Expert Analysis | Federal DEI rollback and the expected compliance landscape for employment lawyers

The past few years have dramatically reshaped employers’ approach to diversity, equity, and inclusion, particularly in race- and sex-based programs. Although the Supreme Court’s 2023 decision in Students for Fair Admissions v. Harvard/UNC formally concerned higher-education admissions, its reasoning quickly spilled into employment litigation and public policy debates.

Employment lawyers now face a landscape in which longstanding obligations under Title VII and related statutes remain intact, while the legal basis for traditional DEI initiatives is shrinking. As a result, the practice has shifted from simply advancing DEI goals and aspirations to helping clients pursue those objectives without risking claims of discriminatory treatment.

Post-SFFA momentum

Students for Fair Admissions did not modify Title VII or directly regulate private employers. Regardless, its strict framing of equal-protection principles has encouraged greater scrutiny of private-sector DEI programs. Lawsuits frequently challenge internships, fellowships, leadership pipelines, and other opportunities that restrict eligibility by race or sex, arguing that such limitations constitute disparate treatment regardless of the employer’s good-faith motives.

Constitutional challenges are also emerging against federal programs that consider race, exposing employers who receive federal funding to heightened risk. Yet, the ruling leaves intact the core obligations of Title VII, the Americans with Disabilities Act, the Age Discrimination in Employment Act, and, for federal contractors, Office of Federal Contract Compliance Programs requirements. The result is a more politically charged and litigious environment in addition to the existing compliance duties.

Emerging risk areas

The highest risk arises in programs that expressly reserve opportunities for particular demographic groups. These initiatives, once viewed as remedial or inclusive, now result in claims that qualified individuals were excluded because of protected characteristics. Employers will increasingly need to reorganize such programs around neutral criteria such as socioeconomic status or geographic factors.

Diversity targets and quotas present a second category of risk. While aspirational goals are not per se unlawful, they become problematic when managers interpret them as directives to weigh race or sex in employment decisions.

Performance evaluations and compensation methods can create similar risks. Systems that appear to reward demographic outcomes, rather than fairness and consistency, risk being construed as encouraging discrimination. Careful creation and implementation of evaluation criteria is now more essential than ever.

Practices that remain lawful

Despite intensified scrutiny, many DEI practices remain lawful. Anti-harassment training and Equal Employment Opportunity education continue to be critical compliance tools. Inclusive outreach, such as partnerships with women’s colleges, veteran programs, or disability organizations, remains permissible so long as protected traits are not used as selection criteria.

Internal barrier analysis similarly aligns with longstanding regulatory expectations. Employers are encouraged to review hiring, promotion, and compensation data for adverse impact and to revise neutral policies that unintentionally create discriminatory outcomes. Courts and regulators have historically endorsed race-neutral measures such as removing unnecessary degree requirements, adopting structured interviews, and expanding recruitment channels.

A more technical compliance model

The current legal environment favors a more technical approach to DEI. Reframing DEI around equal opportunity, barrier removal, and consistent decision-making, rather than demographic-based outcomes, reduces litigation risk while preserving the employer’s ability to pursue their DEI aspirations. Clear documentation of this reframing is critical for both internal compliance and future defense of potential lawsuits.

Extensive documenting is becoming central to DEI compliance. Employment decisions should be based on defined, performance-related criteria that are applied and recorded in a consistent. Manager training must make clear the boundary between lawful inclusion efforts and impermissible preferential treatment. Public statements and corporate commitments should be reviewed to avoid language suggesting discriminatory intent.

Conclusion

The DEI landscape is tightening but it is not disappearing. Thorough scrutiny and greater demand for precision will shape the next generation of compliance. Regardless, the core mandate of equal employment remains intact. Employers must continue building nondiscriminatory inclusive workplaces through disciplined documentation, race- and sex-neutral hiring criteria, and a focus on removing structural barriers rather than adopting demographic preferences.

In conclusion, counsel who understand this transition and are able to manage DEI within these current narrower legal constraints will be central to defining workplace compliance in the coming years.

Nicole Brenecki is a founding partner and head of employment litigation at Jodre Brenecki