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Speaker 1: This is Bloomberg Law with June Grossel from Bloomberg Radio.

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Speaker 2: I will also end the government policy of trying to

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Speaker 2: socially engineer race and gender into every aspect of public

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Speaker 2: and private life.

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Speaker 3: And in sweeping executive orders. On Monday, President Donald Trump

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Speaker 3: ended diversity, equity and inclusion programs throughout the federal government,

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Speaker 3: and in an attempt to end DEI policies in the

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Speaker 3: private sector, he directed agencies to drop lists of private

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Speaker 3: sector companies to investigate over their DEI policies. He also

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Speaker 3: issued an executive order to end what he's called transgender lunacy.

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Speaker 2: It will henceforth be the official policy of the United

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Speaker 2: States government that there are only two genders, male and female.

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Speaker 3: Legal and advocacy groups condemned the orders, which will likely

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Speaker 3: be challenged in court. Joining me is Niche Verma, a

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Speaker 3: labor and employment litigation partner at Dorsey and Whitney. Nishe

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Speaker 3: he signed three executive orders relating to DEI. Start by

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Speaker 3: telling us about the first one, which has to do

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Speaker 3: with the federal government.

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Speaker 1: I would say the three orders put together are primarily

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Speaker 1: based on the federal government, which he of course has

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Speaker 1: a significant amount of control over. But then there's bleedover

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Speaker 1: and express regulations around private sector as well. So starting

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Speaker 1: with the I think most obvious within his purview, order

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Speaker 1: to dismantle DEI programs, the order is essentially just saying

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Speaker 1: that these programs are creating discrimination in the federal workplace,

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Speaker 1: harming the federal workplace, and therefore need to be removed.

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Speaker 1: And so there is a mandate, as you've seen, that

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Speaker 1: all individuals who are said to be in those roles

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Speaker 1: are to be put on paid leave I believe till

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Speaker 1: the end of the month and then terminated. Is interesting

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Speaker 1: in and of itself because there's no question as to

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Speaker 1: whether there's another job these people could be doing, and

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Speaker 1: that is something that their unions or any other advocate

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Speaker 1: for them would want to be asking. I think in

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Speaker 1: that aspect, it appears these people are being punished for

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Speaker 1: working in the DEI space in the federal government such

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Speaker 1: that they must lose their jobs, even if there is

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Speaker 1: something else they could be doing given their skills.

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Speaker 3: Let's say that there's no other position that they could take.

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Speaker 3: Is the government allowed to fire them or are their

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Speaker 3: protections for these workers?

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Speaker 1: Very many of these workers could be in any union, and

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Speaker 1: if so, they would have layoff provisions in that CBA,

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Speaker 1: and there would be just cause provisions in that CBA,

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Speaker 1: and so those unions would be reviewing those provisions to

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Speaker 1: see whether they can file agrievance and challenge the terminations.

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Speaker 1: There may be others that were like your guests on

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Speaker 1: yesterday's show, was indicating that whose job was always at

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Speaker 1: the pleasure of the administ station and we're always able

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Speaker 1: to be terminated at will, and that wouldn't change today.

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Speaker 1: There may be another bucket of people who, due to

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Speaker 1: the change to schedule s which took away some of

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Speaker 1: those protections for the civil workforce, could now be terminated

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Speaker 1: where that would not have been enough before.

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Speaker 3: And I found this a bit odd. Secretary of State

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Speaker 3: Marco Rubio, in a memo Warren state Department officials that

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Speaker 3: they'll have to face adverse consequences if they failed to

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Speaker 3: report on colleagues who've concealed or obscured existing DEI programs

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Speaker 3: at the department. So he's asking them to let me

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Speaker 3: use the legal term rat on their colleagues.

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Speaker 1: So the same order we're talking about, I'll go ahead

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Speaker 1: and say the name, which is ending radical and wasteful

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Speaker 1: government DEI programs and preferencing. So in that order, in

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Speaker 1: addition to the mandate that those programs be cut, those

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Speaker 1: people be fired, there is a request that anybody who

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Speaker 1: could be engaging in that sort of work but might

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Speaker 1: have a coded or ambiguous name that I would suppose

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Speaker 1: conceals that they're engaging in that kind of work needs

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Speaker 1: to be essentially brought forward so they can't hide and

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Speaker 1: engage in these diversity supporting activities continuing to be in

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Speaker 1: the government.

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Speaker 3: He also revoked decades of executive orders, including the landmark

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Speaker 3: executive Order signed by President Lyndon Johnson in sixty five

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Speaker 3: to prevent discrimination in government employment and advance racial equality.

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Speaker 3: Is that historic?

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Speaker 1: It's very historic. Just as that original order in nineteen

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Speaker 1: sixty five was historic. This is as well. There's an

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Speaker 1: entire federal agency that has been built around monitoring compliance

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Speaker 1: with this order. The way that federal contractors engage with

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Speaker 1: the federal government INCLU foods understanding that they have an

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Speaker 1: obligation to prohibit discrimination in the workplace. And of course,

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Speaker 1: the original order has the word affirmative action, which is

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Speaker 1: where we get these requirements that federal contractors can't just say, hey,

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Speaker 1: we don't allow discrimination. They have to find ways to

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Speaker 1: show that. And the most important thing to understand is

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Speaker 1: when we talk about a change in presidential administrations, we

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Speaker 1: talk about, oh, deregulation. This is going to make things

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Speaker 1: easier for employers because there was this thick packet of

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Speaker 1: regulations that they had to pour through and now they

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Speaker 1: can just put it on the shelf and forget about

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Speaker 1: it because they can do what they want. That's not

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Speaker 1: this order. This order is not just taking away those

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Speaker 1: affirmative action regulations. It is replacing them with new regulations

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Speaker 1: that are essentially letting employers know, hey, we are watching you.

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Speaker 1: If you, as a federal contractor, are engaging in any

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Speaker 1: sort of activity that could be seen as balancing your

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Speaker 1: workforce based on race, sects, etc. Then not only could

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Speaker 1: you lose your federal contract, you could be sanctioned and

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Speaker 1: potentially be subject to the False Claims Act. So this

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Speaker 1: isn't one of those actions that employers like to see

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Speaker 1: where they can put aside the regulations and just start

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Speaker 1: focusing on their core business. This is an onerous burden

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Speaker 1: on those employers. Some of them might say that have

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Speaker 1: to make sure that they're in line with what the

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Speaker 1: President wants here in order to continue to be considered

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Speaker 1: for federal contracting, and they have to do that pretty quickly.

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Speaker 1: They only have ninety days to go from the old

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Speaker 1: rules to the new rules. Whereas so much of their

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Speaker 1: procurement policies, some of the vendors and consultants they use,

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Speaker 1: may have been based on the longstanding Lyndon Johnson Executive Order,

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Speaker 1: which of course requires action to ensure that you're not

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Speaker 1: engaging in race discrimination. Now there's an expectation that you

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Speaker 1: show us that you are disregarding race focus on it

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Speaker 1: will be punished, and.

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Speaker 3: One of the orders will affect companies in the private sector.

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Speaker 3: It requires each federal agency to identify up to nine

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Speaker 3: potential civil compliance investigations of private sector entities, including publicly

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Speaker 3: traded corporations, nonprofits and foundations, state and local bar and

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Speaker 3: medical associations, and institutes of higher education. So every federal

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Speaker 3: agency is now going to be investigating private companies for

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Speaker 3: DEI violations.

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Speaker 1: It looks like every single agency, So I read that

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Speaker 1: as being obviously the EEOC, but also something that would

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Speaker 1: not come to mind immediately, like the EPA needs to

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Speaker 1: make sure that they're holding the private sector responsible to

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Speaker 1: end DEI priority. And yeah, it absolutely says the heads

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Speaker 1: of all agencies need to assist with that. And it's

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Speaker 1: also asking the Attorney General to come up with the

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Speaker 1: kind of report that you're mentioning, and that would be

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Speaker 1: quite a bit of companies, and it does not really

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Speaker 1: state the criteria for identifying that company. But I think

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Speaker 1: the most interesting thing for employers is this is not

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Speaker 1: an example of deregulation that makes it easier to do

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Speaker 1: one's job and engage with one's employees outside of the

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Speaker 1: purview of the federal government. This is a good example

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Speaker 1: of the federal government injecting itself into those relations. It

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Speaker 1: really is a we're watching you message.

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Speaker 3: Yeah. The Attorney General has one hundred and twenty days

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Speaker 3: to submit a report with enforcement recommendations, including potential litigation

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Speaker 3: or regulatory action. The order refers to illegal DEI discrimination

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Speaker 3: and preferences what's the basis for calling it illegal?

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Speaker 1: This in combined with the recent statements by the new

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Speaker 1: acting chair of the EEOC, and I would say the

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Speaker 1: other executive order on transgender employees that I'm sure we'll

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Speaker 1: get to in a minute, all poll appear to be

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Speaker 1: taking the position that in the employment context, where Title

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Speaker 1: seven governs and prohibits discrimination, a DEI program that supports

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Speaker 1: the advancement of certain employees of color, for example, would

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Speaker 1: violate Title seven. That is a possible way to read

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Speaker 1: all of these orders because there is a consistent reference

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Speaker 1: to DEI as being illegal in the employment context, and

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Speaker 1: the most relevant law in that context is Title seven, which,

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Speaker 1: of course the EEOC is tasked with enforcing.

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Speaker 3: What do you think will happen at the EEOC? Will

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Speaker 3: they change what they've been doing?

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Speaker 1: I believe very quickly.

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Speaker 3: So.

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Speaker 1: The acting Chair has already her name is Andrea Lucas,

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Speaker 1: and she has already issued a statement indicating what the

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Speaker 1: eeoc's priorities are, and the number one priority is rooting

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Speaker 1: out on lawful DEI motivated race and sex discrimination. The

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Speaker 1: next one is protecting American workers from an anti American

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Speaker 1: national origin discription. And that's an indication as to what

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Speaker 1: types of claims the EEOC, or at least the Acting

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Speaker 1: Chair might be interested in advancing, which very well could

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Speaker 1: be claims by non traditional groups, particularly white employees or

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Speaker 1: mail employees, arguing that they have been treated differently than

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Speaker 1: minority groups or have been harmed based on some DEI

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Speaker 1: program that existed in the past. I think, reading between

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Speaker 1: the lines, there's an invitation for non traditional groups that

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Speaker 1: previously would not have sought the eeoc's production to go

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Speaker 1: ahead and file claims with the EEOC so that these

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Speaker 1: employer practices can be investigated.

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Speaker 3: I mean, the order suggests that employers could face litigation

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Speaker 3: or regulatory action. Do you think the government will actually

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Speaker 3: sue businesses over DEI programs.

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Speaker 1: Yeah, So there's many charges that are filed with the EEOC,

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Speaker 1: and as I said, given the public statements, several of

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Speaker 1: those could be based directly on a DEI program. Others

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Speaker 1: could just be based on employee who's terminated and maybe

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Speaker 1: would not have sought the protection of the EEOC, particularly

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Speaker 1: because they're white or thirty six years old and very healthy,

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Speaker 1: but may feel emboldened to do so now and very

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Speaker 1: well maybe that that claim is advanced and brought forward

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Speaker 1: by the EEOC if, for example, that employee says that

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Speaker 1: they were treated differently with respect to the use of

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Speaker 1: a specific word or certain conduct than other employees in

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Speaker 1: their organization. So it could be exactly focused on a

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Speaker 1: DEI policy, or it could be an extrapolation based on

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Speaker 1: somebody who simply believes that they're way that they were

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Speaker 1: treated is unfair and previously probably would not have considered

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Speaker 1: the EEOC as the place to go.

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Speaker 3: Coming up the Executive Order on Transgender Americans. This is

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Speaker 3: bloomberg diversity, equity and inclusion efforts and in the raft

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Speaker 3: of executive orders. On day one, President Donald Trump called

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Speaker 3: for ana dei efforts in the federal government, including terminating

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Speaker 3: diversity programs and eliminating all related offices and positions. There

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Speaker 3: is also an order declaring a new policy that the

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Speaker 3: US will recognize only two sexes, male and female, signaling

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Speaker 3: a rollback of transgender protections. I've been talking to labor

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Speaker 3: and employment law expert niche Verma, a partner at Dorsey

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Speaker 3: and Whitney. So the order covers state and local bar associations,

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Speaker 3: and two major state bar associations, California and Massachusetts, have

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Speaker 3: pushed back. For example, California said in a statement, the

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Speaker 3: executive order will not affect its programs as long as

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Speaker 3: our work in this space involves illegal discrimination or preferences.

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Speaker 3: Massachusetts Bar said, I think there are better ways our

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Speaker 3: federal government could use its time than looking at bar associations.

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Speaker 3: For bar associations to say that, what does it indicate?

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Speaker 1: If anything, it's not too surprising because there have been

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Speaker 1: letters by several state attorneys general too, to law firms

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Speaker 1: that have had DEI programs. Right, So it seems like

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Speaker 1: there has been a focus on simultaneously. For several years,

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Speaker 1: there's been a focus on increasing diversity among the bar,

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Speaker 1: and then simultaneously a focus on those programs and whether

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Speaker 1: they might be illegal. And I think the state and

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Speaker 1: local bar associations have some significant grounds to challenge this

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Speaker 1: investigation by the federal government because they're not employers to

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Speaker 1: most of these people, so there's another relationship that they have,

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Speaker 1: and I think the government has to be sure they're

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Speaker 1: finding a federal statute that relates to discrimination, which is

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Speaker 1: what the government is calling the DEI program that applies.

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Speaker 1: And so I can understand why they feel somewhat confident

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Speaker 1: in their position.

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Speaker 3: Have we seen this sort of trend towards a slow

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Speaker 3: death of DEI programs because of the Supreme Court's decision

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Speaker 3: curtailing affirmative action programs in universe?

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Speaker 1: I think that's right, But I think that from the

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Speaker 1: strikedown of affirmative action in universities to today, there has

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Speaker 1: been a question as to whether the laws that apply

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Speaker 1: to the employment relationship prohibit DEI, because those are different

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Speaker 1: laws that apply to the funding of a university. And

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Speaker 1: the clearest way to argue that DEI violates the law

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Speaker 1: in an employment context is to say that it violates

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Speaker 1: Title seven, which is to say that the program discriminates

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Speaker 1: on the basis of race. And that is not a

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Speaker 1: conclusion that has been widely adopted, but it appears to

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Speaker 1: be the position stated multiple times by the federal government today.

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Speaker 3: Also, an executive order on Monday declares that the United

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Speaker 3: States will only recognize two sexes, male and female, and

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Speaker 3: states that these sexes are binary, biological, and not changeable.

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Speaker 3: What's the import of that?

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Speaker 1: Yeah, So that executive order, I'll say the name of it.

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Speaker 1: It is defending women from gender ideology extremism and restoring

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Speaker 1: biological truth. To the federal government includes definitions that all

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Speaker 1: of the federal government is required to adopt and then

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Speaker 1: enforced with respect to its enforcement of federal laws. And

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Speaker 1: one of those is sex, defining it as only male

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Speaker 1: or female. And then simultaneously there's another definition of gender identity,

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Speaker 1: and it really truly defines gender identity as something that

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Speaker 1: is completely subjective and essentially not real in the world

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Speaker 1: and unrelated to sex. And the biggest question, looking just

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Speaker 1: at the text of the order is whether there's any

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Speaker 1: attempt to disturb the ruling of the Supreme Court decision

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Speaker 1: in twenty twenty Boss docsy Clayton County, which did find

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Speaker 1: that gender identity is included in the term sex under

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Speaker 1: Title seven for prohibited transgender discrimination.

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Speaker 3: What's the import of that executive order for transgender people?

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Speaker 1: I think there's two questions. One, is the EEOC Acting

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Speaker 1: Chair going to be pushing The logic of the answer

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Speaker 1: is yes, because in her statement she uses the exact

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Speaker 1: same language and specifically cites the order. But what is

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Speaker 1: the import and the import I don't know if it

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Speaker 1: means that the EEOC is going to be telling employers, yes,

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Speaker 1: you can fire employees for being transgender. It does not

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Speaker 1: seem like that's something that a federal enforcement agency should

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Speaker 1: be able to do because that does contradict a Supreme

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Speaker 1: Court decision, which is of course by another branch of

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Speaker 1: the government. However, another thing that the EEOC does is

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Speaker 1: issue guidance and guidance that's been in effect since April

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Speaker 1: twenty twenty four has described things like misgendering intentionally a

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Speaker 1: transgender person or unnecessarily referring to their clothes, anatomy sexual

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Speaker 1: relationships as harassment based on gender identity, and the EEOC

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Speaker 1: has pursued it to Trump's executive order rescinded that. So

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Speaker 1: there is a clear and identifiable limitation of protections for

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Speaker 1: transgender employees based on this order. And I think the

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Speaker 1: next question is how much will the EEOC acting chair

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Speaker 1: skirt the boss stock decision around protection overall?

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Speaker 3: He rescinded a Biden administration provision that allowed transgender people

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Speaker 3: to serve in the military, but he didn't ban transgender

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Speaker 3: people from serving in the military. Do you think that's

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Speaker 3: the next step.

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Speaker 1: I think he has a lot more power with respect

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Speaker 1: to the military is than the private sector, and so

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Speaker 1: that's something that he could do, and I think the

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Speaker 1: challenges will be different than something that the EEOC does.

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Speaker 1: I think a EEOC position that it is okay to

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Speaker 1: fire someone because their transgender is the opposite of the

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Speaker 1: Supreme Court's ruling in Bostock. And I think the language

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Speaker 1: of the executive order does conflict with that ruling, and

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Speaker 1: we've already seen some indication of where the EEOC is

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Speaker 1: taking their guidance too, But we are also interested to

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Speaker 1: see how far they're going to take that.

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Speaker 3: This up ends so many things in the workplace. Will

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Speaker 3: we see a difference within one year, within a month?

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Speaker 3: How fast can these things be put into action?

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Speaker 1: I think given the risk and penalties for employers relating

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Speaker 1: to retaining DEI, even if there's not further action from

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Speaker 1: the federal government, there may be employers that are just

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Speaker 1: discussing with their legal departments what's worth it and what's not,

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Speaker 1: and they are immediately rolling back whatever they can to

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Speaker 1: just get out of the scrutiny of the federal government. Again,

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Speaker 1: we're talking about three executive orders on the same topic.

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Speaker 1: It's a vehement attack on DEI, and I think the

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Speaker 1: private sector understands that and potentially, like any company or organization,

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Speaker 1: is likely wanting to get back to their mission what

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Speaker 1: they do best, which means getting out of the eye

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Speaker 1: of the federal government on this issue. So it's very

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Speaker 1: likely that these changes are going to happen soon. I

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Speaker 1: think the other consideration relating to what you just mentioned

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Speaker 1: is that the idea that more people are going to

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Speaker 1: be using the EEOC for their grievances is a specific possibility,

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Speaker 1: given again that the reading between the lines of the

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Speaker 1: chair's position is that there's a bit of an invitation

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Speaker 1: that if you have a problem with your employer and

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Speaker 1: you haven't seen yourself as protected before, you're protected now. Simultaneously,

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Speaker 1: you will have all these employees who are seeing DEI

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Speaker 1: programs rolled back, are seeing their employers talk about race

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Speaker 1: and sex in a different way, may feel less supported,

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Speaker 1: less protected, and may react by bringing their own claims.

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Speaker 1: It doesn't appear that there's going to be less litigation

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Speaker 1: or less individual claims on this topic.

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Speaker 3: What are the finds like or the penalties for employers

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Speaker 3: who violate these DEI rules.

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Speaker 1: It's just an employer who's violated Title seven, either in

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Speaker 1: a private lawsuit or in an action brought by the EEOC,

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Speaker 1: then the penalties are going to be based on the

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Speaker 1: same concepts as any employment action, which is lost wages,

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Speaker 1: emotional distress, and punitive damages. If we are talking about

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Speaker 1: the federal contractor sphere, and you have a federal contractor

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Speaker 1: who may have had an affirmative action program as understandably

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Speaker 1: they would given them many years that that was required,

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Speaker 1: and continues to leave that in place and then seeks

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Speaker 1: a federal contract. That contractor could be found now under

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Speaker 1: the new order to be violating the False Claims Act,

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Speaker 1: be making a false claim to the government for fees

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Speaker 1: under this contract, because from the government's perspective, the contractor

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Speaker 1: has hid or lied about the fact that they are

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Speaker 1: indeed taking measures to have a diverse workforce, which is

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Speaker 1: strictly prohibited and monitored in the federal contractor scheme.

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Speaker 3: So nishe our employers completely confused. Are you getting calls

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Speaker 3: from people about you know, what's going on here? What

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Speaker 3: do I have to do? What can I do?

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Speaker 1: Yeah? Absolutely, particularly in the federal contracting space. It's a

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Speaker 1: pretty big change, and unless you were really in the know,

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Speaker 1: not something that was expected for the entire executive order

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Speaker 1: addressing Affirmative Action that's been in place since nineteen sixty

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Speaker 1: five to not only go away, but be replaced with

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Speaker 1: this other onerous and risk executive order. Right, And I

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Speaker 1: do think that these companies want to be able to

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Speaker 1: go do what they do best without an overt amount

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Speaker 1: of scrutiny on these matters and so there's some questions

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Speaker 1: as to how best to move forward there. And then,

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Speaker 1: of course, with any private sector employer, what is the

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Speaker 1: EEOC going to be focusing on and is there any

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Speaker 1: reason that they'd be focusing on me?

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Speaker 3: These orders are game changers, that's for sure. Thanks so much,

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Speaker 3: nizsche That's Niche Rma, a labor and employment litigation partner

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Speaker 3: at Dorsey and Whitney. In other legal news today, the

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Speaker 3: first of Donald Trump's executive orders to be blocked by

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Speaker 3: a judge, at least temporarily. A Seattle federal judge has

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Speaker 3: temporarily blocked Trump from restricting who's eligible for automatic US

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Speaker 3: citizenship at birth, in an early legal setback for the

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Speaker 3: new administration's hardline immigration agenda. Judge John Kaufenor called Trump's

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Speaker 3: executive order ending birthright citizenship blatantly unconstitutional and question the

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Speaker 3: quality of lawyering within the administration. The order denies automatic

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Speaker 3: citizenship to US born children of immigrants who entered the

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Speaker 3: country illegally or have temporary legal status. Birthright citizenship is

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Speaker 3: a right enshrined in the Fourteenth Amendment, and the judge said,

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Speaker 3: it just boggles my mind that a lawyer could argue

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Speaker 3: that the order was constitutional. The judge stopped the administration

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Speaker 3: from taking any steps to carry out the order for

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Speaker 3: fourteen days. He'll next consider whether to sign a longer

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Speaker 3: term injunction. The administration is facing at least six lawsuits

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Speaker 3: over Trump's birthright citizenship order. Federal judges in Maryland and

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Speaker 3: New Hampshire have hearings scheduled in the coming weeks to

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Speaker 3: consider whether to also block the order from taking effect.

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Speaker 3: The Justice Department released a statement saying it will vigorously

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Speaker 3: defend Trump's order, which quote correctly interprets the fourteenth Amendment

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Speaker 3: of the US Constitution. And that's it for this edition

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Speaker 3: of The Bloomberg Law Show. Remember you can always get

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Speaker 3: the latest legal news on our Bloomberg Law podcasts. You

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Speaker 3: can find them on Apple Podcasts, Spotify, and at www

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