Don’t die of surprise at this news, but the Trump Administration is dragging Corporate America into its attacks on diversity training and racial equity. Compliance officers would do well to understand what’s happening and prepare accordingly.

The action is happening along two fronts. First, President Trump issued an executive order on Sept. 22 that directs all federal government agencies and government contractors to cease using any diversity training that “promotes race or sex stereotyping or scapegoating.” This order is the detailed follow-up to Trump’s original directive on Sept. 4 that forbade government agencies (but not contractors) from using any training that mentioned “white privilege,” “critical race theory,” or any other “un-American propaganda.” 

Now that his executive order applies to government contractors too, suddenly a lot more companies are swept into the scope of the order. Federal contractors include hospitals, universities, IT services firms, manufacturers of heavy equipment, and many more. And the employee diversity training, guest speakers, and executive messaging those companies use to discuss diversity — that’s all going under the microscope

Second, the Labor Department is launching investigations into businesses that have publicly pledged to hire more minority employees, to see whether those firms are violating federal civil rights law. For example, Microsoft received a letter on Sept. 29 from the Office of Federal Contract Compliance Programs saying that the company’s pledge in June to hire more black managers “appears to imply that employment action may be taken on the basis of race.” Wells Fargo made a similar vow earlier this summer, and received a similar letter from OFCCP on Sept 29. 

This is essentially the same maneuver that the Education Department dropped on Princeton University last month. Education Department officials took a statement the university’s president made supporting diversity — he circulated a letter to the school community saying, “Racism and the damage it does to people of color nevertheless persist at Princeton” — and used those words to ask whether that means Princeton’s prior statements of compliance with civil rights law were false.

The investigations into Microsoft and Wells Fargo are unfolding along the same lines: using a corporate statement in affirmation of diversity to justify an investigation into compliance with civil rights law. They are not likely to be the last targets here. (For the record, Microsoft general counsel Dev Stahlkopf says the company’s pledge is well within permissible labor law practices.)

What’s Really Happening Here?

That’s easy. Trump is losing re-election, so he’s whipping up his political base of white supremacists by feeding them some red meat in the culture wars. Nothing soothes a white supremacist like the idea that his problems in life are caused by minorities. Heck, that sentence even describes Trump and his fixation on Barack Obama. 

Will these investigations and executive orders fade away under a Biden Administration? That’s another easy answer: yes.

The much more interesting (and troubling) question is this: What will happen with these investigations and orders if Trump does secure a second term?

Clearly Trump is using the power of the executive branch to pursue his political impulses. That’s not improper per se — a president gets to do that with the executive branch, after all — but Trump is contorting that power into something that poses significant peril for the corporate world. 

First, his political impulses are just outside of mainstream public opinion. Most of us aren’t white supremacists. Most of us do believe black people and other Americans have gotten a raw deal over the years. Most of us support greater respect and attention to diversity— especially Millennials and Generation Z, who are 38 percent of the workforce today, and will be 58 percent by 2030

So corporations will be stuck trying to serve two masters: an obstreperous, impulsive, racist president barking orders to a vast regulatory apparatus; and a young, diverse workforce and consumer base who mostly can’t stand the man. Corporations may well find that their commitment to ethical values, such as workplace respect and diversity, are contrary to the compliance standards dictated by an administration the majority of Americans don’t like and didn’t vote for. Good luck threading that needle.

Second, this fight against diversity training is only one example of the battles Trump might provoke in a second term; there would be many more, none leaving Corporate America in a good position. Whatever impulse grasps his brain — probably from watching too much Fox News or listening to whatever sycophantic quack caught his ear that day — would become a regulatory priority. Those organizations out of step with that impulse would then be vulnerable to a regulatory regime lurching from one enforcement priority to another. 

That would be terrible for corporations generally, and for corporate ethics and compliance programs especially. But that world could come to pass, and the fights over diversity training are one glimpse into what that world might look like. 

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