Republican State AGs Press Costco to End DEI Efforts

Nineteen Republican state attorneys general sent a letter to Costco demanding that the company end its “unlawful” DEI initiatives as pressure against such practices increases. 

What’s illegal? The letter urges the company to “end all unlawful discrimination imposed by the company through diversity, equity, and inclusion (“DEI”) policies,” and claims Costco is “clinging to DEI policies that courts and business have rejected as illegal.” 

Predictably, the letter fails to identify any specific Costco DEI practice that the officials consider unlawful – or which DEI practices in general are unlawful.

Not the first time: After the Supreme Court’s college affirmative action-ending decision in Harvard, a comparable group of Republican attorneys general sent a similar letter to all Fortune 100 companies. 

• The post-Harvard AG letter also failed to cite specific unlawful DEI practices and threatened legal consequences.

State of play: It is no secret that the war against DEI initiatives has reached a fever pitch. 

• The Trump administration plans to mobilize the executive branch against perceived unlawful DEI practices in both the public and private sectors.

• Employers already face shareholder actions, lawsuits, and public smear campaigns aimed at curbing alleged DEI-related discrimination. 

• To date, the law remains the same. For now, the avalanche of lawsuits has yet to produce a decision identifying specific corporate DEI practices as unlawful. 

Employer considerations: Ahead of expected additional regulatory actions from the Trump administration targeting private sector DEI practices, employers should consider auditing their own DEI-related initiatives and mitigate potential risks, including:

• Selection criteria for hiring/employment decisions: Ensuring final decisions are being made without any consideration of protected characteristics.

• Employee resource groups, mentorship programs, etc.: Reviewing the membership/selection criteria for these groups and programs – are they open to all? 

• Qualitative/quantitative diversity goals: Are these goals aspirational, and what are the actual processes or incentives for achieving such goals? 

  • How do you structure potential links between goal progress and compensation? 

• Internal communications: How are your managers, particularly those involved with employment decisions, talking about DEI initiatives and diversity goals? 

• External partnerships and targeted outreach programs: What are the selection criteria for these programs?