DOJ’s Growing War on ‘Illegal DEI’ Adds Risk to Corporate Hiring

Companies seeking to boost workforce diversity without running afoul of the Trump administration’s views on “illegal DEI” are facing an increasingly narrow path.

The administration continues to ratchet up scrutiny of how companies look at diversity in employment actions—recently arguing that creating a “diverse slate” of applicants might constitute discrimination. That’s a departure from companies believing they were complying with civil rights law as long as they didn’t make employment decisions, like hiring, based on protected characteristics.

In a July 29 memo, Attorney General Pam Bondi described the Justice Department’s view of potentially unlawful actions. Those include diverse slate policies that “explicitly mandate representation of specific groups in candidate pools,” and using anything that could be a proxy for a protected characteristic—including asking an applicant how they’ve overcome obstacles.

Bondi’s focus on strategies to make applicant pools more diverse marks a “big shift,” said Allan Schweyer, principal researcher at the business think tank Conference Board’s Human Capital Center.

“Not even a few months ago, it was considered OK” to recruit at certain schools to broaden a candidate pipeline, as long as a company didn’t base decisions on a protected characteristic, he said. Now, he’d still advise members to do so—but “don’t make the mistake of only” going there based on demographic targets.

Bondi’s memo is nonbinding and doesn’t change the law—it just gives the administration’s interpretation.

It signals the government will likely take these “very expansive” positions in court, said Danielle Conley, who leads the anti-discrimination and civil rights practice at Latham & Watkins LLP.

“So it flips back to companies,” she said. “Lawyers can say, ‘Here’s where the law has been on an issue. The position the government is taking seems to be more aggressive.’ So the question for you is: How much risk do you want to take?”

Diverse Slate

Title VII of the Civil Rights Act of 1964 prevents companies from making employment decisions based on protected characteristics. The law covers hiring—but how it applies to companies shaping their candidate pipelines is murkier.

“If it’s just, ‘We want a pool of applicants,’ historically that’s been appropriate,” as long as no decisions are being made based on protected characteristics, said Sheila Abron, chair of the affirmative action and federal contractor compliance practice group at Fisher & Phillips LLP.

Most employers have viewed candidate sourcing as an area where they “want to cast a broad net,” said Camille Olson, who chairs the complex discrimination litigation practice group at Seyfarth Shaw LLP.

Olson said she doesn’t read the memo as telling employers not to recruit at historically Black colleges or universities, for example. But employers, she said, should document the reasoning behind any employment or recruiting decisions.

The Society for Human Resource Management is telling members they can “engage in inclusive hiring practices and create inclusive environments that yield diverse representation organically over time”—but should avoid “mandating quotas or specific diversity outcomes,” Jim Link, the organization’s chief HR officer, said in an email.

Bondi’s memo also recommends employers document “legitimate rationales” that are unconnected with protected characteristics to justify decisions that could be correlated with variables like race or sex.

Attorneys said “diverse slate” describes a range of practices, and companies can widen their applicant pipelines without violating federal anti-discrimination statutes—as long as they avoid specific mandates.

For example, a company can assign someone independent of hiring decisions to assess the diversity of the candidate pool, said David Goldstein, a shareholder at Littler Mendelson PC. and co-chair of the firm’s government contractors industry group. If needed, he said, the company can do more outreach with a focus on diverse candidates, but not remove anyone from the pool.

“I think that’s still a very defensible process,” Goldstein said. “It adds time and expense, but there are companies that do it that way,” including for lower-level jobs, not just senior leadership.

Cutting Diversity Language

The DEI landscape has shifted dramatically the past five years. Companies had rushed to burnish their DEI credentials in the wake of George Floyd’s 2020 murder, with diverse slate policies among the strategies some touted.

But amid the growing anti-DEI push over the last few years—and fueled by the Trump administration’s DEI crackdown—many changed how they talk about their policies publicly and to investors and employees.

Honeywell International Inc., CoStar Group Inc., and Williams-Sonoma Inc. were among large companies that stopped telling their shareholders in 10-K annual reports filed this year that they were using diverse slates to fill job vacancies, after mentioning the policies since 2021.

Williams-Sonoma aimed to “bring forward a diverse slate of candidates for our corporate roles posted externally,” the home goods retailer said in its 2024 10-K annual report. CoStar, which owns Apartments.com and Homes.com, used a “robust process to attract a diverse slate of candidates to fill vacancies and contribute to our growth,” according to the real estate data company’s 10-K last year.

Honeywell also touted diverse slate practices in its 2024 10-K. Darius Adamczyk, the aerospace and automatic technology conglomerate’s CEO in 2020, promoted the company’s use of diverse slates at the time, saying it had made “good progress, but we have a long way to go.”

Representatives of the three companies didn’t respond to requests for comment.

Risk Tolerance

The Bondi memo applies to recipients of federal funding such as federal contractors and universities, as well as sub-contractors. For other employers, it’s an indication of positions the administration may take in Title VII litigation.

Some companies defend DEI practices because they see them as core corporate values—but “they are not the majority,” Goldstein said. Others, especially if they rely on federal contracts, do whatever they can to “stay in the good graces of the administration,” he said.

“And in between those two extremes is everyone else,” he added. “All those companies calibrating their values and their ability to assume risk, and coming somewhere in between.”