Diversity, equity and inclusion, or DEI, is a term used to describe policies and programs that promote the representation and participation of different groups of individuals. This includes people of different ages, races and ethnicities, abilities and disabilities, genders, religions, cultures and sexual orientations.
The awareness of the necessity to not only hire more diverse candidates but to include, train and promote these individuals has come front and center and is more important now than ever. However, when businesses make a good-faith effort to hire diverse employees, they may unwittingly be opening themselves up to lawsuits. And on the other hand, businesses that don’t try to diversify their workforce could face lawsuits as well. It’s quite a dilemma.
Lowenstein Sandler LLP’s Julie Levinson Werner, a noted employment law attorney, says adopting quotas of a fixed percentage of individuals in certain roles by a certain date based on race, gender or other characteristics is legally risky. In fact, this very issue is at the heart of the upcoming Supreme Court case Students for Fair Admissions Inc. v. President & Fellows of Harvard College. While this case deals with the legality of race-based admissions in the scholastic context, one can foresee the result extending to the broader workplace environment.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Reminding us of the adage that “no good deed goes unpunished,” businesses that seek to create an inclusive workforce by advancing employees to meet certain quotas of diversity, rather than merit, could find themselves in legal jeopardy. And those businesses that do not incorporate DEI strategies could find themselves as defendants in a lawsuit that, if successful, could bankrupt the business and possibly the business owner personally.
So, What’s a Business Owner to Do?
This article is not intended to argue for one position or another. It is intended to bring the future into the present where the business owner “hopes for the best but plans for the worst” if moving away from merit-based hiring and promotion with a DEI focus to one singularly based on quotas. Yet, what if the business forsakes the DEI policies and programs that promote these new values, and uses merit-based criteria for promotion and advancement? It could find itself in harm’s way by the legal profession, who are gearing up to take on these cases even as this article is being written.
So how can a business hope for the best but plan for the worst? When carrying out the good intentions of diversity planning and hiring, businesses need an integrated business, estate planning and asset protection plan to protect them. This process involves retitling selected business and personal assets into legal structures that by their nature present significant legal hurdles to reaching such assets, absent a fraudulent transfer. In other words, it’s the process of keeping what you have worked for and earned out of harm's way.
There are many strategies to achieve integrated business, estate planning and asset protection: a HYCET Trust, domestic and foreign asset protection trusts, private retirement plans and IRA rescue plans, just to name a few.* In fact, sometimes a simple change in basic corporate structure can provide valuable protection, such as creating two classes of shares – voting and non-voting. Retain the non-voting shares and gift the voting shares to an irrevocable dynasty trust. If a lawsuit creditor can only reach your non-voting shares, he or she may be dissuaded from suing you in the first instance.
Cover Your Bases
Almost universally, an effective asset protection plan will consist not of one, but multiple strategies integrated into a holistic plan designed to achieve many benefits, including asset protection. That plan should serve several functions: protect your assets while you are alive, provide for the efficient transfer of your assets on your death, and mitigate to the maximum extent possible the amount of taxes owed. What that plan looks like, and which particular strategies are used, should always be tailored to the client.
Every client and business is unique , with its own circumstances. That is why it is crucial to work with an experienced asset protection attorney who can not only evaluate what steps you should take but also — perhaps more importantly — what steps not to take.
Be aware and take caution. These strategies should not be attempted if you have a foreseeable, expected or current lawsuit, or another legal claim. If so, these efforts could subject you to serious legal jeopardy and even violations of state and federal laws. Consult with a law firm that has extensive experience in this area of practice to determine if you are a candidate for integrated asset protection planning.
As the world continues to evolve and social and business paradigms are constantly in flux, successful business owners owe it to their business and themselves to promote strong inclusion and equity in their workforce while addressing the needs and merits of open positions.
Be prepared. Be proactive. Put an asset-protection plan in place today. Don’t let your DEI efforts cause your finances to DIE.
*Go to www.jmvlaw.com and view the library of videos describing many of these strategies.
-
Tax Credit vs. Tax Deduction: What’s the Difference?Tax Breaks Your guide to tax deductions and credits, how the IRS treats them differently, and how they impact your tax bill.
-
Why Now May Be a Good Time to Invest in CommoditiesYou may want to consider adding inflation-hedging commodities such as bitcoin and gold to your portfolio.
-
For a More Secure Retirement, Build in Some 'Safe Money'To solidify your retirement plan, write it down, reduce your market risk and allocate more safe money into your plan for income.
-
Five Steps to a Mindfully Fearless CareerIf, like many women, you're struggling with imposter syndrome, try developing an athlete's winning mindset. It's as simple as facing one small fear every day.
-
Six Ways to Optimize Your Charitable Giving Before Year-EndAs 2024 winds down, right now is the time to look at how you plan to handle your charitable giving. The sooner you start, the more tax-efficient you can be.
-
How Preferred Stocks Can Boost Your Retirement PortfolioHigher yields, priority on dividend payments and the potential for capital appreciation are just three reasons to consider investing in preferred stocks.
-
Structured Settlement Annuity vs Lump-Sum Payout: Which Is Better?As the use of structured settlement annuities grows, it can be tough to decide whether to take the lump sum to invest or opt instead for guaranteed payments.
-
What to Do as Soon as Your Divorce Is FinalDon't delay — getting these tasks accomplished as soon as possible can help you avoid costly consequences.
-
Many Older Adults Lack Financial Security: What Can We Do?Poor financial literacy and a lack of foresight have led to this troubling reality. It's going to take tax policy changes, education and more to address it.
-
Winning Investment Strategy: Be the Tortoise AND the HareConsider treating investing like it's both a marathon and a sprint by taking advantage of the powers of time (the tortoise) and compounding (the hare).
