By: Eva Zelson
On: March 4, 2025
The Legal Risks of Cutting DEI Programs
Since the Supreme Court’s decision in the Students for Fair Admission (SFFA) v. Harvard in June 2023 and the latest executive order from the White House on Wasteful Government DEI Programs and Preferencing enacted on January 20, 2025, a significant influx of anti-DEI lawsuits appeared in the courts. Many companies have cited political pressure, economic uncertainty, and rising costs as the driving force to eradicate their DEI initiatives to potentially minimize the risk of litigation. While others fear such actions may have the opposite effect.
However, cutting DEI programs can increase legal risks instead of reducing them. According to Jason Solomon, director of the National Institute for Workers’ Rights, “Without these tools, companies are more likely to overlook inequities and face increased legal risks.” (Dungan). Employers must understand the consequences of diminishing workplace diversity programs to avoid unintended legal and reputational damage.
Understanding DEI Initiatives and Key Anti-Discrimination Laws
The acronym DEI stands for diversity, equality, and inclusion. DEI initiatives aim to create fair and inclusive workplaces by promoting equal opportunities, unbiased hiring, and equitable policies. These DEI programs ensure compliance with anti-discrimination laws while fostering a positive work culture.
DEI programs in the workplace encompass a large spectrum of applications and practices. The focus of these DEI programs can vary between entities, as they can emphasize diversifying personnel, create fairness in policies and procedures, and promote a more inclusive culture among employees.
While DEI programs are not federally mandated, they must align with federal, state, and local anti-discrimination laws, including:
- Title VII of the Civil Rights Act of 1964 – Prohibits workplace discrimination based on race, color, religion, sex, or national origin.
- Equal Protection Clause – Ensures equal protection of the laws to anyone within their jurisdiction.
- Americans with Disabilities Act (ADA) – prohibits discrimination against people with disabilities.
- Equal Pay Act – Prohibits paying men and women competing for the same work different wages.
- 42 U.S. Code §1981 (Section 1981) – Prohibits racial discrimination in the making and/or the enforcement of employment contracts.
Employers who reduce or eliminate their DEI strategies risk non-compliance with these laws, increasing their vulnerability to lawsuits.
Why Are Companies Scaling Back DEI Programs?
Although DEI policies have been in place for decades, recent legal and political shifts have led some companies to reduce their diversity efforts. A pivotal moment for DEI programs came after the Geoge Floyd murder in 2020 as Taylor Telford wrote in The Washington Post, “companies made big pledges about racial equity, hiring teams dedicated to diversity, equity and inclusion.” (Telford). Key reasons include:
- Political and legal challenges – The SFFA v. Harvard ruling restricted race-conscious policies, leading businesses to rethink their DEI commitments.
In June of 2023, DEI programs suffered a significant blow in the ruling from Students for Fair Admission (SFFA) v. Harvard. The landmark decision set unprecedented restrictions on considering race in the college admissions process. In a 6-3 ruling, all six members from the Supreme Court’s conservative wing, found that Harvard’s and UNC’s admissions programs violated the Equal Protection Clause of the 14th Amendment. (Caldera et al.)
- Government intervention – The 2025 executive order ordered the termination of federal diversity and inclusion programs, influencing corporate decisions.
The executive order from January 20, 2025 called for the immediate dismissal of DEI programming within the federal government. According to the order, the White House called for “terminate, to the maximum extent allowed by law, all DEI, DEIA, and “environmental justice” offices and positions.”
- Economic uncertainty – Budget cuts and cost-saving measures have led some employers to deprioritize DEI efforts.
(“Ending Radical And Wasteful Government DEI Programs And Preferencing”) On the following day the Whitehouse issued a second presidential order where the president stated, “critical and influential institutions of American society, including the Federal Government, major corporations, financial institutions, the medical industry, large commercial airlines, law enforcement agencies, and institutions of higher education have adopted and actively use dangerous, demeaning, and immoral race- and sex-based preferences under the guise of so-called ‘diversity, equity, and inclusion’.”(“Ending Illegal Discrimination And Restoring Merit-Based Opportunity”).
This sudden shift in the views and opinions of our political system has sent many prominent and major corporations and businesses scaling back and even abandoning their DEI programs.
Legal and Financial Risks of Reducing DEI Initiatives
Scaling back DEI programs can create significant legal, financial, and reputational risks. Potential consequences include:
- Increased discrimination claims – A lack of DEI training and policies may lead to bias-related lawsuits.
- Weakened legal defense – Companies without DEI frameworks may struggle to prove non-discriminatory practices in court.
- Damage to company reputation – Consumers and employees increasingly value inclusivity; reducing DEI efforts can lead to public backlash.
- Lower employee morale and retention – A lack of diversity efforts can decrease job satisfaction, reducing productivity and increasing turnover.
With the tumultuous climate surrounding DEI programs, many corporate leaders and business owners are failing to see the potential ramifications and risks in operating with menial DEI initiatives in place.
How to Maintain DEI Compliance and Reduce Legal Risk
Employers can protect their businesses while staying compliant with anti-discrimination laws by consulting attorneys who specialize in employment discrimination law and implementing these best practices:
- Regularly review DEI policies – Ensure they align with evolving legal standards and company goals.
- Provide anti-discrimination training – Educate employees on bias prevention and equal opportunity.
- Maintain transparent hiring and promotion processes – Use structured criteria to prevent unconscious bias.
- Establish a DEI task force – Monitor workplace diversity efforts and address concerns proactively.
- Consult legal experts – Seek guidance from employment law professionals to navigate DEI-related risks.
By maintaining equity-focused workplace programs, businesses can protect themselves from legal challenges while promoting a more inclusive workforce.
Protect Your Business with Experts in DEI Initiatives
At Zeff Law Firm, we understand the importance of diversity, equity, and inclusion in the workplace. With 30 years of professional employment law and civil rights advocacy experience, our team of experts can assist you through the latest myriad of DEI controversies. If you have concerns your enterprise is not providing the best environment or procedures for your employees, contact our team of employment law attorneys for your free consultation.