An executive order issued last month by President Donald Trump has already had a “chilling effect” on diversity training at companies with federal government contracts, but experts say contractors shouldn’t abandon their diversity efforts entirely.
The executive order, announced Sept. 22, prohibits federal contractors and federal grant recipients from promoting “race or sex stereotyping or scapegoating” through workplace diversity and inclusion trainings. According to the Department of Labor, examples of stereotyping or scapegoating include the idea that an individual bears responsibility for past actions committed by others of the same race or sex and the view that meritocracy is a racist or sexist concept.
The order expressed concerns that “[i]nstructors and materials teaching that men and members of certain races, as well as our most venerable institutions, are inherently sexist and racist are appearing in workplace diversity trainings across the country, even in components of the Federal Government and among Federal contractors.”
A follow-up memo from the Office of Management and Budget clarifying the executive order instructs agencies to review diversity training materials by searching for terms such as “critical race theory,” “white privilege” and “systemic racism.”
Federal contractors risk losing their contracts if their diversity and inclusion programs are found to run afoul of the order, and the Office of Federal Contract Compliance Programs in late September set up a hotline so employees can report their employers for potential violations.
It didn’t take long for business groups to express concern about the president’s order. On Oct. 15, more than 150 business, industry and nonprofit groups, including the U.S. Chamber of Commerce, submitted a letter to the White House urging the administration to withdraw the order. They cited fears about “non-meritorious complaints” and investigations brought on by “disgruntled” employees and confusion about what content would be allowed under the order.
Raymond Perez, of counsel at Fisher Phillips’ Columbus, Ohio, office, agreed the definitions and examples of sex and race stereotyping and scapegoating are open to interpretation. For example, the order prohibits teaching the idea that a person should “feel discomfort, guilt, anguish, or any other form of psychological distress on account of his or her race or sex.”
“How do you know what might make someone feel discomfort or anguish as part of a diversity training? It’s a very difficult standard,” said Perez, who, before joining Fisher Phillips, was in-house at American Honda Motor Company, where his duties included developing and implementing diversity and inclusion programs.
“I think that’s, from an in-house perspective, the challenge you have — some of these examples are ambiguous and also very subjective.”
In their letter to the White House, the business groups said some companies were “suspending all D&I training” and the order was having a “broadly chilling effect on legitimate and valuable D&I training.” They note these results are contrary to the stated intentions of the executive order, which encourages federal agencies and contractors to continue to “foster environments devoid of hostility” and states that “training employees to create an inclusive workplace is appropriate and beneficial.”
According to Denver-based diversity and inclusion consultant Kathleen Nalty, whose clients include federal government agencies and federal contractors, “basically all diversity, equity and inclusion training [at federal agencies] is put on hold as long as this administration stays in office.”
“It is devastating for my federal government clients, because they’re really excited about following the rest of the country’s lead, in terms of education on diversity, equity and inclusion,” she said. “In corporate America, this topic is exploding, given the racial justice movement that’s sweeping the country.”
Nalty said private entities with federal contracts will probably put diversity training on hold at least until the election, but she expects some will resume if Trump loses the election, since enforcement is likely to be lax. However, she said, federal government employers won’t want to risk defying the order and will wait until a new administration reverses it.
According to Nalty, even federal government agencies that try to move forward with D&I training will be slowed down by the approval process, which requires training to be submitted to the Office of Personnel Management for review. “Anyone who’s ever worked in the government knows that’s the death knell right there,” she said. “It’ll take months, if not years.”
The OFCCP on Thursday published a request for information asking for comments, materials and information related to contractors’ diversity training programs. According to the RFI, the OFCCP will exercise its enforcement discretion and won’t take action against federal contractors and subcontractors that voluntarily submit materials by Dec. 1.
While affected companies might be tempted to do away with diversity training altogether to avoid controversy, Perez says, “Don’t panic.”
“I think they’ve got to avoid a kneejerk reaction to say, ‘Well, we’re just not going to do any training,’” he said. “I think that there are benefits there to training and they should consider that very carefully if they’re going to stop.”
He noted the executive order and RFI acknowledge the benefits of D&I training and added that companies that opt to abandon such efforts might be up against expectations from employees who want more diversity programs in the workplace, especially in light of the Black Lives Matter and #MeToo movements.
According to Nalty, diversity training also makes good business sense. “If the folks in the administration who say that they are businesspeople had education on DEI, they would realize that diversity, equity and inclusion research shows that it is really good for business outcomes.”
“They’re cutting off their nose to spite their face … because the research is absolutely clear that companies that have more advanced DEI efforts are higher performing and more profitable.”