McDonald's sued over controversial DEI decision

“We’re a people business, and never forget it,” said McDonald's CEO Fred Turner in response to McDonald's commitment to inclusion after multiple companies began scaling back or entirely removing their diversity, equity, and inclusion (DEI) policies for 2025.

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However, earlier this month, McDonald's joined the trend by announcing it would end some of its DEI practices after a comprehensive review of the company.

These previously implemented DEI practices include retiring aspirational representation goals. Now, instead of continuing to implement inclusion practices into its everyday process and operations, the company will be pausing external surveys to focus on the internal aspects of its business, getting rid of the Supply Chain’s Mutual Commitment to the DEI pledge, and renaming its diversity team the "Global Inclusion team."

Customers waiting in line outside of a McDonald's location.
Image source&colon; Ezra Acayan/Getty Images

McDonald's is sued over its longstanding Latino scholarship program

On Sunday, the American Alliance for Equal Rights filed a lawsuit with the U.S. District Court for the Middle District of Tennessee against McDonald's and International Scholarship & Tuition Services over their HACER National Scholarship Program.

The HACER program is a college scholarship created by McDonald's in 1985 and is one of the largest corporate aid awards for high school seniors nationwide. The scholarship is worth up to $100,000 and is awarded to 30 winning applicants annually who are selected by the International Scholarship & Tuition Services.

Those who wish to apply for this scholarship must meet eight requirements, including being a legal U.S. Resident, Citizen, or DREAMER/DACA recipient, a high school senior with a minimum 2.8 GPA, and eligible to attend a college, university, or vocational/technical school full-time, to name a few.

Lastly and most importantly, having at least one parent of Hispanic or Latino heritage. This caveat is the main reason McDonald's has landed in a racial discrimination lawsuit.

The plaintiffs seek to end racial discrimination at McDonald's

The lawsuit seeks to end racial discrimination and asks that the winning students be chosen based on their “own merit and essential qualities,” as the scholarship unlawfully discriminates against students from other races and ethnicities.

The plaintiff backs up its claims by citing that the HACER scholarship violates Title VI in the U.S. Constitution, which prohibits discrimination based on "race, color, or national origin …under any program or activity receiving Federal financial assistance.”

It also cites Section 1981 of the Civil Rights Act of 1966, which bars companies from discriminating based on ethnicity when making contracts. Since applicants must agree to a "Privacy Policy" contract and accepting the scholarship "...constitutes an acceptance of an offer and forms a binding contract,” it is therefore contract-based and violates this law.

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The American Alliance for Equal Rights also seeks "A temporary restraining order and preliminary injunction that bars Defendants, pending further order of the Court, from closing the current application window or selecting winners for HACER" and nominal damages of $1.

McDonald's responds to the lawsuit over its HACER scholarship program

McDonald's (MCD) responded to The Street's request for comment with the following statement:

"We are in the process of reviewing the complaint and will respond to it accordingly. However, McDonald’s announced its evolution on our inclusion work last week, and part of that process will be reviewing programs, in partnership with our franchisees as applicable, to ensure these programs align with our vision moving forward," said McDonald's

"McDonald’s remains committed to our values and our support of the communities in which we operate," the fast food company added.

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