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HomeFinance & InvestingBusinessDEI’s ‘Rooney Rule’ placed under legal microscope, on and off the field

DEI’s ‘Rooney Rule’ placed under legal microscope, on and off the field

With nine minority head coaches lined up to lead NFL teams in 2024, the Rooney Rule is having one of its best years ever.

The question now is whether the hiring practice — and its progeny in corporate America — will stay in the game much longer amid a wave of legal challenges to workplace diversity, equity and inclusion (DEI) initiatives. On Tuesday, a conservative legal nonprofit filed a federal civil rights complaint against the NFL, alleging that the rule is illegal.

“If the National Football League truly wants to end discrimination in the employment process, then the NFL should stop discriminating in the employment process, follow the meritocratic system it displays on the field, and eliminate the Rooney Rule,” said Ian Prior, a senior adviser with America First Legal, the nonprofit founded by former Donald Trump adviser Stephen Miller.

Through a spokesperson, the NFL said that it looks “forward to responding to this complaint and demonstrating that our policies and programs are fully consistent with the law and with fundamental notions of fairness.”

“We are proud of the work that we have done to promote equal employment opportunities for women and people of color and the resulting growth in diversity throughout the NFL,” the league added, noting that “diversity makes us better.”

Hundreds of companies have adopted some form of the Rooney Rule since 2003, when the league began compelling teams to interview minority candidates for any head coaching position. Many Fortune 500 companies go further, with some requiring that as many as three-quarters of job contenders come from underrepresented groups, or offering incentives to select them.

Now, some legal scholars and conservative activists say the hiring practice — referred to in the private sector as “diverse candidate slates” — could be legally vulnerable, especially since the Supreme Court upended race-conscious college admissions in June, sparking a wave of legal challenges against corporate diversity, equity and inclusion (DEI) initiatives.

Kenji Yoshino, a New York University law professor and director of the Meltzer Center for Diversity, Inclusion, and Belonging, consults with Fortune 500 companies on the legal risks facing DEI programs. The center rates programs “green,” “yellow” and “red” depending on their level of risk, with the last being the riskiest.

“The Rooney Rule is squarely in the yellow zone,” Yoshino said in an interview.

That’s because the practice typically allows hiring managers to consider race and gender when populating candidate pools, which could be perceived as a form of discrimination, Yoshino said. On the other hand, candidates are not ultimately chosen based on those characteristics, so there’s a “firewall” between sourcing and the final decisions, he said. The practice, he added, has been deemed legal in several lower-court cases in the 1990s.

Yet over the past year, signs have emerged that it may again be tested in court.

The Equal Employment Opportunity Commission complaint filed Tuesday contends the Rooney Rule violates Title VII of the 1964 Civil Rights Act and that the agency should investigate.

“It is abundantly clear that the NFL and its member teams do indeed limit, segregate, or classify their employees or applicants for employment in ways that deprive at least some individuals of interview and employment opportunities specifically because of race, color, or sex,” the letter says.

Similar allegations have been leveled against programs in corporate America.

In January, America First Legal accused pharmaceutical giant Sanofi Pasteur of discrimination because its “diverse slate policy” requires at least one person of color and one woman be considered for an open position. In a pair of Jan. 2 letters addressed to the EEOC and the Office of Federal Contract Compliance Programs, the nonprofit accused the company of violating federal law and said it should be investigated. EEOC complaints can be precursors to lawsuits.

“These programs have some real legal problems,” Prior said in an interview.

Even “nuanced” policies on diverse slates, Prior argued, can violate Title VII of the Civil Rights Act, which prohibits employment discrimination. America First Legal also has targeted diverse candidate slate policies at Mars and Activision Blizzard, which was recently acquired by Microsoft.

“We’re in a new era,” Prior said, referring to the Supreme Court’s college admissions ruling. “And these are cases that are going to start working their way up the federal courts.”

In a Jan. 11 letter sent to 10 recruiting firms, Sen. Tom Cotton (R-Ark.) took a similar position. He wrote that he had received “troubling reports that recruiting firms are conspiring with companies to exclude ‘non-diverse’ candidates from the hiring pool.”

“Race-based hiring policies are being challenged in court, and you can be assured that corporate DEI initiatives that discriminate based on race will soon suffer the same fate as affirmative action in academia,” Cotton wrote.

The legal scrutiny comes as diverse slate practices have exploded in corporate America. A survey of 489 companies by DEI consulting firm Diversity MBA Media showed that 85 percent of respondents had selected job candidates using some form of a diverse slate policy in 2022 — up from 64 percent in 2012. The survey respondents span 38 industries — including technology, retail and finance — and average $27 billion in annual revenue.

“In the last two decades, it really became more formalized,” Pam McElvane, the chief executive of Diversity MBA Media, said in an interview. “Now organizations are creating practices — required practices — around diverse slates.”

Even with the wide adoption of diverse hiring slates, few people of color helm the largest U.S. companies. In 2023, eight Black CEOs led Fortune 500 companies, a record high.

But McElvane’s data, which she collects to track companies’ progress on DEI efforts, shows that diverse slates work best when coupled with what McElvane described as an “accountability measure” — which can be an incentive or penalty tied to a manager’s success in meeting the company’s diversity goals.

For example, 36 percent of the surveyed companies provided some kind of incentive — including bonuses — for meeting diversity goals. On the whole, those companies saw the highest rates of women and people of color promoted to senior leadership. Forty-nine percent of the companies surveyed made hiring decisions based on diverse slates, only sometimes using an incentive. While those companies still saw people of color moving into senior leadership, fewer women rose to those roles.

Without some sort of incentive, McElvane said, diverse hiring slates can be “hit or miss — and if you’ve been achieving your goals, you’ve been lucky.”

The failed NFL diversity ‘rule’ corporate America loves

The NFL’s use of the Rooney Rule has produced more misses than hits in diversifying the NFL’s head coaching ranks, a 2022 Washington Post investigation found. The number of Black head coaches leading the 32 NFL teams has never hit double digits. In 2024, there will be nine minority head coaches, including six Black coaches.

Jonathan Beane, an NFL senior vice president and the league’s chief diversity and inclusion officer, said he was “pleased” by the numbers, but he cautioned that it was “one cycle and one place in time” and that the league was looking for “sustainable improvement.”

The NFL has enhanced the rule in recent years. When it was established, in 2003, it required that only one minority coach be interviewed for any open head coaching position; now it requires two. The rule also has been extended to general manager and offensive coordinator positions. In 2020, following corporate America’s lead, the NFL began offering incentives. If a team loses a minority executive or coach to another team, that team receives a third-round compensatory pick for two years. If a team loses both a coach and personnel member, it receives a third-round compensatory pick for three years.

But incentives — particularly financial incentives — tied to diverse hiring could be legally risky, said Yoshino, the NYU professor. “I would say that is in the red zone,” Yoshino said, adding in a recent Harvard Business Review article that the practice could place preferences on members of protected groups, such as particular races or genders, which could expose a company to legal action.

McElvane said that incentives don’t always come in the form of money or benefits; rather, they often come in the form of “recognition,” which can include a positive performance review or an award.

She also argued that diverse slates have so far been legally safe. “When you look at a lot of the employment law, most of it is direct discrimination and has nothing to do with diverse slates — or you’d see a lot more of it,” she said. “It just so happens the slate is equalized so that a woman and a person of color has a chance of being hired.”

Following the calls for racial justice in the wake of the 2020 murder of George Floyd, large companies came under intense pressure to bolster diversity in their upper ranks — including the use of the Rooney Rule. Among those companies were the five largest U.S. banks — JPMorgan Chase, Bank of America, Citigroup, Wells Fargo and U.S. Bancorp, the Wall Street Journal reported in 2021. All said they’d implement a diverse slate hiring practice or disclose the ones they had in place.

Asked for comment, three of the banks — JPMorgan Chase, Citigroup and Wells Fargo — confirmed that they continue to use diverse hiring slates. JPMorgan also noted that it is continually reviewing its DEI programs for legality.

“As the landscape around DEI evolves, we continue to review our programs and initiatives to confirm that we have clear, well-founded objectives, and that our approach is appropriately tailored and measurable,” the bank said in a statement. “How we support this may evolve, but our commitment to DEI remains steadfast.”

Bank of America and U.S. Bancorp did not respond to requests for comment.

In a statement, Wells Fargo spokeswoman Laurie Kight said the bank has “recommitted to our diverse candidate slate guidelines with enhancements focusing on simplicity of process and improving the experience of all candidates, internal and external.”

Mark Maske contributed to this report.

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Amit Ghosh
Amit Ghoshhttps://serpways.com
MYSELF AMIT GOSH. I AM A PROFESSIONAL BLOGGER AND RESEARCHER.
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