What Is the DEI Ban? Understanding the Legislation

Sarah Akida
Latest posts by Sarah Akida (see all)

In recent years, Diversity, Equity, and Inclusion (DEI) initiatives have become a focal point in corporate and academic spaces across the United States. What is the DEI ban, and how does it affect businesses and higher education?

what is the dei ban

Many businesses and educational institutions have seen tangible benefits from these initiatives. Companies that have embraced DEI have reported higher employee engagement, increased employee retention, improved financial performance, and enhanced brand loyalty. Research consistently shows that diverse teams outperform homogeneous teams in problem-solving and innovation.

For universities, DEI programs have led to increased graduation rates, better student engagement, and stronger institutional reputations. Colleges that prioritize diversity often see higher enrollment numbers and improved retention rates among underrepresented students.

Employees, particularly those from marginalized communities, have benefited from workplace environments that foster inclusion, leading to increased job satisfaction and career advancement opportunities.

However, the landscape of DEI is shifting rapidly due to recent legislative actions. The most notable development came in January 2025 when President Donald Trump issued an executive order titled “Ending Illegal Discrimination and Restoring Merit-Based Opportunity.” This order aims to eliminate DEI programs within the federal workforce and among federal contractors, emphasizing merit-based hiring and promotions. This move, along with similar state-level laws, has ignited fresh debate about the role of DEI in modern workplaces and educational institutions.

What Is the DEI Ban & Anti-DEI Laws?

The DEI ban refers to a range of legislative actions, executive orders, and institutional policies aimed at limiting or removing DEI offices, programs, and initiatives. These restrictions primarily affect public institutions of higher education, public schools, and state agencies, prohibiting them from using state funds for DEI-related efforts. Some laws extend to corporate entities, particularly federal contractors, imposing new limitations on diversity training and hiring processes.

Key DEI Bans and Legislative Actions

To better understand the scope of DEI bans, here is a list of key legislative actions that have been passed across the U.S.:

These developments reflect a growing movement to reassess and, in many cases, dismantle DEI initiatives within both governmental and educational institutions.

How the DEI Ban Affects Higher Education – Impact on Public Universities and Colleges

Public colleges and universities have traditionally implemented DEI programs to support minority populations, undocumented students, and students of color. These initiatives include:

  • Inclusion offices: providing resources for underrepresented groups.
  • Multicultural centers: that foster community engagement and student organizations.
  • Diversity training: for faculty, staff members, and students.
  • Affirmative action policies: aimed at creating equitable hiring practices.

With the rise of anti-DEI legislation, institutions have been forced to dismantle DEI efforts, placing public institutions of higher education in a challenging position. This shift has led to concerns about the potential effects on academic freedom, free speech, and civil rights protections, though the extent to which legislation will be enforced is yet to be seen, as some experts deem the language “broad“.

Financial Implications for Universities

Public institutions rely heavily on state funding and, in some cases, federal funds to support DEI programs. As state legislatures reduce funding for DEI efforts, public universities may face challenges in attracting a diverse student body, which could have long-term financial consequences.

Additionally, research shows that inclusive campus environments improve retention and graduation rates, further reinforcing the economic value of DEI initiatives. A study published in the Journal of Diversity Management found a direct positive correlation between African-American students’ perceptions of campus climate and their retention at predominantly white institutions.

Similarly, EdTrust highlights that when campuses foster an environment for underrepresented groups, such as men of color, these students tend to perform better and are more likely to complete their degrees or certifications.

The DEI Ban and Its Impact on Businesses

While many DEI bans primarily target higher education institutions, corporate America is also feeling the effects. Companies that do business with the federal government—particularly federal contractors—must navigate evolving regulations regarding diversity statements, inclusion programs, and hiring practices. Though hiring for ‘merit’ may appear positive for businesses at first look, there are other metrics to consider:

  • Compliance with new laws: Employers must ensure that their diversity policies do not violate new state laws or federal mandates.
  • Recruitment and hiring challenges: DEI initiatives have played a key role in attracting top talent from diverse backgrounds, and restrictions on these efforts could make it harder to recruit skilled employees.
  • Risk of litigation: Businesses that maintain DEI programs may face legal scrutiny, while those that dismantle them may face backlash from employees and advocacy groups.
  • Employee Turnover and productivity: DEI initiatives have been shown to improve both employee retention and productivity.

The Financial Implications of Anti-DEI Policies on Businesses

Implementing Diversity, Equity, and Inclusion (DEI) initiatives offers numerous benefits to organizations, including enhanced innovation, improved employee engagement, and access to a broader talent pool. Conversely, the absence or removal of DEI policies can lead to significant financial repercussions, from legal liabilities to talent attrition and reduced market competitiveness.

A 2023 McKinsey report found that companies ranking in the top quartile for ethnic diversity were 39% more likely to outperform their industry peers in profitability. Additionally, research from Harvard Business Review highlights that organizations prioritizing DEI tend to experience higher levels of employee engagement and retention, translating into improved financial performance.

Legal and Settlement Costs

Companies that fail to uphold DEI principles may face costly legal challenges. Notable examples include:

  • Coca-Cola (2000): The company settled a racial discrimination lawsuit for $192 million, marking one of the largest race employment discrimination settlements in U.S. history.
  • Verizon Communications (2011): Verizon settled a disability discrimination lawsuit for $20 million after being accused of failing to accommodate employees with disabilities.
  • Tesla (2021): The company was ordered to pay $137 million in damages in a racial discrimination lawsuit after a Black employee reported widespread racial abuse at one of its plants. 

Employee Turnover and Reduced Productivity

A lack of DEI initiatives can lead to higher employee turnover and decreased productivity. Research has found that employees who experience workplace discrimination or an unfair environment are more likely to leave, leading to significant costs in recruiting and training replacements.

Despite the growing movement against DEI, research consistently highlights the financial benefits of diverse and inclusive workplaces. Studies indicate that organizations with strong DEI policies experience:

  • Higher revenue growth: Companies with diverse leadership teams are more likely to outperform their competitors.
  • Improved innovation: Inclusive teams bring diverse perspectives, leading to more creative solutions and problem-solving.
  • Enhanced employee satisfaction: DEI efforts contribute to workplace culture, increasing engagement and reducing turnover.

Companies that continue investing in DEI, even in states with restrictive laws, may position themselves for sustained success in an increasingly diverse market.

A February 2025 report from MyPerfectResume reveals that employees overwhelmingly value the positive outcomes of diversity programs:

  • 88% of employees believe DEI initiatives have improved workplace diversity overall.
  • 87% say diversity within company leadership has increased due to DEI efforts.
  • 95% report that DEI programs have positively impacted their personal experiences at work.

These findings point to a disconnect between corporate decisions to reduce DEI support and employee perceptions of DEI’s importance. Employees consistently identify DEI initiatives as vital for promoting inclusivity, enhancing company culture, and effectively supporting underrepresented groups in the workplace.

Additional insights from the report include:

  • 72% believe that their organization’s leadership is held accountable for DEI progress, regularly monitored through metrics and performance reviews.
  • 79% have noticed positive changes in their organization’s culture resulting from DEI efforts.
  • 74% affirm that their company’s DEI programs effectively address challenges faced by underrepresented employees.

Economic Impact on States

Anti-DEI policies can also have broader economic consequences. Research suggests that removing DEI initiatives from workplaces and universities could lead to decreased business investment and talent drain in affected states.

  • The Perryman Group estimated that banning DEI policies in Missouri alone could cost the state $2.6 billion in annual gross product and lead to 23,842 lost jobs by 2030.
  • Following the ‘Stop WOKE Act’, Florida-based companies saw their stock prices fall by 1.8 percentage points more than similar companies elsewhere in the United States

The financial implications of anti-DEI policies are substantial, encompassing legal costs, reputational damage, and economic losses. Organizations may need to consider these factors when evaluating their DEI strategies to mitigate potential risks and promote a more inclusive workplace. Research shows that businesses prioritizing diversity and inclusion enjoy higher profitability, innovation, and employee retention—all key factors in long-term success in today’s evolving marketplace.

Is There a Moral Factor to Consider?

While much of the discussion around DEI bans has focused on legal, financial, and business implications, an important question remains: is there a moral responsibility for companies and institutions to prioritize diversity and inclusion?

For many, DEI is not just about meeting quotas or complying with regulations—it’s about creating environments where all individuals, regardless of their background, feel valued and empowered to succeed. Historically, systemic barriers have prevented marginalized groups from accessing the same opportunities as others, and DEI initiatives aim to address these inequities.

Beyond economic arguments, fostering diversity and inclusion is about fairness and social progress. Employees, students, and communities thrive when organizations actively promote representation, equity, and belonging. Many business leaders argue that ethical leadership includes creating workplaces that reflect the diverse world in which we live.

Moreover, businesses that take a stand on social issues often strengthen their brand reputation and attract talent that values inclusivity. Consumers, particularly younger generations, are increasingly making purchasing decisions based on a company’s commitment to social values. Companies that continue to support DEI, even amidst legal challenges, may be seen as industry leaders that stand for more than just profits.

Ultimately, while compliance with DEI bans is necessary, organizations still have choices in how they support diversity and foster inclusive work and learning environments. Whether through mentorship programs, fair hiring practices, or employee resource groups, businesses and institutions can continue to prioritize ethical inclusivity while staying on the right side of the law.

Looking Ahead: Navigating the Future of DEI

The DEI ban represents a significant shift in how diversity, equity, and inclusion are approached in both academic and corporate settings. While legislative actions may reshape the landscape, the underlying principles of DEI remain critical for organizational success.

Key Takeaways for Businesses and Educational Institutions:

  • Stay informed: Monitor legislative changes at the state and federal levels to ensure compliance with new laws.
  • Adapt DEI strategies: Consider alternative approaches to fostering inclusion, such as mentorship programs and unbiased hiring technologies.
  • Leverage AI tools: Solutions like AI-driven job description analyzers can help businesses create uniform and unbiased hiring materials while maintaining compliance with new regulations.

While the DEI ban presents new challenges, it also underscores the need for innovative and thoughtful approaches to diversity and inclusion in both education and the workplace. Organizations that remain committed to these values—while adapting to evolving legal frameworks—may be the best positioned for long-term success.

The Role of HR Software in Maintaining DEI Compliance

As organizations navigate the evolving legal landscape surrounding DEI policies, HR software solutions like Ongig’s Text Analyzer provide essential tools to maintain compliance and foster an inclusive workplace. With increasing restrictions on traditional DEI initiatives, businesses must explore alternative ways to ensure fair hiring practices, unbiased job descriptions, and a diverse talent pipeline.

How Ongig Helps Mitigate DEI Challenges

  • AI-Powered Job Descriptions: Ongig’s job description software helps companies eliminate bias in their hiring materials, while ensuring compliance with evolving DEI laws.
  • Automated Compliance Monitoring: Businesses can use Ongig to automatically assess job postings for language that may not align with new state regulations, reducing legal risks.
  • Enhanced Candidate Engagement: Ongig’s platform enables HR teams to craft inclusive job descriptions that attract diverse candidates, improving recruitment and retention rates.

Why I Wrote This:

Ongig is committed to helping HR professionals, business leaders, and academic institutions navigate success. By understanding these legislative changes and their implications, organizations can make informed decisions about their diversity and inclusion efforts while navigating legal complexities. Book a demo with Ongig to see how the software aids businesses keep up with legislation while prioritizing finding top talent.

Shout-outs:

  1. Leveraging DEI for Long-Term Business Success by Uday Jain
  2. One More Time: Why Diversity Leads To Better Team Performance by Ron Carucci
  3. A Simplistic View of DEI: Birnbaum’s Critique Falls Short by Leah Smiley
  4. Ending Illegal Discrimination and Restoring Merit-Based Opportunity by The White House
  5. Texas Senate Bill No. 17
  6. Florida Senate Bill 266
  7. North Dakota Senate Bill No. 2247
  8. Missouri (2024) – Senate Bill 1125
  9. Mississippi (2025) – Senate Bill 2515
  10. Tennessee Bill House Bill 622
  11. Trump Takes Aim at DEI in Higher Ed by Jessica Blake
  12. Student Retention Through The Lens Of Campus Climate, Racial Stereotypes, And Faculty Relationships by Derrick Love
  13. Why DEI Programs Matter to College Students by Emmanuel Marshall
  14. Diversity matters even more: The case for holistic impact by Dame Vivian Hunt, Sundiatu Dixon-Fyle, Celia Huber, María del Mar Martínez Márquez, Sara Prince, and Ashley Thomas
  15. How Companies Can Improve Employee Engagement Right Now by Daniel Stein, Nick Hobson, Jon M. Jachimowicz, and Ashley Whillans
  16. Coca-Cola lawsuit (re racial discrimination in USA)
  17. EEOC History: 2010 – 2019
  18. Tesla must pay $137 million to a Black employee who sued for racial discrimination by Joe Hernandez
  19. The Cost of Replacing an Employee and the Role of Financial Wellness by Enrich
  20. Diversity and Inclusion Build High-Performance Teams by Manasi Sakpal
  21. DEI Rollbacks vs. Workplace Reality: 88% Say DEI Efforts Have Tangibly Improved Diversity by Jasmine Escalera
  22. The Potential Economic and Fiscal Cost to Missouri and Kansas of Proposed Policies Limiting the Role of Diversity, Equity, and Inclusion by The Perryman Group
  23. Repercussions From Florida’s Stop WOKE Act Show Investors Value DEI by Hoa Briscoe-Tran
  24. Taking a stand: 5 brands making bold statements on social issues by Sonia Nigam

by in Diversity and Inclusion