Title VII Refresher in Light of Possible Criminal Investigations

Compliance with Title VII of the Civil Rights Act of 1964 is more important now than ever, as equal employment opportunity efforts are being scrutinized more closely following President Donald Trump’s diversity, equity, and inclusion (DEI) executive orders. Concern among companies also has been heightened by a Feb. 5 U.S. Department of Justice (DOJ) memo considering criminal investigations of illegal programs.

Title VII prohibits discrimination based on race, color, national origin, sex (including sexual orientation and gender identity or expression), and religion. Title VII applies to employers with 15 or more employees, each working 20 or more weeks in the current or preceding calendar year; state and local government; employment agencies; labor unions; and U.S. citizens employed by U.S.-owned or controlled companies in foreign countries.

“DEI programs, while well-intentioned, can sometimes inadvertently create issues if they are not carefully designed and implemented,” said Sarah Goodman, an attorney with Offit Kurman in Philadelphia. Here’s what may be prohibited and allowed as employers strive to comply with Title VII and government enforcement initiatives.

Criminal Investigations Encouraged

“The news that Attorney General Pam Bondi has prepared a memo indicating that the DOJ will target private-sector DEI initiatives for potential criminal investigation reinforces my position that companies that don’t take this issue seriously are whistling past the graveyard,” said Aaron Goldstein, an attorney with Dorsey & Whitney in Seattle. 

The memo directs the DOJ’s Civil Rights Division and Office of Legal Policy to provide a report to the associate attorney general by March 1 on recommendations for enforcing civil rights laws and ending illegal discrimination and preferences, “including policies relating to DEI and DEIA [diversity, equity, inclusion, and accessibility].” The report should, among other things, provide “a plan including specific steps or measures to deter the use of DEI and DEIA programs or principles that constitute illegal discrimination or preferences, including proposals for criminal investigations and for up to nine potential civil compliance investigations” of entities that meet the criteria in one of the DEI executive orders, Executive Order 14173.

Employers need to be prepared to have their hiring, promotion, and other practices investigated by government agencies for instances where they made decisions regarding the benefits of employment on the basis of protected class membership, such as race or gender, Goldstein noted. Even aspirational goals, such as “We commit to increasing the number of women and people of color in leadership,” will likely come under government scrutiny, and employers will need to be able to defend their actions in light of Title VII’s prohibition on discrimination on the basis of protected class status, which includes discrimination against white and male employees and candidates, he added.  

“Employers need to audit not just their policies, but their internal communications over the last several years, and they should do so now so they are prepared—not just for investigations by federal agencies, but for the private lawsuits that will be inspired by the stance that the Trump administration is taking on DEI,” Goldstein said.

Prohibited Actions

Goodman provided the following examples of actions prohibited by Title VII:

• Quota systems. Setting specific hiring or promotion quotas based on race or sex is a direct violation of Title VII. Even if the intention is to address historical underrepresentation, quotas are illegal. Title VII aims to create a level playing field, not guarantee outcomes based on protected characteristics. Example of a prohibited quota: “We need to hire five Black engineers this quarter to meet our diversity goals.”
• Preferential treatment based on protected characteristics. Giving preferential treatment to applicants or employees based solely on their race, sex, or other protected characteristic, even if it’s framed as affirmative action, can lead to reverse discrimination claims. An example of prohibited preferential treatment: “We’re only considering female candidates for this leadership role to improve gender balance.”
• Exclusionary practices. Programs that exclude certain demographic groups from participation can also violate Title VII. An example of a prohibited exclusionary practice could be a mentorship program specifically for women in science, technology, engineering, and math that excludes qualified male employees.
• Stereotyping and assumptions. Inclusion and diversity (I&D) training that relies on harmful stereotypes about specific groups, even if presented as “unconscious bias” training, can create a hostile work environment and lead to discrimination. An example of prohibited stereotyping could be training that suggests all members of a particular racial group share the same work ethic or communication style.
•  Adverse impact. Even if a policy or practice seems neutral on its face, it can still violate Title VII if it has a disproportionately negative impact on a protected group and is not job-related and consistent with business necessity. An example of prohibited adverse impact could be a physical fitness test that disproportionately screens out female applicants for a physically demanding role, if that level of fitness isn’t truly essential to the job. 

The DOJ said in a separate Feb. 5 memo on “Eliminating Internal Discriminatory Practices” that updated guidance should narrow the use of “disparate impact” theories that might require race- or sex-based preferences. The DOJ also called for guidance emphasizing that statistical disparities alone do not automatically constitute unlawful discrimination.

Best Practices

“The key is to focus on creating equal opportunity and a level playing field, rather than guaranteeing specific outcomes based on protected characteristics,” Goodman said. She recommended the following best practices:

• Focus on outreach and recruitment. Implement strategies to attract a diverse pool of qualified applicants. This could include partnering with organizations that serve underrepresented communities, advertising in diverse publications, and attending career fairs at universities with diverse student populations.
• Use skills-based assessments. Rely on objective, job-related criteria for hiring and promotion decisions. Focus on skills, experience, and qualifications, rather than subjective assessments that can be influenced by bias.
• Rethink mentorship and sponsorship programs. Offer mentorship and sponsorship programs that are open to all employees, but that provide targeted support and development opportunities to individuals from underrepresented groups. Eligibility should be based on objective criteria, not protected characteristics.
• Offer diversity training that emphasizes inclusion. Instead of focusing solely on “unconscious bias,” focus on training that promotes inclusive leadership, respectful communication, and understanding different perspectives. Avoid perpetuating stereotypes. Training should emphasize the value of I&D and how it benefits the organization.
• Optimize data collection and analysis. Track diversity metrics related to hiring, promotion, and retention. Analyze this data to identify any potential barriers to equal opportunity and develop strategies to address them. Be careful not to use this data to implement quotas or preferential treatment. The data should be used to ensure fairness and identify areas for improvement.
• Conduct regular reviews and evaluations. Regularly review I&D programs to ensure they are effective and compliant with Title VII. Seek legal counsel to review programs and policies to ensure they are legally sound.

“It is important to note that the executive order does not prevent employers from identifying and recruiting a diverse applicant pool for positions and/or promotions, rather it directs the decisions regarding applicants and/or employees to be merit-based,” said Brooke Iley, an attorney with Blank Rome in Washington, D.C. “A holistic candidate pool should, aside from all genders and races, include veterans, first-generation college students, persons with disabilities, and individuals from disadvantaged backgrounds.” 

Make Inclusion an Operational Strategy, Not a Standalone Program

Recommendations

Policies or statements that tout the benefits of a diverse workforce are “less risky” than ones explicitly stating a preference for employees of one group over another, Goldstein said. However, he added that employers need to be prepared to defend any statements on the benefits of diversity with clear policies and practices showing they comply with Title VII.

Goldstein recommended that employers make their “DEI buzzwords more specific.” For example, employers should commit to removing the barriers to success for all employees rather than adopting broad, general statements of commitment to inclusion and diversity without stating what specific actions will be taken. Employers should also be clear they are not making employment decisions on the basis of traits protected by Title VII.

“The challenge employers face going forward will be how to balance DEI efforts while ensuring that such programs are beneficial for all employees and are not perceived as exclusionary or providing unfair benefits to one particular group,” said Chris Duke, an attorney with Akerman in West Palm Beach, Fla. “Employers need to be cautious and thoughtful in their approach and not be merely reactionary.”

HR should carefully and consistently review applicants’ objective qualifications and ensure all employment decisions are merit-based, Iley noted.