Finance
Analysis-Despite Trump order, abandoning DEI could land companies in legal trouble
Published by Global Banking & Finance Review®
Posted on January 24, 2025
5 min readLast updated: January 27, 2026
Global Banking & Finance Review®
Company
Published by Global Banking & Finance Review®
Posted on January 24, 2025
5 min readLast updated: January 27, 2026
Companies reducing DEI efforts due to Trump's order risk more discrimination lawsuits. DEI policies help comply with anti-discrimination laws.
By Daniel Wiessner
(Reuters) - U.S. companies that scale back workplace diversity efforts to avoid scrutiny from the Trump administration may be exposing themselves to more discrimination lawsuits by workers, experts said.
President Donald Trump this week issued a sweeping executive order directing federal agencies to terminate diversity, equity and inclusion programs and encouraging private companies to do the same. Trump ordered all agencies to identify potential targets for civil investigations, who could then be subjected to legal action.
Some companies have already ended or scaled back DEI initiatives in response to conservative backlash, legal threats, and Trump's November election victory, and more are expected to follow suit.
But many common corporate policies that fall under the DEI umbrella, such as auditing pay practices, requiring diverse pools of job candidates, and ensuring that promotions are awarded fairly are crucial tools for employers to ensure compliance with state and federal laws banning workplace discrimination, lawyers and other experts said.
“When companies are sued by women or people of color and they're held liable for discrimination ... the Trump administration can't save them and nothing in this executive order can save them," said Jason Solomon, director of the National Institute for Workers' Rights, a left-leaning think tank.
To be sure, some lawyers who represent companies and critics of diversity programs pushed back on the claim that DEI is critical to complying with employment laws, saying diversity initiatives were just as likely to cause discrimination as to prevent it.
"It comes down to making personnel decisions for legitimate, non-discriminatory business-related reasons. That is the best balancing factor there can be," said Gerald Maatman, a Chicago-based lawyer who defends companies in discrimination cases and class actions.
DEI policies became more widespread after nationwide protests in 2020 of police killings of unarmed Black people, spurring a conservative backlash and an increase in the number of "reverse discrimination" lawsuits mostly by white, male and heterosexual workers.
But those cases are far outnumbered by the thousands of more traditional discrimination lawsuits filed in state and federal courts each year. And getting rid of diversity and equity policies could lead companies to inadvertently violate anti-discrimination laws and invite more scrutiny from workers and their lawyers, experts said.
Scaling back recruiting efforts for diverse job candidates, for example, could lead to claims that women, people of color or LGBTQ people were not considered for jobs and promotions. Employers who stop conducting comprehensive pay audits may not be aware of discrepancies, such as gaps in pay for men and women, that could trigger lawsuits.
A federal law, Title VII of the Civil Rights Act of 1964, prohibits employment discrimination based on race, sex, religion, color and national origin, and other laws ban pregnancy and disability discrimination. Every U.S. state has comparable laws, though they vary in scope.
The U.S. Equal Employment Opportunity Commission, which enforces federal anti-discrimination laws, received more than 81,000 discrimination complaints in 2023, and state and local agencies that year received about 50,000 more. In most cases, workers must file complaints with those agencies before suing in court.
'EVIDENCE OF ANIMUS'
Companies often agree to implement DEI-style policies in order to settle claims that they engaged in widespread discrimination. Goldman Sachs in 2023 said it would review its pay and performance evaluation processes and address any issues as part of a $215 million settlement of a pay discrimination case by female employees.
Delivery company DHL last year said it would adopt policies to ensure that work assignments are not based on race in settling the EEOC's claims that Black DHL employees were given more dangerous and physically demanding jobs. And in 2020, insurance company Jackson National agreed to begin rating managers on their compliance with anti-discrimination laws and equal employment policies to settle a sprawling discrimination lawsuit.
Goldman Sachs, DHL and Jackson National, which denied wrongdoing in those cases, declined to comment.
Companies' abandonment of DEI policies could also be cited in future lawsuits as evidence of animus against certain groups of workers, and deprive employers of the ability to defend against discrimination claims by pointing to their policies and training programs, lawyers said.
Solomon cited the example of Meta, which recently eliminated some DEI programs and whose CEO, Mark Zuckerberg, said on a podcast earlier this month that “a lot of the corporate world is pretty culturally neutered" and companies needed more “masculine energy” within their work forces.
Zuckerberg's comments do not violate any laws, but a woman suing Meta for sex discrimination would likely seize on them and the company's retrenchment on DEI as evidence that it favors men, Solomon said.
Meta did not respond to a request for comment. (This story has been refiled to change reference to 'discrimination' from 'bias' in paragraphs 4, 7, 9, 11, 12, 14 and 18)
(Reporting by Daniel Wiessner in Albany, New York, Nate Raymond in Boston, and Tom Hals in Wilmington, Delaware, Editing by Alexia Garamfalvi and Alistair Bell)
The article discusses the legal risks companies face when scaling back DEI efforts following Trump's executive order.
DEI policies help companies comply with state and federal anti-discrimination laws, reducing the risk of lawsuits.
These are lawsuits filed mostly by white, male, and heterosexual workers claiming discrimination due to diversity initiatives.
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