Bloomberg Law
Aug. 18, 2023, 5:56 PMUpdated: Aug. 18, 2023, 10:17 PM

Corporate Diversity Complaints Place EEOC in Thorny Spot (1)

Riddhi Setty
Riddhi Setty
Reporter
Andrew Ramonas
Andrew Ramonas
Senior Corporate Disclosure Reporter

A US civil rights agency finds itself in a difficult position after getting hit by requests from ex-Trump administration officials to investigate Activision Blizzard Inc., Kellogg Co., and other major corporations because their diversity policies allegedly violate federal anti-discrimination law.

The America First Legal Foundation, led by former senior Trump adviser Stephen Miller, recently sent letters to the US Equal Employment Opportunity Commission about what it called “unlawful employment practices” that include diversity, equity, and inclusion policies.

The group over the past year has accused more than a dozen companies—including Morgan Stanley, PricewaterhouseCoopers, McDonald’s, and Starbucks—of having discriminatory DEI programs that aim to increase workplace representation of women and minorities at the expense of white, heterosexual men.

If EEOC steps into the fray, attorneys say the commission would traverse a complex path in investigating corporate policies aimed at avoiding the type of workplace discrimination the agency was created to combat.

“I do think there’s some internal conflict within the EEOC,” said Michael Elkins, an employment attorney and founder of MLE Law. “Certainly the EEOC has promoted diversity and inclusion programs. And now, they are being asked to scrutinize these programs to see if they violate the terms of Title VII.”

AFL’s latest volley comes in the wake of a split US Supreme Court decision that affirmative action policies at Harvard University and the University of North Carolina were discriminatory against White and Asian applicants. But the justices didn’t weigh-in on employer policies designed to improve workforce diversity. The organization has also actively targeted companies’ environmental, social, and governance initiatives in federal court.

“What is clearly the goal with these efforts is to create a chilling effect on what employers do, including for perfectly legal actions,” former EEOC Commissioner Chai Feldblum said of AFL’s letters.

‘Patently Illegal’

In its plea to the EEOC about Activision, AFL alleged the video game maker’s “hiring, training, and promotion” policies are “patently illegal” because they violate Title VII of the 1964 Civil Rights Act’s prohibition against race, sex, religion, and color discrimination.

“Activision has mandated that internal and external talent recruitment teams create ‘diverse slates’ of job candidates, thereby limiting, segregating, or classifying applicants for employment in a way that deprives or tends to deprive or limit the employment opportunities of white, Asian, and Jewish males with the company,” the group wrote.

It also targets the company’s “employee network groups” for women, racial and ethnic minorities, LGBTQ+ workers, and others, saying they are also discriminatory.

“These groups are used for job training and other similar purposes,” the letter said. “No such group exists for heterosexual white males.”

Activision in recent years has been the target of enforcement action from the EEOC and California regulators, which alleged it cultivates a “frat boy culture” of harassment and discrimination against women. The company earlier this year touted its progress in hiring more female employees.

Activision declined to comment on AFL’s letter Friday.

AFL’s request regarding Kellogg makes similar accusations, saying its “employment practices are unlawfully based on ‘equity,’ which is a euphemism for illegal discrimination.” Those practices, it said, include pledges to employ “25% underrpresented talent” and attain a 50/50 “gender parity goal” for managers by 2025.

“We are committed to compliance with all applicable employment laws, and we have policies in place that prohibit workplace discrimination,” said Kellogg company spokesperson Kris Bahner.

Kellogg has faced roughly a dozen employment discrimination lawsuits in federal courts over the past five years, according to Bloomberg Law’s Litigation Analytics.

What EEOC Can Do

The EEOC launches the vast majority of its investigations based on discrimination complaints, known as charges, submitted by employees. This administrative process must be completed before a federal lawsuit can be filed in court.

But each of the five commissioners on the agency’s leadership panel can also initiate “commissioner charges” to begin a probe. That option has rarely been exercised in the past, but was used by commissioners 29 times in fiscal year 2022, a jump from only three times in 2021. In 2022, Republican Andrea Lucas filed 12 charges, the most of any commission member. The specifics of the charges are not disclosed by the EEOC.

“A commissioner could decide that there is reasonable basis to believe that discrimination is occurring, and based on that can file a charge and send it to an EEOC district office to begin an investigation,” said Feldblum, a Democratic appointee who served on the agency during the Obama administration.

“I would be surprised if the EEOC thought to investigate a very general charge that any DEI program is problematic,” she added.

Current commissioners have publicly expressed differing views about the future of corporate diversity initiatives following the Supreme Court’s affirmative action decision.

“While mourning the very real losses to the education of our nation’s youth, it’s important to recognize that workplace DEIA initiatives will survive,” Democratic EEOC Commissioner Jocelyn Samuels wrote in an op-ed for Bloomberg Law.

In her own op-ed, Lucas said employers with DEI programs face risks in light of the Supreme Court re-emphasizing its “rejection of diversity, nebulous ‘equity’ interests, or societal discrimination as justifying actions motivated — even in part — by race, sex, or other protected characteristics.”

“Companies continuing down this path after today may violate federal antidiscrimination laws,” she wrote.

The commission has received notice from AFL but cannot comment further due to confidentiality rules, said EEOC spokesperson Victor Chen. He pointed to a statement from Chair Charlotte Burrows, a Democrat, who said the Supreme Court’s decision does not address employer diversity efforts.

Publicity Play

AFL has also attempted to target companies through the EEOC’s commissioner charge process on the issue of abortion.

In the summer of 2022, AFL sent letters to the commission asking it to probe policies set by Lyft Inc. and Dick’s Sporting Goods Inc. to fund travel benefits for employees who were unable to obtain abortions in the states where they lived following the Supreme Court’s Dobbs v. Jackson Women’s Health Organization decision. AFL wrote that the policies violated Title VII by failing to provide equivalent benefits to pregnant workers who chose not to have abortions.

Bloomberg Law reported in November that Lucas had filed commissioner charges against at least three companies that provided their employees with abortion travel benefits. The companies were not identified and the outcome of Lucas’s charges remains unknown.

Even if no commissioner charges emerge from the new round of AFL letters criticizing corporate DEI programs, they could still draw public attention that might help the group achieve its aims.

Elkins said the publicity could put the organization’s concerns on the radar of employees who could actually approach the EEOC themselves, avoiding the need for commissioner charges altogether.

“It’s entirely possible that what this letter might do in the publicity attended to it is support a situation where an employee or group of employees actually file charges,” he said.

(Updated with additional reporting on commissioner charges.)

To contact the reporter on this story: Riddhi Setty in Washington at rsetty@bloombergindustry.com; Andrew Ramonas in Washington at aramonas@bloombergindustry.com

To contact the editors responsible for this story: Rebekah Mintzer at rmintzer@bloombergindustry.com; Jay-Anne B. Casuga at jcasuga@bloomberglaw.com

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