Conducting Formal Racial Equity Audits in the Workplace

Companies have increasingly turned to formal racial equity audits to identify and address systemic bias and discrimination. Typically, a third-party or external law firm conducts a racial equity audit for a company by evaluating its policies, procedures, and practices. For instance, the auditor may look at the company’s recruiting, interviewing, hiring, promotion, and retention processes. The auditor also may examine the type of training, advertising, social media messaging, and algorithms the company uses in its daily operations for any indications of bias or discrimination.

The audit aims to detect any signs of inequity and point them out to the employer. By identifying these issues, the employer can target and address where they fall short in creating a more diverse and inclusive workplace. For example, a racial equity audit could recommend that a company engage in various actions, such as further training for employees, adjusting, eliminating, or replacing certain policies, addressing pay inequity, or conducting culture surveys among employees. 

Shareholders, investors, and other stakeholders are driving the increase in demand for racial equity audits in large corporations. Consumers and the public also demand greater accountability regarding the environmental, social, and government impacts of companies. Increasingly, the emphasis appears to focus on the impact on communities of color and social justice issues. 

Every company has different goals when they request a racial equity audit. Although they may have primary goals of increasing diversity and creating a more inclusive workplace, the overarching hope is that these initiatives will increase profits and the company’s competitive advantage. Implementing audit recommendations takes time and does not happen solely because a company’s human resources department modifies or improves a few policies. 

Conducting an effective audit involves the following:

  • Using an experienced external partner to conduct the audit;
  • Encouraging and expecting honesty and transparency from all employees; and
  • Maintaining confidentiality to allow employees to speak openly.

Once the audit is complete, the company must follow the auditor’s recommendations. Completing the audit is useless unless the company is willing to take action to implement the audit’s suggestions.

HBL has experience in all areas of benefits and employment law, offering a comprehensive solution to all your business benefits and HR/employment needs. We help ensure you are in compliance with the complex requirements of ERISA and the IRS code, as well as those laws that impact you and your employees. Together, we reduce your exposure to potential legal or financial penalties. Learn more by calling 470-571-1007.

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Hall Benefits Law, LLC

HBL offers employers comprehensive legal guidance on benefits in mergers and acquisitions, Employee Stock Ownership Plans (ESOPs), executive compensation, health and welfare benefits, healthcare reform, and retirement plans. We counsel a wide spectrum of clients including small, mid-sized, and large companies, 401(k) investment advisors, health insurance brokers, accountants, attorneys, and HR consultants, just to name a few. HBL is passionate about advising clients, and we are dedicated to our mission: to provide comprehensive, personalized, and practical ERISA and benefits legal solutions that exceed client expectations.

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