Out-Law / Your Daily Need-To-Know

US lawyer Cara Crotty tells HRNews about the shift in legal exposure for employers with EDI policies that give unlawful preference in the US.
HR-News-Tile-1200x675pxV2

We're sorry, this video is not available in your location.

  • Transcript

    In the US, a high-profile arrest has raised serious questions about how far legal risk can stretch when EDI policies go wrong. Ian Roberts, former Superintendent of Des Moines Public Schools, has been accused of lying about his qualifications and immigration status. He claimed to have a doctorate he didn’t hold, and to be a US citizen, despite a long-standing removal order. His former employer, a federally funded school district, may now face liability of its own. We’ll speak to a US lawyer advising clients on the compliance risks and how to manage them.

    Under the Trump administration, EDI has become a compliance issue for federally funded organisations. Contractors and grant recipients must certify that they do not operate unlawful diversity policies, and those certifications carry legal weight. If they’re false - even in part - that can trigger action under the False Claims Act, with whistleblower claims, treble damages, and reputational fallout.

    The Roberts case is widely covered in both the US and the UK, with the Washington Post and The Guardian both reporting on it in some detail. This is not just a story about one individual. If his background or status formed part of any federal compliance document, and that information turns out to be false, the legal consequences fall on the district, not just the leader. That includes scrutiny from regulators, exposure to civil litigation, and the risk of whistleblower action.

    It also raises a broader compliance point. Public-facing diversity goals - the kind that are common in the UK - can create legal risk in the US if they suggest a preference based on race or gender. That contrast matters. Policies seen as progressive here may be interpreted as unlawful over there.

    So for UK multinationals, the message is clear: global EDI frameworks need to be reviewed carefully for US compliance. Earlier I caught up with US lawyer Cara Crotty, a partner with law firm Constangy in Columbia, South Carolina. She advises employers across the US on these issues and joined me by video link to explain the legal position:

    Cara Crotty: “Federal law prohibits employers from using protected characteristics, like race, gender, religion, national origin as a basis for making employment decisions and President Trump issued an executive order on his second day in office that requires federal contractors and other recipients of federal funds to certify two things. One, that they do not have illegal DEI in place, and two, that they are acknowledging that their payment from the government is conditioned on understanding the materiality of that certification. So if a contractor, or other recipient of federal funds, is has a DEI policy that would violate that provision, that discriminates in some way, then there's a potential that a False Claims Act could apply and result in significant monetary liability. In addition, the Department of Justice started a Civil Rights Fraud Initiative that encourages employees and private citizens to file qui tam actions or whistleblower lawsuits against employers that are violating those provisions that have illegal DEI. So it strongly encourages and incentivizes employees to report their employers to the federal government.”

    Joe Glavina: “I gather Roberts was hired in large part because of his EDI credentials – his identity, background, and commitment to inclusion were central to how he was perceived and positioned as a leader. In the US right now, how much of a legal risk is that kind of public messaging?” 

    Cara Crotty: “Any kind of statement that indicates the employer has a quota or a preference for individuals based on a protected characteristic could certainly get an employer in hot water and raise the risk here in the US. So statements around goals that are expected or required to be achieved, especially by a certain date and time, could be construed to be a quota, or that the employer has adopted an illegal preference and will be using protected characteristics when they’re making employment decisions. So most US employers are abandoning diversity goals altogether, but an employer would certainly want to avoid creating the perception that any protected characteristic is being used in making an employment decision. So if an employer decides to retain goals – and they are not necessarily unlawful – but any statements around diversity goals should make it clear that protected characteristics are not being taken into account when making decisions, and that employment decisions are based on legitimate job-related criteria and not protected characteristics.”

    Joe Glavina: “So what does all this mean for UK businesses with operations in the US? Are there steps they should be taking now?”

    Cara Crotty: “I think UK firms with US operations should definitely review all of their employment practices and procedures for potential issues with DEI and illegal preferences. I do want to say that not everything DEI-related is unlawful in the US. There are still many organisations that are embracing their diversity, equity and inclusion policies and practices so it’s not necessarily that we need to throw everything out, but we should just be taking a close view to make sure that none of those initiatives are either advantaging groups because of a protected characteristic, or disadvantaging groups because of that.”

    In recent weeks Cara has been talking to this programme about the EDI risks facing both US and UK-based businesses which have a presence in the US. Both of those programmes are available now for viewing from the Out-Law website and we’ve included a link to them it in the transcript of this programme for you.

    Clearly, navigating the contrast between UK and US rules requires specialist advice on the American side and Cara and her team at Constangy are very well placed to help with that so please do make contact if you need help. Her details are there on the screen for you.

    - Link to HRNews programme: ‘Spotlight on EDI risk for UK employers with US operations’
     
    - Link to HRNews programme: ‘Spotlight on US EDI compliance risk for employers’ 

We are processing your request. \n Thank you for your patience. An error occurred. This could be due to inactivity on the page - please try again.