Can DNA Prove You Are a Disadvantaged Business Enterprise?

An interesting case is unfolding in federal court in which a man who has for decades identified as white is now seeking status as minority business owner as the result of a DNA test. The man, 55-year-old Ralph Taylor, claims the test showed he is 4 percent black and 6 percent indigenous American, which should qualify him as a disadvantaged business enterprise under federal law. The State of Washington rejected that claim, although in 2014 it granted his insurance agency minority status on the state level after Taylor appealed their initial rejection in 2013.  

Taylor believes the decision to deny him status as federally disadvantaged business was unfair and discriminatory. So in July 2016, he sued.  

Questionable Science

Taylor’s DNA test was marketed by the company AncestrybyDNA, which is no longer testing ancestral DNA. He took the test in 2010, at a time when direct-to-consumer DNA testing was still in its infancy, a fact that, in itself, renders the results questionable at best. AncestrybyDNA’s algorithm, for example, used between 71 and 175 “ancestrally informative” markers. Today’s tests, by contrast,  sort through nearly half a million markers for each result. 

Yet even those tests are imperfect and imprecise, says Sheldon Krimsky of Tufts University. In fact, each of the close to 40 companies who currently market the ancestral DNA tests uses a different database, and “their methods are not validated by an independent group of scientists and there are not agreed-upon standards of accuracy,” Kyrimsky says.

But even if Taylor’s results were proven 100 percent accurate, would that automatically make him a “disadvantaged business enterprise” under federal law? Absolutely not, says the state of Washington, which wrote in its rejection, “It is nonsensical for Mr. Taylor to claim that he has encountered social and economic disadvantage due to a heritage he was not aware of until the DNA test conducted in 2010.”

What the Law Says

The federal Disadvantaged Business Program was established nearly 30 years ago to assist business owners who are members of socially or economically disadvantaged groups, specifically those “who have been subjected to racial or ethnic prejudice or cultural bias, and who have limited capital and credit opportunities.” Thus, it would seem patently ridiculous that a person who does not appear to be African American or Native American, and was not even aware of his ethnicity until several years ago could claim status as a disadvantaged minority. However, the Small Business Act merely says that “African Americans, Asian Americans, Hispanic Americans, and Native Americans are presumed to be socially disadvantaged.” It does not establish guidelines for verifying ethnicity.

In fact, it was a similar vagueness in Washington State law that allowed Mr. Taylor’s business to gain state MWBE certification in  2014. According to Taylor’s appeal, the state requires that a person be “visually identifiable” as a minority to gain MWBE status. But it provides no guidelines as to what qualities identify a person as being part of a specific ethnic group.

Similarly, federal law defines a black person as someone “having origins in any of the Black racial groups of Africa.” But it makes no reference to a minimum percentage of DNA necessary to establish that a person is black under the law.

According to Taylor’’s lawsuit, this means of determining ethnicity is “impremissibly vague” and results in “arbitrary and capricious decisions.” But in November 2016, a federal judge in Tacoma disagreed, dismissing the suit and admonishing Taylor that his focus on genetic background was “misplaced.”

Undeterred, Taylor appealed. His case is due to be heard in the 9th Circuit Court of Appeals in December 2018

About the Carmoon Group

The Carmoon Group, Ltd. is an insurance broker headquartered in Hicksville, New York. We are a minority-owned business with over 20 years of experience serving businesses of all types in various locations across the United States. We offer a full suite of business insurance products to meet your every need, so please give us a call to schedule your insurance review. Or, if you prefer, you may reach out online and we will contact you at a convenient time.

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