Diversity, Equity, and Inclusion (DEI) initiatives have been a cornerstone of workplace culture for many organizations, developed in response to historic and ongoing patterns of exclusion, and have been linked to better profits and improved work environments. But under the current administration, these programs are facing increased legal and political scrutiny. Recent executive orders, federal guidance, and high-profile lawsuits have significantly altered the landscape for DEI, especially for companies that rely on federal funding or government contracts.

While most DEI programs remain legal, employers must now be more cautious than ever about how they structure and communicate their inclusion efforts. A misstep in this evolving environment can trigger not just reputational damage, but also serious legal consequences.

The Legal Framework: What Still Stands

The foundational legal standards for workplace discrimination remain protected by Title VII of the Civil Rights Act of 1964, which prohibits employers from discriminating based on race, color, religion, sex, or national origin. Courts interpreting Title VII have made clear that DEI programs must avoid certain practices—specifically, using race or other protected traits as a basis for hiring, promotion, or termination, or instituting race-based quotas or preferences.

Categorizing employees by race or creating benefits that are only available to particular demographic groups may violate Title VII’s equal treatment principles. However, participating in a race-conscious training program does not by itself constitute an “adverse employment action,” which is a necessary element of a discrimination claim.

Two additional statutes are relevant for organizations receiving government funds or operating in regulated sectors. Title VI of the Civil Rights Act of 1964 (42 U.S.C. § 2000d) prohibits discrimination on the basis of race, color, or national origin in programs receiving federal financial assistance. Title IX of the Education Amendments of 1972 (20 U.S.C. § 1681) prohibits sex-based discrimination in educational programs and activities.

The Ripple Effect of the Harvard Case

In Students for Fair Admissions, Inc. v. President & Fellows of Harvard College, the U.S. Supreme Court held that race-conscious admissions policies at Harvard and the University of North Carolina violated the Equal Protection Clause and Title VI, which now impacts all college and university admissions. While the decision directly applies to educational institutions, its reasoning has clear implications for employment under Title VII. The Court rejected the use of race as a categorical factor in decision-making but allowed for its consideration within the context of a personal narrative. Employers should heed this logic: considering race explicitly in hiring decisions is likely unlawful, even if well-intentioned.

Executive Orders under the Trump Administration

Two executive orders signed under the Trump Administration have intensified compliance obligations for government entities and contractors. Executive Order 14151 directs all federal agencies to terminate existing DEI programs. Executive Order 14173 requires federal contractors to certify they do not maintain “illegal DEI programs,” with the threat of False Claims Act liability (31 U.S.C. §§ 3729–3733) for misrepresentation.

Under EO 14173, each federal agency may nominate up to nine contractors for compliance review. The Department of Justice is scheduled to begin prosecuting non-compliant contractors beginning May 21, 2025. The Equal Employment Opportunity Commission (EEOC) issued clarifying guidance on March 19, 2025, addressing permissible DEI practices and identifying potential areas of legal exposure. Companies engaged in federal contracting should review this guidance closely.

What’s Still Permissible?

Despite these constraints, employers still have room to foster inclusive workplaces—if they do so carefully and in compliance with federal law. For example, outreach and recruitment efforts aimed at underrepresented communities remain permissible, so long as employers do not use race or sex as decision-making criteria.

Employee Resource Groups (ERGs) and affinity networks can continue to exist and serve important cultural roles, provided they are open to all employees and do not grant or restrict access based on protected characteristics. The content and focus of these groups may center on shared identities or experiences, but eligibility must remain non-discriminatory.

With respect to DEI training programs, employers should avoid separating employees by race or tailoring content based on demographic traits. These practices could be viewed as discriminatory under Title VII. Training should emphasize respectful communication, bias awareness, and inclusion principles—without suggesting that any racial or identity group is inherently privileged or deficient.

Messaging Matters

Optics and tone are increasingly important in managing DEI risk. Companies do not need to eliminate all references to DEI in their public-facing materials, but careful messaging can help mitigate scrutiny. Legal counsel should review websites, social impact statements, and recruitment materials to ensure they reflect the company’s commitment to equal opportunity and inclusion—without suggesting preferential treatment.

Many organizations are shifting from terminology like “diversity,” “equity,” and “DEI” toward softer framing such as “belonging,” “community values,” and “inclusive culture.” These alternatives often better capture the intent of such programs while lowering the risk of being perceived as discriminatory or exclusionary.

Lessons from the Courts

Several recent cases illustrate how DEI-related policies can give rise to litigation—and how courts are approaching these claims.

• In Herrera v. New York City Department of Education (S.D.N.Y. 2021), several white executives alleged they were demoted and replaced as part of a discriminatory push against “toxic whiteness.” The case settled for $2.1 million, underscoring the risk of implementing perceived race-based personnel decisions.

• In Duvall v. Novant Health, Inc. (4^th Cir. 2024), a jury awarded $3.4 million to a white male executive who alleged his termination was driven by the company’s diversity goals. The jury found that race and sex were impermissible factors in the decision, reinforcing that DEI initiatives must not violate anti-discrimination laws.

• In contrast, the court in Young v. Colorado Department of Corrections (D. Colo. 2022), dismissed a claim that DEI training created a hostile work environment, emphasizing that discomfort with DEI content does not meet the legal threshold for harassment.

• Finally, in Diemert v. City of Seattle (W.D. Wash. 2022), a white male employee challenged the city’s Race and Social Justice Initiative. While some of his claims were dismissed, others survived early motions, indicating how DEI efforts, if seen as exclusionary or coercive, can be vulnerable to legal challenges.

Proceed with Purpose

Despite the legal and political headwinds, DEI is not dead—but it is evolving. Employers should avoid the temptation to abandon inclusion initiatives entirely. Instead, they should take this moment as an opportunity to reassess, refine, and reframe.

In the rush to reduce legal exposure, some employers are choosing to rapidly scale back or entirely eliminate their DEI initiatives. A growing number of companies have quietly scrubbed DEI language from their websites, renamed employee groups, or disbanded inclusion committees altogether. While these changes may be intended to align with new federal directives or to preempt political scrutiny, they carry their own set of legal risks.

As recent coverage has tracked (HR Brew DEI Tracker), this trend is becoming increasingly visible—and potentially problematic. From a litigation standpoint, an abrupt reversal of DEI commitments could be cited as evidence of a company’s shifting culture or intent. In the context of a hostile work environment or disparate treatment claim, particularly one involving race or gender, the removal of DEI programs could be used to support an inference of discriminatory motive or tolerance of bias.

Put simply, if a plaintiff alleges that their employer fostered or ignored a toxic or exclusionary workplace, the dismantling of programs designed to promote inclusion may undermine the employer’s defense. Employers should therefore proceed thoughtfully, ensuring that any changes are rooted in legal compliance and sound business judgment—not in fear or political reaction.

A careful review of training programs, ERGs, recruitment policies, and public messaging can go a long way in ensuring that DEI efforts are both legally compliant and culturally meaningful. In this environment, thoughtful recalibration—not retreat—is the key to continuing to build inclusive workplaces without exposing the company to unnecessary legal risk.