#Hollywood Diversity Initiatives May Be Challenged After Supreme Court Affirmative Action Ruling

While Hollywood has been a longtime target in the culture wars, this time Fortune 500 firms were hit first. The initial mark was Starbucks. Then it was Morgan Stanley. The Hershey Company and McDonald’s were struck soon after, with BlackRock close behind. Since last year, America First Legal Foundation, a conservative group founded Stephen Miller, a White House policy advisor under the Trump administration, has been filing complaints with the Equal Employment Opportunity Commission against major companies arguing corporate diversity and hiring practices run afoul of civil rights laws.

Now that the U.S. Supreme Court has struck down race-conscious admissions in colleges and universities, legal experts say Hollywood should brace for elevated scrutiny around diversity, equity and inclusion initiatives and that employers in the private sector could see a surge of reverse discrimination complaints. The legal challenges will be bolstered by the court’s reasoning questioning the use of racial preferences in any context.

Legally, the ruling is limited to higher education and likely won’t directly affect companies, which are governed by a separate set of federal and state anti-discrimination laws that don’t allow employers to consider race in hiring decisions. But its impact may soon be felt across Hollywood and beyond, from a shake up in the pipeline of students that the entertainment industry would recruit to a chilling effect on businesses wary of litigation over hiring practices and programs aiming to boost diversity.

“There will be fights in the corporate setting,” said Neal Katyal, former US acting solicitor general, at the Aspen Ideas Festival on June 29 after the order was issued. “This decision has implications for how corporations think about their DEI programs, their commitments to affirmative action and the like.”

Tristan Morales, a partner at O’Melveny & Myers who leads the firm’s affirmative action working group, notes the ruling’s “ripple effects” on employment law. He stresses, “There will be more lawsuits challenging DEI programs.”

For nearly half a century, race conscious admissions were permitted, in part, based on the idea that there are educational benefits to having a diverse student body. Race was allowed to be considered as long as it wasn’t the sole determinant. The decision from the Supreme Court abandons that premise in favor of a purportedly color-blind approach to college admissions.

The group that brought the suit claimed a violation of the 14th Amendment’s Equal Protection Clause, which protects against discrimination by the government, through Title VI. This part of the Civil Rights Act of 1964 only applies to Harvard and the University of North Carolina because they receive federal funds. Critically, Justice Neil Gorsuch in his concurring opinion draws comparisons between Title VI and Title VII, which covers employment discrimination. Just as lawmakers held in Title VI that a “recipient of federal funds may never discriminate based on race, color, or national origin — period,” Congress “just next door, in Title VII” made it “unlawful for an employer” to discriminate against individuals based on those same characteristics, Gorsuch wrote.

William Trachman, who wrote an amicus brief for the Former Federal Officials of the Department of Education’s Office for Civil Rights, says the ruling has broad implications that stretch beyond college admissions. “Gorsuch’s concurrence is about how employment law looks a lot like education,” he says, noting he will cite the language in a discrimination suit against the Colorado Department of Corrections. “He’s explaining that Title VI and Title VII say the same thing in not discriminating on the basis of any characteristic.”

While the majority opinion doesn’t mention Title VII, Chief Justice John Roberts wrote, “Eliminating racial discrimination means eliminating all of it.” The message was clear, according to legal observers who spoke with The Hollywood Reporter.

“If I was general counsel at one of these companies, my response would be just to keep race completely out of hiring decisions,” says Jess Miers, legal counsel for Progress for Chamber, which filed a friend-of-the-court brief along with companies including Google, Meta and Paramount, which declined to comment.

The seventy companies that filed a brief in support of Harvard and the University of Carolina argued that diversity at their businesses will suffer because they rely on colleges that practice affirmative action to “create a pipeline of diverse leaders.” If diversity at institutions of higher education drops, the same will happen at major corporations that rely on those colleges for new recruits, they claimed.

Julie Shapiro, director of Loyola Law School’s Entertainment and Media Law Institute who previously led the legal departments for New Line Television and Endeavor Content, underscores that “diversity in entry-level jobs will suffer” the most since the decision impacts the pool of “candidates that the media and entertainment companies have to choose from.”

Litigation remains the foremost concern. The court’s ruling puts DEI initiatives squarely in the crosshairs of prospective or current employees who take issue with programs aiming to boost diversity that may treat people differently based on protected characteristics. The Ladder and The Producers Inclusion Initiative from Netflix and Shondaland could be challenged. The program is “specifically designed to provide an opportunity for individuals from underrepresented groups to gain onset experience and training” to work as line producers, according to a news release issued in April announcing the next iteration of the program. Under the eligibility requirements for the job posting, applicants must be “Producers, UPMs, Supervisors, and First ADs who come from underrepresented communities (e.g., BIPOC).” The initiative mirrors a similar mentorship program at Starbucks that is open only to Black, indigenous and other minorities, excluding Asians, alleged to violate civil rights laws by an America First Legal challenge. “We remain committed to creating a culture of warmth and belonging, where everyone is welcome,” said a Starbucks spokesperson in a statement. Netflix and Shondaland declined to comment.

Amazon Studios’ inclusion policy to cast at least one Black, Latinx, Indigenous, Middle Eastern or Asian character for speaking roles in each project could similarly draw attention. Legal observers note that the use of racial quotas are already prohibited under federal law. “The minimum aspirational goals for casting across speaking roles are 30% white men, 30% white women and non-binary people, 20% men from underrepresented races and ethnicities, 20% women and non-binary people from underrepresented races and ethnicities,” states the policy from the company, which didn’t respond to a request for comment.

Diversity programs requiring applicants to come from certain racial or ethnic groups were on legally tenuous ground even before the Supreme Court’s ruling striking down affirmative action in college admissions, though there’s an exception for temporary efforts that seek to address a “manifest imbalance in a traditionally segregated job category,” according to court precedent. The Equal Employment Opportunity Commission and Department of Justice maintain that Title VII bars discriminating in all actions affecting the terms and conditions of employment, including those falling short of hiring, firing and promotion decisions, wrote EEOC commissioner Andrea Lucas in a Reuters op-ed. The Supreme Court’s ruling could implicate race-conscious corporate DEI initiatives from providing race-restricted access to mentoring, internship or training programs to tying executive or employee compensation to the company achieving certain demographic targets.

Another effort that could be challenged is the Academy of Motion Picture Arts and Sciences diversity requirements for Oscars eligibility in the best picture category. Starting in 2024, films will have to meet minimum requirements relating to diversity and inclusion to be considered. They specifically call for lead or significant supporting actors, general ensemble cast or the creative leadership team, among other roles, to be from historically underrepresented racial or ethnic groups. An individual could sue a studio or production company for employment discrimination, alleging they were turned down for a job because their would-be employer was looking for an Oscar nod.

Such a suit may not get far since it would be difficult to sufficiently allege injury but the possible liability should put Hollywood on alert, according to other legal experts. The same goes for newly-imposed diversity requirements for receiving the full tax benefits of filming in California. Under the state’s budget signed by Gov. Gavin Newsom on Monday, productions will automatically get 96 percent of their tax credit and will get two percent bumps for meeting diversity quotas for below-the-line and above-the-line crew.

“The ruling gives ammunition to suits like those,” Trachman says. “The decision rejects the idea of raw racial preferences in nearly every context, and quotas are even more questionable.”

In the wake of increased scrutiny around DEI initiatives, even before the Supreme Court’s ruling striking down affirmative action, companies have been moving away from explicitly mentioning racial diversity. Most programs are open to all applicants regardless of race or ethnicity. For example, The Directors Guild of America’s Director Development Initiative, billed as a program to increase diversity and inclusion among the industry’s ranks, is open to all DGA members. None of Warner Bros. Discovery’s 30-plus diversity and inclusion initiatives appear to restrict eligibility by race. Its Music Supervisor Program, described as an effort to “provide marginalized voices a pathway for entry into the television industry,” says “applicants from historically underrepresented backgrounds are highly encouraged to apply” but does not require participants to be minorities. In place of race, studios and companies may look to adopt first-generation or low-income programs, says Morales. He explains that they would be on solid legal footing as long as the intent is not to use those criteria as proxies for diversity.

Efforts to boost DEI have been waning after they boomed in the wake of protests after the murder of George Floyd. While there was a nearly 170 percent increase in hires for chief diversity and inclusion officers since 2019, the role saw a five percent decline last year, according to a LinkedIn report. In the past month, six Black women leading DEI efforts at companies across Hollywood exited their posts. They include Netflix’s Vernā Myers, Disney’s LaTondra Newton and the Academy of Motion Pictures Arts and Sciences’ Jeanell English.

A key consideration in the Supreme Court’s ruling is that it allows the consideration of racial or ethnic background in someone’s lived experience. It’s impossible to eliminate any mention of race in the admissions process; applicants have to give their names, which could hint at race or ethnicity. Just like how students will leverage their personal essays to describe how race has affected their lives, prospective employees can do the same with their cover letters or elsewhere in the interview process.

“There’s portions of the decision that said that you can consider hardships that a candidate may have faced or hurdles or obstacles in their life,” says Sahara Pynes, a labor and employment attorney at Fox Rothschild. “Those are pretty common questions for employers to ask.”

Morales echoes, “Race is something employers will still be thinking about throughout the process.”