Proxy discrimination necessitates heightened scrutiny
Two years ago, the Supreme Court struck down Harvard and UNC’s discriminatory racial preferences as unconstitutional, banning affirmative action in college admissions. But in the wake of that decision, schools and government entities often resorted to discrimination by proxy, including proxies for race like ZIP Code and income.
In a new law review article published in New York University Journal of Law & Liberty, PLF attorneys Alison Somin and Erin Wilcox discuss how proxy discrimination could be used in government contracting. The current administration passed a new executive order revoking an order from 1965 and significantly restricting race preferences in federal contracting. But preferences are still pervasive in state, county, and municipal contexts, allowing state and local governments to discriminate based on race in contracting projects.
There are growing concerns that all levels of government might implement proxy discrimination to skirt around bans on affirmative action.
What is proxy discrimination?
“Proxy discrimination refers to a decisionmaker’s use of a non-racial characteristic associated with race (the proxy) to achieve a racial result,” Somin and Wilcox write in the article, Proxy Discrimination in Public Contracting. Whether it’s ZIP Code or socioeconomic status, if a race-neutral proxy is used to achieve a racial goal or quota, it is still discrimination.
Although education and contracting are two separate spheres, contracting could adopt similar proxy discrimination practices if affirmative action is banned outright in that context. Considering Students for Fair Admissions and other precedents, proxy discrimination necessitates “heightened scrutiny.”
Like every law or policy that treats people differently based on their race, attempts at proxy discrimination are subject to strict scrutiny, the highest level of judicial scrutiny. As Chief Justice John Roberts warned in his majority opinion, “‘What cannot be done directly cannot be done indirectly. The Constitution deals with substance, not shadows,’ and the prohibition against racial discrimination is ‘levelled at the thing, not the name.’”
Whether discrimination is called “affirmative action” or “proxy discrimination” or labeled as reaching “disadvantaged” communities, the substance of the action is discrimination based on immutable characteristics, which is antithetical to the promise of equality before the law. Although the Students for Fair Admissions opinion addressed only direct race preferences in affirmative action, Chief Justice Roberts’ statement philosophically addresses the questions at issue in proxy discrimination, possibly teeing up a future Supreme Court case.
Proxy discrimination in government contracts
Somin and Wilcox argue that “some of the proxies…could have clear analogs in contracting.” For example, just as some universities did in the wake of Students for Fair Admissions, a handful of federal contracting programs have adopted essay or personal statement requirements. Two years ago, the U.S. District Court for the Eastern District of Tennessee halted the Department of Agriculture and the Small Business Administration (SBA) from selecting contractors to serve “socially disadvantaged” businesses because of their racial status.
“The SBA promptly tried to evade the decision by asking each of its racial minority contractors to write an essay explaining how they were disadvantaged by coming from a racial minority group,” the authors added.
As addressed in Coalition for TJ and the Boston Parent Coalition, government contracting programs could also use socioeconomic status, ZIP Code, or income as a proxy for race in awarding public contracts. Through race-neutral terms like “socially disadvantaged” or “economically disadvantaged,” such programs purport to be facially neutral while imposing a racial quota in practice: These are the types of unconstitutional programs that Students for Fair Admissions challenges in substance, as Chief Justice Roberts wrote.
Although federal contracting statutes still include economically disadvantaged criteria, each agency applies those standards at its discretion. For example, the Small Business Administration and the Department of Transportation created a cut-off for what constitutes economically advantaged versus disadvantaged. But the terms are still overly broad, Alison Somin and Erin Wilcox say.
The Supreme Court could issue a decision stating more forthrightly that proxy discrimination is unlawful, but it hasn’t agreed to hear such a case yet. Pacific Legal Foundation is continuing to litigate cases in this area, including Landscape Consultants of Texas v. Harris County, Aerospace Solutions v. Hegar, and California for Equal Rights Foundation v. Alameda County.
Rather than using race as a determining factor, public contracting programs should “adopt truly race-neutral programs that help all small businesses thrive.” Immutable characteristics, such as race and gender, are unrelated to whether someone is qualified to complete a project excellently and efficiently. Rather than creating arbitrary categories and application hurdles, public contracting programs should consider whether the contractor is the best fit for the job, which benefits entrepreneurs and communities.
