The current administration is pushing hard against DEI in government and business. Building on the Supreme Court’s ruling in Students for Fair Admission v. Harvard, the administration has repeatedly argued that many DEI practices are unlawful. Recently, a U.S. district judge struck down two memos issued by the Department of Education (DOE) earlier this year, including a “Dear Colleague” letter sent to universities and a memo targeting K-12 school districts. However, the memos were overturned on procedural grounds rather than substantive ones, with the opinion stating:
“The Court again must conclude that, by seeking to substantially alter the legal obligations of schools and educators without employing the procedures necessary to implement such a change, the government ran afoul of the APA’s procedural requirements. The regulation of speech cannot be done casually. After ample opportunity to acknowledge the supposedly unintended impacts of these policies on teachers’ freedom of speech, the government still downplays the massive change it announced through the Letter and Certification Requirement. The government did not merely remind educators that discrimination is illegal: it initiated a sea change in how the Department of Education regulates educational practices and classroom conduct, causing millions of educators to reasonably fear that their lawful, and even beneficial, speech might cause them or their schools to be punished. The law does not countenance the government’s hasty and summary treatment of these significant issues.”
The ruling will likely be appealed. Failing a successful appeal, the DOE could issue the same guidance from the memos through formal rulemaking. This would tee up a legal battle on the substance of the administration’s arguments.
At the same time, the Department of Justice issued guidance last month on “illegal DEI” practices for federal funding recipients. A recent Husch Blackwell memo summarizes the guidance:
“DOJ’s guidance clarifies its enforcement approach and signals increased scrutiny around DEI practices for all entities receiving federal funds, with a particular focus on whether seemingly neutral policies conceal impermissible consideration of protected characteristics. Even well-intentioned practices have the potential to trigger enforcement risk if not carefully structured and justified. Proactive review with the assistance of counsel and documentation are essential to mitigate legal, financial, and reputational risks.”
Companies should take this evolving legal threat seriously. While the administration’s efforts currently target educational institutions and other federal funding recipients, private industry could be next. We’ve seen this happen before when two major law firms were sued in the wake of the Supreme Court’s decision in Students for Fair Admission v. Harvard. Companies should stay aware of the developments in this space so they can proactively manage litigation exposure.
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