Bass, Berry & Sims attorney Denise Barnes was quoted in an article for Global Investigations Review examining a recent U.S. Department of Justice (DOJ) resolution with PayPal that is prompting companies to reassess the risk profile of diversity, equity and inclusion (DEI) programs. The matter involved a DOJ challenge to a PayPal initiative supporting minority-owned businesses, which the company agreed to revise by removing demographic-based criteria and providing financial concessions, without admitting wrongdoing.
Against this backdrop, Denise emphasized that regulators may now be interpreting prohibited DEI activity more expansively. “It appears that the term ‘illegal DEI’ is being viewed by the DOJ and this administration as much broader than previously explained and understood,” she noted, warning that companies, especially those doing business with the federal government, face “significant risk on the question of what constitutes illegal DEI.”
Denise further described the resolution as signaling a shift in enforcement priorities, with increased scrutiny directed at programs designed to advance diversity objectives. “The government is looking for the right vehicle for the result that the administration would prefer: to penalise, target and deter ‘illegal’ DEI programmes,” she explained.
She also cautioned that enforcement strategies may extend beyond traditional legal theories, adding, “Although the DOJ brought this matter on the basis of fair lending discrimination, I would not be surprised if the government used other less-traditional tools at its disposal to meet its policy objectives here.” With limited judicial guidance to date, companies must navigate an uncertain landscape by reevaluating program design and preparing for continued regulatory scrutiny.
The full article, “PayPal’s DEI settlement complicates corporate risk, lawyers say,” was published by Global Investigations Review on May 15 and is available online (subscription required).