As companies focus on workforce inclusion, equity, and diversity (IE&D), they are under increasing pressure to assure that the membership of their boards reflects these values. The Securities and Exchange Commission (SEC) recently approved a rule proposed by Nasdaq that requires companies listed on its exchange to meet certain minimum diversity targets on their boards or explain in writing why they are not doing so. This “comply or explain” approach demands of corporations additional accountability for IE&D efforts, requiring them to navigate diversity and anti-discrimination considerations thoughtfully.
In the United States, implementing workforce quotas that mandate hiring on the basis of protected characteristics such as race, ethnicity, or gender is generally unlawful. While the law encourages voluntary diversity efforts, they are subject to careful judicial scrutiny to ensure that they do not constitute unlawful “reverse” discrimination. There has been an increase in investigations and related lawsuits as to whether diversity initiatives constitute unlawful discrimination.
By Philip Berkowitz, Corinn Jackson and Britney Torres via Littler