If there was any question about the future of corporate diversity, equity, and inclusion programs following the 2023 U.S. Supreme Court ruling ending affirmative action in higher education, the Trump administration has put an end to those questions. Programs once considered a sign of corporate responsibility are now referred to as “illegal DEI.” In May, the Justice Department announced a new civil rights fraud initiative that will use prosecutors, whistleblowers, and the federal False Claims Act to go after companies that take advantage of racial or ethnic preferences to receive federal funds. And the FCA has teeth, with penalties including treble damages.
reversal of justice
“The administration, especially the Department of Justice, has been emphasizing its focus on ‘secret DEI’ policies, policies that have changed in name but not in substance,” said Austin Evers, a partner at Freshfields in Washington and a former deputy attorney general in the Biden administration. “If you make changes to your website, you'll need to work to adjust how you address these issues internally. Make sure your internals and externals are aligned.”
Of course, more than half a century of employment discrimination laws are still in place. Therefore, corporate human resources managers, and ultimately the directors who oversee them, must walk a careful line between what was previously considered legal and what the Trump administration now considers illegal. Explicit racial and ethnic quotas are always a stretch, but what about programs designed to address disparities in how minorities are hired and promoted?
Answer: It's complicated.
Companies should review existing DEI programs at the board level and ensure they comply with the Trump administration's discrimination guidelines and federal certifications and compliance documents. “Unlawful DEI” is an impossibly vague term, but the Equal Employment Opportunity Commission said in March that “unlawful DEI” includes “any employment action motivated, in whole or in part, by race, sex, or other protected characteristic.” Mentoring and networking groups restricted to people of a particular racial or ethnic background are likely obsolete.
The world of whistleblowing
It's also a good idea for management to look at social media to identify potential problems, such as employees complaining about reverse discrimination. Not only is the administration actively recruiting whistleblowers who will receive bounties for successful FCA cases, but there are cameras everywhere. In June, a University of North Carolina employee was caught on video saying, “The word of the year is 'finesse.'”
“If you’re looking for DEI external status, it’s not going to happen,” the employee said in a hidden camera video shot by Accuracy in Media. “But if you're interested in secret work, there are opportunities.”
That employee no longer works at UNC. But companies must do everything they can to avoid the same embarrassment and potential criminal penalties that come with submitting false DEI documents to the government. The Civil Rights Fraud Initiative will appoint attorneys in each of the nation's 93 federal prosecutor's offices to investigate cases and work with whistleblowers and other agencies to bring FCA cases.
Multinational companies face even greater risks. The Trump administration's anti-DEI push could conflict with rules in some U.S. states, as well as the European Union and Canada. Companies need to create and “surround” U.S. policies to avoid violating international standards, Evers said.
“There is a clutter of competing and sometimes contradictory laws, and governments are placing the burden of compliance on businesses,” he says.
