DEI and the future of diversity at work John-Paul Sauer joins the experts to discuss the future of workplace diversity. Diversity, equity and inclusion (DEI) has had a major impact on work and in education for many years. In 2024, however, Harvard lost a key DEI battle in the Supreme Court. Since then, several large employers have significantly cut back on their DEI programs. Now, employers are wondering about the future of diversity at work. Learn: Origins of DEI, intentions and legal future Implications for compliance and employee training Race, and other protected classes, cannot be used for hiring or promotion However, governments are allowed to award contracts to women and minority-owned businesses Practical tips for the business owner about setting up DEI and workplace education As a quick reminder, the Expert Network Team provides free consultations. We would love the opportunity to be of service to you or someone you care about. Just scroll the liner notes to contact one of our experts or today’s guest. And please share this podcast with anyone who you think might find it interesting.
Welcome to the Expert Network Team Podcast.
Welcome to today's podcast. I am Nathan Merrill of the Expert Network Team, and I'm with Goodspeed Merrill. And I am here with another full house. I think this is two, two episodes in a row, Carl. Carl Frank. How about that? Yeah, I know. It's been a busy summer. It's been, we've been all over the place, but, everybody's traveled.
Yeah. With A& I Wealth Management, Jeff Kromendieck with One Digital Insurance, and my partner in crime, John Paul Sauer of Goodspeed Merrill, our lead employment law guru. Just to kick off today's topic, it would have been fun to grab pretty much any episode of The Office. As our lead into this, because, you could probably find something related to our topic today in any given episode of the office.
But, We thought it would be appropriate, just given some of the activity that has been occurring in this space, it's not something we've addressed so far, but discussing the, kind of advent and response to the area of diversity, equity and inclusion. And basically it's place in our businesses and how our workforces are responding to that.
And just generally the legal landscape around that, but to kick us off, John, I'm going to kick it over to you to just help us understand what we're talking about when we're talking about diversity, equity, inclusion, where did it come from? What is it? How do you know it? Is it like pornography with the Supreme Court?
When you see it, or is there a box we can put around this? So DEI is an idea that really we need to develop better. more inclusive and welcoming workspaces for underrepresented groups. And there's been an initiative that's taken place probably very significantly in the last, five to eight years for, from fortune 100 companies all the way down to the smallest businesses to really identify and train and create policies around diversity, equity, and inclusion.
The idea is not. Sometimes it's easier to define an idea by what it's not. It's not a firm. It's not affirmative action, right? We're not talking about quota hiring. We're not talking about, only hiring women or only hiring men or only hiring particular minority groups. What we're talking about is a shift in the mindset and training and policies within businesses to try to help Individuals, especially, employees, managers, supervisors, directors really be able to identify implicit bias, identify sensitive issues and to handle those issues in the works workspace with a different level of sensitivity than, previously.
It's in some ways. It's a lightning rod because it's very politicized. At the same time, my view of it is that it is effectively should be part of generalized compliance training that you give to employees on a day to day basis. And I'll just say 1, 1, other thing about it that I think that it's, I think that unfortunately, the term has become a lightning rod in and of itself, and then it's probably better to refer to it as respectful workplace type training and it does require, A little bit of introspection from people that are taking that type of training to start to recognize that they may have, particular issues particular implicit bias or particular implicit views of the world that they need to set aside before they make decisions about in the workplace.
Sure. And again, for additional context here, just for our listeners, there is no express law that requires or mandates or implicates within private businesses at this point. Is there. That's correct. There's no legal requirement to do training. Okay. And then 1 other legal context question, and I'll turn some time over to Carl and Jeff to dig deeper in our briefing before this.
You mentioned the Harvard case. And perhaps you can explain the Harvard case and why that has implications relative to because I think that will lead to how we talk about how employers look at the programs and how they're rolled out how they're managed. Okay, so at a very high level, the Supreme Court for the longest time had approved, universities to use race as a plus 1 factor in admissions.
And what that meant is that on a numerical basis, if you were evaluating 2 candidates, and that 1 candidate happened to fall into a particular racial class, you could give them a little bump in the evaluation to promote them above potential other classes. Candidate that didn't have that. So they call it the race plus 1, kind of determination.
This recent year, there was a case against Harvard that challenged Harvard's admissions practices. Now, if you're really deep in the weeds on these legal issues, you'd recognize that Harvard is a private institution. How could you apply constitutional? Rules like the equal protection act equal protection clause in the 14th amendment to a private institution.
There's this there's a under title 6, which is a federal law. If institution accepts. Federal funds, they have to comply with basically equal protection, non discrimination provisions that they wouldn't have had to previously comply with. Effectively, even though it's a private institution, if it's a.
If it's a private institution that accepts federal funds, they still have to, not engage in anti discrimination. So the Harvard case was effectively a challenge to Harvard's admission admissions practices that gave additional credit. To particular racial minorities and other individuals from diverse backgrounds, that extra credit against other individuals.
And the challenge was that violates the equal protection clause. The Supreme Court ruled in favor of the. Petitioner in that case, the individual that was challenging that practice and held that Harvard's practice, which was supported for probably 30 or 40 years of Supreme Court precedent as appropriate, was illegal in the violation of equal protection clause equal protection in and of itself.
Is really the underpinnings of the title 7, which is the anti discrimination and employment act, and you can't discriminate in employment. The Harvard case does not address the employment context. It's exclusively in the higher ed space, but because it's so broad, Intricately tied with this idea of nondiscrimination one way or the other, whether it's against the racial majority or racial minority or in favor of the racial minority, you can't do it either way.
And so the concern basically, since that decision has come down from employment lawyers and from employers more generally, is that it's only a matter of time before. There's a challenge or a test case brought against an employer for DEI policies DEI practices, realistically, and what would that look like?
If that challenges to be brought, it would be on the basis that. Similarly, a hiring practice reflected what Harvard was doing and gave special consideration to race or circumstance. Yes, exactly. Is that, I'm not, I think dreaming it up is probably offensive in and of itself, but what's your what you're looking at is if you have 2 equal applicants for a position or 2 equal applicants for a promotion, even if the non racial minority or the non.
The non D. E. I. Candidate has better qualifications. If the employer makes a decision and promote someone because of some D. E. I. Policy that they want to be hiring minorities in these leadership roles that they want to be hiring more women into leadership roles, the company could be subjected to a particular type of claim.
That the DEI policies and procedures are illegal, that the, that type of decision making is illegal. I think I need to make it very clear, even with the Harvard before and after the Harvard case, you can't be making employment decisions based on protected status. You can't under any circumstance. And so there's a question that comes up as to when does DEI go too far?
And that's one of the major concerns is that DEI is not. Affirmative action. DEI is not the instruction to promote people based on protected statuses, not promote people based on protected statuses. It's the idea of trying to recognize implicit bias and be sensitive about diverse backgrounds and creating a respectful workplace where people feel welcome and included.
And when those two things get confused, you could end up with Potentially someone making a decision based on a protected status that would be impermissible under law existing prior to the Harvard case after the Harvard case, and will likely be the law for the rest of my life lifetime is that you can't make decisions.
Decisions and employment on those types of protected status of this real quick, John, if you could maybe clarify for me in particular, and certainly our listeners. How far reaching is D. I. We've talked about the current employees based on promotion. We've also talked a little bit about. Applicants into, college, colleges, college settings, so on and so forth, the kind of the plus one type, scenarios.
Does this, has it been reaching into employers making hiring decisions, not just promoting decisions, but hiring decisions? Or even does it extend to, vendors? Does it extend to customers? Has there been Any yeah, case cases or case studies where those types of situations have been brought, I think about the baker here in downtown Denver, who's been in the news for the last, 10 years, just denying, to provide a service or to deliver a service to a specific, customer, based on their, religious beliefs and so on and so forth.
So what. How far reaching is DEI, is it primarily just to those that, to the employer and those that the employer employs, or is it reach outside the firms as well?
So the, true DEI training really raises questions for the person that's receiving the training. That should impact their day to day life, right? And it really calls into, like, when you just go into, implicit bias training, do you have an implicit bias against a particular group? Do you have a particular perception?
Do you carry these stereotypes around in your head when you interact with? People from different backgrounds, it shouldn't just stop at the workplace, right? And if you're asking yourself these implicit questions about your coworkers, you should be naturally asking those questions about your neighbors, your friends at church, your friends, in the community, those types of things.
And it should really, if it's effective and trying to make you sensitive as to your own internal thoughts, right? It shouldn't just stop at the workplace. I think your question may be a little bit more along the lines of does it. Put together, does do businesses start making decisions differently with who they choose as vendors?
I think from a competitive market stamp standpoint, right? You don't want to contract with a business that inherently. Has 10 lawsuits against it for the way that it treats his employees and. It can be a value add for businesses from the perspective of risk mitigation, right? If you're able to put yourself in a better position from a competitive standpoint, because you don't have 10 lawsuits against yourself.
You're not on the front of the Denver Post. You're not in the New York Times. You're not on, somebody's, top 10 worst employer list and state of Colorado. But I did. I think that's really what it comes down to is that it's it's really targeted at trying to create a respectful workplace and that it's really the idea behind it is at least from an employer side employment lawyer.
It is a risk mitigation effort, but I can go back to something you said that I think is profound because it's universal is the implicit bias assumption. Everybody. Has an implicit bias, whether known or unknown, we just have our filters. We have our life experience. And so we all view others through that lens.
We, whether they, be similar skin color, different skin color, race, religion, creed, all that sort of stuff. That. There's just almost a universal, or there needs to be a universal assumption of some implicit bias exists in all of our. The way we conduct ourselves, and so I wonder if.
Recognizing that you talked a little bit in the pre briefing about some companies who readily embrace this large companies for fortune 500s who embraced it. And then there was. A parent. Backlash internally against it, and then they've since tapered off on that.
I wonder if it's. Mostly to do with this idea that no, not anybody wants to be told you're a bad person, that your implicit biases are somehow inherently wrong. And you need to change. I'm wondering if that may have contributed to some of that backlash or if you can speak to that. I think really that the there's implicit bias that is not necessarily morally or legally reprehensible.
I've got particular perception about. Individuals in a profession, right? I'm not going to name the profession, but I know people in this particular profession are always ripping their clients off. It's not lawyers. It's not financial advisors. It's not insurance agents. It's other. It's another particular profession.
That's an implicit bias that I have that is not morally reprehensible. But there are morally reprehensible implicit biases, perception about people of color, perception about women, perception about other people, in particular religious groups, those types of implicit bias are the ones that DEI is trying to draw out.
And the idea behind it is that if you're able to identify that implicit bias. Maybe you will not can if you recognize that you have that you can either overcome it, or maybe you'll be able to set it aside when you deal with a particular person that falls into one of those groups because you recognize, I'm not recognizing this of myself because, of course, I'm going to deny my own implicit biases.
But, maybe there are people that have implicit biases about Mormons, or Christians, or Catholics, or implicit bias about people, African Americans, or Hispanics, or Latinas, those types of things. That's a very good clarification. I appreciate that. John playing devil's advocate just on that part. And then I've got another maybe more practical question, but we're talking beforehand how perhaps maybe D.
E. I. training might cause even greater divisions within the company because you're focusing on the differences. Can you speak a little bit more about that? And some of the stories that are coming out of the big companies that are dropping programs. 1 of the, so Ford was a company that has drawn back on its programs, and it indicated in its pullback really that it became more divisive in the workplace than actually productive.
And I think that 1 of the things that, and maybe this is just trying to read the tea leaves as to what has happened, but. My belief is that D. E. I started is this is something that we really need to talk about in the workplace. Let's put together training on this. Let's start talking about D. E. I. In the workplace.
And then you have then these companies hire teams of people to start doing this. Then you have these policies that kind of grow out of nowhere. And then you have, a full on. Campaign for DEI and one of the things that happens when you have this concept grow to that level of corporate direction it becomes divisive because it becomes its own animal that you have to confront at every turn and I think that it is important to recognize the differences amongst us But to talk about it constantly for it to be a primary part of the way that we interact in the primary driving force between You The way that the workplace is supposed to work, I think it becomes a problem and it does become divisive, right?
It becomes, am I being promoted on merit? I think it starts to call into question for employees. Am I being promoted on merit? Am I being promoted based on the value that I add? Or am I a DEI hire? Am I a DEI promotion? And. The perceptions of others when individuals from diverse backgrounds are promoted or hired into particular positions.
There may be a questions that are that come up from other workers as to whether this person actually has the competency and the ability to do their particular position because they do fall into a category and the real concern is that truthfully. If someone is hired because they're black or because they're a woman, it is indeed a violation of Title VII because you're making protected status decision making in the workplace.
It's one of those things that even though it may feel like the right thing for the company to do, we need more female directors hiring specifically because a person is a woman. Person is a person of color is still a violation of title 7 and it's a type of claim that could be brought by someone that has equal merit, but is outside that protected class that I've got 1 kind of follow up because that led right into what I'm thinking, which is a lot of private employers.
Make money from the government, particularly the state governments by being minority or women owned businesses. How does this affect that decision? And what about those business plans that those companies have put in place? There are some certain restrictions on you can't make decisions about who you contract with based on protected statuses.
But, of course, if you're a woman or minority owned business, the state can award contracts and prop you up. So I think that you're starting to hit on. This bigger question as to where do you draw the line on what is legal and what is illegal when you start giving particular preference and it seems like that example.
At least from a perspective, or from a title 7 perspective, they cross the line. Now, title 7 doesn't regulate specifically contracting between private parties, but it does get to the point where you are giving preferential treatment to certain groups. That's what makes people uncomfortable about these things is because you see it.
You see the law saying 1 thing in 1 circumstance, and then you take it to another circumstance, and it doesn't seem to have the same spirit. Yeah, absolutely. Diversity is great, but these are some examples there where it seems like it is unfair and it has been for a while, and maybe it does need to be bringing brought out into the light.
So 1 of the things I would say is that the DEI also stems from this idea of kind of systemic. Racism and systemic oppression within American culture and economics and everything else. And that the idea is from A DEI perspective is to try to correct those systemic problems. And if that is what DE i's true underlying goal is to create a respectful, inclusive workplace.
The policies from the government of trying to prop up minority and women owned businesses is still in that same vein of let's provide. Better loans or better accommodations or more contracts along these lines. It's trying to recognize systemic racism, systemic problems in the US and correct them through training or correct them through preferential treatment.
Circling back to, I think, something you said when we started, perhaps the moniker has become politically or emotionally charged and might be well worth avoiding. You called it. Respectful workplace training or something like that. So for a listener, who's a business owner. Without offering any specific legal advice, what are your, what are you promoting employers to do or think about or adopt to be.
To do that to foster and to document and to create policies surrounding this. Or a respectful workplace environment mindset. I think it goes back to your question, Nate, really, which is training required or is it a good idea? I think every single employer in the United States should have an equal opportunity of employment.
Revision in a handbook. You have to have that because the 1st thing that comes up when you're responding to a charge of discrimination is what's in your handbook. Okay. Here's your EEO policy. I think every single business in the United States should have some level of sexual harassment, racial harassment type training.
Those are all things that they build out better defenses in the event that there is a particular claim against the company. I think one of the, from the DEI perspective, I think there is a lot of. About there is a lot of value to that can come from a training. It really helps people understand how to interact with 1 another.
I think 1 of the problems. This is all generational discussion, right? And I think that as business owners, I think that there is a lot of concern about what it's like to hire a gen X person or gen Z person that. Came up in education through COVID, where they basically sat at home, had very little interaction with others.
And now they're in a, you need to come into this workplace from nine to five and do a job. They don't really know how to interact with other human beings. And so maybe on some level, the training from a DEI perspective is how to Recognize and work with other human beings. Interpersonal communication 101, like, how to read verbal cues, how to read not right.
That would not be Gen X. By the way. I know you just were speaking off the top of your head, but it would be generally younger. Okay. Younger Jen's even mostly got out of it, but they've got young and but I think if the plan is to implement a program for your particular business, you need to go through.
It needs to go through some level of legal review. I think this kind of goes back to what's the checklist, right? I think Nate, you were asking me earlier for a checklist. What are permissible pieces of a DEI program if a business decides that this is something that should take place, right? So it is primarily a training on implicit bias.
It's the creation of structured interview processes. So the. Everybody that's getting an interview has the same questions. There's a scoring system associated with that. So everybody scored on the exact same answers. The same question, targeting recruiting is targeting. Targeted recruiting is permitted, right?
But you can't just hire on protected status. It's the creation of non discriminatory training programs. So I think from a DEI expert, which is not me, but from a DEI expert's perspective, sexual harassment, non discrimination training is actually a subset of a larger DEI program. From my view, I think DEI should actually be Smaller part of just like normal employment law compliance training and then some other permissible parts of the program would be and I've heard this from others is that you can provide flexible workspaces so that the perception is that you will have a larger candidate pool and a more diverse candidate pool.
The more flexibility you're able to provide in your workplace. And so if that's part of your plan, that's part of your plan. Some things that are certainly not permissible is, creating jobs or job openings that are only open to people that are in the fall into protected class. That sounds stupid, but that's 1 of the things that has been under attack in the recent lawsuits, creating training or internship programs are only open to specific gender races or ages.
My brother was he was hired out of college to be in the, enterprise, management internship, whatever it was. I can't remember what it was, but the idea was that he could work for enterprise for, 3 or 4 years, and then get promoted up to management and they would bring in. General managers to talk to area managers to talk to these recruits to be a manager for enterprise rent a car and they would talk about their salaries and their perks and all this great stuff to try to keep these people engaged with their management program.
My brother basically just was a rental car agent for 3 years. There was no actual permission beyond that. But now enterprise is faced with a lawsuit. By the EEOC, alleging that their initiative. To hire younger people straight out of college to be in these management roles was a violation of the age discrimination and employment act that they were specifically targeting younger individuals and that those positions were not open for.
People over the age of 40, so you still can't create internships that target specific groups are only open to specific groups based on age, sex, religion, gender. You still can't refuse to hire certain people in favor of other groups. You can't hire a fire to maintain some sort of racial balance or gender balance.
You can't create quotas. Those are still things that are all completely illegal. When I look at DEI programs, I'm looking to see, is this actually an informational training opportunity? Is the material really based on, studies? Is it based on, kind of fundamental Assistance to people to try to identify implicit bias.
Is it informative? Where it crosses the line is when it starts saying things like women are like men are like people of color are like when it starts going down this path of reinforcing underlying stereotypes is when it starts to really starts to cross the line. Phenomenal. Carl, you want to take us home on this?
That was a great list of really practical pieces of advice, John. Thank you so much for that. I learned a lot just as a small business owner and a gentleman who works with small business owners. A lot of my clients are going to appreciate just a real practical list there. I think diversity is a very good thing.
And I think that we're right in the crosshairs right now, the rules getting more clear, hopefully for all of us so that we can stay on the right side of the law. Thank you, my friend, for that sound advice. Really appreciate it. Nate, it's always good to see you. Jeff, it's great to see you, my friend. Yeah, real quick, one last question.
Maybe I just want to ask Carl, and I want to ask Nate. I'm part of a big corporation now, so DEI training is nothing new to me. We do one or two a year, I think. Have you guys incorporated this into your small businesses? Do you guys feel like it's something you do need to incorporate here going forward?
John obviously said it helps with the defense in the event there is a case. But, what are you guys thinking? John, I'm going to have to plead a little ignorance here. I know that if we had something, you'd probably be behind it. But, do you know if there's been levels of discussion about this?
We have. I think an inherently respectful workplace. That's why we're able to attract the talent. We do. But John, do, if we've had discussions, we are in motion on regular training and our group, we've crossed some major thresholds in that direction. And I would say that we're starting our, we're working on an annual training.
Along what Jeff is talking about more in just the legal compliance space. And then we have we have a number of very young associates and we're working on a associate development plan that would inherently include some of those ideas. That's great. Yeah. And for our little company, which is smaller than yours, even we did, in fact, do that.
And we hired a software company that had great presentations already created for us. And at a very modest fee, we were able to deliver a very professional set of training out to our team about. Treating each other respectfully and some real practical advice there and it was well received and but it was required.
It was a mandatory thing. Yeah I, it wasn't that painful for us to implement it even as a small company. So any of our small business owner listeners, are interested in learning more about that. I would assume, Carl, you'd be happy to maybe post it to the, the notes. Yeah. Yeah. I can't remember the name of the company off the top of my head.
I could have figured that out before today's call, but that was got me off guard there, Jeff. But yeah, that was, it was a fine program. It was a LMS that's available on the internet just for purposes like that. Yep. All right. Thank you gentlemen. And I appreciate all your time and look forward to seeing you again until we meet again, create a beautiful day.
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