Newly Formed DEI Practices Expect Heightened Demand During Trump Administration
“The only people that benefit from this are the lawyers, which is unfortunate,” said Gibson Dunn labor & employment co-chair Jason Schwartz of the uncertainty in the laws governing DEI issues.
November 12, 2024 at 06:00 AM
5 minute read
DiversityWhat You Need to Know
- Recently formed DEI practices and industry groups are gearing up for a busy four years with the change of administration.
- Uncertainty around civil rights laws and how they’ll be enforced is driving demand from corporations.
- Advisors said their clients aren’t planning on pulling back from DEI initiatives altogether.
In the past four years, numerous Big Law forms launched practices and industry groups geared at advising clients on matters related to their diversity, equity and inclusion (DEI) programs—and mounting backlash from the political right against the concept of DEI itself.
With the upcoming Trump administration, employers are bracing for opposition coming from lawmakers and federal agencies in addition to legal activists. That means more work for lawyers who counsel employers on their DEI practices. While DEI lawyers believe that the expected scrutiny may prompt some companies to reduce or eliminate their DEI programming, they also said most clients are holding firm in their convictions so far.
In addition to heightened scrutiny of DEI, a lack of clarity regarding how federal agencies like the Equal Employment Opportunity Commission view current practices is adding to the need for outside counsel. “There’s so much uncertainty in the law around this; the only people who benefit from this are lawyers, which is unfortunate,” said Jason Schwartz, a Gibson, Dunn & Crutcher labor & employment practice co-chair who also leads the firm’s DEI Task Force. “You want people to understand what the law is so you can follow it.”
Schwartz cited the EEOC’s conflicting response to the U.S. Supreme Court’s decision to overturn race-based affirmative action in college admissions last year as proof of the confusing regulatory landscape. While Chairperson Charlotte Burrows issued a press release noting that SFFA v. Harvard did not impact private employers’ DEI efforts, fellow Commissioner Andrea Lucas told Reuters that the decision should prompt private employers to take a “hard look” at DEI programming.
Mitchell Silberberg & Knupp labor & employment partner Louise Truong said she’s seen a steady stream of legal challenges against corporate DEI initiatives in recent months. “While it is hard to predict the timing and magnitude of any additional changes, we certainly anticipate an increase in demand,” Truong said. “There is a lot of speculation about how much further we’ll see anti-DEI sentiment creep into workforce regulation.”
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Where Challenges May Come
DEI attorneys look to the Heritage Foundation’s Project 2025 as a potential blueprint for action during the second Trump administration. The document includes suggestions to eliminate disparate impact liability, which currently allows members of a protected group to sue on the basis of a policy’s discriminatory impact on them. Page 615 of the document also outlines the elimination of race and ethnicity data collection by the EEOC and the elimination of the Office of Federal Contract Compliance Programs, which currently exists to ensure federal contractors abide by a 1965 executive order for federal contractors to commit to nondiscrimination.
While such objectives may not touch every private employer with a DEI program, other aspects of Project 2025 could have a more widespread impact. For instance, DEI professionals interpret the document’s goal of “pursuing equal protection for all Americans by vigorously enforcing applicable federal civil rights laws” as a plan to use civil rights laws to investigate reports of reverse discrimination.
The document even signaled that DEI measures could be investigated for anti-competitive practices alongside environmental, social and governance (ESG) measures. “Managers, particularly in publicly traded corporations, who use their power to advance sets of fashionable moral beliefs, such as ESG/DEI, introduce agency problems into the shareholder relationship and appropriate corporate wealth for their own benefit,” Project 2025 states.
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The Pace of Change
While the EEOC’s conflicting messaging has already generated legal work for law firms, the agency isn’t likely to make a hard turn against DEI until its current makeup of three Democrats and one Republican changes, Schwartz said. President-elect Donald Trump is expected to fill the vacant fifth seat after taking office, although he won’t be able to swing the balance toward Republicans until the expiration of commission Vice Chair Jocelyn Samuels’ second term in 2026.
Until then, proposed changes like Project 2025’s desire to remove employers’ obligation to cover elective abortions—the EEOC said employers’ beliefs shouldn’t restrict health care access in a final rule this year—may be on hold.
Changing Title VII of the Civil Rights Act of 1964 to prevent the EEOC from collecting data on race and ethnicity—thereby hamstringing the disparate impact cause of action—would also take time. “Republicans are not a monolith,” said Vicky Slade, co-leader of the DEI strategic consulting, support and defense group at Davis Wright Tremaine. However, Slade noted that although Title VII isn’t at the top of the administration’s priorities list, Republican control of both chambers of the legislature could expedite change.
While faster anti-DEI measures could come in the form of executive orders, Slade said she expects First Amendment challenges to follow. “It may not be something they can legally do, but nevertheless it changes the risk landscape and the way people on the street feel about DEI training,” Slade said.
Unrelated to the change in administration, the U.S. Supreme Court in October granted certiorari to Ames v. Ohio Department of Youth Services, a case out of the U.S. Court of Appeals for the Sixth Circuit in which a straight woman, Mariam Ames, alleges reverse discrimination on the basis that she was demoted in favor of a gay male.
If the court rules in favor of Ames, it would effectively lower the threshold for filing a reverse discrimination case, Schwartz said.
To the extent that some anti-DEI litigation is geared toward drawing public attention to a specific program or practice, clients are also working to contend with the sentiments of their own workforces. “If employees are being left behind, I think companies are taking that very seriously,” Slade said. “That’s contrary to what the programs are trying to convey.”
However, the impending challenges for corporate DEI programs have not stifled most corporations’ underlying commitments, Slade said. “I have been heartened in the last year about the extent to which leaders in the organizations we’ve been working with have doubled down on their commitment to DEI,” Slade said. “They’ve refused to change course because of the headwinds.”
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