Illegal DEI? Understanding Compliance, Risk, and the Real Focus of Enforcement

In the past year, workplace diversity, equity, and inclusion (DEI) programs have attracted heightened attention from federal agencies. For some employers, this scrutiny has sparked confusion. As the Equal Employment Opportunity Commission (EEOC) sharpens its focus on DEI, the agency is making the rounds to educate and inform employers of the EEOC’s current approach to enforcement.

The corporate relationship with diversity, equity, and inclusion is a nuanced one. Most organizations genuinely aim to do the right thing: recruit the best candidate for the role, consider a broad range of factors beyond technical skills, and retain high-quality talent. Historically, employers have pursued these objectives through a variety of tools, ranging from considering whether diverse backgrounds enrich organizational viewpoints to creating affinity or employee resource groups to foster engagement and improve retention. However, according to Andrea Lucas, EEOC Chair, some of these initiatives have become focal points for enforcement and certain practices, even when well-intentioned, may cross into the territory of unlawful discrimination if they involve decisions or opportunities based on race, sex, or other protected characteristics.

Defining the Issue: It’s Not About the Name

In a wide ranging interview, Lucas touched on several topics that employers would be wise to consider. Employers should not assume that simply changing the name of a program reduces risk. Whether you call it DEI, belonging, inclusive leadership, or any other title, the real question is: does the program involve actions that violate longstanding civil rights laws? Emphasizing recent Supreme Court rulings, the EEOC rejects any effort to inject a “diversity exception” to law prohibiting discrimination based on race or sex.

The practical takeaway: if a program’s criteria, selection processes, or opportunities are determined by protected characteristics such as race or sex, that’s a compliance red flag.

Labels Don’t Protect You

Federal agencies aren’t looking at titles first — they’re looking at the substance of what your program does. Changing the wording without changing the structure is cosmetic; it does not reduce liability. Investigators can compare current practices with past ones, even using archived versions of your website. If the substance is unchanged, the risk remains. Indeed, Lucas explained in an interview with Reuters that the EEOC will look behind the labels to determine whether an employer’s practices are compliant, including using web archive tools to evaluate whether companies have changed their policies or whether they have simply changed how they talk about DEI, saying such a practice is akin to “rearranging the deck chairs on the Titanic.” Likewise, the EEOC’s focus is not on whether an employer used the DEI label for certain programs; so long as that program is compliant, the EEOC will not find fault that the label had been previously used.

Where Are Employers Now?

From a compliance perspective, the employer community falls into three broad camps:

Double-Down Activists
- These organizations are maintaining or expanding identity-based programs, with little regard for the legal risk.
- They face the highest exposure if their initiatives involve unlawful discrimination.
Cosmetic Changers
- Employers who have rebranded or lightly tweaked programs but kept their substance largely the same.
- This approach signals change for the sake of optics, without genuine risk reduction. Liability likely remains.
Good-Faith Reformers
- Organizations actively revising programs to align with civil rights law, removing any criteria based on protected characteristics, and focusing on lawful paths to inclusion.
- This group is engaging constructively with enforcement agencies and, in some cases, resolving matters without litigation.

What Employers Should Do Now

If you lead a business or HR function, here are action steps to protect against unlawful discrimination claims in this context:

Audit existing programs with experienced employment counsel.
Remove eligibility criteria tied to protected characteristics like race, sex, or age.
Focus on lawful inclusion strategies — such as broadening talent pipelines through skills-based recruiting, mentoring open to all, and addressing structural barriers impacting the entire workforce.
Train leaders and managers on civil rights compliance and the limits of lawful affirmative outreach.
Document reforms to show genuine, substantive change.

As employers move into this new enforcement landscape, it is helpful to remember that the enforcement focus is not on “DEI” as a concept — it’s on unlawful discrimination, whatever the label. Employers who take compliance seriously, and act to reform programs accordingly, will be best positioned to preserve inclusion efforts without inviting legal risk.

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