Last year, the US Supreme Court ruled in SFFA v. Harvard that discriminating on the basis of race in college admissions violates
the equal protection clause of the 14th Amendment.(1) As a result, the legality of corporate Diversity, Equity and Inclusion (DEI)
programs was called into question(2) and 13 Attorneys General warned that SFFA implicated corporate DEI programs.
(3)
This year, those implications widened when the Supreme Court ruled in Muldrow v. City of St. Louis that Title VII of
the Civil Rights Act protected against discriminatory job transfers.(4) The ruling also lowered the bar for employees to
successfully sue their employers for discrimination,(5) and is therefore likely to lead to an increase in discrimination claims.
Since SFFA, a number of DEI-related lawsuits have been filed. Starbucks was successfully sued for discrimination by an
employee for $25.6 million,(6) and the risk of being sued for such discrimination is rising.(7)
Sensibly, many major companies have responded by rolling back their DEI commitments and laying off DEI departments.(8)
Alphabet and Meta cut DEI staff and DEI-related investments;(9) and Microsoft and Zoom laid off their entire DEI teams.(10)
Since Muldrow, John Deere publicly halted DEI-related policies(11) after Tractor Supply explicitly stated that it “eliminate[d]
DEI roles and retire[d] our current DEI goals;”(12) Lowe’s and Ford ended their participation in the Human Rights Campaign’s
Corporate Equality (CEI);(13) Harley Davidson ceased its DEI efforts;(14) Jack Daniels ended both its DEI efforts and CEI
participation;(15) and Boeing got rid of its DEI department.(16)
DEI poses risks to companies, and therefore risks to their shareholders, and therefore further risks to companies for not
abiding by their fiduciary duties.
Despite these obvious risks, the SFFA and Muldrow decisions and the wave of corporate DEI retreats, Levi Strauss still has
a DEI program,(17) which includes: considering and valuing race and sex in hiring and promotion decisions(18) and in picking
suppliers;(19) Employee Resource Groups for some groups (only those arbitrarily deemed “diverse”), but not for others;(20)
and contributing shareholder money to organizations that advance DEI.(21)
With over 19,000 employees,(22) Levi Strauss likely has thousands of employees who are potentially victims of this type of
discrimination. If even only a fraction of them file suit, and only some of those prove successful, the cost to the Company
could be substantial.