By Dionysia Johnson-Massie
Littler Mendelson P.C.
The Dodd-Frank Act authorizes certain federal agencies to assess the “diversity policies and practices of the entities they regulate.” Effective June 10, 2015, six federal agencies (“agencies”) issued a joint policy statement establishing standards for assessing these entities’ (”employers” or “organizations”) policies and practices. While the regulation provides a useful framework for identifying important components of an effective diversity and inclusion effort aimed at expanding employment and contracting opportunities for women and minorities and evaluating such progress, it is nonetheless a voluntary compliance scheme that does not require employers to implement these standards.
Promoting Organizational Commitment to Diversity and Inclusion
The policy statement presumes that progress on diversity and inclusion efforts related to employment and contracting occurs when an organization’s leadership, including its Board of Directors, is fully engaged. To that end, the standards anticipate that an employer’s senior leadership and Board will both approve and support a diversity and inclusion policy and receive regular progress reports.
Moreover, the standards focus on giving employers tools for creating and sustaining cultures that support diversity and inclusion strategies. These standards include ensuring that diversity and inclusion considerations are components of an employer’s strategic plan; taking proactive steps to promote diverse pools of candidates when making employment decisions at all levels of an organization, including for Board positions; selecting an executive level person with both the skills and knowledge necessary to manage and direct diversity and inclusion efforts and providing dedicated resources to support those efforts; and conducting regular training and offering educational opportunities concerning equal employment opportunity and diversity and inclusion throughout the organization.
Evaluating and Improving Workforce Profiles and Employment Practices
Regarding measureable indicia of whether an employer’s diversity and inclusion workplace efforts are effective, the agencies encourage employers to consider evidence of “both quantitative and qualitative measurements.” The idea is to collect various data — such as information related to “applicant tracking, hiring, promotions, separations (voluntary and involuntary), career development and retention” at all levels of an organization and to assess trends. The agencies recognize that certain employers already have recordkeeping and reporting obligations existing under applicable laws and, further, acknowledge that these standards do not change those pre-existing legal obligations.
While employers are reminded that unlawful discrimination based on race and gender is prohibited, the standards outline various efforts presumably considered lawful including engaging in outreach efforts to organizations, educational institutions and business conferences serving significant minority and women populations. The agencies also support holding managers accountable for supporting diversity and inclusion efforts via “individual performance plans.”
Improving Procurement and Business Practices Related to Supplier Diversity
The agencies also are focused on providing fair opportunities for minority-owned and women-owned businesses to “compete for procurement of business goods and services.” The standards outline a multi-tiered approach to accomplish this, including having employers allow minority and women-owned businesses to bid on “contracts of all types” and track the dollars and percentage of overall contracts awarded to minority and female suppliers.
Promoting Practices That Make Workforce and Supplier Diversity and Inclusion Efforts Transparent and Public
The agencies encourage employers to use their “Web site[s] or other appropriate communication methods” to publicize their diversity and inclusion efforts.
Conducting Annual Self-Assessments and Disclosing Related Information
The agencies recommend that employers use the standards as a measuring stick against which they assess their diversity and inclusion policies, procedures and progress on an annual basis. Employers are then asked to provide self-assessment information to their primary regulator’s OMWI Director and to otherwise “publish” this information.
Overall, the standards — with the exception of the components encouraging disclosure of self-assessments to the public and agencies — contain traditional elements of a diversity and inclusion framework that are likely familiar to many employers already engaged in diversity and inclusion efforts. As a reminder, companies should consult with counsel to ensure their diversity and inclusion strategies are legally compliant. AT