What is human resource diversity, and is DEI still legal?

Few phrases in HR have changed meaning as fast as “diversity.” For a decade it meant goals and programs. In 2025 it started showing up in federal guidance about what employers cannot do. Business owners now ask me two questions in the same breath: what does diversity even mean for my company, and am I allowed to work on it? Both have clear answers.

What does diversity mean in HR?

Diversity is the range of people a workforce includes: race, sex, age, disability, national origin, religion, veteran status and the other characteristics the law protects, plus differences the law does not cover, such as education path, economic background and first-generation status. In HR terms, diversity is less a headcount than a set of outcomes. Who applies, who gets interviewed, who gets hired, who gets paid what and who gets promoted: those numbers tell you whether your process treats people fairly. Retaliation claims carry a special presumption, see California 90-day retaliation presumption.

How is diversity different from inclusion and equity?

Diversity describes who is in the room. Inclusion describes whether they can do their best work once they are there: whether they are heard, developed and given the assignments that lead to promotion. Equity, the most contested of the three words, describes fair process: pay, promotion and discipline decisions made on the same criteria for everyone. A company can be diverse and not inclusive, which is how it loses the people it worked to hire. The cost of that gap shows up in research on code-switching, the energy employees spend managing how they are seen.

Is DEI illegal?

No, but parts of how some employers practiced it can be. In January 2025, executive orders 14151 and 14173 targeted what they called illegal DEI, and on March 19, 2025 the EEOC and the Department of Justice issued technical assistance explaining where they draw the line. The EEOC’s test is that a DEI practice may be unlawful if it involves an employment action motivated, in whole or in part, by an employee’s or applicant’s race, sex, or another protected characteristic.

Two things matter about that guidance. First, it does not have the force of law, and it did not change Title VII, which has prohibited race- and sex-based employment decisions since 1964. Second, the practices it flags are the ones that were already risky: hiring or promoting to hit a demographic number, limiting training or mentoring programs to one group, or segregating employees into groups by race or sex. Widening your applicant pool, structuring interviews and auditing pay for unexplained gaps are not on that list, because they apply the same rules to everyone.

What does California law add?

More protected characteristics and stricter enforcement. California’s Fair Employment and Housing Act covers everything federal law does and adds, among others, reproductive health decisionmaking, gender expression, marital status, and veteran or military status. It applies to employers with five or more employees, far below the federal threshold of 15. A California employer has to protect a wider set of people with fewer employees, regardless of what federal guidance emphasizes in a given year.

What does diversity work look like when it is done legally?

It looks like process, not preference. Recruit from more places so more kinds of people apply, including candidates without degrees for roles that do not need one. Use a structured recruiting process where every candidate answers the same questions and is scored on the same criteria. Search for skills, not proxies; my guide on how to use LinkedIn Recruiter search explains which filters screen people out for the wrong reasons. Open development programs to everyone who qualifies. And check pay: a pay equity audit finds unexplained gaps between groups doing the same work, which California’s Equal Pay Act requires you to justify or fix. Done that way, diversity work is not a legal risk. It is how you prove your decisions were fair. One practical step is to review degree requirements.

McKinley holds a J.D. but is not a licensed attorney. Articles here are general information, not legal advice. For your specific situation, talk with an employment attorney.