Somewhere in your company there is a dashboard, a slide deck, or a bonus plan that made perfect sense in 2021. Nobody has looked at it since. Federal and state enforcers have, and they didn’t need your login to do it. 

Inclusion programs aren’t the problem. Programs that use race or sex as a selection criterion, tie pay to discriminatory headcount targets, or restrict access by protected trait are the problem, and renaming them “belonging” changes nothing. This article explains where enforcement stands, why it reaches employers who have never signed a federal contract, and how to run a disciplined risk assessment that keeps your mission intact while removing the parts that invite a subpoena.

Where Enforcement Stands Right Now

The Equal Employment Opportunity Commission has spent 2026 reorganizing itself around this agenda. On January 13, the Commission voted 2 to 1 to adopt a resolution on the Chair’s and the Commission’s roles in agency organizational changes. On January 21, it voted 2 to 1 to require Commission approval for almost all litigation. The agency’s own January 2026 vote record lists both. The practical effect is more centralized litigation decision-making at an agency whose leadership has made unlawful diversity-related practices an enforcement priority.

On June 30, 2026, the Commission announced it had rescinded its interpretive guidelines on voluntary affirmative action and the related Compliance Manual Section 607, stating the guidelines conflicted with the text of Title VII and later Supreme Court case law. That guidance was the roadmap employers had used to structure and defend voluntary programs since 1979. The map is gone. The statute is unchanged, which leaves employers with less predictability, not more freedom.

The Chair has been explicit about targets. On February 26, 2026, she sent a reminder letter to the chief executives, general counsel, and board chairs of 500 of the largest employers in the country, covering Title VII obligations for programs “labeled as ‘DEI’ or other euphemisms.” Her quote from the release: “The only lawful way to stop discrimination on the basis of race or sex, is to stop discriminating on the basis of race or sex.” The vocabulary doesn’t matter. The mechanics do.

Then the  results started arriving. 

 On November 20, 2025, the EEOC went to federal court in Wisconsin to enforce a subpoena against Northwestern Mutual in a charge alleging an employee was denied advancement under a diversity policy with mandatory promotion metrics. The subpoena sought advancement data, DEI practice information, the metrics tied to financial rewards, and an interview with the vice president of diversity and inclusion.

On March 19, 2026, the EEOC announced that Planned Parenthood of Illinois would pay $500,000 to end an investigation involving mandatory race-segregated affinity caucuses, derogatory statements aimed at white employees in training, and time off granted only to Black employees. The Chair’s line from that release: “There is no DEI exception to Title VII’s requirements.” 

On August 12, 2026, the agency sued Washington University in the Eastern District of Missouri, alleging a senior program manager at its cancer center was separated from colleagues based on race during mandatory diversity training, complained, filed a charge, and then had her position eliminated. Separating employees by race creates risk no matter who is separated, and the claim that reached court was about what happened after she complained.

 

The Department of Justice opened a second front. Its Civil Rights Fraud Initiative, announced in May 2025, uses the False Claims Act against federal contractors and grant recipients that certify nondiscrimination while allegedly running unlawful race- or sex-conscious programs. 

The first settlement came on April 10, 2026, when IBM agreed to pay $17,077,043 over allegations that included a “diversity modifier” tied to bonus pay and diverse interview slates. IBM received credit for cooperating, including sharing what its own internal investigation found and ending or changing the programs at issue. 

 Another came in August 2026, when Deloitte agreed to pay $21.5 million, including $9,995,000 in restitution, under a settlement agreement signed August 20, 2026. The alleged conduct, which Deloitte denies, included hiring, promotion, and staffing decisions aimed at nonpublic workforce composition goals, training and sponsorship programs with eligibility limited by race or sex, and pay tied to those goals. For two years, compensation for about 150 of Deloitte’s most senior partners that, for two years, could be affected by whether those partners’ units met those goals.

Deloitte’s case did not start with the government. It was filed by the American Alliance for Equal Rights, an advocacy group, in the Northern District of Texas, and the group receives approximately $4.3 million. That is how the False Claims Act works: a private party who brings a successful case gets a share of the recovery. Anyone with inside knowledge, including a current or former employee, has a financial reason to come forward. Settling with the Justice Department does not end the exposure, either. Deloitte’s agreement leaves the EEOC free to pursue charges over the same conduct. 

The rules are also making these cases easier to win and wider in reach. On April 17, 2026, the FAR Council issued  guidance creating clause 52.222-90, which states that compliance is “material to the Government’s payment decisions.” That phrase matters.  

To win a False Claims Act case, the government must prove a violation mattered to its decision to pay, and the clause has contractors agree to that in advance. The clause must also flow down to subcontractors at any tier, and prime contractors must report subcontractor conduct that may violate it, once that reporting requirement clears final paperwork approval. That is how this reaches companies several steps removed from the original government contract. One limit: the clause covers race and ethnicity, not sex.

Why This Reaches Employers Who Never Signed a Federal Contract

The False Claims Act headlines involve federal contractors, so a Texas manufacturer with no government work at all, even as a subcontractor, might assume this is someone else’s problem. Four reasons that assumption is wrong.

First, the Supreme Court removed the extra hurdle majority-group plaintiffs used to face in some federal courts. In Ames v. Ohio Department of Youth Services, decided unanimously on June 5, 2025, the Court held that Title VII imposes no heightened “background circumstances” standard on majority-group plaintiffs.The Fifth Circuit, which covers Texas, did not apply that standard, but the rule is now the same everywhere. A white male employee passed over under a diversity slate policy now walks into any federal court without that additional threshold burden. Private plaintiffs don’t need the EEOC’s permission to pursue a Title VII lawsuit once applicable procedural requirements are satisfied. Race claims under Section 1981 skip the EEOC process entirely.

Second, Texas has taken its own position.On January 19, 2026, the Texas Attorney General issued Opinion No. KP-0505 on diversity, equity, and inclusion. The Texas Register summary states the conclusion plainly: a large body of  private-sector DEI practices trigger liability under Title VII, the Texas Commission on Human Rights Act in Chapter 21 of the Texas Labor Code, Section 1981, and state and federal securities law. The opinion’s private-sector analysis identifies common practices that can raise that exposure. AG opinions aren’t law, but courts may consider them persuasive, and attorneys general don’t issue lengthy opinions on private employer practices for fun.

Third, the EEOC’s own guidance treats many common program features as potential violations when a protected trait is the gate. The March 2025 technical assistance, What You Should Know About DEI-Related Discrimination at Work, lists training, mentoring, sponsorship, networking, internships, fellowships, interview slates, and work assignments. It identifies restricted employee resource group membership and race-based separation during training as practices that can violate Title VII. The joint EEOC and DOJ one-page guide for workers tells employees how to file.

Fourth, the state-level False Claims Act has arrived. On August 25, 2026, the Indiana Attorney General announced a $1.2 million settlement with Deloitte under Indiana’s False Claims and Whistleblower Protection Act, alleging the firm certified compliance with the state’s nondiscrimination requirements in its state contracts while running the same practices. The release notes Deloitte resolved similar claims with Florida at the same time. If your company holds a state, county, school district, or municipal contract with a nondiscrimination certification, examine whether comparable state-law exposure exists.

The Label Doesn’t Matter. The Mechanics Do.

Read the IBM and Deloitte allegations, the Texas AG opinion, and the EEOC guidance side by side and the same five mechanics show up repeatedly. Enforcers aren’t just reading your values statement. They’re reading your spreadsheets.

• Protected traits as a selection criterion. Race, sex, or another protected characteristic determines who gets hired, promoted, staffed, interviewed, or assigned.
• Numeric demographic targets with consequences. Headcount goals tracked on dashboards, color-coded, and tied to bonuses, evaluations, or partner compensation.
• Eligibility restricted by protected trait. Leadership academies, mentoring, fellowships, internships, and resource groups open only to certain races or sexes.
• Segregation during training or programming. Breakout rooms, caucuses, or affinity sessions sorted by race or sex, even with identical content.
• Proxies that function as protected traits. Criteria such as skin color or demographic coding that substitute for race or sex. Criteria like first-generation professional status or geographic outreach may stand on their own merits, but the DOJ’s August 6, 2026 findings against Duke Law School, which cite reviewer tags for traits “commonly correlated with race” such as Pell Grant status, show that enforcers will test whether a neutral label is doing race’s job. Duke is an admissions case under a different statute, but employers should expect enforcers to ask the same question about hiring and promotion criteria.

Here’s the part that should reassure most employers: broad outreach, structured interviews, pay audits, accommodation processes, harassment prevention, and mentoring open to everyone generally avoid these five mechanics. The EEOC’s own guidance recommends training and mentoring open to workers of all backgrounds. The programs that build a fair workplace are not inherently the problem.

A Disciplined Way to Decide What Stays

Panic produces two bad outcomes. Companies either scrub every reference to inclusion from their websites, which changes nothing about the underlying practice and can raise questions about why the language disappeared once a charge arrives, or they freeze and change nothing, which leaves the 2021 dashboard running. Neither is a strategy. Changing public language is a business decision. Deleting the records behind it is not, especially once a charge is filed or a claim is likely. 

The better approach treats each program as a line item in a risk register. Score it, decide, document the reasoning with counsel where appropriate, and move on. Running the review at counsel’s direction helps keep the working analysis privileged. The scoring below is a simplified screening method for program review. It fits on one page and it forces the right conversation. It is not a legal determination or a substitute for examining the facts.

Step one: inventory

List every program, policy, metric, and public statement that touches workforce or supplier composition. Include the ones HR forgot: supplier diversity dashboards, recruiting vendor contracts with demographic deliverables, scholarship partnerships, the slide from the 2022 investor day, and the manager scorecard with a “diverse hiring” line. Pull your contract certifications at the same time, including state and local ones.

Step two: score each item on four questions

Question	What it measures	Score
Criterion	Does a protected trait decide eligibility, selection, pay, assignment, or access? Yes scores 3. A proxy that tracks a protected trait scores 2. Neutral scores 0.	0 to 3
Consequence	Is a demographic number tied to money, ratings, or decisions? Compensation or evaluation link scores 3. Tracked and reported scores 2. Aspirational and unmeasured scores 1. No demographic target scores 0. Calling a goal “aspirational”does not lower its score if it is tracked or used.	0 to 3
Visibility	Is it in a certification, public filing, website, dashboard, or internal report a whistleblower could attach to a complaint? Certification scores 3. Public scores 2. Internal only scores 1. No applicable record scores 0.	0 to 3
Channels	How many exposure channels does it touch: EEOC charge, private Title VII or Chapter 21 suit, Section 1981 suit, False Claims Act, state false claims act, state AG, securities disclosure? One point per applicable channel, capped at 3.	0 to 3

Any item that scores 3 on Criterion goes to legal review regardless of its total. A total of 0 to 3 suggests lower priority for review. A total of 4 to 7 calls for closer examination and possible redesign, often by opening eligibility and replacing demographic targets with process metrics. A total of 8 or above warrants prompt legal review to determine whether to retire or rebuild the program. These thresholds are screening priorities, not legal safe harbors or automatic findings of unlawful conduct. Involve counsel in determining how the review should be documented and whether privilege applies.

Step three: a worked example

Consider a fictional Austin logistics company, Hill Country Freight, with 900 employees and a few state transportation contracts. Its inventory turns up four items.

A women’s leadership academy, open only to women, scores 3 on criterion, 1 on consequence (because leadership has an informal goal for women in management), 2 on visibility (because it’s on the careers page), and 2 on channels (an EEOC charge and a private Title VII or Chapter 21 suit)..Total 8. Redesign: open the academy to everyone, select on structured criteria such as performance and manager nomination, and keep the outreach to women’s professional networks, which is recruiting, not selection.

A regional manager bonus plan with a 10 percent modifier based on “team diversity progress” scores 3 on criterion (pay turns on the demographics of the manager’s team) , 3 on consequence (the target is titled directly to compensation), and 3 on channels (an EEOC charge, a private suit, and Section 1981 since team diversity includes race). Total 12. Retire it. Replace the modifier with metrics the company controls and can defend: posting every opening, using structured interviews, completing a pay audit, and documenting promotion decisions.

Five employee resource groups with membership open to anyone, funded equally, with no role in hiring or promotion, score 0 on criterion (membership is open to all), 0 on consequences (no demographic target), 1 on visibility (internal records only), and 0 on channels (no trait based gate for anyone to challenge). Total 1. Keep them and write down why. The EEOC guidance and the Texas AG opinion raises concerns about segregation, so confirm the open membership rule is written and followed, including for events and leadership roles.

A supplier program that gives a scoring bump to vendors owned by particular racial groups scores 3 on criterion (the owner’s race decides the bump), 2 on consequence (spending with those vendors is tracked and reported), 2 on visibility (the program is described on the company’s vendor page), and 2 on the channels (Section 1981, which covers vendor contracts, and the state AG, whose opinion targets race based contracting preferences). Total 9. . Rebuild it around small-business status, local ownership, and first-time vendor outreach, using criteria that do not function as substitutes for protected traits.

Four programs, four different answers, one morning of scoring. The mission survives. The subpoena bait does not.

Design Principles That Survive Any Administration

Even if the scoring table never leaves this article, six principles hold up regardless of who runs the EEOC.

• Open the door, don’t reserve the seat. Broad recruiting and outreach can be lawful. Selection based on a protected trait can create legal exposure. Keep the first, review the second.
• Measure process, not demographics. Track whether openings were posted, interviews were structured, and promotions were documented. Those metrics improve fairness and generally present less risk than demographic incentives.
• Make words match practice. A website that says one thing while the bonus plan says another is the worst of both worlds. Fix the practice first, then update the language.
• Don’t destroy history. Deleting old materials when litigation is reasonably anticipated or after a charge is filed can create a spoliation problem. Archive, don’t shred, and let counsel handle what gets produced.
• Inventory every certification. Federal, state, county, municipal, grant, and customer contracts (customer contracts matter when they pass down a government clause). False Claims Act theories, federal and state,  runs through the signature line. 
• Keep the programs that actually prevent claims. The EEOC’s fiscal 2025 performance report shows the agency processed 88,201 new charges and recovered $660 million for 17,680 people through its enforcement and related efforts. Ordinary discrimination, harassment, retaliation, and accommodation matters haven’t gone anywhere. Overcorrecting into a workplace where nobody talks about fairness creates the next round of charges.

One more point on retaliation, since it rides along with nearly every one of these cases. The Washington University suit is pleaded as a retaliation case: the employee’s position was eliminated after she complained internally and filed a charge. The Northwestern Mutual charge includes retaliation allegations (the employee says he was passed over after complaining about the diversity policy). An employee who objects to what they reasonably believe is unlawful discrimination in a diversity program may be engaged in protected activity. So may an employee who objects to what they reasonably believe is discriminatory elimination of one. Treat both complaints the same way: take them, investigate them, and keep retaliation out of subsequent employment decisions.

The audit you run yourself is cheaper than the one the government runs for you.

Treaty Oak Employers’ Law Group is a Texas law firm representing employers, with attorneys licensed in Texas, North Carolina, Wyoming ,and  Colorado Our work includes workplace program reviews, risk assessments, and policy revisions. If your leadership team is still working from a 2021 dashboard, it may be worth taking a closer look at what the numbers are actually rewarding.

Frequently Asked Questions

Is it illegal to have a DEI program in Texas in 2026?

No, not for a private employer. Texas Attorney General Opinion KP-0505 concludes that a large body of private-sector DEI practices triggers  liability under Title VII, Section 1981,  and Chapter 21 of the Texas Labor Code, not that the label itself does. Liability depends on specific practices, such as discriminatory demographic hiring criteria, candidate selection based on protected traits, eligibility restricted by race or sex, and pay or promotion tied to unlawful diversity preferences.

Can an employer limit a mentoring or leadership program to women or minorities?

Not without significant legal risk. The EEOC’s March 2025 technical assistance lists training, mentoring, sponsorship, fellowships, and leadership programs as employment opportunities that may violate Title VII when restricted by protected trait. The IBM and Deloitte False Claims Act settlements both involved allegations concerning programs with eligibility limited by race or sex. Open eligibility and select on neutral criteria.

Are employee resource groups still legal?

Yes. Employee resource groups can operate lawfully when membership and participation are open to employees regardless of protected characteristics and the groups do not make discriminatory employment decisions. The EEOC identifies resource groups with membership restricted by protected class as a potential Title VII violation. Put the open membership rule in writing and follow it.

Does the False Claims Act apply to employers without federal contracts?

Federal False Claims Act exposure generally requires a qualifying claim involving federal funds or the federal government, not necessarily a direct federal contract. Subcontractors can be covered, because the new federal contract clause must flow down to subcontracts at any tier (the clause covers race and ethnicity, not sex). Deloitte separately settled with the State of Indiana over state contracts under that state’s law, and state or local certifications may create separate legal exposure (Texas’s own false claims law covers only health care programs, so state false claims exposure for most Texas employers comes from contracts in other states). Employees can also pursue Title VII claims regardless of whether their employer has government contracts.

Can a company be sued for racially segregated diversity training?

Yes. On August 12, 2026, the EEOC sued Washington University, alleging an employee was separated from colleagues based on race during mandatory diversity training and later had her position eliminated after complaining. On March 19, 2026, Planned Parenthood of Illinois agreed to pay $500,000 to resolve an EEOC investigation involving race-segregated affinity caucuses. Avoid separating employees by race in workplace training.

What changed when the EEOC rescinded its affirmative action guidance?

On June 30, 2026, the EEOC announced it had rescinded its interpretive guidelines on voluntary affirmative action under Title VII and Compliance Manual Section 607, stating they conflicted with the statute and later Supreme Court case law. Title VII itself is unchanged, but the longstanding agency framework employers used to structure and defend voluntary plans has been withdrawn. Review any plan that cites it.

Should an employer remove diversity language from its website?

Only after reviewing the underlying practices, and never by quietly deleting materials subject to preservation obligations. The EEOC Chair’s February 2026 letter to large employers covers programs labeled DEI “or other euphemisms,” so a vocabulary change alone accomplishes nothing. Align the practice, then update the language, and preserve prior versions as appropriate under counsel’s direction.