The US Supreme Court ruling last month overturning affirmative action at colleges and universities may not have an immediate impact on employers, but it does raise concerns about long-term effects on companies’ diversity, equity and inclusion initiatives.

The court’s decisions will have a “chilling effect” on employers’ diversity efforts, according to Ken Oliver, VP of and executive director of the Checkr Foundation. Oliver anticipates “far-reaching implications for workplace DE&I policies, which are essential for fostering positive work environments and driving organizational success,” he said in a statement on LinkedIn. Oliver is also a board member at DE&I staffing firm Turning Basin Labs.

Making employment decisions based on race or another legally protected characteristic was almost always unlawful. But the court’s opinion — even though it does not pertain to employment issues — increases the likelihood that future hiring decisions might be challenged.

“Although the ruling, on its face, does not extend beyond the educational context, there is little doubt that the decision will embolden opponents of affirmative action to expand their challenges into the employment realm and elsewhere,” Ropes & Gray attorneys Greg Demers and Renai Rodney wrote in an article. “Such litigation is already underway.”

And more might be on the horizon. On July 13, attorneys general from 13 states issued a letter to the CEOs of all Fortune 100 companies telling those companies to comply with “race-neutral principles in [their] employment and contracting practices” following the court’s decision. The letter also warned that firms will be held accountable for their actions.

“Employers should take this opportunity to reassess their programs and ensure their effectiveness and compliance with the law, both on paper and in practice,” added Demers and Rodney.

Keeping DE&I Programs Compliant

Hiring practices that favor one race over another are already illegal, and poorly structured voluntary diversity programs pose both legal and practical risks for companies. So, contingent workforce programs and other employer initiatives should already have practices in place to ensure their diversity, equity and inclusion programs do not overstep into illegal territory.

Those risks existed before the Supreme Court’s decision, noted Andrea Lucas, a commissioner on the EEOC, in a Reuters commentary. “Now they may be even higher,” she added.

Contingent workforce managers’ staffing requests or demands must be unrelated to protected characteristics and instead be framed in terms related directly to the qualifications and responsibilities called for by the position to be staffed.

The ruling does not alter federal employment law, Lucas noted, adding that now is a good time for employers to review their compliance with existing limitations on race- and sex-conscious diversity initiatives.

“Companies seriously err if they evaluate their risk under federal employment law by mistakenly referring to (now outdated) standards for higher education admissions which had approved of diversity-motivated affirmative action,” Lucas stated. The June ruling “only heightens those employers’ practical risks by reemphasizing the Supreme Court’s 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.”

State AGs Enter the Fray

The letter from the attorneys general to the Fortune 100 companies cited the court’s ruling to voice their concerns about racially based hiring practices.

“Hiring practices that favor one racial group over another are immoral and illegal,” Attorney General Daniel Cameron of Kentucky said in a press release. “I joined this coalition to ensure that systemic racial discrimination — like in corporate hiring — is a thing of the past.”

The letter said racial discrimination in employment and contracting is common among Fortune 100 companies and other large businesses.

“In an inversion of the odious discriminatory practices of the distant past, today’s major companies adopt explicitly race-based initiatives which are similarly illegal,” the letter read.

“These discriminatory practices include, among other things, explicit racial quotas and preferences in hiring, recruiting, retention, promotion and advancement,” according to the letter. “They also include race-based contracting practices, such as racial preferences and quotas in selecting suppliers, providing overt preferential treatment to customers on the basis of race, and pressuring contractors to adopt the company’s racially discriminatory quotas and preferences.”

The letter stated Fortune 100 companies should immediately cease any unlawful race-based quotas or preferences for employment and contracting practices.

The letter drew a response.

“This development is deeply concerning, as it could have significant implications for diversity and inclusion programs, hiring practices and contracting within these companies,” Ken Harris, president/CEO of The National Business League, a trade association for Black professionals, wrote in a LinkedIn post. “We continue to witness racially biased decisions that undermine progress toward equality. It is time to take a stand against these detrimental actions.”

State attorneys general signing the letter represented Alabama, Arkansas, Indiana, Iowa, Kansas, Kentucky, Mississippi, Missouri, Montana, Nebraska, South Carolina, Tennessee and West Virginia.

The Bright Side

With the possibility of race-conscious considerations facing more legal challenges and greater legal scrutiny, private employers may adopt more comprehensive diversity strategies that address various dimensions of diversity beyond race, Jimmy Robinson Jr., an attorney with Ogletree Deakins in Richmond, Va., told the Society for Human Resource Management.

“They may focus on creating inclusive and equitable workplaces that promote diversity in multiple ways, including hiring practices, talent development programs, mentorship initiatives and fostering inclusive organizational cultures,” SHRM quotes Robinson as saying. “By embracing a more inclusive approach, companies can cultivate a diverse workforce that goes beyond racial representation alone.”

Value Remains

The bottom line is that companies should still recognize the value of diverse workplaces, Mandy Price, CEO and co-founder of Kanarys, a Dallas-based tech platform aimed at helping companies improve DE&I, told Inc.

“We think that it’s really important — given the long-term impacts that we’ve seen DE&I have on workplaces — that they continue to ensure that they have workplaces that not only reflect our country but reflect the consumers that they serve as well.”