Why Are Companies Cutting DEI? The Legal Landscape and What DEI Experts Should Do Now

In 2024, major companies like Walmart and American Airlines made headlines by scaling back their Diversity, Equity, and Inclusion (DEI) efforts. This has left many wondering: Are DEI programs at risk everywhere? Should companies follow suit? And what does this mean for DEI professionals?

Let’s break it all down:

Why Are Companies Cutting DEI?

Federal Contractor Requirements Companies like Walmart and American Airlines are federal contractors. This means they must comply with specific regulations, including:

• Executive Order 11246: Requires federal contractors to promote equal opportunity without engaging in practices that could be perceived as discriminatory, even in the name of DEI.
• OFCCP Oversight: The Office of Federal Contract Compliance Programs enforces these rules and scrutinizes DEI programs for potential violations.

For example, DEI initiatives perceived as favoring certain groups based on race or gender could conflict with federal guidelines. Walmart and American Airlines likely scaled back their programs to avoid regulatory scrutiny or further legal action.

1. Litigation Risks The rise of “reverse discrimination” lawsuits, fueled by organizations like the American Alliance for Equal Rights, has made companies nervous. These suits allege that DEI programs unfairly disadvantage non-minority employees.
2. Supreme Court Ruling on Affirmative Action The Students for Fair Admissions v. Harvard decision ruled that race-based admissions policies in higher education are unconstitutional. While this ruling doesn’t apply directly to private employers, it signals heightened legal scrutiny of any policies that appear to prioritize race or ethnicity.

Who Needs to Comply—and Who Doesn’t

If you’re a federal contractor:

• You must align with OFCCP rules and avoid practices that could be interpreted as discriminatory.
• Compliance with Executive Order 11246 is non-negotiable.

If you’re NOT a federal contractor:

• These rules likely don’t apply to you.
• Private companies still need to comply with general anti-discrimination laws (e.g., Title VII of the Civil Rights Act), but they have more flexibility in structuring DEI programs.

Small businesses and non-government entities:

• Companies with fewer than 50 employees or no government contracts generally face fewer legal constraints on DEI efforts.

What DEI Experts Should Do Now

1. Understand the Law If you’re a DEI practitioner or consultant, now is the time to educate yourself on the legal landscape. Know the difference between federal requirements, state-level restrictions, and what’s legally permissible in private sector workplaces.
2. Reposition Yourself as a Strategic Advisor Companies need guidance—not just on compliance, but on how to maintain inclusive cultures in legally sound ways. Your expertise should focus on:

• Creating equal opportunity programs that benefit all employees.
• Structuring DEI efforts around broader values, such as equity, teamwork, and innovation.

1. Offer Compliance-Driven DEI Solutions Help businesses audit their DEI initiatives to ensure they align with laws like Title VII while still fostering diversity. Position yourself as the go-to resource for legally compliant DEI strategies.
2. Build Your Brand as a DEI Consultant This is your moment to pivot. Companies cutting internal DEI teams still need external advisors to guide them. You can:

• Land corporate contracts to provide strategic DEI services.
• Offer training and compliance workshops tailored to new legal realities.

The Opportunity for DEI Professionals

The current landscape might seem challenging, but it’s also an opportunity. While some companies are retreating out of fear, the smartest organizations will lean into strategic, compliant DEI efforts. They need experts who can help them navigate these waters—and that could be you.

What DEI Experts Should Do Next

This legal shake-up isn’t the end of DEI—it’s a chance to reposition yourself as a must-have expert. Companies are scaling back internally, but they still need help navigating compliance and strategy.

Here’s your opportunity: → Show businesses how to align DEI with the law. → Build your brand as a strategic consultant. → Land corporate contracts to replace what they’ve lost in-house.

But here’s the catch: Most DEI professionals aren’t trained to sell their expertise to corporations. That’s where I come in.

?? Join my Corporate Selling Secrets Masterclass, where I’ll teach you:

? How to position yourself as the go-to DEI consultant.

? The exact steps to land high-value corporate contracts.

? How to turn this industry shift into your biggest career opportunity yet.

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