A key concept in determining whether a reasonable basis exists for affirmative action is underutilization. Underutilization exists when the percentage of women and persons of color in one or more of an employers job groups is lower than the percentage of women and persons of color with the necessary skills for that type of employment. (This is when the employer self imposes an affirmative action plan in order to remedy this problem.)

Challenges to the use of preferences by public employers and to court-imposed affirmative action plans often allege violations of the U.S. Constitution. In constitutional cases, courts subject the use of racial preferences in affirmative action plans to strict scrutiny - the most stringent form of judicial review of government actions. To survive a constitutional challenge to an affirmative action plan that uses racial preferences, a public employer must show that the plan serves a compelling governmental and that the measures employed are narrowly tailored. Put differently the plan must serve a very important public purpose and harm the interests of nonpreferred persons no more than absolutely necessary.
In reverse discrimination cases, an employee alleges disparate treatment, believing that he passed over for an employment opportunity because an employer with an affirmative action plan considered the protected class characteristics of applicants and chose a woman or a person of color instead.
Affirmative action that arises out of legal proceedings can be imposed either as a remedy following a determination by court that an employer has engaged in a serious pattern of practice of intentional discrimination as part of judicially approved settlement between parties. The latter is called consent decree. When the goals of the affirmative action plan are achieved the municipality is relieved of its obligation to comply with consent