Employers are creative and strategic when it comes to increasing workforce diversity. Sometimes, however, that creativity -- and the motivation to “move the needle” on diversity metrics -- can create unintended consequences.

There are two competing notions at play here: the legal requirement to make employment decisions that are not based on protected characteristics, and the desire to ensure underrepresented groups are fully considered in the employment process. How can employers do the latter without violating the former?

Traditional affirmative action efforts focus on the recruitment process and are based on the theory that creating diverse candidate pools will, over time and through application of a neutral selection process, naturally lead to more diverse workplaces. Federal contractors have been required to engage in such affirmative action efforts since 1965, when President Lyndon Johnson signed Executive Order 11246. Many entities that are not federal contractors understand the value of using diverse recruitment sources and do so voluntarily. 

But what if casting a wide net for applicants, and using recruitment sources geared toward diverse candidates, still fail to produce the desired result? What can employers do to ensure that the diverse candidates who apply for employment are considered and evaluated by hiring managers?

This is actually a complex legal issue, and employers should tread carefully before implementing procedures that specifically take race, gender, or any protected characteristic into account. 

Principles of non-discrimination

Both Title VII of the Civil Rights Act of 1964 and Executive Order 11246 prohibit employers from basing employment decisions on a person’s protected characteristic, such as race and gender, and these protections apply equally to men and non-minorities. The regulations implementing Executive Order 11246 make this clear:

In all employment decisions, the contractor must make selections in a nondiscriminatory manner. Placement goals do not provide the contractor with a justification to 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)(2).

The U.S. Equal Employment Opportunity Commission has also said in an Informal Discussion Letter that collecting demographic information from applicants is legal so long as it is “not used in the selection process.” A literal interpretation of this guidance suggests that employers cannot use race and gender information gathered during the voluntary self-identification process to ensure that candidate pools are diverse or to highlight diverse candidates for consideration. 

In the EEOC’s April 2006 Compliance Manual on Race Discrimination, the EEOC notes that “Title VII forbids not only recruitment practices that purposefully discriminate on the basis of race but also practices that disproportionately limit employment opportunities based on race and are not related to job requirements or business needs.” The EEOC further states that “[t]he process of screening or culling recruits presents another opportunity for discrimination. Race obviously cannot be used as a screening criterion. Nor may employers use a screening criterion that has a significantly disparate racial impact until it is proven to be job related and consistent with business necessity.” (Emphasis added).

EEOC’s Guidelines on voluntary affirmative action

These pronouncements regarding non-discrimination, however, must also be read in conjunction with the EEOC’s Guidelines on voluntary affirmative action. The Commission recognized that Title VII was enacted “to improve the economic and social conditions of minorities and women by providing equality of opportunity in the work place” and that Congress intended for employers to “act on a voluntary basis to modify employment practices and systems [that] constituted barriers to equal opportunity. . . .” 29 C.F.R. § 1608.1(b). The Guidelines further provide,

The principle of nondiscrimination in employment because of race, color, religion, sex, or national origin, and the principle that each person subject to Title VII should take voluntary action to correct the effects of past discrimination and to prevent present and future discrimination without awaiting litigation, are mutually consistent and interdependent methods of addressing social and economic conditions which precipitated the enactment of Title VII. Voluntary affirmative action to improve opportunities for minorities and women must be encouraged and protected in order to carry out the Congressional intent embodied in Title VII.

29 C.F.R. § 1608.1(c). Although written in 1979, these words are equally applicable today.

The EEOC’s Guidelines provide employers a defense to claims of “reverse” discrimination if their actions are “adopted in good faith, in conformity with, and in reliance upon these Guidelines. . . .” 29 C.F.R. § 1608.1(e). Thus, employers should follow specific steps and procedures before implementing any voluntary affirmative action efforts, and legal counsel should thoroughly review the processes in light of the Guidelines and existing case law.    

Determine basis for voluntary affirmative action

The Guidelines identify three circumstances when voluntary affirmative action may be appropriate:

(1)  Adverse effect – Employers may take affirmative action if an analysis shows actual or potential adverse impact caused by existing or contemplated practices. 29 C.F.R. § 1608.3(a). 

(2)  Effects of prior discriminatory practices – Employers “may take affirmative action to correct the effects of prior discriminatory practices,” which “can be initially identified by a comparison between the employer’s work force, or a part thereof, and an appropriate segment of the labor force.” 29 C.F.R. § 1608.3(b).

(3)  Limited labor pool – “Because of historic restrictions by employers, labor organizations, and others, there are circumstances in which the available labor pool, particularly of qualified minorities and women, for employment or promotional opportunities is artificially limited.” 29 C.F.R. § 1608.3(c). 

Establish affirmative action plan

If an employer identifies appropriate circumstances for taking affirmative action, it must develop a plan that contains (1) a reasonable self-analysis; (2) a reasonable basis for concluding action is appropriate; and (3) reasonable action. 29 C.F.R. § 1608.4. The self-analysis should focus on determining whether any employment practices adversely affect a protected group and the reason for that effect. No specific methods for analysis are mandated, and the techniques set forth in the regulations implementing Executive Order 11246 may be used for conducting the self-analysis. 29 C.F.R. § 1608.4(a). An employer can conclude that a reasonable basis for the plan exists if the self-analysis shows any employment practice has an adverse effect, does not correct effects of past discrimination, or results in disparate treatment. 29 C.F.R. §1608.4(b). 

The final step in establishing a voluntary affirmative action plan requires that the action taken by the employer “be reasonable in relation to the problem disclosed by the self analysis.” 29 C.F.R. § 1608.4(c). The reasonable action can “recognize the race, sex, or national origin of applicants or employees.” Id. The Guidelines include a non-exhaustive list of the types of actions employers can then take, including “measures designed to assure that members of the affected group who are qualified to perform the job are included within the pool of persons from which the selecting official makes the selection.”Id. In other words, an employer can implement procedures to ensure that candidate pools are diverse before making a selection decision. 

The voluntary affirmative action plan should also satisfy the following criteria:

• Be narrowly tailored to address the issues identified in the self-analysis;
• Avoid restrictions on opportunities for non-protected groups;
• Maintain race/gender-conscious steps for a limited time and only for as long as needed to achieve the objectives identified;
• Reasonably relate any goals and timetables to the availability of qualified applicants and the number of employment opportunities; and
• Be dated and written.

29 C.F.R. § 1608.4(c) and (d).

Title VII and the EEOC’s Guidelines make it clear that employers cannot use race or gender-conscious selection procedures unless they have sufficient justification, undertake a thorough assessment of existing procedures, and develop a written plan that adheres to the Commission’s standards. Given the complexity of the law in this area, employers should involve counsel in each aspect of developing a voluntary affirmative action plan and reviewing relevant legal precedent.

For guidance or assistance in this area, please contact a member of our Affirmative Action/OFCCP Compliance practice group, and see additional information regarding Constangy’s Diversity, Equity & Inclusion practice group.