed by Title VII of the 1964 Civil Rights Act and other federal and state employment anti‑discrimination laws. Using protected classes, such as race, to make employment decisions is generally illegal under these laws.

The high court’s decision has set the stage for future challenges to the rationale behind workplace diversity initiatives and increased judicial scrutiny of those programs, attorneys said.

“There will be very direct implications from the decision” for private employers, said Krissy Katzenstein, a partner at Baker & McKenzie LLP. It “will lead to a further uptick in trends we are already seeing in terms of both reverse discrimination cases and, more broadly, challenges to DEI initiatives that many companies have undertaken.”

David Gans, director of the human rights, civil rights, and citizenship program at the Constitutional Accountability Center, said “the decision will open up new avenues for litigation” over workplace DEI initiatives.

Racial Affinity Groups Get Attention

The basis on which the majority curbed the use of race in admissions appears to calls into question the legality of employee resource groups, which provide spaces for workers who share the same racial identity to gather, attorneys said.

The concern stems from Chief Justice John Roberts’ mention in the majority opinion that Harvard’s admissions policy “rests on the pernicious stereotype that ‘a black student can usually bring something that a white person cannot offer.’”

That language “caught our attention to ensure our clients aren’t using any kind of language in their DEI materials that the court could interpret as a version of stereotype,” said Carol R. Ashley of Jackson Lewis PC, who advises corporations, nonprofits, and education institutions on compliance with various civil rights statutes.

Employee resource groups should be open to all employees, “but maybe how you describe the affinity group might be a stereotype, according to the Supreme Court,” Ashley said.

Talent Pipeline Fears

Challengers in the case argued that the schools’ affirmative action programs penalize Asian-American and White students in violation of Title VI of the 1964 Civil Rights Act—which bans discrimination in federally funded programs—and asked the court to reconsider earlier rulings allowing race-based criteria for higher education.

Industry groups and dozens of major employers—including Alphabet Inc.’s Google, Meta Platforms Inc., and Apple Inc.—urged the high court in amicus briefs to uphold the schools’ policies. Corporate DEI efforts rely on college admissions programs that produce a diverse pipeline of qualified future workers and business leaders, they said.

With the court pulling back the use of race-conscious admissions policies, schools could see a decline in the enrollment of students of color across many fields of study, attorneys said.

That would exacerbate existing racial inequities in the workplace, said Gans, the lead drafter of a brief the CAC filed in the affirmative action cases.

“Ensuring we have a workforce that reflects the society begins with how admissions decisions are made in higher education,” he said. “A college and a graduate education is often key to advancement to the highest quality jobs. That’s one reason why the ramifications of the court’s ruling will be felt throughout American life and not merely in the education setting.”

The 1979 landmark case United Steelworkers of America v. Weber was the first dispute over employment affirmative action policies to reach the Supreme Court.

The majority upheld an aluminum producer’s voluntary affirmative action plan designed to eliminate racial imbalances in the company’s workforce, ruling that Title VII—which prohibits racial discrimination by private employers—doesn’t deem all voluntary, race-conscious affirmative action plans illegal.

Weber didn’t grant private employers carte blanche to implement these programs, but limited their use “to very specific circumstances,” Katzenstein said.

These plans must be narrowly tailored to eliminate conspicuous racial imbalance in a workforce as long as they don’t impede the interests of non-diverse workers, and can only be used as a temporary measure.

Contractor ‘Constitutional Attacks’

The ruling also has ramifications for companies with federal contracts, which are subject to specific affirmative action requirements by the government, said Tony Torain II, a shareholder at Polsinelli PC.

These requirements are codified through executive orders and regulations that are aimed at recruiting and advancing qualified minorities, women, and others from underrepresented groups. They strictly prohibit quotas and make clear that contractors cannot use protected categories such as race and gender as factors in making employment decisions.

But because of the limited case law on the legality of these requirements, the Supreme Court’s ruling provides an argument for opponents to launch “constitutional attacks” against them, Torain said.

“This current administration is going to double down based its authority under executive orders,” he said. “But I’m telling you if they face a lawsuit in a more conservative jurisdiction like the Fifth Circuit, there may be an injunction against having affirmative action plans. It will definitely be under attack based on this ruling.”

Contractors’ policies are policed by the US Labor Department’s Office of Federal Contract Compliance Programs, and the agency’s regulatory scheme is aligned with high court precedent related to employment law.

An agency spokesperson didn’t immediately reply to inquires on whether the ruling would implicate federal contractors and if the agency will provide any guidance on this issue.

In the meantime, Katzenstein and other employment attorneys are urging all businesses to quickly assess and consider potential changes to their DEI policies to ensure they are compliant with the law.