DEI programs challenged under Section 1981

The full court press on corporate diversity, equity, and inclusion (DEI) programs is intensifying as the 2024 presidential election looms. A year after the Supreme Court’s decision in SFFA v. Harvard/UNC, employers face increasing litigation from anti-DEI nonprofits like Stephen Miller’s America First Legal (AFL) and Edward Blum’s American Alliance for Equal Rights (AAER) and unhappy employees over their DEI programs.

Litigation under Section 1981

Edward Blum’s AAER has pushed its anti-DEI agenda by using Section 1981 of the 1866 Civil Rights Act to challenge programs that exclude applicants based on race. Since it was enacted, Section 1981 was used by members of minority groups alleging race discrimination in contracts, and prior to the 1991 revisions to Title VII of the Civil Rights Act of 1964, Section 1981 allowed litigants to get jury trials and punitive and compensatory damages.

After the SFFA v. Harvard/UNC decision, Blum’s AAER sued numerous law firms under Section 1981 over diversity fellowship programs alleging they excluded applicants based on race and interfered with the ability of members to create contractual relationships with the law firms based on race. AAER has also sued the Fearless Fund—a venture capital firm owned by black women entrepreneurs—over the fact that it provides grants to black women, saying that it discriminates based on race and gender in violation of Section 1981 because to “submit an entry, an applicant must ‘certify’ that she meets all the programs requirements.”