Exclusive | Why we’ve filed civil-rights complaints against DEI in New York and Wisconsin: ‘Discriminates openly based on race’

Introduction to the Issue

In a significant legal development, public-interest law firms have filed federal civil-rights complaints against New York and Wisconsin, alleging discrimination in the allocation of government contracts based on race and gender. Contractors in these states claim they are losing millions of dollars due to diversity requirements that prioritize minority and women-owned businesses. One business owner in New York expressed frustration, stating that without these requirements, his company could be two or three times larger. This sentiment is shared by others who feel the current system creates an uneven playing field, despite their competitive pricing and quality services.

New York’s Case and Contractor Frustrations

The New York case centers on the state’s Minority and Women’s Business Enterprise (MWBE) program, which allegedly disqualifies contractors who fail to meet specific racial and gender quotas. A supplier, who chose to remain anonymous, shared that losing orders is a daily reality due to not being classified as a minority or women-owned business. He recounted a conversation with a client who preferred his services but was constrained by diversity goals. This frustration is exacerbated by the perception that such programs lead to overpayment and inefficiency, as some businesses set up fraudulent minority fronts to meet mandates.

Wisconsin’s Case and Quota System

In Wisconsin, the complaint targets the state’s Department of Administration and its supplier-diversity program, which enforces a 5% quota for contracts awarded to woman- or minority-owned businesses. Contractors argue that this system openly discriminates against small businesses based on race and gender. A business owner highlighted the irony of losing contracts not due to lack of merit but solely because of demographics. This quota system, while intended to promote diversity, is seen as fostering an environment where businesses feel compelled to establish shell companies to meets mandates, leading to potential fraud.

Legal Arguments and WILL’s Position

The Wisconsin Institute for Law and Liberty (WILL) argues that both New York and Wisconsin’s programs violate Title VI of the 1964 Civil Rights Act, which prohibits race and sex discrimination in federally funded programs. WILL filed complaints with the U.S. Attorney General, bypassing federal court to seek an investigation. The New York complaint emphasizes that the MWBE program’s racial balance requirements are penalties in disguise for non-compliant contractors. Both states receive substantial federal funding, making their programs subject to Title VI regulations. WILL contends that these practices are illegal and perpetuate inequality rather than promote diversity.

States’ Responses and Compliance Claims

Both New York and Wisconsin defend their programs as legally sound and effective. New York’s Department of Economic Development spokesperson noted the program’s compliance with state law and Supreme Court precedent, highlighting the 32.3% of state contracts awarded to MWBEs as a success. Wisconsin similarly defended its program, emphasizing its commitment to diversity and fairness. However, these defenses do not address the core issue of potential discrimination against non-minority and non-women-owned businesses, which feel excluded from opportunities despite their qualifications.

Fraud and the Impact of Trump’s Policies

The issue of fraud in these programs is a significant concern, as some businesses create shell companies to exploit diversity mandates. This not only undermines the integrity of the programs but also leads to inefficiencies and higher costs. The landscape may shift with President Trump’s executive orders, which aim to curtail diversity, equity, and inclusion (DEI) initiatives. This has sparked hope among contractors but also fear of retaliation, making the fight for fair practices more critical. Contractors remain cautious, aware that speaking out could lead to retribution, emphasizing the importance of this legal challenge for fostering a truly level playing field.