Lawsuits and DEI

The aftermath of George Floyd’s murder has led to several large corporations facing multiple lawsuits for failing to meet the diversity, equity, and inclusion (DEI) commitments they made.
The commitments were made following Floyd’s death in 2020, with businesses quickly issuing statements and pledging to adopt new ways to combat racism.
Those pledges included addressing ethnic and gender inequalities among their employee ranks.
However, according to Bloomberg Law, a host of lawsuits claim those pledges were never met.
Among the most egregious parties are Wells Fargo and Delta Air Lines.
Bloomberg said those companies falsely claimed that, over the past three years, they worked to promote diversity, equity, and inclusion.
Five shareholder lawsuits allege that Wells Fargo ran afoul of federal law against discrimination.
Wells performed “sham interviews to nominally fulfill a diversity-enhancing policy,” the lawsuit claims.
Further, the bank’s board acted on diversity and inclusion issues only because of negative media coverage.
Law firms have filed at least 40 suits alleging that employment discrimination has only increased since pledges were made.
Sarah Fortt, worldwide co-chair of Latham & Watkins LLP’s environmental, social, and governance practice, told the outlet that she also noted a spike in “‘reverse discrimination’ claims.”
According to a published report, these lawsuits take the form of shareholder derivative proceedings, in which investors claim that a company’s failure to achieve specific DEI goals caused the value of its stock to decline.
Bloomberg noted that “DEI-specialized lawyers, academics, and practitioners contend that companies must balance the needs of the business, employees, shareholders, and customers when creating progressive initiatives while averting legal action from any of those groups.”
Bloomberg continued: One strategy offered is formulating policies “aspirationally,” or in general terms.
Lawyers asserted that instead of creating a strict quota to employ a specific number of people of color for its board, a corporation might aim to match the proportion of people of color in its workforce to that of people of color on its board.
Elena Philipova, director of sustainable finance at Refinitiv, noted that the most prosperous businesses are genuine, and authentic and have DEI objectives built into their DNA.
Despite the lawsuits, some corporations have moved to improve DEI within their organizations.
For example, in December 2020, Microsoft announced that it had achieved its goal of doubling the number of Black and African American managers, senior individual contributors, and senior leaders in the U.S.
However, the report noted that the company still has work to do to achieve gender and racial parity at all levels.
Additionally, some companies are incorporating innovative approaches to improve diversity and inclusion.
For instance, Airbnb has reportedly implemented a program called “Project Lighthouse” to increase representation across race, gender, and other dimensions.
The program includes creating “belonging assessments” that measure employees’ sense of belonging and connection to the company and then creating tailored solutions based on the results.
Still, the report concluded that some corporations had improved diversity and inclusion, while others faced lawsuits for failing to meet their DEI commitments.
The most prosperous businesses are open and honest about their objectives, pay attention to their staff, and incorporate DEI objectives into all operations, Philipova told Bloomberg.
“It really needs to be genuine and authentic, built into the DNA of the organization, and then being transparent.