Listen 🔉 originally published at Insurance Journal
Navigating DEI Legally: Emphasizing Equity Without Legal Pitfalls
The debate over what constitutes "illegal DEI" has intensified following recent US President executive orders. The orders instruct federal agencies to identify organizations engaging in potentially unlawful diversity, equity, and inclusion (DEI) activities, targeting them for compliance investigations. Additionally, federal contractors and grant recipients must certify that their DEI initiatives align with legal requirements. While this order is currently subject to legal scrutiny, its potential implications make it critical for organizations to reassess their DEI strategies.
The absence of a clear definition of "illegal DEI" has been met with legal challenge and EEOC Commissioner’s statement leaves room for so much interpretation. It is as we say on my InclusionScore Podcast, “if you ask 100 what DEI means, you’ll get 100 answers”. There is a correct answer and it is actually a number: ISO30415. Still, legal precedents, particularly the U.S. Supreme Court’s decision in Students for Fair Admissions v. Harvard, suggest that DEI initiatives become legally questionable when they grant preferential treatment to protected groups based on race, gender, or other characteristics. The legal landscape indicates that DEI is not inherently unlawful but must be structured to ensure compliance with merit-based principles and equal opportunity regulations.
Elevating DEI vs Capitalizing DEI
As JFK mentioned in Forbes in 2024, DEI is Capitalism. The key to legally sound DEI practices lies in distinguishing between "elevating" DEI—where certain groups receive preferential advantages—and "capitalizing" DEI, which seeks to remove systemic barriers without offering direct preferences. Firms need to establish how they do this via their explicit process statements. A notable example of capitalizing DEI is the use of blind auditions in symphony orchestras, which led to a significant increase in the representation of women without explicitly favoring any group.
Organizations employing elevating DEI strategies, such as hiring set-asides, diversity-based tiebreakers, or compensation incentives tied to “diversity goals”, face higher legal risks. These approaches are more susceptible to legal challenges and scrutiny from American Justice Department. In contrast, capitalizing DEI, which includes structured hiring practices, inclusive mentorship programs, bias mitigation strategies, adequate feedback mechanisms from protected classes (often called employee resource groups), and equitable work allocation, provides a more sustainable and legally compliant path forward.
ISO-30415: A Framework for Reducing Legal Risks in DEI Implementation
One effective way for organizations to ensure that their DEI initiatives comply with legal and regulatory standards is by aligning them with ISO-30415, the international standard for DEI. It’s a business process that offers structured guidelines to help organizations deploy a portfolio of DEI services in a way that minimizes legal exposure while promoting inclusivity.
ISO-30415 encourages business operations to focus on embedding inclusion through the communication of policy rather than applying Ad Hoc projects mistaken for preference. It emphasizes practices such as:
Unbiased recruitment and promotion processes to ensure equal opportunity for all candidates.
Systematic bias detection and mitigation in workplace policies and decision-making.
Inclusive leadership training to foster an environment where diverse perspectives contribute to organizational success.
Stakeholder engagement strategies that prioritize transparency and fairness in DEI efforts.
By integrating ISO-30415 into their DEI strategies, organizations can create inclusive workplaces that comply with legal frameworks while maintaining their commitment to diversity and equity. This approach not only mitigates the risk of litigation but also fosters a more equitable and productive workforce.
The Future of DEI: A Legally Sustainable Approach
Dr. BA regularly reminds us that there is no such thing as “reverse discrimination” under the law. We are all protected by the 14th Amendment. Despite political and legal challenges, organizations do not need to abandon DEI. Instead, they should refine their approaches to focus on inclusion without engaging in noted preferential treatment. The distinction between elevating and capitalizing DEI serves as a practical guide for businesses seeking to balance inclusivity with compliance. It is important to note that the international standard segments DEI service offerings in 4 types:
Training which companies have the first amendment right to deploy.
Data Collection which is a catalyst to validate a market of action on a particular protected class.
Internal Infrastructure which are feedback mechanisms designed to validate the previous two.
External Infrastructure which are efforts to engage specialists in protected classes, like chambers of commerce and trade associations.
Americans oppose taking race and ethnicity into account in hiring and promotion decisions, yet there is wide support for “opening doors” so that “people who have traditionally had less access to opportunities get the chance to be considered.”
Ultimately, organizations should prioritize policies that remove systemic biases and create equal opportunities without violating anti-discrimination laws. By adopting evidence-based DEI strategies and adhering to international standards like ISO-30415, businesses can navigate this evolving legal landscape while fostering an inclusive and equitable work environment for all.
TOMORROW
James Felton Keith is speaking at Aon in New York with NAAIA NY & Guidewire Software for Black History Month on the article above and his latest book Data Is Labor.
