Navigating the Legal Risks of Corporate DEI Policies

The Trump administration’s executive orders have placed corporate diversity, equity, and inclusion (DEI) policies under heightened scrutiny. While some parts of these orders have been blocked by federal courts, the administration has signaled its intent to make noncompliance highly punitive. This has led many companies to reevaluate their DEI initiatives to ensure compliance while maintaining their commitment to diversity.

Legal Landscape: Core EEO Laws and First Amendment Rights

Despite recent executive orders targeting DEI policies, core federal and state equal employment opportunity (EEO) laws remain unchanged. While the administration has ended federal contractor affirmative action programs and directed action against so-called “illegal” DEI policies, what constitutes illegality under EEO laws has not shifted. The primary risks companies face are regulatory and litigation-related rather than legal.

Additionally, companies retain their First Amendment rights to express views on DEI. This was reaffirmed in 2024 by a ruling from the Eleventh Circuit, which struck down Florida’s attempt to restrict corporate DEI training content. While organizations should remain cautious in their approach, they are not legally barred from discussing or promoting diversity initiatives.

EEOC Guidance on Lawful DEI Practices

In response to concerns about compliance, the Equal Employment Opportunity Commission (EEOC) has provided recommendations to help organizations structure their DEI efforts within legal boundaries. EEOC Acting Chair Andrea Lucas has emphasized the importance of avoiding race- or gender-based decision-making and suggests:

• Standardizing interview questions, promotion criteria, and hiring policies
• Removing subjective “culture fit” considerations from hiring and promotion processes
• Expanding recruitment to include a broader range of colleges and geographical areas
• Conducting regular internal audits to identify potential areas of legal risk

These strategies help ensure that DEI programs remain both effective and legally sound.

Assessing Risk in DEI Programs and Policies

Using guidance from the EEOC and complaints filed by organizations such as America First Legal, companies can assess the risk levels of various DEI policies. One area of concern is diverse-slate requirements, which mandate interviewing a certain number of women or people of color for open roles. While these differ from quotas (which are illegal), they remain a legal gray area and have been challenged as ineffective in increasing workplace diversity.

Similarly, diversity goals, even when carefully framed to comply with legal requirements, have come under scrutiny. Research suggests that setting aspirational diversity goals alone does not reliably lead to more diverse hiring outcomes, making them both legally risky and potentially ineffective.

Targeted professional development programs, including internships, mentorships, and employee resource groups (ERGs), also present legal challenges. Programs that limit participation based on race or gender are more vulnerable to legal challenges, particularly following recent Supreme Court rulings. To mitigate risk, companies can open these initiatives to all employees while maintaining a focus on fostering diverse talent.

Reframing DEI Initiatives for Compliance

To maintain diversity efforts while minimizing legal exposure, companies have begun reframing their DEI programs. One approach is adjusting internships and fellowships that were previously limited to specific demographic groups by broadening eligibility to include anyone with a demonstrated commitment to diversity and inclusion.

Another consideration is the terminology used in DEI efforts. While it is not illegal to use the term “DEI,” some companies have opted for alternative phrasing, such as “belonging,” “meritocracy initiative,” or “organizational and professional development,” to reduce the risk of attracting legal scrutiny.

Research indicates that the most effective and legally secure DEI programs focus on structural change rather than individual behavior modification. The Equality Action Center (EAC) has demonstrated that organizations can reduce bias effectively by:

• Auditing processes to identify and address biases
• Standardizing decision-making criteria to ensure consistency
• Eliminating subjective “culture fit” assessments that may reinforce existing biases

These structural changes have led to measurable progress in improving equity in hiring, promotions, and access to career-enhancing opportunities across multiple industries.

Conclusion

The evolving legal landscape surrounding DEI policies presents both challenges and opportunities for businesses. While regulatory scrutiny has increased, companies still have viable paths to maintaining and enhancing diversity efforts within legal bounds. By focusing on structural improvements, refining professional development programs, and using inclusive terminology, organizations can continue to promote diversity while minimizing legal risk.

This article has been adapted from the an article published at the Harvard Business Review 

Disclaimer: The information provided above is for informational purposes only and does not constitute legal advice. Please consult a legal professional before acting on any information provided.