This is Bloomberg Law with June Grossel from Bloomberg Radio.
I will also end the government policy of trying to socially engineer race and gender into every aspect of public and private life.
And in sweeping executive orders. On Monday, President Donald Trump ended diversity, equity and inclusion programs throughout the federal government, and in an attempt to end DEI policies in the private sector, he directed agencies to drop lists of private sector companies to investigate over their DEI policies. He also issued an executive order to end what he's called transgender lunacy.
It will henceforth be the official policy of the United States government that there are only two genders, male and female.
Legal and advocacy groups condemned the orders, which will likely be challenged in court. Joining me is Niche Verma, a labor and employment litigation partner at Dorsey and Whitney. Nishe he signed three executive orders relating to DEI. Start by telling us about the first one, which has to do with the federal government.
I would say the three orders put together are primarily based on the federal government, which he of course has a significant amount of control over. But then there's bleedover
and express regulations around private sector as well. So starting with the I think most obvious within his purview, order to dismantle DEI programs, the order is essentially just saying that these programs are creating discrimination in the federal workplace, harming the federal workplace, and therefore need to be removed. And so there is a mandate, as you've seen, that all individuals who are said to be in those roles are to be put on paid leave I believe till
the end of the month and then terminated. Is interesting in and of itself because there's no question as to whether there's another job these people could be doing, and that is something that their unions or any other advocate for them would want to be asking. I think in that aspect, it appears these people are being punished for working in the DEI space in the federal government such that they must lose their jobs, even if there is something else they could be doing given their skills.
Let's say that there's no other position that they could take. Is the government allowed to fire them or are their protections for these workers?
Very many of these workers could be in any union, and if so, they would have layoff provisions in that CBA, and there would be just cause provisions in that CBA, and so those unions would be reviewing those provisions to see whether they can file agrievance and challenge the terminations.
There may be others that were like your guests on yesterday's show, was indicating that whose job was always at the pleasure of the administ station and we're always able to be terminated at will, and that wouldn't change today. There may be another bucket of people who, due to the change to schedule s which took away some of those protections for the civil workforce, could now be terminated where that would not have been enough before.
And I found this a bit odd. Secretary of State Marco Rubio, in a memo Warren state Department officials that they'll have to face adverse consequences if they failed to report on colleagues who've concealed or obscured existing DEI programs at the department. So he's asking them to let me use the legal term rat on their colleagues.
So the same order we're talking about, I'll go ahead and say the name, which is ending radical and wasteful
government DEI programs and preferencing. So in that order, in addition to the mandate that those programs be cut, those people be fired, there is a request that anybody who could be engaging in that sort of work but might have a coded or ambiguous name that I would suppose conceals that they're engaging in that kind of work needs to be essentially brought forward so they can't hide and engage in these diversity supporting activities continuing to be in the government.
He also revoked decades of executive orders, including the landmark executive Order signed by President Lyndon Johnson in sixty five to prevent discrimination in government employment and advance racial equality. Is that historic?
It's very historic. Just as that original order in nineteen sixty five was historic. This is as well. There's an entire federal agency that has been built around monitoring compliance with this order. The way that federal contractors engage with the federal government INCLU foods understanding that they have an
obligation to prohibit discrimination in the workplace. And of course, the original order has the word affirmative action, which is where we get these requirements that federal contractors can't just say, hey, we don't allow discrimination. They have to find ways to show that. And the most important thing to understand is when we talk about a change in presidential administrations, we
talk about, oh, deregulation. This is going to make things easier for employers because there was this thick packet of regulations that they had to pour through and now they can just put it on the shelf and forget about it because they can do what they want. That's not this order. This order is not just taking away those affirmative action regulations. It is replacing them with new regulations that are essentially letting employers know, hey, we are watching you.
If you, as a federal contractor, are engaging in any sort of activity that could be seen as balancing your workforce based on race, sects, etc. Then not only could you lose your federal contract, you could be sanctioned and potentially be subject to the False Claims Act. So this isn't one of those actions that employers like to see where they can put aside the regulations and just start focusing on their core business. This is an onerous burden
on those employers. Some of them might say that have to make sure that they're in line with what the President wants here in order to continue to be considered for federal contracting, and they have to do that pretty quickly. They only have ninety days to go from the old
rules to the new rules. Whereas so much of their procurement policies, some of the vendors and consultants they use, may have been based on the longstanding Lyndon Johnson Executive Order, which of course requires action to ensure that you're not engaging in race discrimination. Now there's an expectation that you show us that you are disregarding race focus on it will be punished, and.
One of the orders will affect companies in the private sector. It requires each federal agency to identify up to nine potential civil compliance investigations of private sector entities, including publicly traded corporations, nonprofits and foundations, state and local bar and medical associations, and institutes of higher education. So every federal agency is now going to be investigating private companies for DEI violations.
It looks like every single agency, So I read that as being obviously the EEOC, but also something that would not come to mind immediately, like the EPA needs to make sure that they're holding the private sector responsible to end DEI priority. And yeah, it absolutely says the heads of all agencies need to assist with that. And it's also asking the Attorney General to come up with the kind of report that you're mentioning, and that would be quite a bit of companies, and it does not really
state the criteria for identifying that company. But I think the most interesting thing for employers is this is not an example of deregulation that makes it easier to do one's job and engage with one's employees outside of the purview of the federal government. This is a good example of the federal government injecting itself into those relations. It really is a we're watching you message.
Yeah. The Attorney General has one hundred and twenty days to submit a report with enforcement recommendations, including potential litigation or regulatory action. The order refers to illegal DEI discrimination and preferences what's the basis for calling it illegal?
This in combined with the recent statements by the new acting chair of the EEOC, and I would say the other executive order on transgender employees that I'm sure we'll get to in a minute, all poll appear to be taking the position that in the employment context, where Title seven governs and prohibits discrimination, a DEI program that supports the advancement of certain employees of color, for example, would
violate Title seven. That is a possible way to read all of these orders because there is a consistent reference to DEI as being illegal in the employment context, and the most relevant law in that context is Title seven, which, of course the EEOC is tasked with enforcing.
What do you think will happen at the EEOC? Will they change what they've been doing?
I believe very quickly.
So.
The acting Chair has already her name is Andrea Lucas, and she has already issued a statement indicating what the eeoc's priorities are, and the number one priority is rooting out on lawful DEI motivated race and sex discrimination. The next one is protecting American workers from an anti American
national origin discription. And that's an indication as to what types of claims the EEOC, or at least the Acting Chair might be interested in advancing, which very well could be claims by non traditional groups, particularly white employees or mail employees, arguing that they have been treated differently than minority groups or have been harmed based on some DEI
program that existed in the past. I think, reading between the lines, there's an invitation for non traditional groups that previously would not have sought the eeoc's production to go ahead and file claims with the EEOC so that these employer practices can be investigated.
I mean, the order suggests that employers could face litigation or regulatory action. Do you think the government will actually sue businesses over DEI programs.
Yeah, So there's many charges that are filed with the EEOC, and as I said, given the public statements, several of
those could be based directly on a DEI program. Others could just be based on employee who's terminated and maybe would not have sought the protection of the EEOC, particularly because they're white or thirty six years old and very healthy, but may feel emboldened to do so now and very well maybe that that claim is advanced and brought forward by the EEOC if, for example, that employee says that they were treated differently with respect to the use of
a specific word or certain conduct than other employees in their organization. So it could be exactly focused on a DEI policy, or it could be an extrapolation based on somebody who simply believes that they're way that they were treated is unfair and previously probably would not have considered the EEOC as the place to go.
Coming up the Executive Order on Transgender Americans. This is bloomberg diversity, equity and inclusion efforts and in the raft of executive orders. On day one, President Donald Trump called for ana dei efforts in the federal government, including terminating diversity programs and eliminating all related offices and positions. There is also an order declaring a new policy that the US will recognize only two sexes, male and female, signaling
a rollback of transgender protections. I've been talking to labor and employment law expert niche Verma, a partner at Dorsey and Whitney. So the order covers state and local bar associations, and two major state bar associations, California and Massachusetts, have pushed back. For example, California said in a statement, the executive order will not affect its programs as long as our work in this space involves illegal discrimination or preferences.
Massachusetts Bar said, I think there are better ways our federal government could use its time than looking at bar associations. For bar associations to say that, what does it indicate?
If anything, it's not too surprising because there have been letters by several state attorneys general too, to law firms that have had DEI programs. Right, So it seems like there has been a focus on simultaneously. For several years, there's been a focus on increasing diversity among the bar, and then simultaneously a focus on those programs and whether
they might be illegal. And I think the state and local bar associations have some significant grounds to challenge this investigation by the federal government because they're not employers to most of these people, so there's another relationship that they have, and I think the government has to be sure they're finding a federal statute that relates to discrimination, which is what the government is calling the DEI program that applies.
And so I can understand why they feel somewhat confident in their position.
Have we seen this sort of trend towards a slow death of DEI programs because of the Supreme Court's decision curtailing affirmative action programs in universe?
I think that's right, But I think that from the strikedown of affirmative action in universities to today, there has been a question as to whether the laws that apply to the employment relationship prohibit DEI, because those are different laws that apply to the funding of a university. And the clearest way to argue that DEI violates the law in an employment context is to say that it violates Title seven, which is to say that the program discriminates
on the basis of race. And that is not a conclusion that has been widely adopted, but it appears to be the position stated multiple times by the federal government today.
Also, an executive order on Monday declares that the United States will only recognize two sexes, male and female, and states that these sexes are binary, biological, and not changeable. What's the import of that?
Yeah, So that executive order, I'll say the name of it. It is defending women from gender ideology extremism and restoring biological truth. To the federal government includes definitions that all of the federal government is required to adopt and then enforced with respect to its enforcement of federal laws. And one of those is sex, defining it as only male
or female. And then simultaneously there's another definition of gender identity, and it really truly defines gender identity as something that is completely subjective and essentially not real in the world
and unrelated to sex. And the biggest question, looking just at the text of the order is whether there's any attempt to disturb the ruling of the Supreme Court decision in twenty twenty Boss docsy Clayton County, which did find that gender identity is included in the term sex under Title seven for prohibited transgender discrimination.
What's the import of that executive order for transgender people?
I think there's two questions. One, is the EEOC Acting Chair going to be pushing The logic of the answer is yes, because in her statement she uses the exact same language and specifically cites the order. But what is the import and the import I don't know if it means that the EEOC is going to be telling employers, yes,
you can fire employees for being transgender. It does not seem like that's something that a federal enforcement agency should be able to do because that does contradict a Supreme Court decision, which is of course by another branch of
the government. However, another thing that the EEOC does is issue guidance and guidance that's been in effect since April twenty twenty four has described things like misgendering intentionally a transgender person or unnecessarily referring to their clothes, anatomy sexual relationships as harassment based on gender identity, and the EEOC has pursued it to Trump's executive order rescinded that. So there is a clear and identifiable limitation of protections for
transgender employees based on this order. And I think the next question is how much will the EEOC acting chair skirt the boss stock decision around protection overall?
He rescinded a Biden administration provision that allowed transgender people to serve in the military, but he didn't ban transgender people from serving in the military. Do you think that's the next step.
I think he has a lot more power with respect to the military is than the private sector, and so that's something that he could do, and I think the challenges will be different than something that the EEOC does. I think a EEOC position that it is okay to fire someone because their transgender is the opposite of the
Supreme Court's ruling in Bostock. And I think the language of the executive order does conflict with that ruling, and we've already seen some indication of where the EEOC is taking their guidance too, But we are also interested to see how far they're going to take that.
This up ends so many things in the workplace. Will we see a difference within one year, within a month? How fast can these things be put into action?
I think given the risk and penalties for employers relating to retaining DEI, even if there's not further action from the federal government, there may be employers that are just discussing with their legal departments what's worth it and what's not, and they are immediately rolling back whatever they can to just get out of the scrutiny of the federal government. Again, we're talking about three executive orders on the same topic.
It's a vehement attack on DEI, and I think the private sector understands that and potentially, like any company or organization, is likely wanting to get back to their mission what they do best, which means getting out of the eye of the federal government on this issue. So it's very
likely that these changes are going to happen soon. I think the other consideration relating to what you just mentioned is that the idea that more people are going to be using the EEOC for their grievances is a specific possibility, given again that the reading between the lines of the chair's position is that there's a bit of an invitation that if you have a problem with your employer and
you haven't seen yourself as protected before, you're protected now. Simultaneously, you will have all these employees who are seeing DEI programs rolled back, are seeing their employers talk about race and sex in a different way, may feel less supported, less protected, and may react by bringing their own claims. It doesn't appear that there's going to be less litigation or less individual claims on this topic.
What are the finds like or the penalties for employers who violate these DEI rules.
It's just an employer who's violated Title seven, either in a private lawsuit or in an action brought by the EEOC, then the penalties are going to be based on the same concepts as any employment action, which is lost wages,
emotional distress, and punitive damages. If we are talking about the federal contractor sphere, and you have a federal contractor who may have had an affirmative action program as understandably they would given them many years that that was required, and continues to leave that in place and then seeks
a federal contract. That contractor could be found now under the new order to be violating the False Claims Act, be making a false claim to the government for fees under this contract, because from the government's perspective, the contractor has hid or lied about the fact that they are indeed taking measures to have a diverse workforce, which is strictly prohibited and monitored in the federal contractor scheme.
So nishe our employers completely confused. Are you getting calls from people about you know, what's going on here? What do I have to do? What can I do?
Yeah? Absolutely, particularly in the federal contracting space. It's a pretty big change, and unless you were really in the know, not something that was expected for the entire executive order addressing Affirmative Action that's been in place since nineteen sixty five to not only go away, but be replaced with
this other onerous and risk executive order. Right, And I do think that these companies want to be able to go do what they do best without an overt amount of scrutiny on these matters and so there's some questions as to how best to move forward there. And then, of course, with any private sector employer, what is the EEOC going to be focusing on and is there any reason that they'd be focusing on me?
These orders are game changers, that's for sure. Thanks so much, nizsche That's Niche Rma, a labor and employment litigation partner at Dorsey and Whitney. In other legal news today, the first of Donald Trump's executive orders to be blocked by a judge, at least temporarily. A Seattle federal judge has temporarily blocked Trump from restricting who's eligible for automatic US citizenship at birth, in an early legal setback for the
new administration's hardline immigration agenda. Judge John Kaufenor called Trump's executive order ending birthright citizenship blatantly unconstitutional and question the quality of lawyering within the administration. The order denies automatic citizenship to US born children of immigrants who entered the
country illegally or have temporary legal status. Birthright citizenship is a right enshrined in the Fourteenth Amendment, and the judge said, it just boggles my mind that a lawyer could argue that the order was constitutional. The judge stopped the administration from taking any steps to carry out the order for fourteen days. He'll next consider whether to sign a longer term injunction. The administration is facing at least six lawsuits
over Trump's birthright citizenship order. Federal judges in Maryland and New Hampshire have hearings scheduled in the coming weeks to consider whether to also block the order from taking effect. The Justice Department released a statement saying it will vigorously defend Trump's order, which quote correctly interprets the fourteenth Amendment of the US Constitution. And that's it for this edition of The Bloomberg Law Show. Remember you can always get
the latest legal news on our Bloomberg Law podcasts. You can find them on Apple Podcasts, Spotify, and at www dot Bloomberg dot com, slash podcast Slash Law, And remember to tune into The Bloomberg Law Show every weeknight at ten pm Wall Street Time. I'm June Grosso, and you're listening to Bloomberg