U.S. Supreme Court Invalidates Race-Conscious Admissions: Key Considerations for Postsecondary Institutions, Employers and Others

At a Glance

• Both public colleges and universities, and private institutions receiving federal funds, are prohibited from considering race in admissions decisions.
• Colleges and universities must carefully review and assess their admissions policies to ensure compliance with the Court’s rulings.
• There may be significant implications for employers’ voluntary affirmative action and DEI programs, as well as potential implications for mandatory affirmative action for government contractors, as a result of the decision.

On June 29, 2023, the U.S. Supreme Court decided Students for Fair Admissions, Inc. v. President and Fellows of Harvard College, No. 20-1199, and Students for Fair Admissions, Inc. v. University of North Carolina et al., No. 21-707 (together, Students for Fair Admissions), holding that race-conscious admissions programs used by Harvard College and the University of North Carolina are constitutionally impermissible, and violate the Equal Protection Clause of the Fourteenth Amendment. That decision and our same-day summary are available here. The Court granted certiorari in order to determine whether Grutter v. Bollinger, 539 U.S. 306 (2003), the controlling precedent holding that institutions of higher education may use race as a factor in admissions, is still good law. The Court declined to explicitly overrule Grutter, but its holding effectively ends the ability to consider race as a factor in admissions decisions. (In a concurring opinion, Justice Thomas notes that he “highly doubt[s]” that any race-conscious admissions program will pass muster “given the strictures set out by the Court.”) Considering the breadth of the language in the majority opinion, this decision has far-reaching and significant implications not only for colleges and universities, but also potentially for private employers, K-12 schools, government contractors, and other entities outside the higher education sector.

Implications for Educational Institutions

Holding Applies to All Public Institutions and to All Private Institutions Receiving Federal Financial Assistance

Plaintiffs challenged Harvard’s admissions program as violating Title VI of the Civil Rights Act of 1964 and UNC’s as violating the Equal Protection Clause. Whereas the Equal Protection Clause prohibits any State, including any public university, from denying a person the “equal protection of the laws,” Title VI prohibits discrimination or exclusion from any program receiving Federal financial assistance on the basis of race, color, or national origin. Citing its explanation in Gratz v. Bollinger, 539 U. S. 244 (2003), that discrimination which is impermissible under the Equal Protection Clause also constitutes a violation of Title VI, the Court evaluated both admissions programs under the standards of the Equal Protection Clause. Thus, public institutions, as well as private institutions receiving federal financial assistance (including Title IV federal student financial aid funds), must ensure that their admissions programs comply with the Court’s decision in Students for Fair Admissions.

The Court held that the admissions programs at Harvard and UNC failed to meet the three criteria which it characterized as necessary for any race-conscious admissions program to be constitutionally permissible: (1) it must satisfy strict scrutiny (being narrowly tailored to meet a compelling state interest); (2) it may not use race as a stereotype or negative; and (3) it must eventually end. In addition, putting aside its precedent in Regents of Univ. of Cal. v. Bakke, 438 U.S. 265 (1978), the Court stated that the only two compelling interests that meet strict scrutiny permitting “race-based government action” are: (1) remediating specific, identified instances of past discrimination that violated the Constitution or a statute, or (2) avoiding imminent and serious risks of human safety in prisons, such as a race riot. (Slip op. at 20.) In the Court’s view, both Harvard and UNC failed these requirements. Second, the Court also noted that the admissions practices of Harvard and UNC failed to comply with the Equal Protection Clause’s mandate that race never be used “as a stereotype or negative.” (Slip op. at 22.) Finally, the Court noted that the respondents’ race-conscious admissions practices “had no logical end point,” thus rejecting the view that under Grutter, such preferences should be allowed to exist for 25 more years, until at least 2028. (Slip op. at 30.) In a footnote, the Court did leave the door open for miliary service institutions alone to continue race-conscious admissions programs.

Expressing the view that under the Equal Protection Clause “[e]liminating racial discrimination means eliminating all of it,” the Court concluded that each applicant “must be treated based on his or her experiences as an individual — not on the basis of race. Many universities have for too long done just the opposite. And in doing so, they have concluded, wrongly, that the touchstone of an individual’s identity is not challenges bested, skills built, or lessons learned, but the color of their skin. Our constitutional history does not tolerate that choice.” (Slip op. at 40.)

Permissible admissions considerations. The majority opinion states that “nothing in this opinion should be construed as prohibiting universities from considering an applicant’s discussion of how race affected his or her life, be it through discrimination, inspiration, or otherwise,” so long as the university uses that discussion only to assess that individual student’s quality of character or unique ability. (Slip op. at 39.) This suggests that colleges and universities may consider the individualized impact of race on an applicant’s lived experiences through essays or other means that allow an applicant to describe their particular background, and any challenges or adversity they have faced. However, the Court also strongly cautioned that schools cannot “simply establish through application essays or other means the regime we hold unlawful today.” This statement, as well as the Court’s admonishment that “[w]hat cannot be done directly cannot be done indirectly,” raises questions about the extent to which consideration of such life experiences, if based on race, can actually be considered as a practical matter.

Forthcoming federal guidance. The White House issued a statement asserting that the decision “upended decades of precedent.” The president urged colleges and universities to give “serious consideration” to adversities that applicants overcome, such as their financial means, where they grew up, or firsthand experiences of hardship or discrimination. The U.S. Department of Education and the Department of Justice stated that they expect to issue guidance regarding lawful admissions practices within 45 days. To the extent that the Court’s decision applies more broadly, other federal agencies will likely be required to undertake similar analyses in a variety of contexts.

Immediate takeaways for colleges and universities. The Court’s decision takes immediate effect. As a result, colleges and universities may no longer consider race as a factor in making admissions decisions. As noted above, while the Court suggests that institutions may still provide applicants with a limited opportunity to describe the perceived effects of race or ethnicity on their lives and goals — e.g., in the essay format to which the chief justice’s majority opinion refers — such narrative descriptions of the applicant’s identity or experiences may not functionally circumvent the ruling. Institutions should also not use categorical or group-based assertions of race or ethnicity in order to evaluate candidates. This raises the question of whether schools should even request that applicants identify their race on the application forms. While nothing prohibits schools from collecting such data, the Court’s opinion requires that such information not be considered as a factor in any admission decisions.

Nine states — Arizona, California, Florida, Idaho, Michigan, Nebraska, New Hampshire, Oklahoma and Washington — already prohibit race-based admissions programs for public colleges and universities. Building on the example of institutions in those states, colleges and universities may still be able to consider factors such as the socioeconomic or geographic diversity of their incoming classes. Similarly, schools may seek to increase their outreach and recruiting efforts at high schools with significant minority or economically disadvantaged populations, focus on pipeline programs, or consider factors pertaining to “adversity,” or the grit and perseverance each candidate reflects. Other possible race-neutral strategies for increasing student diversity mentioned by various commentators include: implementing holistic admissions processes; making standardized tests optional; expanding assistance and mentorship programs for first-generation college students; or even adopting a “top percent” program like those used in California and Texas.

Some commentators even have suggested that eliminating preferences for athletes and children or alumni as a mechanism would be a means of increasing diversity. However, the direct impact of eliminating these and other non-racial preferences in the admissions process is not clear. Even without considering race as a factor, institutions may continue to admit an entering class that they believe has a wide range of individuals from various backgrounds, and with different experiences, skills and talents, which are consistent with the university’s mission. In that respect, the admissions process has never been a “zero-sum” game where, as the majority opinion suggests, only students with the highest test scores or grades are admitted, but rather is inherently a process that looks closely at what each student individual brings to the institution. (Slip op. at 27.) That will continue, even taking the Court’s decision into account.

Race-neutral efforts to increase student diversity already face challenges. In a divided panel decision, the Fourth Circuit recently upheld the constitutionality of Virginia’s Fairfax County Public Schools decision to change its admissions standards for a highly selective public magnet school, Thomas Jefferson High School for Science and Technology, by discontinuing its admissions exam, replacing it with an essay, and reserving spots in its incoming class for the top students in local middle schools. (Coalition for TJ v. Fairfax County School Board, U.S. Court of Appeals for the Fourth Circuit, No. 22-1280, May 23, 2023). A group of parents challenged that revised admissions policy on the basis that it disproportionately impacted the number of Asian American students admitted to the high school. The plaintiffs are seeking Supreme Court review of the circuit court’s decision. If considered, the case will provide a basis for the Court to further determine what types of race-neutral admissions practices are permissible, particularly to the extent that they impact the racial composition of the institution. Educational institutions should be prepared for an additional litigation challenging even facially race-neutral admissions policies, including those that that may be adopted following the Court’s decision in Students for Fair Admissions.

Implications outside admissions. On its face, the Court’s decision concerns only race-conscious admissions processes aimed at achieving a racially diverse student body. However, the principles it articulates may impact the use of scholarship funds, financial aid packages, and practices in which race may be a factor in providing other benefits to students attending an educational institution. In addition, schools must be mindful of the accreditation standards imposed by institutional and programmatic accreditors. Many accreditors publish requirements around diversity of students, faculty, and staff, particularly for historically underrepresented minorities who may not be proportionally reflected within a given program or profession. In light of the Students for Fair Admissions decision, accrediting agencies may need to consider the manner in which they expect accredited institutions to comply with standards in this area.

Implications Outside Education

The Court’s opinion also leaves little doubt that its Equal Protection Clause rationale will be used to challenge race conscious actions in many contexts, even outside affirmative action programs. In arriving at the decision, the Court surveyed its precedents forbidding race-conscious governmental action in a variety of cases outside of college admissions, leaving open only to two recognized compelling interests as noted above: remediating specific instances of past discrimination, and avoiding serious risks to prisoner safety. The interest in remedying past discrimination appears very narrow and time-limited given the Court’s apparent wholesale rejection of the historical approach that informed Justice Jackson’s dissent. Justice Kavanaugh, in his concurring opinion, underscores that any racial classifications made by the government are constitutionally prohibited unless narrowly tailored (and temporary) to further a compelling interest. Thus, one should expect potential legal challenges to any programs or actions that have race conscious elements in public employment; contracting and procurement; and program administration and funding. And to the extent that private sector conduct is reachable through federal laws like the Title VII of the Civil Rights Act of 1964, then private employment, DEI programs, and board governance initiatives are also subject to scrutiny, as we illustrate below.

Implications for Employers

Other private and public employers. Private and public employers should expect litigants to apply this decision to challenge their DEI programs even though the actions at issue by Harvard and UNC are governed by Title VI and the Fourteenth Amendment, and employment actions are governed by Title VII.

As a preliminary matter, note that affirmative action programs instituted by employers should not automatically be grouped with DEI programs intended to increase diversity representation in the workforce. Voluntary affirmative action programs in the employment context are rare — they are premised on an employer’s acknowledgement that there is statistically significant discrimination that needs to be remedied. Under prior Supreme Court precedent, affirmative action programs are permitted if they are targeted to the remedial purpose, do not unnecessarily hinder the interests of non-diverse individuals, and are temporary measures. United Steel Workers v. Weber, 443 US 193 (1979). Weber is not directly addressed by Students for Fair Admissions, so for now it remains for the lower courts to determine if Weber still stands. In addition to the voluntary affirmative action programs referenced above, federal contractors and subcontractors may also be subject to affirmative action requirements, as discussed below.

Potential challenges to employer-based DEI programming. However, separate from affirmative action programs, employers can expect challenges to their DEI programs based on this decision. As a preliminary matter, Justice Gorsuch’s concurring opinion makes the link from Title VI to Title VII by stating that both sections codify “a categorical rule of ‘individual equality, without regard to race.’” Current opponents of DEI programs are already citing this decision as support for Title VII challenges of “reverse discrimination” based on allegations of an adverse impact on non-diverse employees, or employees that are outside the group intended to benefit from the DEI initiative. Attacks on a company’s DEI initiatives usually start with letter-writing campaigns to company boards, demanding that DEI programs as described on company websites be disbanded. They may also include cease and desist letters to the CEO, followed by requests to the EEOC to open discrimination investigations, and then the filing of lawsuits claiming that the programs are unlawful. For example, The America First Legal (AFL) Foundation, an organization led by Trump Administration advisor Stephen Miller, takes the view that “all DEI programs, and all ‘balancing’ in employment, training, scholarships, and promotions, based on race, national origin, or sex are illegal.” 

AFL sued Amazon regarding its DEI programs and sent demand letters to a number of other national employers. Another group sued Pfizer, alleging that the company runs a racially discriminatory pipeline program called the “Break-through Fellowship Program” that is only open to Black/African American, Hispanic/Latino, or Native American applicants in violation of Section 1981, Title VI, Section 1557 of the Affordable Care Act, and the New York State and City Human Rights Laws. Do No Harm v. Pfizer, Inc., S.D.N.Y. No. 1:22-cv-07908, (2022). Another organization, The National Center for Public Policy Research, filed a lawsuit against 35 of Starbucks’s current and former directors and officers in National Center for Public Policy Research v. Schultz, et al., WA Superior Court Spokane County No. 22-2-02945-32 (2022). The complaint objects to Starbucks’s entire DEI program including setting hiring goals for people of color, awarding contracts to diverse suppliers and advertisers, and tying executive pay to diversity. The complaint alleges violations of Section 1981, Title VII, and various states’ civil rights laws, including California’s Unruh Civil Rights Act, the New Jersey Law Against Discrimination and the New York State Human Rights Law. The lawsuit also alleges that Starbucks’s directors and officers have breached their fiduciary obligations because the policies harm Starbucks and its shareholders, exposing the company to risk of potential lawsuits, and that in the alternative, Starbucks’s directors and officers have engaged in self-dealing, personally benefiting at the expense of Starbucks and its shareholders by adopting, implementing, and retaining policies with knowledge of illegality.

As for private philanthropy, commentators are expressing differing views on the likelihood of success for potential challenges to funding for certain DEI-related programs and/or grants to charities that pursue DEI objectives internally (e.g., as employers or in their governance).

Mixed reception at the EEOC. The level of uncertainty wrought by Students for Fair Admissions decision is demonstrated by the fracture among EEOC Commissioners as soon as the decision came down. EEOC Commissioner Andrea Lucas penned an article expressing, in her view, that “companies remain under heavy pressure to take race-conscious employment actions,” “enabled by common misunderstandings of the civil rights rules governing employers.” Picking up on language aligned with Justice Roberts’ majority opinion, Commissioner Lucas wrote that, the EEOC’s does “not impose ‘equitable’ outcomes,” and she stresses that “[t]he Court never has blessed employers taking race-conscious employment actions based on interests in workplace diversity.” Id. EEOC Chair Charlotte A. Burrows issued a statement on the EEOC’s website in response to the opinion stating that the decision “does not address employer efforts to foster diverse and inclusive workforces or to engage the talents of all qualified workers, regardless of their background. It remains lawful for employers to implement diversity, equity, inclusion and accessibility programs that seek to ensure workers of all backgrounds are afforded equal opportunity in the workplace.”

This highlights that employers face the same tension now faced by educators. It is not entirely clear how such organizations can foster and increase diverse representation at all levels of the workforce without taking race (or national origin, or other protected characteristics) into account.

Required compliance with pay transparency provisions. Before abandoning DEI initiatives as a means to avoid litigation exposure, companies must also balance the need to ensure equity as new pay transparency laws continue to be passed in the U.S. and in the E.U. Important stakeholders (employees, stockholders, Boards, customers) continue to call for accountability on providing equitable opportunities for all. Title VII, together with state and local anti-discrimination laws, still mandates equal opportunity. Therefore, it seems prudent for companies to undertake careful reviews of their DEI program goals and how they holistically approach those goals. This would involve auditing all aspects of company DEI policies, programs and communications “from the ground up,” as well as additional training especially for those involved in recruitment, retention and advancement decisions. And, as always, documentation of the legitimate business reasons for individual adverse employment decisions are key to defending discrimination claims, including reverse discrimination claims. By being proactive, companies can help control the framework of their DEI programs, rather than having future litigation manage that outcome. 

Public employers. Because state and local governments and other public sector entities are most clearly subject to the strictures of the Equal Protection Clause, they should take care to review any program or initiative that includes race-conscious considerations. For example: minority recruitment programs (especially common in public safety, transportation, and agriculture where minorities are traditionally underrepresented); minority contracting goals in public procurement; board governance composition goals; DEI training; and appropriations to organizations based on racial identity; as well as contractual requirements that mimic federal affirmative action policies. (It is important to note that many states follow the Model Procurement Code and, thus, their public procurement policies are in line with those of the federal government as set forth in the Federal Acquisition Regulation [FAR].) And while race-based classifications are subject to strict scrutiny, government action designed to benefit other identifiable groups — e.g., women — may also require evaluation, although a lower level of scrutiny might apply.

Implications for Federal Contractors

Unlike the race-conscious college admissions programs at issue in Students for Fair Admissions, the affirmative action programming required for private companies doing business with the federal government does not permit race-based employment-related decisions. Much like Title VII, Executive Order 11246 and its accompanying federal regulations prohibit covered federal contractors and subcontractors (contractors) from discriminating against any employee or applicant for employment because of race or other protected class status and contractors must “take affirmative action to ensure that applicants are employed, and that employees are treated during employment, without regard to their race, color, religion, sex, sexual orientation, gender identity, or national origin.” Exec. Order No. 11246; 41 C.F.R. § 60-1.1 (emphasis added). Similarly, Section 503 of the Rehabilitation Act of 1973 and the Vietnam Era Veterans’ Readjustment Assistance Act prohibit discrimination against protected veterans and individual with disabilities and require contractors to take affirmative action to employ and advance in employment qualified individuals with disabilities and protected veterans. 29 U.S.C. § 793; 38 U.S.C. § 4212; 41 C.F.R. §§ 60-741.1; 60-300.1. Failure to comply with these regulations may be grounds for the imposition of sanctions by the Department of Labor, including canceling, terminating, or suspending existing contracts, interruption of progress payments on existing contracts, and/or indefinite or fixed term suspension or debarment (wherein a contractor is ineligible to receive future contracts). 41 C.F.R. §§ 60-1.27; 60-741.66; 60-300.66. In addition, a false certification of compliance could expose a contractor to liability under the False Claims Act, 31 U.S. Code § 3729. Every submission on an invoice under a contract constitutes a certification of all contractual requirements, including affirmative action and all of the related socio-economic requirements set forth in the Federal Acquisition Regulation, C.F.R. Title 48.

Certain required programs. In order to be eligible to be awarded certain federal contracts and subcontracts, contractors must develop an affirmative action program, which is a management tool designed to ensure equal employment opportunity. 41 C.F.R. §§ 60-2.1(b); 60-2.10(a)(2); 60-741.40; 60-300.40. Importantly, however — unlike race-conscious admission programs — contractor affirmative action programming goals and benchmarks are not designed to achieve proportional representation or equal results. Where placement goals are identified, contractors are expressly prohibited from establishing hiring quotas or set asides, must make selections in a nondiscriminatory manner and not “extend a preference to any individual, select an individual, or adversely affect an individual's employment status, on the basis of that person's race, color, religion, sex, sexual orientation, gender identity, or national origin.” 41 C.F.R. § 60-2.16(e); see also §§ 60-741.45 and 60-300.45 (protected veteran hiring benchmark and disability utilization goals are “not a rigid and inflexible quota which must be met, nor is it to be considered either a ceiling or a floor for the employment of particular groups. Quotas are expressly forbidden.”) Affirmative action programs do not “supersede merit selection principles” and do not create a selection process “to hire a person who lacks qualifications to perform the job successfully or hire a less qualified person in preference to a more qualified one.” Id. Moreover, as part of its affirmative action program addressing gender, race and ethnicity, contractors are required to monitor and examine their employment decisions and compensation systems to evaluate whether there are gender-, race- or ethnicity-based disparities, including potential impact on non-diverse applicants and employees. See id. at 60-2.17(b). 

Prior to the court’s decision in Students for Fair Admissions, the Department of Labor’s Office of Federal Contract Compliance Programs (OFCCP)’s FAQs described its affirmative action programs as “wholly distinct from the concept of affirmative action as implemented by some post-secondary educational institutions in their admissions processes” and are anticipated to continue to enforce existing applicable laws and regulations. Nevertheless, contractors may face questions and challenges from applicants, employees and special interest groups (as described above) regarding their affirmative action programming and should prepare to respond how these differ from race-based college admissions programs, while they ensure that they continue to make selections in a nondiscriminatory manner and in compliance with Title VII and federal contracting regulations. 

In addition to affirmative action programming and employment-related requirements for private employers, the U.S. government implements social policy around promoting small businesses (including but not limited to women and minority, tribally, and Alaska Native-owned businesses) and creating employment opportunities for persons with disabilities through the public procurement. Among other things, these preferences include set-asides and requirements for small business subcontracting by large prime contractors, as well as prioritizing qualified non-profits employing persons with disabilities pursuant to FAR 8.001. These programs in some instances provide opportunities for sole-source awards that are not subject to competition and are designed to promote U.S. businesses and ultimately to create jobs. Arguably, there is a compelling federal interest in continuing to include these requirements in federal contracts and subcontracts. While they are distinct from the employment-related focus of the regulations applicable to private employer contractors’ affirmative action programming and not clearly subject to the rationale of Students for Fair Admissions, it would not be surprising to see efforts to undermine these programs as improper preference programs. Given the wide range and impact of the preferences – there is no requirement that small businesses are owned by women or minorities — it would seem that, at least for now, they will not be subject to a meritorious legal attack.

Conclusion

As illustrated here, Students for Fair Admissions establishes Equal Protection Clause and Title VI jurisprudence that will require many colleges and universities to review their admissions processes and policies. Its holding also suggests that policies outside admissions may also require review, and further suggests a broad array of potential implications for secondary schools, public and private employers, government contractors and others.

If you have questions about any matters described in this alert, or other matters, please reach out to the authors or to your customary Faegre Drinker contact.