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President Donald Trump signed an executive order ending DEI programs in the federal government.
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Given the spotlight on DEI, lawyers say private sector companies should asses their own policies.
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It’s “almost certain to create a chilling effect on corporate DEI initiatives,” one lawyer said.
Corporate America’s DEI practices are facing scrutiny like never before.
And thanks to President Donald Trump’s executive order ending diversity, equity, and inclusion programs in the federal government, the private sector’s DEI efforts have come under heightened legal risk.
Trump’s order encourages the private sector to end “illegal DEI discrimination and preferences.” As part of that plan, the order tasks each federal agency to “identify up to nine potential civil compliance investigations” of enterprises including publicly traded corporations and large nonprofits.
Given the current spotlight on DEI initiatives and Trump’s executive actions targeting them, employment attorneys told Business Insider that companies would be wise to assess their own diversity-related programs with legal counsel to make sure they are ironclad in the face of potential federal investigations or workplace lawsuits.
“The main thing that employers should be doing right now is conducting what we call either a DEI audit or a vulnerability assessment,” said Michael Thomas, a California-based attorney specializing in corporate diversity practices at the law firm Jackson Lewis.
Under this type of assessment, companies would work with outside counsel to review their policies and practices related to DEI and equal employment opportunity.
DEI initiatives that focus on the requirements of federal equal employment opportunity laws are most likely to be legally compliant, Thomas said.
Hiring quotas or preferential treatment to certain groups of people were already illegal and now pose a higher legal risk, Thomas said.
“The law hasn’t changed,” Thomas said, explaining, however, “Your scrutiny has increased, the attention has increased, and you face potential legal, reputational, and brand risk from both your majority, for lack of a better phrase, and also your underrepresented groups.”
Jon Solorzano, a partner at the law firm Vinson & Elkins, told BI the legal grounds involving diversity initiatives haven’t really changed, “but the risks have.”
“DEI initiatives are not, in and of themselves, problematic,” said Solorzano, who advises public and private companies on areas related to ESG (environmental, social, and governance) and risk management.
