What's Happening?
The U.S. Department of Labor (DOL) has rescinded a Biden-era advisory opinion regarding a proposed racial equity program at Citi. The advisory, initially issued by the Employee Benefits Security Administration (EBSA), had assumed the program was lawful and provided fiduciary guidance based on that assumption. However, the DOL now states that the program's allocation of benefits based on race violates civil rights laws. Citi clarified that the program was never implemented and has no plans to do so, emphasizing its compliance with all applicable laws. The rescission is partly influenced by the U.S. Supreme Court's decision in Students for Fair Admissions v. Harvard, which found the use of race in college admissions unconstitutional.
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Why It's Important?
This development highlights the ongoing scrutiny and legal challenges facing corporate diversity, equity, and inclusion (DEI) initiatives. The DOL's decision reflects a broader trend of legal and political challenges to DEI programs, particularly those involving race-based criteria. The rescission could have significant implications for companies with similar programs, potentially leading to a reevaluation of DEI strategies to ensure compliance with civil rights laws. The move also underscores the influence of recent Supreme Court decisions on corporate policies and the potential for increased regulatory oversight.
What's Next?
While the DOL has not announced an investigation into Citi, the rescission may prompt other companies to review their DEI programs for compliance with civil rights laws. Legal experts suggest that companies should assess their programs for any elements that could be deemed unlawful, such as quotas or race-based preferences. The decision may also lead to further legal challenges and regulatory actions against DEI initiatives, particularly those perceived as violating civil rights laws.
