As inclusion and diversity (I&D) programs face intensifying legal scrutiny, HR leaders are being pushed to rethink not just what their organizations stand for, but how those commitments are structured, communicated, and enforced.
In a recent SHRM webinar, “A Practical Look at Legally Compliant I&D for HR Leaders,” experts explored how organizations can balance compliance with culture-building. The conversation was led by Carolynn Johnson, president of SHRM CEO Action for Inclusion & Diversity, and Annette Tyman, partner at one of the nation’s leading employment law firms, Seyfarth Shaw LLP, and chair of the firm’s people analytics practice group in Chicago. The discussion made one point clear: the legal standards haven’t changed — but the risks around enforcement have.
The stakes for getting I&D right are high. “SHRM's research shows US organization lose an estimated $2.7 billion per day due to instability,” Johnson said, “highlighting that inclusion is not just a moral imperative, but a business critical one.”
The Law Hasn’t Changed
For HR leaders trying to keep up with a rapidly shifting landscape, the most important takeaway may also be the simplest: foundational civil rights laws remain intact.
“When you really think about it, the law has not changed. So, what has been unlawful remains unlawful,” said Tyman. “It is about enforcement.”
That shift in enforcement — by regulators, courts, and private litigants — means employers must take a closer look at programs that could be perceived as conferring benefits or limiting opportunities based on protected characteristics. Practices once considered low risk may now invite scrutiny if they lack clear alignment with equal employment principles.
For many organizations, the calculus is becoming increasingly practical — and costly. “IBM agreed to pay $17 million to settle a Department of Justice DEI investigation,” Johnson noted. They “paid to end the distraction versus have the expense of a prolonged fight.”
Federal Contractors Face a Broader Lens
For federal contractors and grant recipients, the compliance burden is even more complex. Recent executive actions have expanded the scope of what regulators examine, beyond hiring and promotion decisions to include how organizations allocate resources more broadly.
In light of Executive Order 14398, which prohibits federal contractors from engaging in “racially discriminatory DEI activities,” Tyman emphasized the importance of examining how an organization is allocating and deploying its resources, such as philanthropic giving, investment programs, and marketing budget.
This expanded lens means HR leaders must collaborate more closely with legal, finance, and communications teams to ensure consistency across the organization. Documentation and business justification are becoming critical safeguards.
ERGs Must Be Inclusive by Design
Employee resource groups (ERGs) remain a valuable tool for fostering belonging, but they must be structured carefully to avoid legal risk.
“It is really going to depend on how the groups are created, what the purpose of the groups are, making sure that they are open and accessible to everyone, that you have charters that allow multiple types of employee resource groups, and you are not excluding any group on the basis of a protected category, particularly race,” Tyman explained.
In practice, that means reviewing ERG charters, participation criteria, and programming to ensure they are inclusive and aligned with equal opportunity principles. The goal is not to dismantle these groups, but to ensure they operate in a way that is both meaningful and compliant.
Move Beyond Surface-Level Analytics
People analytics (PA) can play a critical role in identifying barriers to employment opportunities such as hiring or advancement — but only if used strategically.
“When you start with the end in mind, with the outcomes — the present state of your workforce — that also can tell you what programs that have been executed properly are working,” said Johnson. Scaling these effective programs across the organization allows the entire workforce to benefit.
“The data should help you do so,” Tyman elaborated. “But I will tell you that running the analytics at the highest level probably is not going to get you there. You have got to do some double clicking to understand, ‘OK, I have a potential hiring issue at this particular level or a potential promotion issue at this particular level.’ How do I unpack that? How do I understand what the hiring process looks like?”
Rather than relying on high-level demographic snapshots, organizations should dig deeper into specific processes — such as hiring funnels or promotion decisions — to uncover root causes of disparities in employment outcomes. This approach not only strengthens compliance but also drives more effective, targeted interventions.
Transparency Is a Business Imperative
As organizations adjust or scale back certain I&D initiatives, how those changes are communicated can make or break employee trust.
"An important message that you are going to want to leave your employees with [is] being transparent about the changes that are being made and demonstrating that you still have a commitment to equal opportunity for all,” Tyman said. She added that this has been “the basis for I&D programs from the beginning.”
Clear, proactive communication grounded in business rationale and reaffirmed values can help mitigate confusion and maintain engagement during periods of change.
“Trust and belonging are fragile, and the cost of dysfunction is significant,” Johnson said. “Inclusion is not just a moral imperative, but a business critical one.”
What HR Should Do Next
For HR leaders, the path forward is less about retreating from I&D and more about refining it. That includes:
- Auditing programs to ensure they align with equal opportunity principles.
- Expanding compliance reviews beyond HR to include enterprise-wide activities.
- Strengthening documentation and governance practices.
- Using analytics to diagnose — not just describe — workforce trends.
- Communicating changes with clarity and consistency.
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