A recent survey conducted by Littler Mendelson, a global employment law firm, reveals that policy changes enacted by the Trump administration concerning diversity, equity, and inclusion (DEI) and immigration had a more significant impact on employers in 2025 than any other regulatory or policy area, including the rapidly evolving field of artificial intelligence. The findings, published on March 5th, indicate a substantial increase in the number of employers reporting policy and regulatory effects stemming from DEI and immigration initiatives compared to other categories measured in the survey.
The poll, which surveyed just over 300 employer representatives in late January and early February of 2026, underscores a period of considerable flux in the American regulatory environment, particularly as it pertains to workforce management and legal compliance. The disproportionate influence of DEI and immigration policies suggests a deliberate and impactful agenda set forth by the administration, directly shaping the operational realities for businesses across various sectors.
Shifting Sands in DEI: EEOC Actions and Legal Ambiguities
The survey results closely align with a series of significant actions taken by federal agencies, most notably the U.S. Equal Employment Opportunity Commission (EEOC), targeting DEI programs following President Donald Trump’s second inauguration. These actions have created a ripple effect, leading to a reassessment of compliance strategies for many organizations.
One of the EEOC’s earliest substantive moves after reconstituting its quorum and solidifying a Republican majority was the rescission of Biden-era workplace harassment guidance. This guidance had articulated specific positions on Title VII of the Civil Rights Act of 1964, particularly concerning protections for transgender workers and employees seeking abortions. EEOC Chair Andrea Lucas expressed dissent with certain aspects of this guidance, leading to its withdrawal.
Jim Paretti, a shareholder at Littler and a contributor to the survey report, commented during a media event on March 4th that while the rescission of the harassment guidance did not come as a surprise to many employers, it has, however, introduced a degree of uncertainty regarding the EEOC’s current interpretation of Title VII. "I do think that’s unfortunate, only insofar as much of what was in that guidance, I think, was not particularly controversial or novel," Paretti stated. "It served as a good benchmark for employers to know how the agency views certain things."
The withdrawal of this guidance leaves employers navigating a less defined landscape, potentially requiring them to rely on older precedents or develop new internal policies to ensure compliance with anti-harassment laws. This ambiguity can be particularly challenging for companies that had based their DEI initiatives and training programs on the now-rescinded document.
Looking ahead, Paretti indicated that employers should anticipate swift and transparent actions from Chair Lucas on several of her stated priorities. A key area of focus for the EEOC under Lucas’s leadership is the combating of religious discrimination. Paretti observed that this area has become "more fertile" for litigation, with employees increasingly seeking religious accommodations or raising religious-related issues in the workplace. This heightened focus suggests that employers will need to strengthen their understanding and implementation of policies related to religious freedom and accommodation to mitigate legal risks. The trend toward increased litigation in this domain reflects a broader societal and legal discourse surrounding religious expression in public and private spheres.
Immigration Policies and the Workforce Crunch
Beyond DEI, the Trump administration’s immigration policies have also exerted a profound influence on employers, with a significant 65% of survey respondents reporting being affected. Jorge Lopez, another shareholder at Littler, attributed this widespread impact to a "broader talent crunch" that employers are experiencing, largely driven by the White House’s enforcement efforts in immigration.
The administration’s approach to immigration has involved a series of policy shifts and enforcement actions that have directly curtailed the availability of foreign labor. These changes include:
- Updated Asylum Application Requirements: Revisions to the process for asylum seekers seeking employment authorization have potentially lengthened processing times and created uncertainty for individuals and their potential employers.
- Termination of Temporary Protected Status (TPS): The revocation of TPS for nationals of several countries has led to the displacement of long-term residents and workers, many of whom were integral to specific industries.
- Proposed Increase in Prevailing Wage Standards: A proposed significant increase in the prevailing wage standards set by the U.S. Department of Labor for certain foreign worker programs, such as the H-1B visa and PERM Labor Certification processes, aims to ensure that foreign workers do not depress wages for American workers. However, this could also increase labor costs for employers and make it more challenging to secure the necessary foreign talent.
These policy shifts are occurring amidst intensified scrutiny of H-1B visa and Permanent Labor Certification applications, notably through the Department of Labor’s "Project Firewall" initiative. This program aims to enhance the integrity and enforcement of labor protections for U.S. workers.
The cumulative effect of these immigration policy changes has been a struggle for employers, particularly in sectors heavily reliant on immigrant labor. Industries such as construction, hospitality, agriculture, and landscaping are facing difficulties in finding qualified workers to fill roles previously occupied by immigrants whose legal status has been affected or whose immigration pathways have been obstructed.
"There’s not a retinue of individuals that [employers] have available to take on these jobs," Lopez stated. "In hospitality, I’ve dealt with a number of restaurant groups that basically have shut down operations because they just can’t continue to move forward with what they have." This highlights the critical role that immigrant labor plays in sustaining key sectors of the U.S. economy and the severe disruption caused by restrictive immigration policies. The ripple effect extends beyond immediate job losses, impacting supply chains, consumer prices, and the overall economic output of affected industries.
Broader Economic Ramifications: Headcount Reductions and Hiring Freezes
The combined impact of regulatory and economic uncertainty, significantly influenced by the administration’s policy pivots, has led to tangible consequences for employment levels. The Littler survey found that more than one-third of employer respondents had reduced their headcount within the past year. An additional 30% of employers reported either pausing or reducing their hiring activities.
This trend indicates a cautious approach by businesses, driven by a lack of predictability in the regulatory environment and a concern about future labor availability and costs. The reduction in workforce and hiring freezes suggest a more conservative business outlook, potentially impacting economic growth and job creation.
State and Local Policy Divergence Adds Complexity
The challenges faced by employers are further compounded by a divergence in policies at the state and local levels. A striking nine out of ten respondents to the Littler survey indicated that changes in state and local legislation and workplace regulations had affected them over the preceding 12 months. This suggests a fragmented and often contradictory legal landscape that employers must navigate.
A notable example of this conflict, as highlighted by Paretti, pertains to the protections for transgender employees. While many states have enacted laws that explicitly protect employees based on gender identity, the Trump administration has, in contrast, adopted a stance that has been described as dismissive of the concept of gender identity. This creates a "thorny" situation for employers, who are caught between potentially conflicting legal obligations and expectations.
The U.S. Supreme Court’s landmark decision in Bostock v. Clayton County, Ga., which held that gender identity is a protected category under Title VII, serves as a key legal precedent. However, the differing approaches at the federal and state levels create compliance challenges. Employers are tasked with developing practical, real-world solutions to issues such as bathroom access and other gender identity-related concerns, while simultaneously adhering to diverse and sometimes opposing legal mandates.
"Everything is on the table, and you just have to approach it with an open mind in the realm of what is doable and what is predictable," Paretti advised, underscoring the need for adaptability and strategic planning in this complex regulatory environment. This necessitates a careful review of existing policies, ongoing legal counsel, and a proactive approach to anticipating future regulatory shifts. The legal landscape surrounding employment law is continuously evolving, and employers must remain vigilant to ensure ongoing compliance and mitigate potential risks. The interplay between federal, state, and local regulations creates a dynamic environment that demands continuous attention and strategic adaptation from businesses operating within the United States.
About the Author
