Short Answer: Absolutely.
Long Answer: Read on.
Many employers are reassessing their sponsorship of Employee Resource Groups (ERGs) in light of the rapidly changing legal and political landscapes. Broadly defined, an ERG (sometimes referred to as an affinity group) is an employee-led, employer-supported group that fosters community, advocacy, and professional development around shared identities, experiences, or interests while promoting inclusion and workplace engagement. For many employers, ERGs are a vital component of an overall diversity equity and inclusion strategy. ERGs can be an effective way to develop a sense of belonging and to foster a healthy workplace culture
For employers that sponsor ERGs, the latest challenge is to ensure compliance with EEO laws and new Executive Orders while at the same time trying to maximize the effectiveness of ERGs. Balancing these sometimes competing considerations is no easy matter in the current environment. Every employer needs to conduct its own cost-benefit analysis in deciding whether to maintain ERGs and/or how to re-shape them to minimize risk.
Below, we provide guidance on structuring and managing ERGs to minimize legal risks and enhance their role in fostering an inclusive workplace.
What are the Legal Considerations and Risks associated with ERGs?
At their core, ERGs are one prong of an organization’s DEI initiatives. DEI efforts, including ERGs, are not in and of themselves unlawful. However, if not structured and implemented properly, the legal risks associated with ERGs are perhaps greater and more imminent than ever.
The scrutiny of DEI practices has been increasing over the last few years. That scrutiny has intensified dramatically in the early days of the Trump Administration. The Courts have already begun to shape the framework surrounding DEI and ERGs. Understanding how the courts have ruled on DEI practices provides valuable insights into how employers can structure legally compliant ERGs in the workplace. There are still opportunities for ERGs to remain a positive force in the workplace for both employees and employers. Below is a brief overview of some of the key court cases in this realm:
Students for Fair Admissions v. Harvard (SFFA) (2023):
In SFFA, the Supreme Court ruled that Harvard and UNC’s admissions policies violated the Equal Protection Clause by using race as a classification in a way that treated applicants differently based on their racial identity.
The Court emphasized that while promoting diversity is a legitimate and even a desirable goal, policies that explicitly classify individuals by race, such as race-based admissions preferences, are legally suspect.
This decision underscores a critical legal principle for ERGs: while they can support and uplift specific communities, they must not “classify,” or limit participation based on race, gender, or any other protected characteristic. Instead, ERGs should remain open to all employees and focus on fostering inclusion, professional development, and workplace culture in a way that aligns with race-neutral, legally sound approaches.
Muldrow v. City of St. Louis (2024):
In Muldrow, the Supreme Court lowered the burden for proving workplace discrimination, ruling that an employee needs to show only “some harm,” rather than “significant harm,” when alleging discrimination related to a term, condition, or privilege of employment.
This decision is particularly relevant for ERGs, as exclusion from participation in a workplace group that provides networking, professional development, or other career benefits could easily be argued as causing “some harm.”
Since ERGs are often seen as enhancing workplace opportunities and inclusion, an employee excluded from participation based on race, gender, or another protected characteristic under Title VII is likely to have a viable discrimination claim. Given this low threshold for harm, ensuring ERGs remain open to all employees is a crucial step in mitigating legal risk while fostering an inclusive workplace.
These legal decisions, among others, reinforce that while explicit classifications based on race, gender, or other protected traits are legally problematic, workplace programs that foster inclusion, support employees, and promote professional growth remain permissible, so long as they are structured correctly.
The key takeaway for ERGs is that they must remain open to all employees and avoid exclusive benefits tied to protected characteristics. At the same time, the legal standard for proving workplace discrimination has been lowered as even small perceived harms from exclusion could lead to legal challenges.
However, when ERGs are framed as inclusive spaces for networking, mentorship, and workplace engagement, rather than as exclusive or preferential groups, they continue to be a powerful and legally sound tool for fostering a stronger, more connected workforce.
Executive Orders:
The Trump Administration’s Executive Orders proclaim that many of the most powerful institutions and industries in the country have “adopted and actively use dangerous, demeaning, and immoral race- and sex-based preferences under the guise of so-called ‘diversity, equity, and inclusions’(DEI) or “diversity, equity, inclusion, and accessibility’ (DEIA) that can violate the civil-rights laws of this Nation.” The “can” reflects the Trump administration’s recognition that DEI initiatives do not inherently or universally violate federal civil rights laws.
From a legal standpoint, any policy, including those related to DEI and including ERGs, should be assessed to determine how it aligns with an employer’s ongoing obligation to comply with nondiscrimination laws. This evaluation typically involves considering whether: (a) the policy employs methods that could be deemed unlawful, such as treating individuals differently based on race or another protected characteristic; (b) it is motivated by impermissible reasoning, such as racial bias, harmful stereotypes, or intent to disadvantage a specific group or groups; and (c) it results in a negative disparate impact, meaning it disproportionately harms certain groups, compared to others. Even if one of these conditions is met, it does not automatically render the policy unlawful and further legal analysis would be necessary to determine its validity.
Structuring ERGs for Success: Balancing Legal Compliance and Employer Impact.
To remain legally sound and effective, ERGs must align with evolving legal standards while ensuring they support both employees and organizational goals. Recent legal decisions have emphasized that while ERGs can focus on underrepresented groups, they must remain open to all employees and avoid exclusive benefits tied to protected characteristics.
Structuring ERGs with clear governance, inclusive policies, and employer alignment is key to sustaining their success. Here are some key considerations for structuring ERGs effectively:
- Maintain Open Participation – ERGs should be accessible to all employees, regardless of their membership (or non-membership) in a particular protected class. While they can focus on issues affecting specific groups (e.g. women, minorities, LGBTQ+ employees), participation must not be restricted. Guidelines for acceptable behavior within each group can be established to minimize the risk or concern that a less homogenous group (e.g. including men in a “Women in the Workplace ERG) does not detract from the objectives of that ERG.
- Avoid Preferential Benefits – ERGs should not engage in recruitment, hiring, or preferential benefits (such as training or career development), that are based on protected traits. These activities could be seen as violating anti-discrimination laws.
- Shift from Identity-Based Advocacy to Professional Development – ERGs should prioritize career growth, mentorship, and leadership development over exclusive social advocacy. Aligning initiatives with an employer’s mission or strategies ensures ERGs remain impactful and legally sound.
- Establish Strong Governance and Accountability – Organizations should implement structured roles, responsibilities, and leadership selection processes to maintain credibility.
- Formalize ERG leadership roles through a transparent selection process.
- Provide leadership training on workplace policies, compliance, and best practices.
- Develop a business plan or strategic roadmap with measurable goals and updates.
- Encourage Allyship – Fostering allyship within and between ERGs can reduce exclusivity concerns and reinforce a shared culture of inclusion.
- Shift language from “equity” to “inclusion and impact” or from “diversity goals” to “broadening perspectives” to help frame ERG efforts in a way that mitigates legal risks.
ERGs as Employer Assets: Case Studies
- Liberty Mutual’s Amigos@Liberty ERG recognized that Hispanic/Latino communities were underserved in the insurance market and took proactive steps to bridge the gap. By collaborating with company leadership, the ERG helped launch the Liberty Market Share Acceleration Strategy (Liberty MAS), ensuring a fully translated Spanish-language experience for certain products and providing culturally relevant education materials. This not only expanded market engagement but also reinforced ERGs as valuable business partners when aligned with strategic goals.
- PetSmart’s Pride ERG demonstrated how ERGs can drive product innovation and cross-departmental collaboration. By spearheading the launch of an in-house Pride pet product collection, their ERG worked across departments to bring the initiative to market quickly. The project generated strong profit margins and positioned ERGs as key players in accelerating product development while fostering brand alignment with inclusion-focused initiatives.
Navigating ERGs Amid Ongoing Legal Challenges:
As the legal landscape surrounding DEI initiatives (including ERGs) continues to shift, it is essential for organizations to remain vigilant and adaptable in structuring their DEI and ERG programs. Many of President Trump’s Executive Orders targeting DEI efforts are still making their way through the courts. These ongoing legal battles emphasize the need for employers to stay informed, review legal risks, and proactively adjust ERG policies/practices to ensure compliance while maintaining their value as engagement tools that support workplace culture, professional development, and employer goals.
While retreating from DEI and ERG initiatives is a path some organizations are taking, ensuring that such significant decisions are based on a full understanding of the benefits and risks of DEI and ERGs makes good sense. By maintaining clear governance, measurable objectives, and strong leadership support, ERGs can continue to serve as a vital part of a positive workplace culture and organizational success.
Final Takeaway: ERGs Should Be Structured for Both Impact and Compliance
ERGs that do not rely on explicit protected classifications or restrict participation based on membership in a protected class remain legally sound under current federal civil rights laws and Supreme Court precedent. While increased scrutiny on DEI efforts may create uncertainty and increase risk, well-structured ERGs that align with an employer’s goals, foster professional growth, and remain open to all employees continue to be both impactful and compliant.
K|W|W anticipates further developments on this issue and will continue to monitor these developments. However, should you have any questions about implementing or managing ERGs, do not hesitate to contact any K|W|W attorney for assistance. At K|W|W, your workforce is our priority.