The fiduciary case for DEI

Corporate Diversity, Equity, and Inclusion initiatives are not just about social responsibility. They're also about business performance.

Studies from McKinsey and others have consistently shown that diverse teams drive innovation, enhance risk mitigation, improve decision-making, and ultimately deliver stronger revenue and profits. Indeed, according to McKinsey, companies in the top quartile for gender or ethnic diversity on executive teams are 39% more likely to outperform their peers financially compared to those in the bottom quartile, while those that rank in the top quartile for both are, on average, 9% more likely to outperform their peers. Conversely, companies in the bottom quartile for both are 66% less likely to achieve above-average profitability. 

In other words, diversity = profits.

DEI-washing

Verizon just made headlines — by eliminating its entire DEI program. In a memo to the FCC, the company announced sweeping changes:

NO DEI roles or departments

NO DEI references in training materials

NO demographic hiring goals

NO supplier diversity benchmarks

NO scholarships or internships targeted at underrepresented groups

NO diversity-focused recognition surveys.

NO mention of “diversity, equity, or inclusion” on its website or in recruiting materials

NO mention of “diversity, equity, or inclusion” in recruiting materials

And yet, despite this full-scale rollback, Verizon insists it remains "committed to … an inclusive culture."

Let me be very, very clear: You cannot claim to support inclusion while dismantling every tool you've built to achieve it. That's like closing your fire department while saying you're committed to fire safety.

Understanding the difference between legal and illegal DEI

If you want to understand the difference between legal and illegal DEI, here's what illegal looks like.

From The Hollywood Reporter: "CBS Studios has settled a lawsuit from a script coordinator for SEAL Team, who accused parent company Paramount of carrying illegal diversity quotas that discriminate against straight white men."

In the lawsuit, Brian Beneker alleged he was denied a job after Paramount implemented an "illegal policy of race and sex balancing" that prioritized hiring less qualified applicants who identified as minorities, LGBTQ+, or women.

Here's the legal reality — Quotas and preferences based on protected characteristics are unlawful. Title VII requires that employers hire the most qualified person for the job, regardless of race, sex, or any other protected trait.

But what if you want to improve representation of marginalized groups in your workplace, and do it legally?

EEOC issues guidance on "DEI-related discrimination," but doesn't bother to define it

What is "DEI-related discrimination at work?" No one knows, including the EEOC.

Late yesterday, the EEOC released two new policy documents aimed at eliminating "unlawful DEI" in the workplace: What You Should Know About DEI-Related Discrimination at Work and What To Do If You Experience Discrimination Related to DEI at Work (the latter even available as a poster-sized PDF).

The most revealing line appears in the opening sentence of the "What You Should Know" document: 

"Diversity, Equity, and Inclusion (DEI) is a broad term that is not defined in Title VII of the Civil Rights Act of 1964."

Of course it's undefined, because DEI is not illegal.

WIRTW #750: the 'rule of law' edition

This news should alarm any rational lawyer. Donald Trump has issued an Executive Order punishing Perkins Coie, the law firm that represented Hillary Clinton's 2016 campaign.

The EO does the following:

• Directs federal agencies to identify and terminate, where legally permissible, contracts with Perkins Coie.
• Requires government contractors to disclose any business dealings with the firm.
• Mandates the suspension of any active security clearances held by individuals at Perkins Coie.
• Instructs the EEOC to review the diversity, equity, and inclusion practices of major law firms, including Perkins Coie, to ensure compliance with Title VII of the Civil Rights Act.
• Limits official access to federal government buildings for Perkins Coie employees.
• Advises government employees to restrict official engagements with Perkins Coie or its attorneys.

"This is an absolute honor to sign," Trump said from the Oval Office. I call it a horror show.

In response, the firm says that the EO "is patently unlawful, and we intend to challenge it."

Lawyers and law firms should never fear persecution from the President of the United States for simply doing their jobs. The rule of law depends on attorneys being able to zealously represent their clients—whether they are Democrats, Republicans, corporations, or individuals—without political retribution. A functioning democracy requires an independent legal profession, free from government intimidation. If lawyers can be punished for representing disfavored clients, our entire justice system, our rule of law, and our very Constitution are all at risk.

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Here's what I read this week that you should read, too.

Will SCOTUS heighten the evidentiary burden for plaintiffs in "reverse discrimination" cases?

Yesterday, the Supreme Court heard oral arguments in the case of Marlean Ames, a straight woman who sued the Department of Youth Services for sex discrimination under Title VII. She alleged that she was passed over for a promotion, then demoted, and that a gay man was subsequently promoted into her former position—all due to her sexual orientation (straight).

Ames claimed sex discrimination, but the 6th Circuit disagreed, ruling that she failed to establish the "'background circumstances' to support the suspicion that the defendant is that unusual employer who discriminates against the majority."

What are these "background circumstances"? According to the 6th Circuit, plaintiffs typically prove this with evidence that a member of the relevant minority group (here, gay individuals) made the employment decision at issue or with statistical evidence demonstrating a pattern of discrimination against the majority group. Ames lost because she provided neither.

And that's the issue SCOTUS will decide—does "discrimination" under Title VII mean discrimination regardless of majority or minority status, or does it take on a different meaning when the claim comes from a member of the majority class? Does a member of the majority class have to show something "more" to establish discrimination.

The attack on DEI does not mean employers must or should eliminate anti-harassment training

Even as some push back forcefully against DEI workplace initiatives, courts are pushing back even harder. Consider these excerpts from Diemert v. City of Seattle, in which a federal judge dismissed the claims of a white man who alleged that his employer's mandatory DEI training created a racially hostile work environment.

How to respond to the Justice Department's DEI hitlist

"The Department of Justice's Civil Rights Division will investigate, eliminate, and penalize illegal DEI and DEIA preferences, mandates, policies, programs, and activities in the private sector." 

 

That's the key sentence from a Feb. 5, 2025, memo that Attorney General Pam Bondi sent to all DOJ employees.

What does it mean? No one really knows. What we do know is that diversity, equity, inclusion, and accessibility are top priorities for this administration. The key question is how the administration defines "illegal."

Here's what we can infer so far:

What hiring and employment look like without DEI

What does a country without DEI look like? Some people say that's what they want. No more diversity, equity, and inclusion initiatives in hiring or the workplace. Just a pure "meritocracy."

So what does that actually look like?

Is Trump coming after Title VII next?

"Dad, did Trump just get rid of workplace discrimination laws?" That's the question my daughter asked me yesterday.

She was referring to his Executive Order entitled, Ending Illegal Discrimination and Restoring Merit Based Opportunity.

To answer Norah's question, no, that EO did not get rid of workplace discrimination laws. Instead, it dismantled federal Diversity, Equity, and Inclusion programs and placed all federal DEI employees on unpaid leave. It also rescinded Executive Order 11246, originally signed by President Lyndon Johnson in 1965, which prohibited federal contractors from discriminating based on race, color, religion, sex, or national origin, and further removing their affirmative action obligations in that regard.

Costco's masterclass on responding to DEI backlash

It's not easy to stand firm in today's polarized world, but Costco just showed everyone how it's done.

Recently, Costco's board rejected a shareholder proposal aimed at rolling back its DEI (diversity, equity, and inclusion) initiatives. Instead, the company doubled down on its commitment to making its workplaces inclusive and equitable.

In a statement, the retail giant wrote: "Our Board has considered this proposal and believes that our commitment to an enterprise rooted in respect and inclusion is appropriate and necessary. Our success has been built on service to our critical stakeholders: employees, members and suppliers. Our efforts around diversity, equity and inclusion follow our code of ethics."

Predictably, the backlash came fast, with calls for a boycott from some corners. Unlike many other companies, however, Costco didn't buckle under the pressure of a right-wing boycott. Instead, it stood its ground for what it believes in.

SCOTUS to weigh in on the burden of proof in "reverse" discrimination cases

The purpose of our workplace discrimination laws is to ensure that all employees are treated equally, right? Maybe … but maybe not.

Next term, the Supreme Court will hear the appeal of Marlean Ames, a straight woman who sued the Department of Youth Services for sex discrimination under Title VII. She claimed she was discriminated against her because of her sexual orientation, alleging that she was passed over for a promotion, demoted, and that a gay man was then promoted into her former position.

Ames claimed sex discrimination, but the 6th Circuit disagreed, citing her failure to establish the necessary "background circumstances."

What are the "background circumstances" needed to show that an employer is among the small subset that discriminates against the majority? According to the 6th Circuit, "Plaintiffs typically make that showing with evidence that a member of the relevant minority group (here, gay people) made the employment decision at issue, or with statistical evidence showing a pattern of discrimination by the employer against members of the majority group." Ames lost because she showed neither.

"DEI hire" is the new N-word.

After President Biden dropped out of the 2024 campaign and elevated his Vice President, Kamala Harris, as the presumptive Democratic nominee, supporters of Donald Trump started attacking her as a "DEI hire."

For example, during an interview with CNN’s Manu Raju, Republican Rep. Tim Burchett said this: "100 percent, she was a DEI hire." He's not only one pushing this narrative.

When one person calls another a "DEI hire," they mean they are unqualified, unskilled, and hired only because of their race. They say it because they cannot say publicly what they really want to say. 

Refusing to participate in mandatory training isn't "protected activity," it's insubordination

"I am not taking this training because it's a joke … making non-white colleagues all victims and turning white colleagues … into villains."

That's what Charles Vavra wrote in an email to the HR Director of Honeywell International, his now former employer, after she had reminded him of the company's requirement that he complete its unconscious bias training.

Over the next few weeks, the HR Director and other company officers tried to convince Vavra to complete the training. Vavra's response? "Whatever the consequences … I will accept." The consequences were Vavra's termination.

Vavra had a strange way of showing his acceptance of those consequences. He sued Honeywell for retaliation, claiming that his opposition to mandatory DEI training constituted protected activity under Title VII.

Must you accommodation an employee's religion not to attend DEI training? Believe it or not, it might depend on the training.

"Your respectful workplace training is against my religion; count me out."

That's what one employee told his employer when it tried to compel him to attend its mandatory training about treating all with courtesy and respect.

When the employee learned that one module of the training would include LGBTQI+ issues, he explained to his employer, "This subject matter contradicts my sincerely held religious beliefs." He advised that he would excuse himself during that portion of the training.

Does DEI training create a hostile work environment?

"You can't force me to sit through DEI training! I'm White. It creates a racially hostile work environment."

That's what one employee recently argued in a racial harassment lawsuit he filed against his employer, a state department of corrections, which had mandated DEI training for all employees.

The 10th Circuit Court of Appeals affirmed the dismissal of this lawsuit, concluding that this training could not constitute a hostile work environment because it only occurred one and lacked any race-based ridicule or insults.

But all is not roses for employers and their efforts to offer DEI training to better their workplaces. 

“DEI” is not a 4-letter word

"DEI" is not a 4-letter word … no matter what some people want you to believe.

Companies such as Sherwin-Williams are scrapping their internal use of the words "Diversity," "Equity," and "Inclusion," and are replacing them with words such as "Belonging" and "Culture."

A DEI smackdown

It's a DEI heavyweight battle of epic proportions that played out of X over the past week.

In the blue corner, hailing from Big D, the owner of the Dallas Mavericks and serial entrepreneur Mark Cuban: 

I've never hired anyone based exclusively on race, gender, religion. I only ever hire the person that will put my business in the best position to succeed. And yes, race and gender can be part of the equation. I view diversity as a competitive advantage.

And in the red corner, hailing from our nation's capital, EEOC Commissioner Andrea Lucas: 

Unfortunately you’re dead wrong on black-letter Title VII law. As a general rule, race/sex can't even be a "motivating factor" — nor a plus factor, tie-breaker, or tipping point.… This isn't an opinion; reasonable minds can't disagree on this point. It's the plain text of Title VII.

DEI programs continue to be a lawsuit target

Major League Baseball. NASCAR. Starbucks. McDonald’s. Morgan Stanley, American, United and Southwest Airlines. America First Legal, a conservative group led by Stephen Miller, has targeted each of these for their “illegal” practices of hiring non-Whites and females.

In its most recent letter to the EEOC, urging it to investigate American Airlines, AFL cited the following as evidence of “unlawful employment practices” —

Despite what SCOTUS said about collegiate affirmative action, corporate DEI efforts are still legal

Last week, a federal court judge dismissed a lawsuit filed by a conservative shareholder against Starbucks challenging the company's diversity, equity, and inclusion policies. He called the lawsuit "frivolous."

In 2020, Starbucks decided that it needed a greater representation of BIPOC (Black, Indigenous, People of Color) employees. As a result, it announced a policy that aimed to increase company-wide BIPOC representation to at least 30% in five years. Its efforts included implementing a leadership accelerator program for BIPOC employees, linking executive compensation to meeting DEI goals, and granting funds to community nonprofits.

National Center for Public Policy Research, which owns around $6,000 in Starbucks stock, sued, claiming those policies require the company to make race-based decisions in violation of state and federal civil rights laws. Explaining the lawsuit, the NCPPR said that setting "goals for the number of 'diverse'—meaning not-white—employees it hires … is outright racial discrimination."