EEOC Focuses on Favoritism Toward Foreign Workers
First, the EEOC recently announced that it will increase focus on claims where employers allegedly favor foreign workers, such as H-1B visa holders, over American citizens. Although Title VII of the Civil Rights Act prohibits national origin discrimination, not citizenship discrimination, the EEOC indicated that it will pursue cases where hiring decisions show a preference that negatively affects U.S. citizen workers.
A recent federal jury decided against a large IT consulting company, in a case involving bias against non-Indian workers, providing a gateway model for these types of lawsuits. Employers who rely heavily on the H-1B visa program or other foreign worker hiring programs should review their hiring practices closely.
Changes to EEO-1 Reporting Requirements
In another major change, the EEOC will no longer allow employers to report nonbinary categories on the EEO-1 demographic reports. Companies will be required to classify employees strictly as male or female for the reporting questions. This shift follows a new executive order defining sex in binary terms for federal data collection.
The EEOC’s change forces employers to classify workers as male or female for reporting, but Title VII still protects gender identity, putting companies in the tricky position of balancing rigid federal reporting with broader nondiscrimination duties.
Employers will need to adjust their workforce reporting practices while continuing to prevent discrimination based on gender identity.
Shifting DEI Programs Toward Socioeconomic Focus
The administration’s broader approach to diversity, equity, and inclusion (DEI) initiatives is also evolving. Employers are being encouraged to shift from programs based on race or gender to those focused on socioeconomic factors, such as support for first-generation college graduates or economically disadvantaged workers. These types of initiatives may help companies achieve their inclusion goals while minimizing risk given current political scrutiny. However, employers will still want to use caution that these programs may still be viewed as a substitute for prohibited race-or gender-based decision making. They will want to assess the “impact” of any such approach.
EEOC Pulls Back on Disparate Impact Enforcement
Ironically, however, President Trump issued a new Executive Order directed to the EEOC and Department of Justice to eliminate reliance on “disparate impact” theory when enforcing civil rights law. Disparate Impact claims focus on neutral policies that disproportionately affect protected groups indirectly, or even if no intentional discrimination was intended.
While private employees can still pursue disparate impact claims, federal agencies are now being instructed to pull back from this area of enforcement. This shift could reduce government investigations involving policies like background checks, AI hiring tools, or grooming standards, but employers must still guard against private lawsuits alleging unintentional bias.
Next Steps for Employers
Together, these developments show a clear realignment in federal enforcement priorities creating a stronger focus on protecting American workers in hiring, a move away from traditional DEI frameworks, and a reduction in government support for disparate impact cases. At the same time, employers remain fully subject to anti-discrimination laws under Title VII and other statutes.
Employers should review their hiring practices, demographic reporting procedures, and diversity initiatives to ensure they align with the new regulatory environment. Companies using visa workers or offering DEI programs should be particularly cautious and may want to update policies or implement training on these HR issues to reduce risk.
As always, we at K|W|W are available to help you assess how these risks may impact your business and help you make decisions that are well-supported and legally defensible. Your workforce is our priority.