New EEOC Enforcement Plan Raises Potential DEI and Transgender Issues for Employers

The EEOC laid out its areas of focus and coordination for the next three years in its new National Enforcement Plan. Generally, the plan is consistent with the current administration’s scrutiny of DEI policies and hiring practices, as well as its narrow interpretation of transgender protections under Title VII. The agency also plans to explore how recent U.S. Supreme Court decisions might impact the EEOC’s ability to enforce its priorities.

Focus on facially discriminatory policies, practices and programs

The EEOC plans to prioritize matters it deems as involving facially discriminatory policies, practices and programs, as well as those that result in intentional discrimination. According to the plan, the latter “may include, but is not limited to, policies, programs, or practices that preference guest worker visa holders or PERM applicants or those policies, programs, or practices labeled or framed as ‘diversity, equity, and inclusion’ (DEI) or similar euphemisms.”

Examples of potentially unlawful practices referenced by the plan include:

• • Using race- or sex-based quotas, including those identified as aspirational goals
  • Limiting access to training, mentoring, internship, apprenticeship and advancement opportunities
  • Requiring, permitting or incentivizing the use of race or sex in employment decisions and actions

Pursuit of matters that may test employer DEI and transgender policies under recent Supreme Court rulings

The EEOC intends also to pursue matters “having the potential of promoting the development of law supporting the antidiscrimination purposes of the statutes enforced by the Commission” under recent U.S. Supreme Court decisions.

This will include the analysis of DEI practices, programs and policies under Ames v. Ohio Department of Youth Services (eliminating the higher standard for establishing discrimination against majority-group employees), Muldrow v. St. Louis (reducing the threshold of a claimant’s harm necessary to establish an employment claim from “significant” harm to “some” harm) and Students for Fair Admissions (holding that an applicant’s race alone cannot be used as a factor in college admissions).

Collectively, these decisions could pave the way for successful discrimination claims brought by majority-group employees that are based on DEI policies.

The EEOC also intends to explore an employer’s obligation to reasonably accommodate religious practices under Groff v. DeJoy, in which the Supreme Court increased an employer’s burden for establishing that an accommodation creates an undue hardship from “de minimis” to a “substantial cost.”

Additionally, the EEOC plans to “clarif[y] the scope of Bostock v. Clayton County with respect to (i) employees’ right to single-sex intimate spaces; (ii) employers’ right to provide the same; (iii) employees’ and employers’ right to express the binary nature of sex; and (iv) to employees’ right to religious accommodations for sincerely held religious beliefs.”

In Bostock, the Supreme Court held that Title VII’s sex discrimination ban extends to discrimination based on sexual orientation and gender identity. However, Bostock does not address whether or to what extent Title VII’s prohibition on discrimination extends to pronoun usage and access to bathrooms or facilities consistent with an individual’s gender identity. On Jan. 22, the EEOC expressed its current view on this issue by revoking federal guidance that had treated the intentional misgendering of employees as a form of unlawful workplace harassment.

Inclusion of this priority in the plan appears to be consistent with that position, but now it appears that the EEOC also intends to explore the interplay between transgender employment policies and the potential need to accommodate employees with religious objections to such policies. Again, under Groff v. Dejoy, an employer must provide a religious accommodation to an employee in the absence of a “substantial” cost to the employer.

Focus on PWFA, vulnerable worker protections and disparate treatment claims

Under the plan, the EEOC also intends to pursue cases that will explore the scope of liability under the Pregnant Workers Fairness Act, which went into effect in June 2023. The EEOC also plans to prioritize cases protecting vulnerable workers, such as teenagers, persons with limited literacy or education, individuals holding low wage jobs, survivors of sexual assault, and individuals with developmental or intellectual disabilities. Finally, the EEOC asserted a priority for addressing claims of intentional discrimination (disparate treatment) rather than those of unintentional discrimination based on neutral policies or practices (disparate impact).

Steps employers can take now

The plan provides employers with an opportunity to reassess workplace policies, programs and practices that may draw heightened agency scrutiny over the next several years. In particular, employers should review DEI-related initiatives, hiring and advancement criteria, accommodation procedures, and policies addressing gender-based facilities or gender identity issues. Going forward, employers should treat the plan as a roadmap for likely EEOC enforcement activity and consider conducting reviews of higher-risk policies and practices before they become the subject of a charge, investigation or litigation.

Please contact Jay Ebelhar or any member of Phelps’ Labor and Employment team with questions.