Racial Targets

Atinuke O. Adediran is Associate Professor of Law at Fordham University School of Law. This post is based on her recent paper, forthcoming in the Northwestern University Law Review.

In a forthcoming article, titled Racial Targets, I address the legal status and defensibility of corporate hiring and promotion pledges. Racial targets are non-binding, voluntary goals, or aspirations—rather than mandatory requirements—made by companies to hire or promote people of color by a future point in time—on a general institutional level—such as among employees, boards of directors, managers, and other leaders. For example, Meta publicly declared its goal to increase the representation of people of color, including Black leadership, by 30% between 2020 and 2025, and Hartford Prudential Financial has stated that it is on pace to reach its representation goal of 20% people of color in senior leadership roles by 2030.

The article argues that racial targets remain legally defensible even after the Supreme Court has declared it unconstitutional for colleges and universities to consider race in admissions in Students for Fair Admissions, Inc. v. President and Fellows of Harvard College (“Harvard case”).

I examined 901 public and privately held companies. In 2022, I found that 44% of public companies had some form of racial target. Some privately held companies also made racial targets. I categorize racial into two types. The first type is closed-ended racial targets. The second type is open-ended racial targets. Closed-ended racial targets vary in language and levels of specificity, but all of them have two common elements: (1) a specific goal or aspiration to hire or promote a specified percentage of people of color; and (2) a year or period by which the goal would be achieved. Racial targets by BNY Mellon, Hartford Prudential Financial, Starbucks, Sysco, and Target are illustrative of closed-ended racial targets. As those targets reveal, companies are often specific about the actual percentage increase they intend to reach, and the year in which they intend to reach the percentage. There are some exceptions where a company might use a range of years instead of a specific year. But like other closed ended targets, those exceptions have a point in time when the company seeks to meet the stated goal:

By year-end 2023, [BNY Mellon] plans to achieve these levels by improving diverse outcomes in hiring, advancement, and retention: Achieve a 15% increase in Black representation to 12%. Achieve a 30% increase in Black representation of senior leaders (Levels M/S) to over 4%. Achieve a 15% increase in Latinx representation to almost 8%. Achieve a 30% increase in Latinx representation of senior leaders (Levels M/S) to over 5.5%.

Hartford is on pace to reach our new representation goal of…20% people of color in senior leadership roles by 2030 because the actions critical to our success are now fully integrated into our business, compensation, and talent strategies.

In December 2020, [Prudential Financial] committed to the following set of diversity goals for our senior and mid-level leaders to be attained by 2023: Increase overall diversity of our most senior leader population by 10% and increase our percentage of Black and Latinx employees by at least 25%. For our mid-level leaders, increase the percentage of people of color by 8% and increase our percentage of Black and Latinx employees by at least 25%.

[Starbuck has a goal of] at least 40% BIPOC representation…in all retail roles, by 2025 in the U.S. At least 40% BIPOC representation…in all manufacturing roles by 2025 in the U.S. At least 30% BIPOC representation…for all enterprise roles, including senior leadership, by 2025 in the U.S.

[By 2025, Sysco aims to] [i]ncrease total U.S. associate ethnic and gender diversity to 62% (emphasis added).

As a first step forward, [Target is] planning to increase representation of Black team members across the company by 20% by 2023 by sharpening our focus on advancement, retention and hiring (emphasis added).

However, unlike closed-ended racial targets, open-ended racial targets are relatively uncommon. Targets are open-ended when companies have a goal but do not provide a set timeframe in which the aspiration would be met. P&G and Pactiv Evergreen’s racial targets are illustrative of the open-ended approach:

[P&G has declared an aspiration] to achieve 40% representation of multicultural employees at every management level of the Company.

In 2020, nearly 50% of total US [Pactiv Evergreen] employees were Black, Indigenous or People of Color. In 2021, we’re working to revamp and accelerate our people strategy to make it more inclusive and representative.

Like closed-ended racial targets, open-ended types also tend to refer to the hiring and promotion of broad categories of employees and management. They also include percentages but stop short of providing a year or timeframe by which the goals would be met. Despite this distinction, both open and closed ended racial targets are about goals and aspirations rather than mandates, making them distinct from quotas.

In terms of legal defensibility, the article takes two approaches. The first is to examine racial targets as if they were quotas. The second is to examine them as a distinct category. Regardless of the approach used, companies can legally defend their use of racial targets.

Analyzing Targets as Quotas

If the legality of racial targets is called into question, companies can defend racial targets as legal when examined within the framework of racial quotas under the standard in United Steelworkers v. Weber on the basis that they: (1) open opportunities for minorities; (2) do not bar white advancement; and (3) do not maintain racial balance.

  1. Opening Opportunities for Minorities

Under the Weber standard, there is no requirement that employers admit prior discrimination to take voluntary affirmative action measures. This is good news for companies as they do not need to admit to past discrimination to disclose hiring and promotion goals. Not only would admitting discrimination be a violation of the law, but it is unimaginable that companies would admit that they previously excluded people of color from certain positions.

Because racial targets are pervasive, it would be difficult to show that opportunities are entirely closed to people of color.  Instead, companies can argue that racial targets are meant to eliminate the lack of racial and ethnic diversity in their companies. In ESG and diversity reports, companies discuss or allude to the problem of societal discrimination or bias against people of color before making disclosures about hiring and promotion. For instance, Devon Energy expressed that its decision to make targets was based on “acts of racial injustice against Black Americans [that] came to the forefront after the killings of George Floyd, Ahmaud Arbery, Breonna Taylor, and others.” Similarly, Penn National Gaming explained that it increased its hiring efforts “amid one of the most challenging times in our nation’s history, as the world grappled with an outpouring of racial and social anguish.”

Even if a court requires evidence of past discrimination, a company can seek to waive the provision, which would be consistent with the reasoning in Weber. Companies can show instead that positions, particularly in management, have remained largely white despite their best efforts not to exclude people of color.

  1. White Advancement

The second Weber requirement is that a quota must not trammel the interests and advancement of white employees. This is consistent with legal doctrine, which has tended to ensure that the interests of white individuals are not hindered in efforts to protect people of color, and in many cases, also benefits white interests. Numerous legal scholars have argued that the diversity rationale that the Supreme Court accepted as the only constitutional basis for using race in college admissions in the Bakke case favors white people more than people of color because it is meant to enrich white individuals and institutions. Critical Race Scholars and others have also argued that white families through white women have been the primary beneficiaries of diversity programs. And indeed, the Supreme court struck down the consideration of race in college admissions in part because of the concern that admitting more students of color prevents white applicants from being admitted.

A company can show that neither closed nor open-ended targets prevent white individuals from obtaining positions in companies. Like the 50% in Weber, all the targets I examined leave room for white individuals to continue to be hired, sometimes as much as 80% in positions where companies seek to increase the percentage of people of color to 20% by a particular year.

  1. Permanence

Permanence, or the fact that a quota would not maintain racial balance, is probably the most important factor the Supreme Court has emphasized in its analysis of racial quotas. This factor was also prominent in the Harvard case in the context of university admissions. In other words, the Court wants to know that a program will expire. A company can achieve an impermanent program with either closed or open-ended targets.

Analyzing Targets Independently

Companies have an even stronger basis for legality if they argue that targets are different from quotas. There are three key distinctions between quotas and targets. First, targets are private and voluntary programs unrelated to federal affirmative action. They were invented by companies for companies and have no state or government entity overseeing them. Companies are not state entities, nor do they receive federal funding, putting targets squarely under Title VII rather than the Equal Protection Clause or Title VI.

Second, while targets often specifically include numbers or percentages of people of color that a company aims to hire or promote, they tend to do so on a general institutional level. In other words, while they sometimes can, targets do not often specifically apply to any occupation or job position. Instead, targets are almost always general aspirations to increase the percentage of people of color among employees, boards of directors, managers, and other leaders.  So, if a company has a goal to have 20% of its leadership comprise of people of color, “leadership” can be so broadly construed that the 20% can be applied to a range of occupations, professions, or roles.

Third, targets are aspirations or goals rather than strict requirements. This means that they are non-binding. This concept of goals has historical precedence. In 1972, the U.S. Commission on Civil Rights distinguished goals from quotas by defining goals as “nothing more than a description of what the labor force would look like absent the effects of illegal racial discrimination and the ‘timetable’ is the informed estimate of time needed to achieve the discrimination-free labor force without disrupting the industry or denying anyone the opportunity for employment.” As such, a goal is a desired result rather than a strict plan that must be achieved. In this way, companies can choose to use racial targets as metrics of assessment rather than strict end results.

Therefore, a company can ask a court not to evaluate targets under the same stringent standard as quotas, but instead evaluate them under a separate standard that prioritizes corporate discretion.

Regardless of the approach taken, there is possibility for conservative backlash, which may simply mean that racial targets will be challenged despite their legal defensibility.

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