Rethinking DEI & Affirmative Action

Introduction

Kyle Wade:

Good afternoon and welcome to the May edition of the GovCon HR Roundup. My name is Kyle Wade, and I'm the CHRO from GovConPay. I'm happy to be filling in this month for my colleague Joe Young. This is the fifth episode of the podcast.

Declan Leonard:

And it is.

Kyle Wade:

Exciting, it's exciting. I've been able to listen to a lot of them and it's been a lot of great content, so I'm excited about being here today. I'm here with our partners and co-hosts from the founding partners of Berenzweig Leonard. We've got Seth Berenzweig, and we have Declan Leonard, who you've heard from many times on this podcast.

Kyle Wade:

But for those of you that are new to just joining today, let's give them a chance to introduce themselves. So why don't you introduce yourselves?

Declan Leonard:

Yes. Hi, everyone. It's great to be here. I'm Declan Leonard, managing partner at Berenzweig Leonard. I also head up the firm's employment law practice. I want to give a shout out to BMC Digital Strategies. That is the studio we are recording in and presenting this webinar today here in Tysons, and it's actually co-located in our office here in Tysons, Virginia.

Todd Castleberry is the president and also the producer of these webinars. So, we really appreciate that.

Seth Berenzweig:

And I'm Seth Berenzweig. I’m the co-managing partner here at Berenzweig Leonard and I lead the corporate and transactional practice and it's great to be here. This is really one of the hottest topics that's on the plate right now. So really looking forward to the conversation.

Kyle Wade:

Absolutely. I mean, so thanks, guys. Let's get started. Today's topic, as you may have already caught, was affirmative action and DE&I—diversity, equity, and inclusion. I know personally, I can attest that this topic, Seth indicated, is much more prevalent and popular these days. Every time I'm on an interview or dealing with an applicant, they're curious what's your company culture about? What diversity, equity, and equity initiatives do you have in place? So, this is going to be a great topic today. So, we're glad that you're joining us today. All right. Well, we're going to get started. First question is, so why should federal contractors be rethinking DE&I and how should they approach the issue of diversity of their employees?

Declan Leonard:

Yeah, when we came up with the topic for today, you know, we use the word rethinking because a lot is changing and has changed with respect to DE&I, these diversity equity and inclusion programs that companies have implemented. And what's really happened over the last couple of years, really culminating with the Supreme Court's decision relating to not federal contractors and it wasn't even an employment case, but it had to do with Harvard University and the University of North Carolina, Chapel Hill, and their race-based admission policies that were struck down by the Supreme Court. Supreme Court basically said you can't consider race in admissions anymore. Basically, that that alone was discriminatory. You know, you can't have these quotas. And so what has happened since then is there has been a growing tide against anything. So even though that had to do with the issue of education, you can't just say, well, it stops there. There now, it is now spreading to two hiring practices. Companies are being scrutinized for these DE&I policies and frankly, some of them are even getting sued. I mean, Seth, we follow these. We track these cases. You know, law firms are certainly not immune from this. King and Spalding, a very, very large mega law firm, national law firm, a female Caucasian attorney, wanted to apply to their summer associate program. For those of you who don't know, summer associate programs are the way attorneys get hired generally. And it was only open to people from ethnically or culturally diverse backgrounds or if they were members of the LGBT community. And she was she did not consider herself a member of either one of those. And so she was not even eligible to apply to it. And so, you know, she sued. And that case is still winding its way through the courts. But the EEOC actually came out and said that there was probable cause or reasonable cause to allow this case to go forward. And then I'll just I'll touch on one other one, a very high-profile case. A white male employee for Novant Health apparently was a had a great track record. There was a great employee, great performance reviews. He ended up just getting fired and replaced by an African-American manager. He sued. It was Novant health. He sued because what he found out is that the company publicly announced that they wanted to remake the workplace until it mirrored the community, and they actually paid what they called race-based bonuses for managers who did make these hires. He won a boatload of money. He won $3 million in compensatory damages for lost pay. And it also the company got hit with major, major punitive damages. Those ended up getting reversed on appeal, sorry, by the judge, but still a multimillion-dollar verdict. We see, you know, companies are shying away from this.

Seth Berenzweig:

I thought the Duval case was particularly interesting because not only was the plaintiff in that case, a white male replaced by a black female, and again, some might say was that the end of the case? Why was there a multimillion-dollar verdict based upon that? But there was other evidence in the case. Historically, the black male supervisor at one time had seven white male direct reports. However, during the time that the company was implementing its AI policy, that dropped down to zero. So there was a lot of evidence in the background in that case that really showed the, quite frankly, some might argue the potential danger of DE&I, The policies and the intention behind DE&I are very well-intentioned. Of course, but you know, you could look at that and really, really question and think that really DE&I right now is really eating its own tail. It's at a point where there is a backlash, there are some decisions that are made and it applies in different industries. If you take a look, for example, at the so-called Rooney Rule in the NFL, that's something that's been in place for a few decades now. It originated from one of the owners in Pittsburgh and it not long ago ended up in a lawsuit by one of the former coaches from for the Miami Dolphins that said that he was really just given kind of, you know, token service or just disrespect. He was just being brought in for it. Is the Rooney Rule basically says what you have to offer.

Declan Leonard:

You have to interview minority candidates as part of a coaching selection process, not.

Seth Berenzweig:

Less than one exam.

Declan Leonard:

Yes. And so he was basically saying he was getting so many interviews. What he wasn't getting was job offers exactly as a result of those. And so he basically said, look, this is a system that's set up. It's a Pyrrhic system. It's not even it's nobody's bringing me in. They're bringing me into check boxes. You're not bringing me in on my merits.

Seth Berenzweig:

So you look at it and you ask yourself in the NFL and frankly, in other companies, is this working? There was a study that I read recently that said that publicly traded companies that followed the policies do not provide higher rates of shareholder return than any other company. And I'm not trying to be cynical about it. They don't just a plug in DE&I to just try to make shareholders more money, but it's just one of the many metrics and measures to see whether this is something that is working or whether it really needs to be reconsidered.

Declan Leonard:

There are a lot of companies, very well-known companies that are, as we titled this Rethinking DE&I. Again, not the underlying policies of really just trying to get the best and the brightest from as many different applicant pools as possible, which I believe is the true aim of all of this. And it's a very laudable goal. But the way that it has been implemented, as we'll talk about a little bit more today, is just really just trying to get a numbers game and at the expense of hiring always the best and the brightest. That needs to be the goal. It should still never replace a meritocracy, but it should expand who is being considered for that meritocracy?

Seth Berenzweig:

And it shouldn't supplant training. If you really want to promote people from within, you should provide more opportunities for networking, training, certification. Those are the sorts of things that would help lay a more successful foundation rather than just, you know, plugging and blocking quotas.

Kyle Wade:

For sure. Yeah. And we're going to talk about some of these topics here as we progress today. But let me let me throw another question out for you both today then. So but because sometimes there's some confusion, don't federal contractors have to have affirmative action plans? Sometimes people confuse DE&I initiatives with affirmative action plans. But what's the answer there?

Seth Berenzweig:

Sure. So government contract is with 50 or more employees have to have an affirmative action plan in writing. And in fact, there's an upcoming deadline in this regard. The of CCP has benchmarked a July 1st deadline for government contractors, qualified government contractors to submit their affirmative action plan in writing to the agency. And the agencies also set a benchmark of 5.2% for the federal contractors to have a workforce inclusive of veterans. So it is true that if you're a government contractor with 50 or more employees, you have different and frankly, additional regulatory requirements that are layered on top of all the other general provisions and requirements. However, what this does do is it could put government contractors a little bit more in the firing line, because where we see from instances like the Deval case, it has to be done in a very thoughtful manner and to make sure that this is something that promotes merit-based promotions in the company rather than trying to rigidly, you know, throw people into quotas. So it's something that government contractors need to be aware of, particularly in light of the fact that a lot of these cases that we're talking about today have have really just come out within the last few weeks, if not literally within the last few days.

Kyle Wade:

Sure.

Declan Leonard:

And it's important to know that. So you're right. You've got the veteran of CCP saying that, you know, listen, veterans comprise 5.2% of the relevant labor population. And so they don't call it a quota, though. They call it a benchmark. And I and, you know, it's sometimes I feel bad for contractors because they get these terms and it's like, well, what am I supposed to do?

You know, is it a benchmark? Is it a quota? They very specifically use the word benchmark. And we'll talk about this a little bit more as we as the conversation progresses. But, you know, benchmarks should not whether or not somebody would ever confuse them for quotas. But it's our belief that contractors should not confuse benchmarks with quotas. It is really benchmarks are really along the lines of being aware of data in the relevant industry and trying to comprise hiring policies that will help you again expand the relevant labor pool so that chances are the more experience of your labor pool is, the more you're going to you're going to get to these benchmarks of, let's say, 5.2% of veterans.

Seth Berenzweig:

Yeah, I think the thing that you just mentioned is one of the most important points of the day. The labor pool is is critical. And arguably it may I could argue it's more important than the final selection because if you have a well-qualified labor pool where people are treated in an equal and level and fair manner, that's going to be the most important thing.

Giving people opportunities within a pool to then be able to be promoted based on a merit-based system is going to be best for the employees. It's going to be best for the company. It's going to be best for the customer. So I think that distinction is an important one there.

Declan Leonard:

Yeah, I give the example of like Silicon Valley, you know, if you've ever been out to the Bay Area and Silicon Valley, where, of course, you know, so much of the tech hub is an air hub and so many other industries that are the hot industries emanate from Silicon Valley. You know, you've got Stanford University there. If you only sought to hire from that general area of, I guess, Palo Alto, just around there, if you only really sought to hire and the one school that you always went to for your internship program was Stanford University.

That's a great example of to me where I could come into play because if you just narrow it to this small little area, you're going to get a very homogenous workplace. You're just are I mean, it attracts a very homogenous group. Stanford University is going to attract a largely homogenous group, too. So what companies in Silicon Valley so let's just say we're advising one of them about how to really, really not put quotas into place, but how to really like, like expand their labor pool.

They need to go way beyond just Silicon Valley, like they need to go to many different parts of the country. And that will draw on a much larger labor pool. And then when they're looking at applicants, they still have to hire based on meritocracy. They should not be taking into account any of these characteristics like race or gender, because flat out it's discrimination.

The US Supreme Court said it is. And candidly, it's pretty much common sense that if you're taking that into account at the expense of somebody else's immutable characteristic, it's discrimination and it's hard to say it's not.

Seth Berenzweig:

Yeah, absolutely.

Kyle Wade:

Yeah. And I can tell you certainly if you're a GovCon client or government contractor listening and you're approaching that 50 employee mark, if you're not already thinking about affirmative action plans, you should be. You'd be surprised. I run into clients that are, you know, they're north of 50 employees. They're like, what? What's an affirmative action plan or.

Seth Berenzweig:

What's the OFCCP?

Declan Leonard:

Yes.. I have to look that up sometimes, too. And it's important to know that that 50 or more employee, that is only where the requirement comes into play that the AAP, the affirmative action plan be in writing. All federal contractors really are supposed to have an affirmative action plan. It just doesn't have to be in writing.You don't have to certify it to the office. Keep until you get to 50 or more employees. So it's not like you can totally, totally keep it out of mind or disregarded. Exactly.

Seth Berenzweig:

You know, I think companies in these cases could really find themselves at risk on the flip sides of the same coin. On the one hand, they could be asked in any discrimination case whether they have a program and whether they really followed it. But on the other hand, if they really followed it, but they didn't follow it correctly or take to some of the considerations that we're mentioning today, then then then it can be used as a weapon instead of a shield.

So you have to make sure that not only do you have the right plans, but that you have the right strategy in mind.

Kyle Wade:

Agreed. Okay, I'm going to keep this moving. Gentlemen, let's move on to the next question. So how should contractors balance the tide against DE&I with these other requirements to have a more diverse workplace? That's a big question that clients are running into these days.

Declan Leonard:

Yeah, I mean, I think what they have to realize is affirmative action applies to all you know, you can't just pick certain races or get, you know, a gender over another gender. You've got to understand that really the goal of affirmative action is to outlaw discrimination in the hiring process. By the way, it doesn't just apply to the hiring process.

It's pay promotion, all of those different things. I mean, you're world in your world with government pay. You know, it's developing compensation plans that don't discriminate against anybody, whether it's minorities, whether it's whites, whether it's males, whether it's females. You know, so that's one thing. Quotas are just never allowed. If you have a quota, if you have a disguise quota, you're susceptible to litigation no matter what.

We already talked a little bit about benchmarks and quotas and how they're different. I think the key and again, were a little bit of a broken record, but I think companies forget this. The goal is to expand the relevant labor force. You still want to hire the most qualified applicant, whether that's a minority or not. And so a couple of ways to do that.

Okay. So don't just post we talked about the Silicon Valley example where you're just in your little bubble and you're just continue to hire from this, you know, this certain square mileage around headquarters of, you know, whatever hot air company is coming out, that's not the way to practice good hiring. You've got to expand it. Don't just post your your job postings on just the typical job boards, You know, I mean, it's it's easy to do sometimes you you go for the tried and true but you got to branch out things like partnering with universities, partnering with universities in different parts of the country, partnering with HBCU, historically black colleges and universities, other community groups.

What you're trying to do is expand the reach of applicants. There's so many qualified people out there, and if you're just limiting yourself to this little bubble, it's not going to work out well.

Seth Berenzweig:

The career service centers in each of those institutions would be a great place. Absolutely, because one of their things that they're specifically modeled on is to try to have coordinated relationships with potential employers, and then they could help the company as well. So that’s an excellent and very specific, implementable idea.

Declan Leonard:

How about training and internships and apprenticeship? Yeah. How do you think that could be implemented to help expand the relevant labor pool?

Seth Berenzweig:

Well, I would look at the industry and see what kinds of certifications would be helpful for the advancement of each individual's professional plan. You know, certainly software engineers have different kinds of certifications, rather than electrical engineers. But looking at educational programs and certifications based upon a person's skill set and their career goals is one example as well as, you know, continuing education.

These are programs that today are even more accessible with remote learning. So the benefit cost analysis of that is really divergent and really in favor of the company of the employer and the employee. And that would really help them get a continually qualified workforce.

Declan Leonard:

You raise a good point because if you wait until the job is being posted and then you look to see who is the who's the relevant skill, who matches are relevant. It's a.

Seth Berenzweig:

Self-fulfilling prophecy.

Declan Leonard:

Yeah. So, this notion of training is really a key one because what you're doing is you're because let's face it, not everybody in this country has the same opportunities. And so for certain minorities, and that's economic, a minority, you know, disadvantage, all kinds, they might not have the same training coming into a job as others. But if they got that training, they might be excellent employees.

I mean, again, the goal is to be excellent employees. You do nobody a favor putting them in a job just to fill some kind of a quota. It's not going to help the company. And candidly, it's the most unfair thing you could do to that applicant.

Seth Berenzweig:

Well, I would argue that companies in corporate America would really be taking a major lead in terms of the education of the workforce, even arguably beyond what some of the universities are doing. Some of the universities have five, four, 3% acceptance rates where they're not expanding their pool or taking in more money, but they're also accepting in less students.

The employers in many instances are at the lead of implementing more helpful changes to the workforce and in the corporate American culture. So this is an opportunity I think the idea of mentoring and training is something that's really one of the key takeaways here.

Declan Leonard:

And I'll throw out one more just before we move on, which is remote work. You know, COVID obviously sort of expanded on steroids, this notion so many companies, Kyle, we were talking before, you all have largely gone, you know, remote, you know, And so what remote does is it allows your applicant pool to be a nationwide, sometimes even an international pool.

And so again, back to my Silicon Valley example, you can just you know, you can hire somebody in disadvantaged parts of the of the country where you're going to get you know, you're going to by definition, get some diversity. And when I say diversity, I don't necessarily mean based on an immutable characteristic. I mean people who have economic diversity, you know, people who live in Appalachia, people who live in certain parts of, you know, Kentucky, Louisville, all these places, you can start to hire the best and the brightest in those places.

And that's the very definition, in my opinion, of diversity.

Kyle Wade:

Or it is and I'll tell you a couple of quick points before we move on. One is we see a lot of organizations, some now have gone to, you know, their hiring process. They've started reviewing resumes without looking at their the person's name or they make sure they're not looking at their college degree or where they came from or what their level of education is.

Some organizations are thinking about whether or not they truly need a college degree for some of their positions. But the point you touched on earlier, which is the key is you want to cast a wide net as possible. Yeah. When you're out there trying to find people, that is one of the biggest takeaways we've seen with some of the affirmative action plans is you have opportunities here and some of the topics that you are just touched on are always some of those initiatives where there's actionable items that clients then try and implement to try and do that, trying to cast a wider net and see if they can do a better job.

Seth Berenzweig:

Yeah, yeah, absolutely.

Declan Leonard:

You talked about resume shifting. It's a great segway to the next topic.

Kyle Wade:

Yeah, absolutely. Yeah. So next question is how is the latest AI craze impacting DE&I with government contractors?

Seth Berenzweig:

Well, this is really one of my favorite topics because AI is something that is ever shifting and ever progressing. And along the lines of what you mentioned a moment ago, sifting through a huge pile of resumes seems to be an ideal opportunity to just crank it, you know, and sprinkle some air dust on it and then see what comes out at the back end.

And it's not uncommon for most federal contractors to consider using some form of AI when sifting through resumes. But there have been instances, including some very recent litigation developments, that demonstrate that when you mix an AI with the DE&I, it ends up with kind of an OMG moment. I just made that up. OTF, Not bad. Not bad.

So there's a case out of San Francisco from the U.S. District Court for the Northern District of California, Mobley versus Workday. And in this case.

Declan Leonard:

Workday is a very popular platform.

 Seth Berenzweig:

For.

Declan Leonard:

Employment.

Seth Berenzweig:

Yeah, exactly. Derek Mobley was a he's a black male over the age of 40 that relied upon the Workday, a platform to apply for jobs. And he was rejected over 100 times. He filed a lawsuit in California alleging discrimination. And there are two kinds of discrimination. And I promise not to get you lost in the weeds. But there's disparate treatment and disparate impact, disparate treatment is intentional discrimination.

And disparate impact is a practice or program that although not having a discriminatory intent, hasn't has a disproportionate effect upon individuals of a protected class. This is a disparate impact case because what he said in the case is that there was a disparate impact on people of color as a result of plugging the AI program into the job search protocols.

And after going through some back and forth in litigation. Long story short, the judge ruled that this software platform constitutes an employment agency covered by Title seven. And what that means is, is that a software program has now been deemed to basically run as a capacity as an employer for purposes of Title seven of the Civil Rights Act.

And what that also means is that when a company uses this kind of a program and that program could be marred with this kind of a disparate impact, black eye, it's obviously going to have a flow down effect on the interview process. So this Mobley case is something that is is absolutely not going to be the last of its kind, but it shows that overreliance on air models can result in a disparate impact claim in the world of discrimination.

And it's something that we've certainly seen. We're really in the first or second inning of this as far as the legal claims are concerned. But it really is a very important development.

Declan Leonard:

And keep in mind, the company is not going to be able to escape liability here by saying, well, yeah, but we use Workday, everyone uses Workday. That's a tried and true. Everybody does. Yeah, everybody does it. Right. And by the way, we know nothing about technology. We don't know what Workday’s algorithm is. In fact, it's highly it's a highly protected trade secret.

So we would never be able to. Yeah, it's not going to be enough. You're going to be I suspect what's going to happen is it's Workday plus the companies that they're applying for, they're both going to be considered almost like joint employers for purposes of liability. So you can't just outsource the process. Yeah, you've got to be able to be very if you're a company out there, federal contractor and you're using these AI platforms, you can't just outsource it.

You have to be vigilant about knowing what's happening. You know, just be aware of your of your hiring statistics. It's kind of like getting back to the phrase benchmarking. Be aware of your hiring practices, see who's coming in. And am I? Am I? Does it look like I'm at my my labor pool has been expanded enough to really get the best and brightest from as far as we can.

Seth Berenzweig:

Scan the data. Just understand, you know, what you're working with. Don't just completely take the lead from, from, from a, from a machine. Yeah. And the more that you can just stay on top of the process, the more you'll be able to root out these kinds of problems.

Kyle Wade:

But, you know, Workday is certainly not the only organization that's in, you know, implementing. I mean, I'm seeing it a lot with a lot of different applicant tracking systems and a lot of different needs and platforms. So there's not a firm event or a conference that I go to where AI is not on the agenda. Yeah, it is popular.

It is here to stay. So take a look. Make sure you're thoughtful about what you're implementing, that you have some policies in place. Yeah.

Declan Leonard:

And as a help for that for the contractors out there the of CCP and again I know we've talked a lot about the use of CCP. It stands for the Office of Federal Contract Compliance Programs. You probably know this acronym pretty well if you're in this space. They recently released a guide and it's titled Artifice Shill Intelligence and Equal Employment Opportunity for Federal Contractors.

I suggest you you look that up. If anyone needs a link to it, we're happy to provide it. But again, it's artificial intelligence and equal employment opportunity for federal contractors. A lot of good information there. Touching on the the sticking points that we're talking about here. Okay. So we got time for one.

Kyle Wade:

More one more question here. So, Declan, let me give this one to you. What other DE&I initiatives or related issues beyond employee hiring? What do you talk a lot about should federal contractors be on the lookout for me?

Declan Leonard:

And it's a beautiful sunny day out there and I feel like I'm just nothing but bad news and rain clouds with my with my with my discussion here. So here's what I'm just going to leave you all with. I think that this is going to continue. It started with higher education. I think it's going to continue in the hiring process.

I think what we're also going to see, and we're starting to see a little bit of it, is the various set-aside programs for federal contractors where there are presumptions of a disadvantage as opposed to whether it's economically, or intellectually. They like the ADA programs. So this is already starting. There was a case, a Texas federal judge recently found that a federal contracting program that used a presumption that certain race groups are economically and socially disadvantaged, it violates the equal protection clause.

The judge made a comment in there that Oprah Winfrey would qualify presumptively as either economically or socially disadvantaged because of her being an African-American without any analysis of her own individual condition. And so I think that's what we're going to find now. We're already seeing it with the ADA, with the certification program becoming a lot more strenuous and you actually having to show disadvantage versus the presumption that existed up until now.

I think that that's going to be some you see some rumblings on Capitol Hill. People are starting to take note of these programs where presumptive preference is being given to certain minority groups.

Seth Berenzweig:

Yeah, stay tuned. That it's definitely a trend.

Declan Leonard:

Yes. Any happy news too, you know, Joe, I mean, meanwhile, we're talking here. Joe Young is usually, you know, joining us from GovConPay. He's having fun. Yet Lord knows he's probably in a great location I mean, doing great work. Two or. Yeah, he's in New Orleans, right? Yeah.

Seth Berenzweig:

Just because he's drinking now doesn't mean he's not getting any work done.

Declan Leonard:

That's right. That guy is a workhorse, trust me. Well, fantastic.

Kyle Wade:

Okay, well, do we have time for any questions or?

Declan Leonard:

I think we are at our quota.

Kyle Wade:

Our quota.

Declan Leonard:

All right. We are trying to benchmark 30 minutes and now we're ready to quota.

Kyle Wade:

Perfect. Okay, Well, then, on behalf of Seth and Declan, I'd like to thank everybody for carving a little bit of time out of your day today to join us. Yeah, we hope. We hope that you'll join us again next month. The date is June 20th, so go ahead and mark your calendars. The topic is going to be, which is another hot topic that I think you all touched on your last time even, Is that the future of noncompete agreements with the new rules that broke out from the FTC?

So June 20th is the next podcast. Mark your calendars, make sure that you can attend and we certainly look forward to having you there and appreciate your time today, gentlemen.

Declan Leonard:

Kyle, great joining you and thank you everyone for listening.