Navigating DEI Compliance: Key Considerations for Businesses

By: Hilary Holmes Rheaume, David Farmer & Dhivya Singaram

Executive action taken by President Trump and ongoing judicial review has created an environment of uncertainty and unpredictability in both the public and private sectors regarding initiatives intended to diversify the workplace.

In January 2025, President Trump issued multiple executive orders (EOs) that impact Diversity, Equity, and Inclusion (DEI) initiatives, including those at private employers.

A federal court has issued a preliminary injunction against certain provisions, creating a complex and uncertain legal environment. While parts of the EOs are temporarily unenforceable, enforcement agencies, individuals, or third-party organizations may still bring claims or pursue investigations on what they consider to be “illegal” DEI initiatives.

One of the biggest challenges for businesses is that the term “illegal DEI” has not been defined, making it difficult for employers to determine the legal implications on their activities. It is crucial to stay informed of any guidance, decisions, and legal updates on the issue.

While this is not definitive, a Department of Justice (DOJ) memo from February 2025, titled “Ending Illegal DEI and DEIA Discrimination and Preferences,” states the DOJ will “investigate, eliminate, and penalize illegal DEI and Diversity, Equity, Inclusion, and Accessibility (DEIA) preferences, mandates, policies, programs, and activities in the private sector and in educational institutions that receive federal funds.”

This memo addresses programs, initiatives, or policies that “discriminate, exclude, or divide individuals based on race or sex.” It clarifies that it does not prohibit “educational, cultural, or historical observances . . . that celebrate diversity, recognize historical contributions, and promote awareness without engaging in exclusion of discrimination.”

Compliance Strategies for Private Employers
Though much remains uncertain, private employers can take the following steps to support compliance and commitment to DEI initiatives.

    1. Determine your stance. Engage stakeholders to define your stance on DEI, considering your values and risk tolerance. While the authority to mandate that private employers abandon DEI initiatives is uncertain, the executive orders suggest potential legal actions may be taken against private employers. Some employers are backing away from DEIA altogether, others are adjusting their DEIA initiatives, and some are doubling down on their commitments to DEIA.

    2. Review your policies and practices. Consider what changes to make, if any, to DEIA initiatives so that they align with your stance, values, and risk tolerance. This should include a review of at least your policies, practices, and initiatives, employee handbooks, website, and funding.  Additionally, review whether you have any quotas, set-asides, and/or preferences in the employment context.

    3. Ensure compliance with existing laws. Tailor existing policies or practices to avoid taking employment actions based solely or explicitly on race, sex, or other protected characteristics.

    4. Prepare communications. A businesses’ decision on their DEI initiatives, especially if there are significant changes, will impact various stakeholders, which could range from employees to clients to board members to broader community perception. It is wise to prepare internal and external statements and get leadership alignment, which may be nuanced by stakeholder. Given the legal considerations and importance of having a sound communications strategy to understand outcomes of any statements, our Crisis Management & Public Relations team can advise.

     5. Monitor legal developments. Stay informed about ongoing legal challenges and enforcement of the EOs to anticipate and respond to changes.

Navigating DEI compliance in this evolving landscape requires staying informed, planning proactively, and having a sound communications and stakeholder engagement strategy. The Labor and Employment team at Bernstein Shur is closely monitoring the issue and is dedicated to supporting employers navigate these changes.

For further guidance from our Labor and Employment attorneys, please contact Hilary Rheaume or Dhivya Singaram. If you seek consult on stakeholder communications, contact David Farmer, Managing Director of the firm’s Crisis Communications & Public Relations group, at dfarmer@bernsteinshur.com.