Tracking diversity and inclusion efforts on a global basis is often a challenging task for in-house legal, human resources, and diversity and inclusion teams.  While employers may be interested in collecting applicants’ and/or employees’ diversity information for worthy reasons, such an effort is a fertile ground for potential litigation involving data privacy violations and discrimination claims.

Risks of Violating Data Privacy Requirements

Globally, diversity information typically constitutes personal data (and, in many jurisdictions, sensitive personal information) and therefore will be subject to the general privacy law requirements in each jurisdiction related to the collection, processing, use, and transfer of personal and/or sensitive personal information.  Sensitive personal information includes the racial or ethnic origin and sexual orientation, among other personal data.  Generally, to ensure that employers’ processing of sensitive personal information is lawful, employers must require data subjects (i.e., applicants and/or employees) to provide explicit consent.  It also is necessary to consider:  (a) the fact that responses are voluntary is sufficient to comply with any requirements to obtain consent, particularly because consent is viewed skeptically in the employment context in many jurisdictions; and (b) disclosures likely will be required regarding how the information will be processed or used and where to whom and for what purposes it may be transferred.

Potential Discrimination Claims

When collecting diversity information from an international workforce, many questions that employers seek to ask can raise issues of discrimination.  This is the case even when such diversity questions are legally permitted.  It is essential, therefore, that employers always:  (a) have a legitimate justification to ask such questions; (b) communicate to individuals that none of the answers will be used for decisional purposes, and (c) inform individuals that they have the right not to answer (and/or provide individuals with the option to select “other”).  Employers should be careful to avoid using any collected information in a manner that could be perceived as discriminatory.  The primary concern is that as soon as employers collect any diversity information from applicants or employees, and potential employees or employees experience a negative consequence (e.g., applicants are not hired or an offer is retracted, or employees are not promoted or are terminated), the likelihood greatly increases that potential employees or employees will claim that such a decision was due to a protected category and therefore is discriminatory.  As such, to reduce the risk of discrimination claims, the recommended approach is for employers to collect this diversity information from employees (for those employees who volunteer to provide it) on a completely anonymous basis, ideally through a third party (or, in the alternative, a company department wholly unrelated to and disconnected from any hiring and employment decision-making).  The identity of all individuals should not be revealed or determined through the collection of information.  Even on this anonymized basis, however, it is a best practice that this information not be collected until after an employee is hired.

Risk-Based Analysis

Around the world, whether employers may ask individuals diversity-related questions often is not a simple “Yes” or “No” determination.  The analysis is nuanced because countries have different cultures, histories, and sensitivities that affect workplaces and the employment relationship.  As such, when jurisdictions do not provide specifically by law whether certain diversity information may be collected, multinational employers may consider developing a risk-based analysis that assesses the need for the information, as well as the underlying purpose for and reasoning behind collecting this diversity information.  Such a risk-based analysis considers factors in addition to the simple legal bases for collecting diversity information.  Several questions and issues may affect this analysis including, but not limited to, the following:
  • Will the collected information be aggregated and not used by any managers during the hiring process or otherwise in making any employment-related decisions?
  • Will the collected information be gathered in a location where it only can be accessed by the diversity and inclusion team?
  • Will the information only be used to track employers’ progress in its diversity and inclusion efforts?  In addition, will this be communicated to applicants and/or employees who are being asked to provide such information?
  • Will the data be obtained exclusively to enable employers to track their success in attracting and retaining diverse job candidates, from which this can then presumably measure their success in due course by contrasting that data with its actual workforce?
  • Would employers like to take a progressive approach regarding diversity and inclusion and “push the envelope” in the area of diversity and inclusion?  In such a case, employers have a bit more of an appetite for risk in the effort to be more progressive.
In the end, employers must consider (i) whether they are equipped from a data privacy perspective to collect individuals’ personal information and (ii) the underlying purpose of the diversity collection effort.  The answers to these questions will help employers assess whether they are in a position to commit effectively to collecting applicants’ and/or employees’ diversity information.
This question stumped them: “How do you define diversity?”
“Them” was a group of corporate diversity specialists at a New York conference, which drew attendees from all over the country last year.
What followed the audience member’s question was dead silence and deer-in-the-headlights stares from the panelists to the questioner. Finally, only one panelist, a man, ventured, “It means that we want to include more women in management.” 
When so-called diversity experts either can’t or won’t answer a question that’s at the core of their work-life, how can employers, job applicants, and the public at large figure out how to define diversity and put it into practice?
“It’s an important question,” Nate Wong, managing director at Georgetown University’s Beeck Center for Social Impact + Innovation, told Karma. “I don’t think it’s helpful that diversity has come to mean so many things. Sometimes it refers to people who are not white. Sometimes it means other attributes. Or it has become a monolithic word to define representation.”
“In its purest form, it’s meant to be inclusive, to identify racial, ethnic, gender or sexual orientation differences,” he added. “It’s best to be specific about what those differences are so, whether its race or gender or other traits, that diversity is clearly defined for all. If you are focusing on women, then say it. If you are focusing on blacks, then say that, too.” 
Since George Floyd’s death in police custody in May, talk of diversity has more often focused on blacks and other persons of color. However, that leaves out the many other ways diversity can be defined, and those it can include — women, those over age 50, persons who are mentally and physically challenged, transgender people, and refugees or persons from specific countries or regions. 
“Inclusive” is a stronger, more definitive, word than “diversity,” Wong said. It’s a word that’s often paired with diversity when human resources professionals discuss varying their workforces. They often define their companies now as having diverse and inclusive policies.
Doing the right thing in terms of diversity and inclusiveness is only one advantage for companies. Another clear benefit of having a management team and board with people of color, women, and all different age groups, for example, is that the companies tend to be more profitable, productive, and innovative than those that don’t.
“We want to build inclusion,” Molly Ford,’s director of the office of equality, told Barron’s. Ford also cited company research showing workplace equality influences employee engagement and that an inclusive culture increases productivity.   
McKinsey and Co.’s “Delivering Through Diversity” report found that companies “in the top-quartile for gender diversity on executive teams were 21% more likely to outperform on profitability and 27% more likely to have superior value creation.” It also concluded that the best-performing firms on both profitability and diversity had more women in revenue-generating roles than in staff roles on their executive teams. The McKinsey writers added that what also helped produce better results was greater diversity in race, sexual orientation, and international experience.