CLEAR View - What is happening with DEI??

Are you feeling confused about what exactly is happening with “DEI” and “DEIA?” You are not alone. I hope this quick run-down helps bring clarity to the shifting landscape.

First, when the new administration took office in January, two Executive Orders were issued that were directed at DEI: No.14151 and No. 14173. Among the mandates, the President directed all executive agencies to terminate “equity-related grants or contracts,” to require in all contracts or grants language that requires a recipient to certify it does not operate any programs promoting DEI that violate federal anti-discrimination laws, and directed the Attorney General to take “appropriate measures” to encourage the private sector to end illegal discrimination and preferences, including DEI, and deter such “programs or principles,” and identify companies for potential civil compliance investigations to accomplish deterrence. The President also revoked Executive Order No. 11246, which is the anti-harassment and discrimination order that applies to federal contractors.

These new Executive Orders were challenged in the United States District Court for the District of Maryland. There were two primary bases for the challenge: the orders violate First Amendment freedom of speech and viewpoint rights, and the orders are unconstitutionally vague because they did not define what “equity-based” or “DEI” meant, so it is impossible to discern how to comply.  The court found the orders had and would have an unconstitutional chilling effect on speech. After acknowledging the plaintiffs were likely to prevail, the court imposed an injunction on enforcement of the Executive Orders, meaning they cannot be enforced while a full legal challenge moves forward.

The most significant points companies need know are: the laws on discrimination have not changed. It has been and will continue to be unlawful to give preference in hiring, promoting, or other terms and conditions of employment based on protected characteristics. This has been the law since Title VII of the Civil Rights Act was passed in 1964. If you have a contract with the federal government, the terms of that contract have not changed unless you receive a contract modification.

Be mindful that there are conflicting rules for a government contractor, they must not discriminate based on protected characteristics with applicants and employees, but they must discriminate when selecting subcontractors or vendors if they are contractually required to meet minority-owned, women-owned, or veteran-owned small business utilization goals. If there is no contract modification, the federal contract terms remain the same and contractors can be held to those terms regardless of any Executive Orders, much less the ones that are currently enjoined.

So, what is a company to do? 

1. Avoid DEI “policies” or “goals.” Diversity, equity, and inclusion are meant to be values, not policies or procedures. Ensure all hiring and employment practices are compliant with Title VII and any state or local anti-discrimination laws, which can be more restrictive than federal laws. It has been unlawful for decades to consider race, gender, or any other protected characteristic when hiring or in other employment terms. However, efforts to expand the applicant pool by recruiting at single-gender or historically black colleges, or veteran job fairs, are not illegal. A company is free to recruit employees from wherever it wishes. It is also free to hire and promote employees who exemplify the company’s core values – which of course can include diversity, equity, and inclusion. Companies are free to define what performance factors define success and merit reward, including whether and how an employee demonstrates commitment to corporate core values, so long as everyone – regardless of any protected characteristic – is able to perform to that standard on equal footing.
2. Eliminate all programs that are exclusive to specific protected characteristics such as events, opportunities, fellowships, internships, positions, or career progression paths that are restricted to participants based on any protected characteristic: race, gender, sexual orientation, veteran status, etc. This does not mean that your company cannot have voluntary groups or committees that are designed to bring together people sharing a protected characteristic. However, the membership of and participation in those groups should not be exclusive to people with those characteristics. Everyone should be welcome in those groups in the spirit of inclusion.
3. Comply with existing contract terms.
4. Do not fear promoting the values of diversity, equity, and inclusion in your workplaces. Our Constitution protects both speech and viewpoints from government interference. Companies can continue to value DEI and promote its principles so long as its actions do not violate anti-discrimination laws.