The biggest news in yesterday’s U.S. Supreme Court decision in Fisher v. University of Texas at Austin was what it did not do: rule out all use of race in public university admissions. The Court held that the Fifth Circuit erred by upholding the state university’s affirmative action admissions policy without ensuring that the policy met strict scrutiny. Applying affirmative action precedents from Regents of Univ. of Cal. v. Bakke, Grutter v. Bollinger, and Gratz v. Bollinger, the Court reaffirmed that a state university may use racial classification as part of its affirmative action program consistent with the Equal Protection Clause, as long as it furthers a compelling government interest through narrowly tailored means. The decision also confirms that a court may not defer to a university’s judgment that a particular policy is narrowly tailored – or necessary – to further the goal of a diverse student body.

While Fisher is not an employment case, the Supreme Court’s affirmative action decisions can be helpful to employers when crafting their own diversity initiatives. Employment law court watchers have been following Fisher to see whether the Court would take this opportunity to make a broader statement on affirmative action. Instead of using Fisher to reassess the affirmative action landscape, the Supreme Court reiterated that affirmative action programs remain viable, subject to vigilant judicial review.

Fisher arose out of an admissions policy at the University of Texas ("University") that includes two components: (1) as required by a Texas statute, the University admits all students in the top ten percent of their high school graduating class; and (2) for students outside of the top ten percent, the University considers race as one of several factors when deciding which students to admit. A Caucasian applicant, outside of the top 10 percent, brought an Equal Protection Clause challenging the school’s decision not to admit her.

A district court granted summary judgment to the University, and the Fifth Circuit affirmed. The Fifth Circuit reasoned that under the Supreme Court’s decision in Grutter v. Bollinger, the University could maintain an admissions policy in order to promote a racially diverse student body where the University judged that such diversity furthered its educational goals. The Fifth Circuit also deferred to the University’s judgment that its policy of considering racial classification in admissions was necessary to achieve the educational benefits of diversity.

The Supreme Court vacated that decision. It held that the Fifth Circuit had not properly applied the strict scrutiny standard, which requires that the policy further a compelling government interest, and that it do so through narrowly tailored means. According to the Court, the Fifth Circuit appropriately deferred to the University’s judgment that racial diversity promotes its educational goals. But the Fifth Circuit erred by deferring to the University’s "good faith" judgment that its admissions policy was narrowly tailored to promote racial diversity. In particular, the Court held that the Fifth Circuit should have performed a "searching examination" to ensure there were no "race-neutral alternatives" that would "produce the educational benefits of diversity." The Court therefore remanded the case to the Fifth Circuit to perform this "searching examination."

The decision was 7-1, with Justice Ginsburg dissenting. Justice Kagan was recused, and Justices Scalia and Thomas each filed a separate concurrence indicating his willingness to revisit Grutter and hold that the Constitution bars race-based preferences in state university admissions.