How State Anti-DEI Efforts Are Evolving (from Public Sector to Private?)

After the U.S. Supreme Court struck down affirmative action programs at universities (Students for Fair Admissions v.Harvard), a question common question was “Is the private sector next?” Many companies launched corporate diversity programs, with a renewed emphasis after the killing of George Floyd in 2020, under the name “diversity, equity, and inclusion” (DEI). A political backlash against DEI programs began shortly after, with 22 states limiting or banning DEI programs in state universities by 2023. 

Anti-State DEI Legislation

This year, with the Trump Administration’s focus on eliminating DEI programs from the federal government, state lawmakers have renewed their own efforts at the state level. MultiState is tracking 77 bills in 22 states this legislative session related to anti-DEI efforts.

What Do State Anti-DEI Bills Do?

These bills generally ensure that no state funds are spent on DEI programs and prohibit DEI use in state agencies, local governments, schools, higher education, public boards, and public health care systems. A vast majority of these anti-DEI bills are restricted to educational institutions in the state. These proposals sometimes extend to public contractors (e.g., TX HB 147) or entities receiving state funds (WV SB 574) as well.

North Carolina's Bill and "Non-State" Entities

Elected officials have prioritized the repeal of DEI policies inside the public sector, but now are putting additional pressure on the private sector to conform to their preferences. While anti-DEI bills so far are primarily aimed at public sector institutions, a notable proposal in North Carolina (NC HB 171) specifically includes “non-state” entities. Specifically, the North Carolina bill would:

• Prohibit non-state entities from using any state funds for DEI initiatives or from applying for, accepting, or utilizing federal funds, grants, or other financial assistance that require compliance with DEI policies, initiatives, or mandates.
• Require non-state entities to discontinue any existing programs “funded through such means.”
• Require non-state entities to publish a report on their website and send it to the state detailing actions taken to comply with the law. 

The North Carolina bill defines “DEI training” as an activity designed or implemented to “influence hiring or employment practices” or promote “differential treatment of or providing special benefits to individuals” based on “race, sex, color, ethnicity, nationality, country of origin, or sexual orientation.”

We're not expecting this bill to be enacted (although it has 48 sponsors), and so far anti-DEI bills targeting private sector entities are rare, but this is a trend worth keeping an eye on. 

State AG Action on Anti-DEI

Outside of the legislature, state attorneys general are also getting in on the anti-DEI action. After its shareholders voted to keep the company’s DEI program, 19 state AGs sent a letter to the CEO of Costco urging the company to end “all unlawful discrimination” imposed under the company’s DEI policies citing the Supreme Court’s Harvard decision and echoing language in President Trump’s recent anti-DEI executive order. The AG letter gave Costco 30 days to either repeal the DEI policies or explain to the AGs why it has failed to do so. 

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This article appeared in our Morning MultiState newsletter on March 4, 2025. For more timely insights like this, be sure to sign up for our Morning MultiState weekly morning tipsheet. We created Morning MultiState with state government affairs professionals in mind — sign up to receive the latest from our experts in your inbox every Tuesday morning. Click here to sign up.