With the nation's heightened focus on DEI programs and policies, U.S. employers should carefully evaluate the legal risks associated with their DEI-related wage and hour practices.

United States Employment and HR

Allan S. Bloom,Rachel S. Philion, and Laura Fant Your Author LinkedIn Connections

With the nation's heightened focus on DEI programs and policies, U.S. employers should carefully evaluate the legal risks associated with their DEI-related wage and hour practices.

Many employers across a broad range of industries—including financial services, technology, media, healthcare, retail, and professional services—utilize compensation-related incentives to support their DEI efforts. Practices that are likely to be scrutinized by those targeting an employer's DEI initiatives include:

• Diversity referral bonuses. Over the last decade, a number of leading employers have included as a component of their overall DEI efforts a program providing special bonuses to employees who successfully refer diverse candidates. To the extent such bonuses exceed those paid to employees for referring non-diverse candidates, they will likely be among the "low hanging fruit" for challenges.

• Compensation tied to achievement of DEI-related goals. By the early 2020s, a number of companies had conditioned significant portions of their executive and management bonuses to achievement of individual and collective DEI-related goals and/or metrics. The risks inherent in these programs depends in...

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