Podcasts

Summary

In this episode, Labor & Employment Associates Katherine E. McLaughlin and Stacey M. Sanderson tackle one of the most common questions from clients in 2025: What’s going on with DEI? With host, firm Associate Josh A. Friedman, they break down the legal shifts employers must navigate following recent executive orders that impact DEI programs. The discussion covers new guidance from the EEOC and DOJ, including the increased risk of harassment and retaliation claims linked to DEI training, the scrutiny on employee resource groups (ERGs), and the implications of a recent Supreme Court decision that levels the playing field for reverse discrimination claims. They also offer practical guidance for employers reviewing their DEI policies and practices.

Podcast First Aired: September 29, 2025

Transcript

Josh Friedman:

Hello and welcome to another edition of the Frantz Ward podcast, Shoveling Smoke, where we discuss current legal issues affecting the business community in our daily lives. My name is Josh Friedman, an associate in the Labor and Employment Group at Frantz Ward, and I’m your host for today’s edition. I’m here with my two other associates, Stacey Sanderson and Katie McLaughlin, and today’s topic is what employers need to know about DEI regulatory shifts.

Stacey Sanderson:

Thanks so much, Josh. Really appreciate you being here today. Katie and I are absolutely thrilled to share our insights into some of the questions that we most often hear from our clients, such as, what in the world is going on with DEI? As labor and employment lawyers, Katie and I are really on the front lines of these conversations. We are helping clients navigate the ever-changing legal developments, we’re balancing compliance risks, and we’re helping employers figure out how to best keep their DEI programs meaningful and effective throughout this utter chaos.

In this episode, we are going to talk through the latest updates, practical questions that clients are asking us nearly every single day, and we’ll also share some real-world guidance for employers who really want to move forward with better confidence. So moving right in, of course, you just simply cannot talk about DEI in 2025 without addressing the impact of recent executive action.

In particular, there are two executive orders that have really been shaping the conversation and creating new compliance questions for employers. Before we dig into these and some of the scenarios we’re seeing, I’m going to start with just a really quick overview of what executive orders even are and why they matter. We get this question a lot: “What does this mean? We saw an article that there’s another executive order coming down from this administration. Stacey or Katie, can you help us interpret this?”

So executive orders, they establish clear and sort of tangible directives as to what the enforcement policy temperature of the administration is. In this case, we’re going to be talking about two very specific executive orders, and they both have to deal with anti-discrimination laws. However, and this is a big one, it’s important to keep in mind that executive orders cannot do things such as rewrite statutes, overrule case law, or declare what is and what is not constitutional. So when it’s really boiled down, they are, in essence, really just indicative of the administration’s temperature on how they’re going to perceive a certain law.

The first executive order that we’re going to kind of run through is one that was signed on January 21st of this year, and its title is Ending Illegal Discrimination and Restoring Merit-Based Opportunity. In essence, this executive order completely revokes affirmative action mandates for federal contractors. In addition, it bans workforce balancing and DEI preferences. We’re going to be talking a lot about that. It also requires federal contractors to explicitly certify that any DEI programs that they’re running remain in compliance with anti-discrimination laws. That is the one that is, in my opinion, I think is most thought of when our clients are coming to us with questions on “what can we do, what can we not do?” It’s that executive order, and it was signed shortly after the current president took office.

The second executive order that we’re going to be talking about is titled Restoring Equality of Opportunity and Meritocracy. This was signed in late April of this year, and this executive order requires that federal agencies take certain concrete actions, such as deprioritizing the enforcement of any statutes or regulations related to disparate impact liability. Now, hang with me. If you don’t know what that means, we’re going to go through that. Federal agencies were required by certain dates to submit reporting on all of their regulations or guidance or rules or orders that impose these, quote-unquote, “disparate impact liability requirements.”

So, what is disparate impact liability? Let’s break this concept down just a little bit. So first, disparate treatment. Not disparate impact liability, but disparate treatment, is when an employer intentionally treats someone differently because of their race or gender, age, or other protected category. Think of this as the classic example: a manager who walks in the room and says, we don’t hire women for this role. That is obvious discrimination, and that is disparate treatment. Now, how does disparate impact differ? It’s not about intent at all. It’s about the effects. So, the disparate impact theory basically says if a policy looks neutral on its face, it can still be unlawful if it disproportionately harms a member of a protected group and it isn’t closely tied to a real business need. So, the classic example here is an employer requires all of its job applicants to maybe pass a written test that isn’t really tied to the actual job performance. If that test consistently screens out applicants from a particular racial group at much higher rates, that’s disparate impact. The employer in that case maybe didn’t mean to discriminate, and employers in these instances don’t have to mean to discriminate. It’s the outcome itself that can create liability. So, in short, and I think it’s important just to know the distinction, disparate treatment really is about intentional discrimination, whereas disparate impact is about the unintended but still harmful consequences of otherwise neutral rules.

So, all right, we went through all of that. Why are we talking about this? What does this executive order even do? Really, it presents the current administration’s enforcement priorities and really their interpretation of Title VII and related equal opportunity type laws. It doesn’t really change the law for most employers, but nevertheless, it does represent a stark shift in priorities when we’re talking about, you know, the comparison to prior administrations. Also, think about the federal agencies like the EEOC and the DOJ. Under this executive order, they are being specifically directed to deprioritize or halt enforcement of all claims based on this disparate impact theory.

Katie McLaughlin:

While the executive orders issued back in January only technically apply to federal agencies, we advised our clients that, Stacey, as you mentioned, while they weren’t bound by the executive order, it’s likely a sneak peek at the administration’s attitude towards the private sector.

Fast forward to March of this year, and wouldn’t you know it, the EEOC and the Department of Justice each released technical assistance documents directed towards private employers with DEI practices. And this guidance looked a lot like those executive orders from earlier this year. So, one of the key points from this guidance is that you cannot take employment action based on an employee’s race, age, sex, religion, disability, or any other protected class. Now, if that sounds familiar, that’s because it is. Title VII is still Title VII. The only difference is that the current administration is emphasizing that Title VII applies both ways. So, in other words, just like you wouldn’t refuse to hire someone because of their race, you shouldn’t also decide to hire someone because of their race. And this is true even if race or sex or any other protected characteristic isn’t even the exclusive reason for an employer’s decision or the deciding factor.

In other words, an employment action is still unlawful even if someone’s protected characteristic was just one factor among several factors contributing to the employer’s decision or action.

Stacey Sanderson:

Okay, so Katie, what you’re saying is basically this guidance reminds us that Title VII is still Title VII. We’ve reviewed all of that, but what’s new about this guidance?

Katie McLaughlin:

So, one of the concepts in this guidance that has generated some more dialogue among employers is that DEI training can now give rise to harassment and retaliation claims. So, on the harassment side, if the content of a DEI training is perceived as targeting or demeaning individuals based on a protected characteristic, an employee could allege that the training contributed to a hostile work environment.

On the retaliation front, the guidance also notes that an employee’s objection to participating in a DEI training may even qualify as protected activity, as long as that employee articulates a reasonable, fact-based belief that the training violates Title VII.

Stacey Sanderson:

Okay, so it’s completely understandable that a lot of employers and perhaps even our listeners to this episode might have a lot of questions about this. Could you share some examples of what these claims actually look like?

Katie McLaughlin:

Stacey, I’m so glad you asked. Earlier this year, there was a case at a Washington state where a white employee alleged that his employer created a hostile work environment by requiring him to attend three separate DEI trainings that involved discussions about quote-unquote, “white privilege and collective responsibility for racism.” The court did end up finding in favor of the employer here.

It found that, quote, “exposure to material that discusses race does not by itself create an unlawful, hostile work environment,” end quote. However, employers can still learn from this case.

The first lesson is to take any feedback about the content of DEI training or opposition to participating in DEI training seriously. Have a conversation with the employee and document that you did so. And the second lesson is to review any equal employment opportunity or DEI training that you offer. Now I want to make clear that this training is still extremely important. It’s vital to educate employees about these concepts to prevent discrimination and to encourage them to report actionable harassment. And some employers may even still be required to offer this training. So, don’t let this case scare you away from that. But I do recommend that you have an attorney review your training to make sure that it’s avoiding negative stereotypes about anyone or divisive language or really anything that would make an employee say, “hey, this is making me feel uncomfortable.” So, the key takeaway here for employers is to approach DEI training not just with good intentions, but with legal scrutiny as well, particularly around content, implementation, and how employees’ objections to the training are handled.

Now, that same level of legal awareness is just as important when it comes to employee resource groups, which are usually abbreviated to ERGs, also known as affinity groups. Like DEI trainings, these groups are often well-intentioned, and they can play a really important role in promoting inclusion and community, but they can also raise similar legal questions. ERGs or affinity groups are intended to offer a space for employees with shared backgrounds. Usually, this is based on a protected class, like race, sexual orientation, or veteran status. But there can also be groups where it’s still based on a protected class, but a little more subtle, like a young professionals’ group or a parents’ and caregivers’ network.

So, with these groups, organizations should not be drawing distinctions based on any protected characteristic in granting permission to groups and events. So, for example, an employer cannot permit the formation of ERGs only for certain racial groups but not others, or only for one sex, or only certain religions but not others. Another thing that ERGs sometimes get involved with is mentorship programs that aim to support the development and retention of employees from historically underrepresented groups. While these initiatives can offer really valuable support and they promote inclusion, they can also raise potential legal considerations.

This brings us back to the guidance that we talked about at the top of the episode. Are we treating someone differently because of their protected class? Are we giving them preferential treatment through these mentorship opportunities, additional training, or development opportunities that aren’t available to all employees? That kind of analysis is really fact specific, but those are really good questions to ask yourself as an organization before you involve legal counsel to come in and help mitigate that risk.

Stacey Sanderson:

OK, so when we’re talking about Title VII, we usually think of it as protecting employees from discrimination based on race or sex or some other protected category, right? But what’s important and oftentimes overlooked is that Title VII applies in both directions. And I think that brings us nicely into the case of Ames vs. Ohio Department of Youth Services. This is a United States Supreme Court case that was decided on June 5th of this year. It was a unanimous decision, and it held that Title VII imposes no additional evidentiary requirements on majority group plaintiffs. And you might be thinking to yourself, what is a majority group plaintiff? We’ll get into that.

First, a little bit about the background of this case, because I think it’s important. And like we said, Title VII does apply in both directions. So, what happened in this case, this woman, Marlene Ames, she’s a straight woman. She sued her employer under Title VII, claiming that she was 1) denied a promotion, and then 2) later demoted based on her sexual orientation. Her argument was that her employer hired a gay woman for the position to which she applied and a gay man to fill her previous position after she had been demoted.

So, Katie, you did a fabulous job describing Title VII and clearing that up for us. And just as a little refresher, Title VII makes it unlawful for any employer to fail, or refuse to hire, or to discharge any individual, or otherwise discriminate against any individual because of their race, or color, or religion, or sex, or national origin. So, in this case, Justice Katonji Brown Jackson, writing unanimously for the court, completely struck down and invalidated the previously adopted rule that had been upheld in five different courts of appeal, including the Sixth Circuit, where Ohio currently sits.

The previous rule required that majority group plaintiffs have to show, quote, “background circumstances to support the suspicion that the defendant is the unusual employer who discriminates against the majority,” end quote, in order to sustain a Title VII claim. So, what the United States Supreme Court was saying is basically the previous background circumstances requirement is inconsistent with Title VII’s protections because Title VII prohibits covered discrimination of any kind, not merely just discrimination against a limited set of historically disadvantaged groups, which really does comport with the court’s modern approach to anti-discrimination statutes. So, what does this mean for employers in Ohio, and honestly, everywhere?

This decision lowers the barrier for majority group plaintiffs to bring these so-called reverse discrimination claims. It also increases the burden on employers to defend against the claims. So, in other words, now when courts are assessing Title VII claims, they do not need to sort of divide plaintiffs into this majority or minority groups with respect to the plaintiff’s protected characteristics. The burdens of proof are now completely identical for all Title VII plaintiffs.

Josh Friedman:

So that’s the legal takeaway from Ames. Title VII protects everyone, and reverse discrimination claims are real. But what guidance do we have for employers right now, today, when it comes to their current DEI policies and practices?

Stacey Sanderson:

Okay, so when it comes to the day-to-day work of the employers, we get questions like, “Hey, does this policy still fly under the current guidance?” Katie and I are just going to go through a couple of those scenarios and some key takeaways that employers can walk away from this podcast with.

A question I got just the other week from a client was something along the lines of, “Hey, Stacey, I’ve got this policy. I’ll be honest with you. Our company used to have hiring goals and quotas that we would fill. Now, can we just remove the words quotas and replace them with things like intentions when it comes to hiring?” The answer is absolutely not. The DOJ’s recent memos absolutely stress that any DEI practice that ties employment outcomes to things like race, gender, or other protected characteristics, – whether they are called a quota, a goal, or a target – those can and will be viewed as discriminatory. And for federal contractor clients, you’re at a real risk of loss of federal funding. So really here, it’s not just a matter of word choice.

Calling something a goal instead of a quota does not shield an employer if the effect is still the same. What matters is whether your practice impacts employment decisions based on protected traits. The safer path is instead focusing on outreach and opportunity rather than tying yourself to these numbers. And Katie, I think you mentioned earlier with respect to ERGs, these are hot ticket items these days.

I get questions like, “Some of our ERGs include specific options to join the LGBTQ+ group or the women’s group. Is that still OK?” Yes. The answer is yes, so long as these ERGs are truly open to all employees and your employees know, and it is true, that any of them can join and participate. Something we’ve suggested to clients is sending reminders out however frequently that the employer is comfortable with – maybe once a year, maybe twice a year, just to remind employees, “Hey, we have these ERGs. Here’s a list of the current ones that are offered. You are free to join as many or as few as you would like,” just so you are ensuring that you are remaining in compliance with that.

Another piece of practical guidance that we’ve been giving out is instead of rolling out these big, formal, sometimes complicated DEI programs: one approach that we’ve seen work well is simply using exit interviews to ask employees how they experienced the workplace. Did they feel valued? Did they see transparency from leadership? And did they feel that diverse identities were really represented in the workplace? And Katie, I know you’ve also done a ton of policy work and helping to guide clients through these issues lately. Maybe if you want to also share some tidbits of advice that you have.

Katie McLaughlin:

Absolutely. And Stacey, I’ve given a lot of the same advice that you have. The only thing I have to add is that before even beginning a formal policy review, the first things employers should do is think about their organization’s risk tolerance in the current political climate. Now, every company is going to have a different stance based on their size, their location, their industry, their employee population, and a ton of other factors. And as attorneys, we can help facilitate a discussion about this to help make that determination.

So, I’ve reviewed policies from clients across the spectrum. Some are pretty comfortable with a certain level of risk and just want me to adjust any language that clearly conflicts with federal guidance. On the other hand, I’ve had clients say, “Hey, we’re not messing around with this, and we’re comfortable scaling back some of our policies if it means that we’re minimizing as much risk as possible.” So the changes I make to any given policy really depend on the client’s direction. But the consistent advice I give to organizations, especially those revisiting their policies right now, is this: Don’t just focus on how the policy reads on paper. Consider how it functions in practice. A policy that appears neutral in writing can still raise legal concerns if, in implementation, it results in an unlawful preference or differential treatment based on protected characteristics.

Josh Friedman:

And that wraps up another episode of Shoveling Smoke. Thank you, Katie and Stacey, for your insights. This podcast is available on frantzward.com, as well as Spotify, Apple Podcasts, and wherever you get your podcasts from. Shoveling Smoke is a production of Evergreen Podcasts. Our producer and audio engineer is Sean Rule-Hoffman. Our recording engineer is Gray Longfellow. For more information, please visit our website at frantzward.com.

This podcast is provided for educational purposes. It does not constitute legal advice and is not intended to establish an attorney-client relationship, nor is it intended to suggest or establish standards of care applicable to particular lawyers in any given situation. Prior results do not guarantee a similar outcome. Any views, opinions, or comments made by any external guest speaker should not be attributed to Frantz Ward or its individual lawyers. Thank you.