Socioeconomic status, first-generation status, and geographic location are not legally protected characteristics. By that, I mean that it is lawful for an organization to offer benefits and opportunities or make hiring or selection decisions based on those factors. But according to the “best practices” listed in a new memo issued by Attorney General Pam Bondi, any of these three factors are now suspect as “proxies” for unlawful discrimination.

The memo states that criteria like socioeconomic status, first generation status or geographic diversity “must not be used” if selected to prioritize based on race, sex or other protected characteristics. This categorical designation thereby bypasses the fact-specific analysis that the courts generally apply to determine whether seemingly legitimate, non-discriminatory reasons for an adverse employment action are actually a pretext for discrimination or that a discriminatory reason was a “motivating factor” for the employer’s challenged action.

As we discussed in Part I and Part II of this article, the Attorney General outlined a range of factors and examples that the Department of Justice (DOJ) will deem to be unlawful diversity, equity and inclusion (DEI) initiatives. The designation of “proxies” as unlawful is perhaps the most controversial of these factors, and the memo does not cite legal support for the Attorney General’s position.

What the AG Means by “Proxies”

Proxies are defined by the Attorney General as criteria selected either:

• “because” they correlate with, replicate, or are used as substitutes for protected characteristics, or
• because the intent is to advantage or disadvantage individuals based on protected characteristics.

On the one hand, the Attorney General’s definition addresses coded language that has been used for decades to exclude individuals based on race, ethnicity, and gender – exclusions predicated on someone not being the right “fit”, or from the “right” school, club, or community. Selecting individuals who all come from the same handful of schools and similar communities results in a likeness of thought that can build camaraderie and collaboration. Over time more organizations have come to recognize, however, that this sameness can also result in a “group think” approach that inhibits innovation, as the team collectively defaults to the same approaches and solutions.

Organizations that seek to reduce group think recognize the benefits of having a workforce where individuals bring different life experiences and approach challenges from different perspectives. This is workplace “diversity” in its purest form, and it is not predicated on legally protected characteristics.

The Attorney General’s definition, though, constrains organizations’ ability to recruit and develop individuals who bring varied life experiences and perspectives. Most insidiously, it risks labeling as “unlawful DEI” initiatives that cut across racial, ethnic, and religious groups and gender lines to offer job opportunities to individuals who may have lesser qualifications not for lack of talent but for lack of past opportunity.

Where the Harm Lies in Selections Based Solely on Skills and Qualifications

The Attorney General’s memo stresses that selections should be made based on “specific, measurable skills and qualifications directly related to job performance or program participation.” What the memo overlooks is that many times, the individuals who did not go to the “right” school or club or are not from the “right” community may have innate talent and intellect and tremendous potential but lack the polish to present as highly on an “objective” measure of skills and qualifications.

Their standardized test scores may be lower simply because they lacked the financial means for private tutors or may not have even known to look into preparation resources beyond purchasing a practice test book. Their grades also may be lower because of learning disabilities like dyslexia that were not diagnosed, for which they did not receive support to develop compensating strategies, or for which they did not know to request accommodations.

When applying for jobs, they may lack a network of well-placed contacts who can forward a second copy of their resume to the Human Resources department with a note, asking that their candidacy receive serious consideration. Without that boost, they may have lesser odds of their application being considered.

They may not have participated in relevant internships or the most prestigious (and time-consuming) activities during their academic studies because they needed to work to support themselves. Often those opportunities offer no pay or perhaps a modest stipend.

Grades, test scores, activities, and past industry experience are all objectively job-related differentiators among job applicants, and yet the candidate profiles may differ largely due to socioeconomic differences or similar factors that are not legally protected and that are unrelated to raw talent and intellect. Organizations that recognize those influences and offer special training or mentoring programs for such individuals should not face the cudgel of a DOJ enforcement action for race discrimination.

How First-Generation Status Affects Career Progression

In my role as a workplace investigator, I have the privilege of speaking with employees directly about their concerns and experiences. One particular complaint that I investigated has stayed with me. The complainant, a man of color, recounted how he started in his job with a cohort of similarly-skilled individuals. Early on, he said, he had mastered some aspects of the job more quickly than his peers to the point that he was enlisted to help train them and newer hires. This complainant was the first in his family to be working in a more professional environment and he had no one in his personal circle from whom he could receive career advice. The complainant said he had thought if he just did high quality work, he would be recognized and advanced for promotions.

Years later, he looked at his career status and questioned why he had not gotten as far as some of the people he had helped to train. Those former peers happened to be white, and while he had no concerns with how he was treated by his current managers, he did question if his race had held him back earlier in his career.

Based on my review, I did not find sufficient support for his concern of historic racial bias, but I did credit his perception that he had advanced more slowly than his peers. The likely cause was attributable to his first-generation status. He had only belatedly learned that getting ahead usually requires some amount of self-advocacy and sponsorship, seeking stretch assignments and other promotion opportunities.

This complainant was not alone in his experience, as I have heard similar anecdotes and references from individuals I have interviewed on multiple occasions. Sometimes the issue is that they really are not a strong performer and those deficiencies were not clearly communicated to them. Other times the issue has more to do with organizational structure. And some are like that complainant, where their lack of familiarity with the machinations of the workplace delayed their initial progression, with enduring impact for the balance of their career.

What Employers Can Do to Diversify While Minimizing Liability Risk

Some of the “best practices” listed in the Attorney General’s memo are helpful – and necessary – for organizations seeking a way forward without abandoning their outreach to those from a less privileged background.

1.      Document Rationale

Specifically, the Attorney General’s memo advises employers to document their rationale for the criteria they are using to establish they are based on legitimate considerations and not on protected characteristics. Employers should be prepared to demonstrate that they are not seeking to do an end-run around the administration’s strong stand against racial preferences for people of color, but rather that if they are looking at factors beyond skills and qualifications, like socioeconomic or first generation status, it is so they can reach hidden talent and provide those individuals with opportunities to prove themselves.

2.      Scrutinize Neutral Criteria

The memo also advises employers to “scrutinize neutral criteria for proxy effects.” The current climate includes many traps for the unwary and good intentions are not a defense to a discrimination claim. Employers, and most especially those who are federal contractors or grant recipients, should indeed think twice about any special program or initiative that is based on factors other than standard performance metrics, and confirm the appropriateness of their approach with legal counsel.

Take This Seriously

Although the Attorney General’s memo does not technically have the force of law, employers should not overlook the real threat of legal action behind the Attorney General’s position.  I was reminded of this quite recently while reading a federal district court decision that vacated protections for transgender individuals in guidance issued by the Equal Employment Opportunity Commission (EEOC) under the Biden administration. Where the EEOC had argued that its guidance was simply advisory and reporting on existing case law, the court reasoned, “why should an employer even risk a Title VII violation” by acting in a manner contrary to the EEOC’s position. Here too, with the Attorney General’s memo, federal contractors and grant recipients that discount its import and proceed heedlessly as they had in the past place their federal funding at risk and also potentially face substantial liability exposure under the False Claims Act.

This is uncharted territory for organizations. Unfortunately, too many of the law firms that I have seen reporting on the Attorney General’s memo have simply summarized its content and have not highlighted how its directives differ from what had been common, and previously were considered lawful, employer practices. Those law firms that may be hesitant to speak out publicly should still, in private, counsel you appropriately on the import of the Attorney General’s memo, and the liability risks. Please do not hesitate to get the legal advice.

By Tracey I. Levy