Holder-who has charged as much as $2,295 an hour for such work-issued a final report in 2021 that outlined the steps Starbucks had taken to promote "Equity." They included tying executive pay to diversity targets, setting spending goals for "Diverse suppliers," and launching a mentorship program for "BIPOC" employees, which Holder pressed the company to expand.
The lawsuit, which is still ongoing and was filed last August by the National Center for Public Policy Research, a conservative nonprofit that is also a Starbucks shareholder, argued that the programs violate non-discrimination laws as well as the company's fiduciary duties.
Covington's audits alone endorse a plethora of programs many lawyers, including current and former government officials, say are illegal, from a minorities-only scholarship at BlackRock to a bonus scheme linking executive pay to diversity targets at Verizon.
Race-restricted internships, fellowships, and mentorship programs are "Generally unlawful," she said, "Including programs where participants receive offers for a company's general internship program but also receive a unique benefit like an expedited interview process" or "Additional compensation beyond what other interns receive." Those criteria describe almost verbatim the BlackRock Founders Scholarship-established before Covington's audit and praised therein-which offers "Diverse" internship applicants an "Accelerated interview process" and an award of $20,000.
As for programs tying executive pay to racial targets, "The more a company seeks to ensure diversity 'goals' are achieved through significant financial pressure, the higher the risk that a court might find that such 'goals' actually are unlawful quotas," Lucas said.
Covington blessed a BlackRock index fund that invests only in companies run by or for people of color-"Probably illegal," Mortara said-as well as a Citigroup program that gives "Preferential financing" to minority housing developers.
Quoting an article by Lucas-the Equal Employment Opportunity Commissioner who warned against the sort of policies Holder blessed-the firm encouraged employers to "Take a hard look" at their diversity programs.
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