Gibson Dunn’s Workplace DEI Task Force aims to help our clients navigate the evolving legal and policy landscape following recent Executive Branch actions and the Supreme Court’s decision in SFFA v. Harvard. Prior issues of our DEI Task Force Update can be found in our DEI Resource Center.~~Key Developments~~On February 26, U.S. Equal Employment Opportunity Commission (“EEOC”) Chair Andrea Lucas issued a letter to chief executive officers, general counsel, and board chairs of the 500 largest employers in the United States to educate them about her views on the potential for race- and sex-based discrimination in corporate DEI programs. The letter asserts that the “bedrock American principle[]” of equality has been “under attack” by “movements and ideologies” that “demand equal outcomes over equal treatment” and “promote discrimination against certain races or groups.” Chair Lucas writes, “we are the Equal Employment Opportunity Commission, not the Equitable Employment Outcomes Commission.” The letter states that the EEOC is committed to using “every available resource” to eradicate what it views as discriminatory practices in the workplace. In a press release regarding the letter, Chair Lucas, echoing Chief Justice Roberts in the SFFA v. Harvard admissions decision, stated that “[t]he only lawful way to stop discrimination on the basis of race or sex, is to stop discrimination on the basis of race or sex,” and urged corporate leaders to “reject identity politics” as a solution to workplace issues.~~On the same day, the EEOC issued a decision holding that Title VII permits federal employers to maintain sex-separated bathrooms, and similar intimate spaces, based on biological sex and does not require special exceptions for transgender employees, reversing a 2015 EEOC decision which held that federal agencies “must allow” trans-identifying employees access to the “opposite sex restroom.” The case arose when a “male employee” of the U.S. Army began “identif[ying] as a woman” and requested access to female-designated bathrooms and locker rooms. The Army denied the request based on Executive Order 14168, which directed agencies to ensure that “intimate spaces” are designated by sex rather than identity. The EEOC reasoned that because of innate reproductive and physical differences between men and women, the sexes are not “similarly situated” when it comes to bathrooms and other intimate spaces where privacy expectations apply and, therefore, separating men and women under such circumstances is not discriminatory under Title VII. The EEOC also concluded that under the Supreme Court’s 2020 decision in Bostock v. Clayton County, trans-identifying employees are entitled to equal treatment, not exemptions from generally applicable workplace rules, including rules to use the bathroom corresponding to one’s biological sex. The EEOC’s decision applies only to federal agencies subject to the EEOC’s administrative complaint process and does not bind private sector employers or federal courts. In a LinkedIn post about the decision, Chair Lucas said that “[w]hen it comes to bathrooms, male and female employees are not similarly situated. Biology is not bigotry.” The case is Selina S. v. Dep’t of the Army, EEOC Appeal No. 2025003976 (Feb. 24, 2026).~~Beginning on March 1, 2026, the Fair Investment Practices by Venture Capital Companies Law (“FIPVCC”) will require certain “venture capital companies” with broadly defined ties to the State to begin registering with the California Department of Financial Protection and Innovation (“DFPI”). By April 1, 2026, these covered entities must submit their first annual report, which will cover in-scope activities from 2025. The law mandates that these firms collect and report anonymized, aggregated demographic data on the founding teams of their portfolio companies, including information on race, ethnicity, gender identity, LGBTQ+ status, and disability status. While participation in the founder surveys is voluntary, the collected data will be published online by DFPI. Firms that fail to comply will be given a 60-day period to cure the deficiency before potentially facing penalties. In preparation for these new requirements, affected firms are advised to confirm their coverage under the law, identify their reportable 2025 venture capital investments, and implement processes for surveying founders and securely managing the data. For more information, please refer to the Gibson Dunn client alert on this topic.~~On February 24, the United States Court of Appeals for the Sixth Circuit affirmed the dismissal of a putative-class action lawsuit alleging racially discriminatory grantmaking in violation of Section 1981 by Progressive Preferred Insurance, Progressive Casualty Insurance, and Circular Board. The defendants’ program—which was discontinued after the Supreme Court’s 2023 decision in SFFA v. Harvard—offered ten $25,000 grants to small businesses to help them buy a commercial vehicle and limited eligibility to Black-owned businesses.~~In a 2-1 decision, Judge Andre Mathis, joined by Judge David McKeague, held that the lead plaintiff, a white commercial truck driver, lacked standing to challenge the defendants’ grant program because he failed to submit an application for the grant. The Sixth Circuit adopted the plaintiff’s two-contract theory, which distinguished between an “application-stage” contract and subsequent “grant-stage” contract, but held that the plaintiff’s injury was “self-inflicted” because he never applied to the grant program and therefore could not establish that the defendants caused his injury. The court noted that the plaintiff did not plead any race-based barriers to entering into an “application-stage” contract or allege that the grant application required him to disclose his race or certify compliance with any race-based eligibility criteria before applying. Thus, the court reasoned that because the plaintiff chose not to submit his application, he never subjected himself to the allegedly discriminatory race-based criteria for the subsequent “grant-stage” contract. Judge Danny Boggs dissented, disagreeing with the majority’s description of the plaintiff’s injury as “self-inflicted” because the grant program “clearly discriminated” based on race and led to the plaintiff’s injury of an “unequal contracting opportunity based on race.” The case is Nathan Roberts v. Progressive Preferred Insurance Co., No. 24-3454 (6th Cir. 2025).~~On February 17, the EEOC sued Coca-Cola Beverages Northeast, Inc., alleging it engaged in unlawful employment practices on the basis of sex in violation of Title VII of the Civil Rights Act of 1964. The complaint alleges that Coca-Cola Northeast invited only female employees to an “employer-sponsored trip and networking event” at a casino resort, which featured a “social reception, team-building exercises and recreational activities,” excusing them from their regular work duties and paying their normal wages. The complaint alleges that Coca-Cola Northeast’s exclusion of male employees from attending and participating in the event constitutes a “denial of equal compensation, terms, conditions, or privileges of employment on the basis of sex.” EEOC Chair Andrea Lucas posted about the suit on LinkedIn, stating that “Title VII does not permit sex segregation and sex-based disparate treatment in privileges of employment like employer-sponsored events, trips, networking, and training.” The case is EEOC v. Coca-Cola Beverages Northeast, Inc., No. 1:26-cv-00115 (D. N.H. 2026).~~On February 6, the United States Court of Appeals for the Fourth Circuit vacated an injunction barring enforcement of Executive Orders 14151 (“Ending Radical and Wasteful Government DEI Programs and Preferencing”) and 14173 (“Ending Illegal Discrimination and Restoring Merit-Based Opportunity”). The Fourth Circuit previously stayed the injunction pending the resolution of the appeal. The plaintiffs (the National Association of Diversity Officers in Higher Education, the American Association of University Professors, and the Mayor and City Council of Baltimore Maryland), argued that the “Termination Provision” of EO 14151 and the “Certification Provision” and “Enforcement Threat Provision” of EO 14173 violate the First and Fifth Amendments. Those provisions require all agencies to (1) terminate all DEI-related positions, programs, and performance requirements, (2) include in every contract or grant award a provision that states the contractual counterparty or grant recipient does not operate unlawful programs promoting DEI, and (3) prepare a plan specifying measures to deter unlawful DEI programs, respectively.~~The three-judge panel—Chief Judge Albert Diaz, Judge Pamela A. Harris, and Judge Allison J. Rushing—held that the plaintiffs lacked standing with respect to the Enforcement Threat Provision because the allegations “that they’ll be forced to restrict” their speech “or face penalties” “overstate[d]” the text of the provision. The court explained that the provision “focus[es] on internal government agency processes and programs and reporting to the President from his subordinates,” and that the plaintiffs are not in imminent danger of injury because they are not “agenc[ies] within the executive branch of government.” Turning to the Termination and Certification Provisions, the court held that plaintiffs had standing but concluded that their facial challenges as to each were unlikely to succeed. The court held that plaintiffs’ Fifth Amendment claim as to the Termination Provision was unlikely to succeed because the directive to terminate “equity-related” grants was not impermissibly vague. The court also found that plaintiffs’ First Amendment challenge to the Certification Provision was also likely to be unavailing because the provision effectively asks plaintiffs only to “certify compliance with federal antidiscrimination law,” and therefore does not burden “protected speech” because “plaintiffs have no protectable speech interest in operating” DEI programs that violate federal antidiscrimination law.~~The court suggested that an as-applied challenge may be more likely to succeed than a facial challenge, if, for example, “the President, his subordinates, or another grantor misinterprets federal antidiscrimination law” in terminating a particular DEI program. And in a concurring opinion, Chief Judge Diaz emphasized that the court was presented with a “facial challenge,” not the legality or termination of a particular DEI program, which “makes all the difference.” He also stated that the evidence presented by the plaintiffs indicates that programs have been “terminated by keyword,” and “valuable grants” have been “gutted in the dark.” He concluded, “[f]or those disappointed by the outcome, I say this: Follow the law. Continue your critical work. Keep the faith. And depend on the Constitution, which remains a beacon amid the tumult.”~~On February 9, a group of anonymous law students and the EEOC filed a stipulation voluntarily dismissing a lawsuit the students filed in response to the EEOC’s March 17 letters requesting information from twenty law firms. The lawsuit was filed after the EEOC sent requests to the law firms requesting information including the name, sex, race, GPA, and contact information for law students who applied for jobs since 2019. The EEOC stated that responding to the requests was voluntary, most law firms “did not provide any of the requested information,” and any information provided to the EEOC by law firms in response to the March 17 letters “did not include names, email addresses, phone numbers, or other personally identifying information of any law firm employee or applicant.” The stipulation states that the EEOC “considers the matter of responding to those letters closed.” The case is Doe 1 et. al v. EEOC, et. al, No. 25-cv-1124 (D.D.C. 2025).~~On February 5, Judge John Ross of the U.S. District Court for the Eastern District of Missouri dismissed a lawsuit filed by the State of Missouri against Starbucks in which Missouri alleged that the company’s DEI commitments were pretext to discriminate on the basis of race, gender, and sexual orientation. The court found that the State lacked standing, because it “did not point to even a single Missouri resident” who suffered an adverse employment action because they lacked Starbucks’s “preferred racial or sex characteristics.” The court dismissed the State’s claims under both Title VII and the Missouri Human Rights Act. The case is State of Missouri v. Starbucks Corp., No. 4:25-cv-00165 (E.D. Mo. 2025).~~On February 4, the EEOC filed a motion in the Eastern District of Missouri to enforce an administrative subpoena issued in its investigation of Nike for alleged violations of Title VII. The EEOC alleges that Nike engaged in unlawful employment practices by “engaging in a pattern or practice of disparate treatment against White employees, applicants, and training program participants,” including by committing to allegedly unlawful “race-based workforce representation quotas,” as evidenced by its published “2025 Targets.” The EEOC subpoenaed information relating to layoff decisions, executive compensation policies and decisions tied to DEI metrics, demographic and pay data for people of color that was provided to Nike executives, and programs aimed at increasing the representation of racial and ethnic minorities in the workforce. The EEOC asserts that Nike provided “some but not all the information and documents required” and therefore failed to “fully comply” with the subpoena. On February 12, 2026, the court ordered Nike to respond to the EEOC’s motion by March 16, 2026.~~On January 30, 2026, Federal Trade Commission (“FTC”) Chairman Andrew N. Ferguson issued a letter to 42 law firms warning that their participation in the Diversity Lab’s Mansfield Certification program may expose them to potential antitrust liability. The letter alleges that to be eligible for Mansfield Certification, firms agree that at least 30% of the candidates they consider for leadership and promotion will come from underrepresented “racial and other groups” and agree to participate in monthly information-sharing calls with competitor firms to exchange strategies for achieving the program’s DEI benchmarks. The letter states that such coordination among competing employers could violate Section 1 of the Sherman Act and Section 5 of the FTC Act by distorting competition for legal talent, suppressing wages and benefits, and depriving labor markets of independent decision-making. Although the letter does not allege unlawful conduct by recipient law firms, it advises the firms to re-evaluate their relationship with Diversity Lab and peer firms in light of their obligations under federal antitrust law. Last spring, Judge Beryl Howell of the U.S. District Court for the District of Columbia wrote that the Mansfield program does not violate anti-discrimination laws because it “expressly does not establish any hiring quotas or other illegally discriminatory practices” and requires “only that participating law firms consider attorneys from diverse backgrounds for certain positions.” The case is Perkins Coie LLP v. U.S. Dep’t of Justice, et al., No. 25-716 (D.D.C. 2025) and is on appeal at the D.C. Circuit Court of Appeals, No. 25-05241 (D.C. Cir.).~~On February 12, 2026, Bloomberg reported that Diversity Lab founder Caren Ulrich Stacy announced that the organization will pause its Mansfield program. According to Ulrich Stacy, the organization’s operating funds have been “substantially depleted by the need to respond to Executive Orders, DOJ law-firm lawsuits, and EEOC letters to law firms.” Ulrich Stacy stated that the FTC’s January 30 letters led to hundreds of concerned emails from clients. Most of Diversity Lab’s small team will be furloughed and the organization will operate with only one part-time employee and Ulrich Stacy herself.~~Media Coverage and Commentary~~Below is a selection of recent media coverage and commentary on these issues:~~Case Updates~~Below is a list of updates in new and pending cases:~~1. Contracting claims under Section 1981, the U.S. Constitution, and other statutes~~2. Employment discrimination and related claims~~3. Challenges to statutes, agency rules, executive orders, and regulatory decisions~~Legislative Updates~~The following Gibson Dunn attorneys assisted in preparing this client update: Jason Schwartz, Mylan Denerstein, Anna McKenzie, Cynthia Chen McTernan, Zakiyyah Salim-Williams, Molly Senger, Katherine Smith, Cate McCaffrey, Sameera Ripley, Anna Ziv, Emma Eisendrath, Benjamin Saul, Simon Moskovitz, Teddy Okechukwu, Beshoy Shokrolla, Angelle Henderson, Lauren Meyer, Kameron Mitchell, Taylor Bernstein, Jerry Blevins, Chelsea Clayton, Sonia Ghura, Samarah Jackson, Shanelle Jones, Elvyz Morales, Allonna Nordhavn, Felicia Reyes, Eric Thompson, Laura Wang, Daniela De La Cruz, Taylor-Ryan Duncan, Sam Moan, Shreya Sarin, and Rachel Schwartz.~~Gibson Dunn’s lawyers are available to assist in addressing any questions you may have regarding these developments. Please contact the Gibson Dunn lawyer with whom you usually work, any member of the firm’s Labor and Employment practice group, or the following practice leaders and authors:~~Jason C. Schwartz – Partner & Co-Chair, Labor & Employment Group
Washington, D.C. (+1 202-955-8242, jschwartz@gibsondunn.com)~~Katherine V.A. Smith – Partner & Co-Chair, Labor & Employment Group
Los Angeles (+1 213-229-7107, ksmith@gibsondunn.com)~~Mylan L. Denerstein – Partner & Co-Chair, Public Policy Group
New York (+1 212-351-3850, mdenerstein@gibsondunn.com)~~Zakiyyah T. Salim-Williams – Partner & Chief Diversity Officer
Washington, D.C. (+1 202-955-8503, zswilliams@gibsondunn.com)~~Molly T. Senger – Partner, Labor & Employment Group
Washington, D.C. (+1 202-955-8571, msenger@gibsondunn.com)~~Greta B. Williams – Partner, Labor & Employment Group
Washington, D.C. (+1 202-887-3745, gbwilliams@gibsondunn.com)~~Cynthia Chen McTernan – Partner, Labor & Employment Group
Los Angeles (+1 213-229-7633, cmcternan@gibsondunn.com)~~Anna M. McKenzie – Partner, Labor & Employment Group
Washington, D.C. (+1 202-955-8205, amckenzie@gibsondunn.com)~~© 2026 Gibson, Dunn & Crutcher LLP. All rights reserved. For contact and other information, please visit us at www.gibsondunn.com.~~Attorney Advertising: These materials were prepared for general informational purposes only based on information available at the time of publication and are not intended as, do not constitute, and should not be relied upon as, legal advice or a legal opinion on any specific facts or circumstances. Gibson Dunn (and its affiliates, attorneys, and employees) shall not have any liability in connection with any use of these materials. The sharing of these materials does not establish an attorney-client relationship with the recipient and should not be relied upon as an alternative for advice from qualified counsel. Please note that facts and circumstances may vary, and prior results do not guarantee a similar outcome.~~Download PDF~~
Mar 2
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