Private Companies Scramble to Reassess DEI Policies

Even small businesses are being forced to confront what the administration’s diversity-equity-and-inclusion order means for them—especially if they have government contracts.

Good Morning!

Here are today’s highlights:

• Is small business confidence eroding? The head of Small Business Majority cites evidence that owners’ concerns are rising.

• Thanks to artificial intelligence, venture capitalists are increasingly interested in boring businesses with thin margins.

• Businesses around the country are figuring out how to prepare for an immigration raid.

• The premier of Ontario says Canada would retaliate against a Trump tariff.

HUMAN RESOURCES

Donald Trump’s order warning private employers to end “DEI discrimination” puts private companies around the country on edge: “Just days into his new administration, President Trump brought his war on diversity, equity, and inclusion to the C-suite, making business leaders in Boston and beyond wonder if they need to comply with orders aimed at eliminating DEI practices in the private sector, or press on. Some of Trump’s directives may be difficult to carry out and will surely face legal challenges. But lawyers and consultants note they could pressure businesses to scale back their DEI initiatives voluntarily to avoid being targeted, as several major corporations like Meta, Walmart, and recently Target have done since Trump was elected — though some may privately embrace doing away with diversity initiatives.”

• “The striking directive from Trump to eliminate DEI practices on the federal level and ‘combat illegal private-sector DEI preferences’ has added fuel to the DEI backlash already sweeping the country and is causing consternation among some local employers. ‘Clients are concerned, as they should be,’ said Christie Lindor, founder of the DEI-focused firm Tessi Consulting in Boston.”

• “John B. Cruz III, president of Cruz Companies, a third-generation Black-owned construction firm in Roxbury, said diversity goals in federal contracts gave companies like his, which may not have the connections that white-owned businesses do, a shot to participate in bids. He worries the new rules will hurt his business. ‘If I don’t get on a bid list, I can’t grow,’ said Cruz. ‘That’s the most important thing it did for us. It opened doors and allowed us to bid where people weren’t opening the doors.’”

• “Despite the ‘illegal discrimination’ cited in Trump’s orders, many employers aren’t doing anything unlawful, employment lawyers say. Companies tend to know, for example, that hiring quotas are against the law. And most corporate DEI initiatives are focused on combating just that sort of preferential treatment with tools that root out discrimination, such as implicit bias training and pay equity audits. There are gray areas, such as mentorship programs that are only open to certain groups, and impermissible practices, such as employers considering a person’s race or gender alone as a ‘plus’ when hiring or promoting as a way to diversify workforces that have historically been largely white, employment lawyers note.”

• “‘This executive order I think is really significant in that it shifts that paradigm,’ said Jennifer Cormier, an employment lawyer at Ropes & Gray in Boston. ‘The order is really suggesting that DE&I practices are inherently unlawful, and there really isn’t a basis for that in the law.’ Regardless, the Trump administration has already started carrying out the new directives.” READ MORE