With Trump Taking An Ax To Dei, Companies In The Private Sector Should Legally Bulletproof Their Diversity Practices

President Donald Trump quickly acted to end DEI efforts in the federal government.

Melina Mara/Pool/AFP via Getty Images

• President Donald Trump signed an executive order ending DEI programs in the federal government.
• Given the spotlight on DEI, lawyers say private sector companies should asses their own policies.
• 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.

"It's just that there is more scrutiny on the acronym and now the full force of the federal government has squarely taken aim at this concept," Solorzano said of DEI.

Solorzano said that he has already spoken with numerous companies that have inquired about whether their DEI policies are compliant with the law, and what, if anything, they should do to change their practices to minimize their risks of being a target of an investigation.

"This executive order is almost certain to create a chilling effect on corporate DEI initiatives," said Solorzano, who added that he expects to see even more companies roll back their DEI efforts.

Reuters/Jonathan Ernst

Though, companies "need to be careful about clumsily nixing all initiatives," Solorzano said. "Pulling out of initiatives, just because it is politically disfavored at the moment, may not be the right thing for a business over the long term. But careful calibration of the risks and values of pursuing these initiatives remain critical."

Domenique Camacho Moran, a partner at the law firm Farrell Fritz in New York, also called it "critical" that every organization continues to evaluate its DEI-related policies to ensure they are not "in the interest of doing something good, inadvertently crossing the line."

DEI programs, which many companies have adopted in recent years, "often talked about commitment to equal opportunity" and about "educating the workforce," Camacho Moran said. "They rarely included numbers or targets for specific diversity initiatives."

Those programs, however, "were not scrutinized closely by a variety of government agencies, and so some of those programs were outlined and articulated programming and opportunities that emphasized a particular minority group or particular protected class," Camacho Moran said.

Attorneys told BI they now expect, due to the current political climate, employers to face an uptick of lawsuits alleging discrimination and so-called reverse discrimination.

Peter Woo, also an attorney at the firm Jackson Lewis, said it is likely employers will see a rise in internal complaints from employees who are for and against DEI initiatives, which will likely translate to more lawsuits.

"Companies should have a heightened sense of awareness now in terms of how to approach these because of the fact there will be more inquiries, more complaints internally," Woo said.

Thomas said there had been legal challenges to DEI programs since the Supreme Court's 2023 ruling ending affirmative action in college admissions, and expects those challenges to increase post Trump's executive actions taking aim at DEI initiatives.

Ron Zambrano, the employment litigation chairman at the California law firm West Coast Trial Lawyers, told BI he also expects to see a rise in lawsuits related to companies' DEI efforts.

The potential complaints may even cite Trump's executive order targeting DEI initiatives "as a form of legitimacy," Zambrano said.

Those possible lawsuits would succeed only "if they would have succeeded regardless of Trump or Trump's executive order," Zambrano said.

"It does happen. There is reverse discrimination. It absolutely does exist, but it's not as pervasive as just, like, well, the existence of DEI means that only minorities are going to have the advantage," said Zambrano. "That's the implication, right? That's the fear. That's the messaging."