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Do Business Leaders Need to Worry About DEI Laws?

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DEI Laws

Diversity, equity, and inclusion should not be new concepts to business leaders, but DEI programs and policies are relatively new developments that help codify a company’s commitment to welcoming people of all backgrounds to the brand. As with many other business trends, the COVID pandemic accelerated consumer interest in DEI initiatives, and today, executives are feeling more pressure than ever to institute rigorous DEI practices.

Yet, as business leaders begin to develop DEI strategies, they may wonder: Are there any DEI laws or regulations in the United States that require compliance? Here is an exploration of existing DEI rules at the government level as well as laws that might emerge in the coming years to help business leaders make optimal DEI decisions.

Civil Rights and Anti-discrimination Acts

The Equal Employment Opportunity Commission (EEOC) is a federal agency responsible for enforcing anti-discrimination laws related to job applications. The EEOC has been in operation since the 1960s when the first major DEI legislation was passed by Congress — thought it might be worth noting that they were hardly called DEI issues more than 60 years ago.

The first federal law passed to protect employees from unfair discrimination was the Equal Pay Act of 1963, which served to end sex-based wage discrimination. Unfortunately, many workplaces continue to provide unequal pay for equal work, as prosecuting this type of discrimination is remarkably difficult. Employers should respect this DEI legislation and find ways to eliminate the gender wage gap in their workplaces.

Perhaps the most famous DEI law, the 1964 Civil Rights Act stipulates in Title VII that employees and job applicants cannot legally be discriminated against based on their race, color, religion, sex, or national origin. This pertains to the full spectrum of employment decisions, from selection and recruitment to promotion and termination. In 1991, Congress amended Title VII to strengthen and improve it, making it easier for employees to seek compensation in cases of discrimination. Adhering to Civil Rights laws is the bare minimum that employers can do to welcome workers of all backgrounds into their workforce.

The Age Discrimination in Employment Act (ADEA) of 1967 and the Rehabilitation Act of 1973 are two more laws upheld by the EEOC. The former prohibits discrimination against workers aged 40 and older, and the latter protects job applicants and employees with qualifying disabilities.

Recently, the White House announced its support for transgender, nonbinary,

and gender-nonconforming people filing discrimination suits through the EEOC. Though no legislation yet exists to legally protect these workers in the workplace, this move suggests that employers need to begin integrating greater support for all members of the LGBTQIA+ community in their DEI initiatives.

The CROWN Act

Among the most recent legislative moves in the DEI space, the U.S. House of Representatives worked in 2022 to pass the Creating a Respectful and Open World for Natural Hair (CROWN) Act. If passed by the Senate and signed by the president, this bill could prohibit employers from discriminating based on marginalized natural hairstyles, such as braids, twists, dreadlocks, afros, or textured hair.

Though not yet law, the CROWN Act demonstrates to employers that merely hiring people of different backgrounds is likely not enough. Workplaces need to be welcoming of all cultural practices and make space for people to express themselves authentically — as long as doing so is safe and productive. Business leaders who struggle to understand and accept practices from marginalized groups might benefit from a diversity, equity and inclusion course, which can provide the knowledge necessary to found an effective DEI program in the workplace.

State-level DEI Laws

The Federal Government is slow to take action on DEI issues, but many state and local jurisdictions have worked quickly to generate DEI-related legislation to keep communities safe and prosperous. For example, with the exception of Mississippi, every state has passed a pay equity law that prevents worker discrimination based on:

  • Age
  • Race
  • Creed
  • Color
  • Sex
  • Sexual orientation
  • Gender identity
  • National origin
  • Religion
  • Disability

Some states are even mandating a certain percentage of the workforce to come from underserved communities. Though there has been some pushback from conservative lawmakers and business leaders resistant to change, the promotion of diversity, equity, and inclusion through legislation can ensure that the workplace is hospitable to and appreciative of various backgrounds.

Business leaders should not be motivated by legislation alone in the development of DEI initiatives. Though companies must be compliant with existing regulations, business leaders can and should go beyond what is required to ensure that their workforce feels adequately supported.