Trump’s Attack on ‘Illegal’ DEI Disorients Corporate America

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(Bloomberg) — President Donald Trump’s orders against “illegal” diversity, equity and inclusion policies have left companies and their lawyers scrambling to understand what that means.

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Trump on Tuesday ordered federal contractors to ensure they “do not engage in unlawful discrimination, including unlawful DEI.” He also ordered government agencies to create a list of publicly traded companies, large non-profit organizations and others in the private sector for possible investigations into violations of the law.

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However, the order did not provide an explanation of what the DEI program is, nor did it state what it believed to be illegal, employment lawyers said. There are also no details on what methods or processing agencies should use, they said.

The ambiguity of the officials’ decision has made the offices of the law firm Seyfarth Shaw flooded with calls from companies trying to find out how they can be affected by Trump’s order.

“Employers want clear information on what this means for their plans,” said Annette Tyman, a partner at Seyfarth.

They’re also concerned about how government officials will draw up the list of top offenders, said Laura Mitchell, a Jackson Lewis attorney who helps companies comply with government contracting laws.

“These agencies must make this list of those who are extremely racist, why should they be looked at?” Do they just go out and look at the internet?” Mitchell said.

They may review any public comments or information previously shared with government officials about their DEI plans for answers, he said.

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He is still digested

“There’s a lot of confusion right now about what’s allowed and what’s not,” said Andrew Turnbull, chairman of global employment practice at law firm Morrison Foerster. “We’re still processing that ourselves.”

Although the government is limited in its ability to tell companies what internal business policies they can and cannot have, they use influence on government contractors from Boeing Co. to Amazon.Com Inc. to Bank of America Corp. – all applicants for contracts to provide goods or services to the US government.

Efforts to eliminate discrimination in American corporations through executive orders began in the 1960s, when Presidents John Kennedy and Lyndon B. Johnson directed companies to take action to ensure that companies did not discriminate on the basis of race, religion, and national origin.

Trump also rescinded Johnson’s 1965 executive order that ordered government contractors to take steps to ensure equal opportunities for women and underrepresented groups. It is not yet clear what effect this may have on existing agreements between the government and companies that have promised to hire more people from those groups in part to resolve complaints about racism, the lawyers said.

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The law

Employers are prohibited from considering factors such as race, gender and religion in hiring under the Human Rights Act of 1964. However, many large companies have re-examined their diversity programs after the Supreme Court issued measures to guarantee university admissions in June 2023.

Trump’s order “basically says companies have to comply with human rights laws on the books,” Turnbull said. Most companies don’t think they’re breaking any laws, he said.

One way companies have been preparing for the new administration is by adding directors who are part of Trump’s circle. Meta Platforms Inc., which recently dismantled many of its diversification efforts, added Trump ally and Ultimate Fighting Championship CEO Dana White to its board. Former Trump campaign adviser David J. Urban has joined the board of alternative energy company Eos Energy Enterprises Inc.

Anti-DEI activist Robby Starbuck, who has made a name for himself with online videos calling on companies to scrap DEI programs, said he has privately spoken to about 20 CEOs of public companies since the election, giving them advice on how to navigate DEI. and recently talked about the possibility of serving on the board of a large industrial company, which he declined to reveal. He said he also spoke with several Trump administration appointees about how to identify and eliminate DEI from their federal agencies, without giving names.

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Organized Confusion

Some conservative activist groups believe the confusion is part of Trump’s plan.

“How would you like to be on the center’s top five list of the worst actors in the industry?” said Jeremy Tedesco, senior vice president of corporate advocacy at the Alliance Defending Freedom, an activist group that pressures companies to abandon their diversity efforts. Tedesco said the ADF aims to help the government identify companies it believes are using the worst forms of DEI.

“DEI has become incredibly dangerous, in a very real sense,” he added. “We think the smart course for all of these companies is to voluntarily liquidate before the Justice Department comes knocking.”

It’s a threat that’s already very real to Dwayne Kwaysee Wright, assistant professor and director of DEI programs at George Washington University’s school of education and human development.

At every major company and university, the business advisor and chief financial officer ask themselves, “not ‘should I have these plans?’, but ‘can I protect you financially even if I want to have these plans?’,” he said. .

“I think the cooling effect is the point,” he said.

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