DEI Reversals Swap Political Backlash for Higher Litigation Risk

Walmart Inc.’s recent announcement that it will roll back its diversity, equity, and inclusion commitments was no big surprise. While such retreats might protect corporations from conservative backlash, employers who go too far in abandoning DEI initiatives could face increased liability risk.

The US’ largest employer was simply the latest to pull back under pressure from conservative activists such as Robby Starbuck. Anti-DEI pressure will intensify with the incoming Trump administration.

The DEI umbrella is broad. The rise of the Black Lives Matter movement and the murder of George Floyd reignited national conversations about systemic racism and led to corporate initiatives aimed at racial equity, some with an external focus. Other initiatives designed to promote opportunity and inclusion were implemented as part of Title VII compliance—efforts to prevent discrimination.

Some initiatives have been ineffective. The evidence on diversity training is mixed at best, for example. But others had a positive impact on recruitment and workforce diversity, highlighting a critical lesson: Not all DEI programs are created equal.

Measures that embed such considerations into the organization—serving as “bias interrupters”—help ensure that qualified candidates get a fair shot. Companies that appoint diversity managers see increases in women and people of color, and diversity task forces lead to growth or women of color in management.

Similarly, formal mentoring programs and family-friendly policies such as flextime help address structural barriers that disproportionately affect women and people of color. By investing in these high-impact practices, companies have created more inclusive workplaces and prevented discrimination.

Companies’ retreats from such initiatives will reverse this progress and draw discrimination litigation in the future. Plaintiffs’ lawyers will look to use corporate decisions to abandon DEI efforts as evidence of bias and discriminatory intent. For example, executives questioning the value of DEI efforts—sentiments that could be revealed during discovery—can signal bias from which a jury can infer that an employment decision was made “because of” race, gender, or another protected trait.

Backing away from DEI also can be used as evidence in hostile work environment claims. Under Title VII, employers must demonstrate they exercise reasonable care to prevent and correct workplace harassment. Scaling back programs such as affinity groups, DEI task forces, or climate surveys can signal a failure to maintain effective preventive measures.

For instance, employee resource groups often provide spaces for underrepresented employees to voice concerns, fostering accountability and awareness of harassment policies. If these initiatives are cut, employees may lack the support or information they need to report harassment, which can show that the employer failed to create a safe work environment.

Walmart’s own history highlights the risks of abandoning systemic approaches to preventing discrimination. In a landmark US Supreme Court case in 2011, thousands of women alleged that Walmart’s decentralized policies on pay and promotions resulted in widespread gender discrimination. The Supreme Court ultimately ruled that the plaintiffs couldn’t proceed with a class action, finding that the issues to be resolved weren’t similar enough across the company.

Yet this decentralized approach and lack of systematic policies on hiring, pay, and promotions are precisely what enable discrimination to persist. Women who were part of the initial suit, as well as those who weren’t, have since brought gender discrimination and pregnancy bias claims against the company, costing Walmart tens of millions of dollars in settlements. Perhaps investing that money in a more centralized process (or at least review) for pay and promotions would have decreased liability risk and led to a stronger, more satisfied workforce.

The evidence is overwhelming that women and people of color too often experience discrimination at work. Eliminating programs that promote equal opportunity and inclusion risks removing effective tools for building a stronger workforce and preventing workplace discrimination.

This would mean an increase in discrimination and the resulting litigation risk that companies are so eager to avoid. But it’s not too late for companies to discard what is ineffective while standing firm on what works.

This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law and Bloomberg Tax, or its owners.

Author Information

Jason Solomon is director of the National Institute for Workers’ Rights, where Abby Frerick is a fellow.

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