Well before Inauguration Day 2025, political and legislative actions against diversity, equity, and inclusion (DEI) in the workplace and in the marketplace were underway. The challenges to DEI in both the public and private sectors primarily centered on claims of alleged unconstitutional "reverse discrimination," compelled "woke-virus" speech, contractual quotas, and the creation of hostile work environments by DEI initiatives allegedly targeting specific racial or gender groups.
In the weeks since the current administration returned to power, the White House took action to reverse long-standing federal contractor requirements for affirmative action measures based on race, ethnicity and gender, by revoking the executive order creating those requirements 60 years ago. This action does not affect legal requirements for affirmative action for veterans, disabled veterans and individuals with disabilities under Vietnam Era Veterans’ Readjustment Assistance Act of 1974 (VEVRAA) and the Rehabilitation Act of 1973, respectively, which still remain in effect.
The federal Department of Justice (DOJ) recently announced its intent to not only support efforts to eliminate what it sees as illegal DEI efforts in the public sector, but to also pursue criminal penalties against private employers it believes are violating the law with their DEI programs. As a result, many businesses are reassessing their current posture regarding such initiatives. Even those companies deeply committed to DEI are wondering whether standing by their principles is worth the risk of prosecution.
But private sector employers should understand that while the White House may be taking a wildly different approach to DEI than previous administrations, the laws prohibiting discrimination in the workplace and corporate supply chains remain unchanged. Before making any dramatic changes to or eliminating their diversity efforts, private sector businesses should understand the current state of play as well as the factors that can put their programs in the DOJ's DEI crosshairs.
Executive Order Revoking Affirmative Action
The administration quickly took steps to eliminate DEI and DEIA ("diversity, equity, inclusion, and accessibility") programs. It began with a Jan. 21, 2025, Executive Order (Jan. 21 EO) that ordered all executive departments and agencies to "terminate all discriminatory and illegal preferences, mandates, policies, programs, activities, guidance, regulations, enforcement actions, consent orders, and requirements." But the Jan. 21 EO wasn't just focused on eliminating DEI in the public sector. It further directed all agencies to "combat illegal private-sector DEI preferences, mandates, policies, programs, and activities."
The DOJ Memo
More recently, U.S. Attorney General Pam Biondi issued a Feb. 5, 2025, memorandum outlining how the DOJ intends to implement the Jan. 21 EO.
Biondi’s memo, titled "Ending Illegal DEI and DEIA Discrimination and Preferences," directs the department's Civil Rights Division and Office of Legal Policy to submit a report containing recommendations for enforcing federal civil rights laws and taking other appropriate measures "to encourage the private sector to end illegal discrimination and preferences, including policies relating to DEI and DEIA."
The report is to address:
- Key sectors of concern within the Department's jurisdiction;
- The most egregious and discriminatory DEI and DEIA practitioners in each sector of concern;
- A plan including specific steps or measures to deter the use of DEI and DEIA programs or principles that constitute illegal discrimination or preferences, including proposals for criminal investigations and for up to nine potential civil compliance investigations
- Additional potential litigation activities, regulatory actions, and sub-regulatory guidance; and
- Other strategies to end illegal DEI and DEIA discrimination and preferences and to comply with all federal civil rights laws.
Notably, the memo explicitly states that it does not prohibit "educational, cultural, or historical observances - such as Black History Month, International Holocaust Remembrance Day, or similar events - that celebrate diversity, recognize historical contributions, and promote awareness without engaging in exclusion or discrimination."
Anti-Discrimination Laws.
There are a host of civil rights laws prohibiting unlawful employment practices. The most common among these is Title VII of the Civil Rights Act of 1964, as amended. The counterpart in Maryland is the Maryland Human Relations law, as amended.
These laws apply to employers with 15 or more employees. Although these (and other civil rights laws) vary in terms of the classes or characteristics of individuals protected from discrimination, they uniformly prohibit covered employers from making employment-related decisions because of a candidate’s or employee’s immutable characteristics, such as race, color, sex, religion, and national origin. These decisions apply to all aspects of the employment relationship – from hiring to firing and everything in between. They also prohibit employers from limiting access to employment opportunities based on those same protected characteristics. Because of this, employers should ensure that all employment decisions are non-discriminatory, such as those that are based on merit and qualifications.
Employers should be aware that employment laws either set a minimum requirement or a maximum requirement. An example of a minimum requirement is the federal Family Medical Leave Act or the Maryland Healthy Working Families Act, both of which permit employers to offer more generous leave than the minimum required by those statutes.
In contrast, civil rights laws set the maximum requirement for non-discrimination efforts by prohibiting any employment-related actions because of an applicant's or employee’s protected characteristic(s). Employer efforts to promote members of one race or gender, for example, to the detriment of another because of that other person’s race or gender, are discriminatory, even if intended to correct historic discriminatory imbalances in the workplace. Such efforts may be “well-intentioned,” but adopting race or gender-based hiring preferences or quota hiring, to the exclusion of other qualified candidates who do not meet the preference or quota criteria, results in discriminatory decision-making prohibited by the law.
Avoiding "Illegal Discrimination or Preferences" in DEI Efforts
The threat of criminal investigations, as set forth in the DOJ memo, may have an intimidating and chilling effect on private employers who may be concerned that all DEI or DEIA programs will now be considered illegal and subject them to prosecution or penalty. But DEI programs are not, per se, unconstitutional, unlawful or even problematic; it is only when they exceed the scope of the civil rights laws that potential liabilities arise. Indeed, as the DOJ memo states, it is targeting efforts it believes "constitute illegal discrimination or preferences." This recognizes that there are lawful, non-discriminatory employment practices that support diversity, equity and inclusion.
Accordingly, businesses need to carefully frame DEI initiatives to avoid that distinction by promoting inclusivity without creating explicit racial or gender-based distinctions or mandatory ideology-focused training. To navigate these legal risks, many organizations are shifting focus toward broader inclusivity (rather than excluding anyone from
opportunities solely on the basis of their race or gender), avoiding racial or gender quotas, and prioritizing business-aligned DEI goals to bolster supply chain depth and competition, promote brand loyalty, and strengthen workforce cohesion and productivity.
Caution is needed here, though, to ensure that employment and business-related decisions remain lawful. Pulling back potentially excessive DEI efforts does not mean reverting to historically biased practices. To the contrary, in the employment setting, it means employers should always seek the most qualified candidate, who may very well be a minority, a woman, disabled, etc. It also means that corporate buyers should not revert to purchasing practices that historically have effectively precluded the participation of diverse suppliers seeking access to mainstream corporate supply chain opportunities.
A DEI program is most risky when it meets three criteria:
- It confers a preference, meaning some individuals are treated more favorably than others on the basis of race, gender, or another protected characteristic.
- The preference is given exclusively to members of certain legally protected classes, such as groups defined by the categories protected in Title VII of the Civil Rights Act of 1964 and laws prohibiting discrimination.
- The preference relates to a palpable benefit, such as a job, a promotion, a pay raise, a work assignment, a commercial contract award, financial assistance, or access to training and capacity development opportunities.
Even the most carefully designed private sector DEI programs may catch the attention of the DOJ. Employers are advised to consult with counsel with specific knowledge and experience in this arena who can evaluate their DEI programs.
If you would like to discuss your company's DEI programs in light of these recent developments, please contact Franklin Lee or Melissa Jones at Tydings.