As legal professionals responsible for advising corporates and law firms alike, it’s vital to stay informed on emerging legal issues that could reshape the landscape we operate within. Recently, a meaningful shift can be observed towards increased scrutiny on affirmative action policies or practices in the private sector. A cautionary development has emerged surrounding the use of Diversity, Equity, and Inclusion (DEI) performance goals in incentive compensation.
At the center of this issue are recent court decisions, which concluded that certain race-based college admissions programs violate the Equal Protection Clause of the Fourteenth Amendment of the U.S. Constitution. Although these rulings don’t apply directly to private employers, observers anticipate an upshot in the close examination of affirmative action policies in the private sector.
An instance of this potential trend can be found on JDSupra where Foley & Lardner LLP recently penned a comprehensive analysis on this issue.
While the precise impacts remain to be seen, this potential shift could lead to significant changes in the way that corporations and law firms tackle incentive compensation tied to DEI goals. It serves as a potent reminder that our field is always evolving and that continuous learning is an inherent part of our roles. As these developments unfold, it will become increasingly vital for us to foresee the implications of these shifts, advising our clients correctly, and strategizing our operations to reflect the legal realities of the day.