Trump's Anti-DEI Crusade Would Subject Private Employers to New State Harassment

They are staring at public naming-and-shaming campaigns, lawsuits, and worse going forward

(The UnPopulist illustration)

One of the central aims of President Trump’s so-called DEI executive order last month is to declare a many-sided legal war on “illegal DEI” at private employers. But what is illegal DEI? The question is more easily asked than answered. And that’s why many companies and other employers are in for a world of hurt under this administration.

There would probably be wide agreement on one instance of illegal DEI—namely, a company’s discriminating against a qualified candidate in hiring or promotion to make numbers come out in workforce demographics or simply to favor what the law calls a protected group. Discrimination and preferences of that sort have gone on openly for decades, in no small part because of the program of affirmative action for federal contractors introduced by the now-revoked Executive Order 11246 of 1965.

The Supreme Court seemed to countenance such preferences for many years, the language of the Civil Rights Act of 1964 notwithstanding. In theory, to be legally safe, companies were supposed to show that there was a manifest imbalance in their workforce, and if so were allowed to address it by such means as more vigorous outreach to some applicant groups. In practice, outright preferences were used in many workplaces, whether acknowledged or not. At any rate, recent decisions such as that in the Students for Fair Admissions case suggest that the court’s tolerance for so-called reverse discrimination has come to an end. So far, so straightforward.

But “illegal DEI” must mean more than that. For one thing, if discriminatory preferences were the whole game, the executive order could readily have used a more specific term, such as “illegal preferences.” Instead, it uses “illegal DEI,” sometimes adding variations on the word “discrimination.” What other kinds of DEI practices might it have in mind as discriminatory or otherwise illegal?

Here are three categories of employer practice by way of example:

• Employee trainings that get into questions of race or sex. What if white or male employees say these make them uncomfortable or guilty or singled out? Does it matter whether essentially similar sessions are couched as harassment and discrimination prevention, sensitivity training, or diversity training, or whether they draw on controversial concepts such as “implicit bias”?

• Changes in hiring practices that are not themselves based on race or sex, but could have proxy effects based on those. Some employers have revamped hiring methods to drop or alter standardized tests, remove college degree requirements, standardize interview questions, or lift bars on hiring ex-offenders. In each of these instances some employers have cited DEI motivations, while others have adopted the same changes for reasons unrelated to DEI or from a mix of motives. Does that matter? If so, how far will the administration go to delve into the motivation of employers?

• Many companies have either permitted or encouraged the formation of employee affinity groups for women, particular racial groups, gays, and so forth. Tangible business reasons for doing so may include improved recruitment (at historically Black or women’s colleges, for example), an early warning grapevine to identify claims of discrimination that otherwise might eventuate in lawsuits, and defenses against future claims that the company maintained a “hostile environment” toward a group. Legit or no? 

The Trump administration may in time hand down guidance about which of these practices it regards as unlawful discrimination, and given the mood of its conservative base it will probably challenge some instances. The law firm Littler Mendelson notes that “numerous high-profile advocacy groups are committed to publicly highlighting and calling for investigation of [DEI] programs they consider unlawful.” But for the most part, on the topic of what counts as discrimination, all the administration can offer are opinions, because it doesn’t get to decide what the Civil Rights Act of 1964 and other relevant statutes mean; the courts do.

As it happens, the courts have proved relatively tolerant of most of the practices listed above at private employers—even, for example, when conservative employees have claimed that workplace celebrations or obligatory trainings discriminated against them by being overly “woke” in content.

What raises the stakes in all this is that the executive order makes clear its intent to make life legally hot for employers that retain practices it sees as DEI-ish whether or not any courts have ruled those practices discriminatory.

Significantly, bounty-hunting private lawyers will be set loose under the False Claims Act to demand triple damages based on bills submitted to Washington by federal contractors accused of breaking the anti-DEI rules. This category of law, as I have previously written, allows freelance informers to accuse business or non-profit entities dealing with the government of fraud in billing, and then pocket a hefty share of the proceeds of a resulting judgment or settlement. To encourage suit-filing, the law awards treble or other multiple damages, attorney’s fees, stiff statutory damages, and other enhancers. In this case, informers can allege that some private or non-profit entity that holds federal contracts or receives federal grants has been engaging in improper DEI practices and should have to refund the contract moneys paid plus penalties. Claims under the FCA can pose bet-the-company legal uncertainties, which is one reason defendants may choose to settle them for cold cash even if they are relatively confident the law would come out eventually on their side. In short, private entities with federal contracts could face ruinous lawsuits if they deviate from whatever new demands anti-DEI forces may come up with.

There is more. Federal agencies will have to cooperate at regular intervals with higher-ups to identify practices suitable for enforcement action as well as “potential regulatory action and sub-regulatory guidance.” There will be investigations forced like seedlings in greenhouses: the order directs each agency to come up with a list of up to nine private sector employers proposed for investigation in its sector. Public shaming will probably be part of the list strategy as well. The law firm Seyfarth Shaw observes:

Notably, [the report identifying private-sector enforcement targets] is to be submitted to the Assistant to the President for Domestic Policy, one of the most senior White House policy positions responsible for coordinating domestic policy across the federal government. The involvement of such a senior White House official, rather than leaving enforcement solely up to agency discretion, signals that the administration intends to maintain direct oversight of enforcement efforts against major private sector organizations’ DEI programs. This high-level attention from the White House suggests we can expect aggressive and coordinated enforcement actions once targets are identified.

The White House involvement is of significance for a wider reason as well, as recounted by law professor and former federal official Samuel Bagenstos: 

After Nixon’s abuses … President Ford’s Attorney General Edward Levi established a norm keeping the White House out of decisions about which people and entities should be the target of federal enforcement.  Although that norm may have been breached in particular cases, it has largely stood–and served as an important protection against the abusive weaponization of government’s coercive tools against those who oppose the party in power. …

The new EO drops a 2,000-pound bomb on that norm.  It orders the Attorney General to provide the Domestic Policy Advisor–one of the highest ranking officials in the White House–with a list of enforcement targets.

Many of the practices likely to come under attack by the Trump administration, it should be noted, were themselves adopted for business reasons—often specifically on the advice of compliance officers and lawyers. Indeed, it is typical for DEI offices at companies to have grown up from a core of compliance functions. Companies engage in aggressive harassment training not just because progressives talk them into it but because courts penalize them in harassment suits if they don’t do it. Likewise for gestures toward being a more welcoming employer of minorities, which can mitigate damages in case of future discrimination claims.

None of the underlying civil rights statutes have been repealed, which means employers are just as exposed as ever to large payouts from conventional lawsuits claiming discrimination against minorities or a hostile environment for women. They can therefore risk getting sued up one side of the street and down the other—sued if talk in the workplace makes some women uncomfortable, but also sued if they resort to training to discourage that and it makes some males uncomfortable. As practices that were mandatory last month become forbidden and vice versa, the right will get to muscle in on cancellation mob leverage we’ve already seen coming from the other direction. Are we sure this is progress?

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One last thing from the editors…

Trump, in the American right’s own words, is now the “daddy” of the country in more ways than one. From Lauren Boebert to Charlie Kirk, Republicans have gleefully rejoiced that their “daddy” is now in the White House. But as senior producer Landry Ayres points out, beyond infantilizing the nation, this characterization actually captures a core truth: Trump’s patrimonial style of governance ensures protections and privileges to connected friends and family. It is naked nepotism.

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On Monday, we published Andy Craig’s very well-received essay, “Elon Musk Has Appointed Himself Dictator of America.” After publishing, news broke that the White House has made Elon Musk a “special government employee.” We have updated the piece with a new section that substantively addresses this development. Read it here:

Elon Musk Has Appointed Himself Dictator of America

An earlier version of this article first appeared on Cato Institute’s Cato at Liberty blog.

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