The EEOC has changed its rules on DEI. Here’s what employers need to know

This past March the Equal Employment Opportunity Commission (EEOC), following a previously issued executive order by the Trump administration on “illegal discrimination and restoring merit-based opportunity,” issued new guidelines for employers regarding their diversity, equity and inclusion (DEI) policies.

“Far too many employers defend certain types of race or sex preferences as good, provided they are motivated by business interests in ‘diversity, equity, or inclusion.’ But no matter an employer’s motive, there is no ‘good,’ or even acceptable, race or sex discrimination,” said EEOC Acting Chair Andrea Lucas in a statement.

Are you in compliance?

The biggest takeaway for employers is that the federal government will look closely at any policies that discriminate against any favored group over merit and that could potentially violate Title VII of the Civil Rights Act of 1964, which prohibits employment discrimination based on race, color, religion, sex (including pregnancy, sexual orientation, and gender identity), and national origin. Employers could be in trouble if they use quotas as well as race, sex or other protected traits in their hiring decisions, or favor such groups in internal programs, such as offering grants, special incentives, mentorships or fellowships.

The EEOC's guidance is not new law, but more of a technical assistance document that serves to interpret existing laws in effect. So how should companies be handling DEI policies now? Here are a few thoughts.

For starters, know that your company’s DEI policy is still legal. It just needs to be compliant.

Sonal Shah, assistant director of employment law services at HR Source, a human resources association for employers based in Downers Grove, says there is “no blanket prohibition” against promoting workplace equity and inclusion.

“Executive orders have created fear and uncertainty for some,” she said. “As a result, many employers have responded by scaling back or restructuring their DEI efforts. Employers who are uncertain about the scope of permissible activity should consult with legal counsel.”

Audia Wells, president of human resources consulting at WellsWorx HR in Richton Park, agrees and says businesses should be taking the time to look not only at their policies, but also their branding.

“Review all marketing materials, website content, and public communications for language that might be interpreted as promoting illegal preferences under the new interpretation of civil rights laws,” she said. “It’s important to be careful.”

DEI policies still have many benefits.

Regardless of the EEOC’s actions, there are still many benefits for an employer to maintain a DEI policy, including helping to attract and retain talent. Many of my clients have found that when people feel included and treated fairly they’re more likely to stay in their jobs.

There also are market reasons. Not only does a good (and legal) DEI policy offer a way to connect with certain consumers, interest groups and advocates, it’s also a great way for companies to demonstrate their values.

Wells believes that DEI policies can help small businesses thrive as economic boycotts of larger brands (who are retreating from these policies) are driving some customers away. She advises businesses to review all marketing materials, website content, and public communications for language that might be interpreted as promoting illegal preferences under the new interpretation of civil rights laws.

“Be clear on your ‘why’ of your business,” she says. “Understanding these compliance changes become easier when you are rooted in your ‘why.’”

The bottom line is to focus on merit.

A client asked me recently if it’s still acceptable to mention that their company is an “equal opportunity employer” given the new EEOC rules. For me, the answer is simple: yes! Because that seems to be exactly what the EEOC wants employers to know. Hirings and any workplace practice should be based on equal opportunity, not on any other factors.

Andy J. Boling, employment group chair at Kelleher + Holland, LLC in North Barrington, says employment practices need to be based on merit and recommends hiring, training, and promotion decisions be based on qualifications and performance, not quotas.

“Small businesses should conduct an internal audit to review all hiring, training, promotion, and policies to ensure that opportunities are open equally,” he says. “Because of this, employers should review existing policies to determine if they contain terms such as ‘affirmative action’ that may now be problematic at the federal level.”

Shah agrees and says some employers, in response to executive orders and scrutiny, have reframed their DEI-related initiatives to focus on merit, inclusion and belonging. But not all.

“Some employers have chosen to publicly reaffirm their commitment to DEI, maintaining and even expanding programming on the basis that a diverse and inclusive workforce supports both business success and organizational culture,” she said.

• Gene Marks is a CPA who owns and operates The Marks Group PC, experts in customer relationship management technologies.