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FEDERAL FUNDING & OVERSIGHT  

SEC Proposes Ending Federal Shareholder Proposal Requirements

• Rescission of Rule 14a-8’s Federal Regulation of Shareholder Proposals and Amendments to Rule 14a-4

On September 16, the Securities and Exchange Commission (SEC) proposed rescinding Rule 14a-8, the federal rule that requires public companies, under specified conditions, to include qualifying shareholder proposals in their proxy materials for a shareholder vote.

Under the proposal, the SEC would no longer require companies to include shareholder proposals in their proxy materials under federal securities law. Instead, shareholders seeking to bring proposals before other shareholders would rely primarily on rights available under state corporate law and a company's governing documents. The SEC said Rule 14a-8 exceeds the scope of its statutory authority and intrudes into matters traditionally governed by state law.

The practical impact could vary significantly by state. The SEC acknowledges that Rule 14a-8 may have discouraged states from developing their own shareholder-proposal laws, leaving limited state frameworks to replace the federal rule. Without Rule 14a-8, whether shareholders can require proposals to appear in company proxy materials would depend on applicable state law and company governing documents.

The proposal follows an August 14 SEC decision to discontinue its longstanding practice of responding to company requests for staff views on whether individual shareholder proposals could be excluded under Rule 14a-8. The new proposal goes substantially further by seeking to rescind the federal shareholder-proposal rule itself.

Rule 14a-8 has been used by shareholders to bring a wide range of corporate governance and social-policy issues to a vote, including proposals addressing climate, executive compensation, political activity, pro- and anti- DEI and LGBTQ+ issues. During the 2025 proxy season, 786 shareholder proposals were submitted to companies, with 64% ultimately included in proxy materials and put to a vote.

Nike shareholders this month rejected a proposal seeking disclosure about health-care benefits related to gender-transition treatment for minors. Shareholders have also used the Rule 14a-8 process to seek greater corporate action or disclosure on DEI, racial equity, LGBTQ+ rights and other ESG-related issues. If the SEC proposal is finalized, whether similar proposals must appear in company proxy materials would instead depend largely on applicable state law and company governing documents.

The proposal would not prohibit shareholder proposals or shareholder votes, but it would eliminate the federal mechanism that currently requires qualifying proposals to be included in company proxy materials.

The proposal is subject to public comment and does not change the current requirements of Rule 14a-8 while the rulemaking process continues.

See also: Pension Funds Sue AT&T Over Exclusion of Workforce Diversity Disclosure Proposal (Issue 53); Shareholders Overwhelmingly Reject Anti-DEI Proposals for Second Consecutive Year (Issue 70); Nike Board Strikes Down Anti-Trans Proposal (Issue 80)

COURTS & LITIGATION   

Former White Corrections Officer Asks Supreme Court to Review DEI Training Hostile Work Environment Claim

• White Officer Wants Justices' Take On DEI Training Lawsuit 

• Young v. Colorado Department of Corrections, No. 25-1068 (10th Cir. 2026)

OVERVIEW

On September 4, Joshua Young, a former white sergeant with the Colorado Department of Corrections (CDOC), petitioned the U.S. Supreme Court to decide whether a single mandatory workplace diversity training containing allegedly derogatory racial stereotypes can be severe enough, on its own, to support a hostile work environment claim.

Young's case stems from a March 2021 Equity, Diversity and Inclusion training that he alleged made discriminatory generalizations about white people. He claimed the training affected his duties in a prison setting by causing him to second-guess decisions involving contraband searches and uses of force, and that CDOC declined to investigate his complaints. He resigned four months later.

Young filed two lawsuits, both of which were dismissed. In May, the Tenth Circuit affirmed the dismissal of his second lawsuit, concluding that the training and additional allegations about its aftermath did not meet the severe or pervasive standard required to establish a hostile work environment.

The Supreme Court has not agreed to hear the case. Young is asking the Court to determine whether employer-sponsored racial content in a single mandatory training can, by itself, be sufficiently severe to support a hostile work environment claim.

LEGAL INTERPRETATION

Title VII's hostile work environment standard requires discriminatory conduct to be sufficiently severe or pervasive to alter the conditions of employment. Young's petition focuses on the distinction between those alternatives: he argues that a single employer-mandated training can be actionable based on its severity without repeated conduct or additional harassment.

Young argues that the Tenth Circuit's approach conflicts with decisions from other federal appeals courts recognizing that a single sufficiently severe incident of racial harassment can support a hostile work environment claim. He also points to the Second Circuit's 2025 decision in Chislett v. New York City Department of Education, which allowed claims involving mandatory DEI training and additional alleged race-based workplace conduct to proceed. The Tenth Circuit distinguished Chislett, concluding that Young's training and allegations about its aftermath did not meet the required threshold.

The petition therefore asks the Supreme Court to clarify how the “severe or pervasive” standard applies when the alleged harassment arises from a single mandatory employer-sponsored training. The Court has not yet decided whether to hear the case, and the Tenth Circuit's decision remains controlling within its jurisdiction.

BRIDGE POV

Organizations need to ensure that all training is grounded in legitimate business and workplace objectives and does not attribute beliefs, behaviors or responsibility to employees because of their race or other protected characteristics.

The legal scrutiny surrounding DEI training reinforces the importance of doing this work well. Inclusion education that is thoughtful, accurate and designed to build organizational capability remains an important tool for creating workplaces where employees can work effectively across differences.

ACTIONABLE STRATEGIES

1. Review training content for protected-class generalizations. Examine DEI and other workplace training for language that attributes beliefs, behaviors, privilege, culpability or other characteristics to employees based on race, sex or another protected characteristic.
   
   
2. Connect training to workplace responsibilities. Ground inclusion education in specific organizational objectives, employee responsibilities and skills that support effective workplace interactions rather than generalized statements about demographic groups.
   
   
3. Create meaningful channels for employee concerns. Ensure employees can raise concerns about training content without retaliation and that complaints are reviewed consistently with other workplace discrimination or harassment concerns.

See also: See also: DEI Training Hostile-Work Claim Rejected (Issue 64); Employer Requirement of "Equity Mindset" Not Reverse Discrimination (Issue 74)

Accenture Settles DOJ Diversity Discrimination Claims for $25 Million

• Accenture pays $25 million to settle DOJ diversity discrimination claims

On September 14, Accenture agreed to pay $25 million to resolve DOJ allegations that its federal contracting business used race and sex as factors in hiring, promotions and access to training and development opportunities. The alleged conduct dates back to 2017. Accenture denied wrongdoing, and the settlement includes no determination or admission of liability.

The DOJ alleged that Accenture circulated color-coded demographic reports that influenced staffing decisions, used racial representation objectives in an entry-level hiring initiative, gave preferential treatment to certain managing director promotion candidates and restricted participation in a mentoring program based on race.

The settlement follows similar False Claims Act resolutions involving alleged employment discrimination by federal contractors, including Deloitte's $21.5 million settlement and IBM's $17 million settlement. 

The settlements have focused on allegations that contractors used race or sex in employment decisions or restricted opportunities based on protected characteristics, rather than workplace DEI programs generally.

See also: DOJ Uses False Claims Act to Secure $17 Million Settlement with IBM (Issue 60); Deloitte Pays $21.5 Million to Resolve DOJ False Claims Act Allegations Over DEI Employment Practices (Issue 80)

EEOC Chair Urges American Workers to Report National Origin Discrimination

• EEOC Chair Solicits National Origin Discrimination Claims by American Workers 

• U.S. EEOC on X: "Every day, American workers face discrimination simply because they’re American..."

• Discrimination Against American Workers Is Against The Law 

EEOC Chair Andrea Lucas is encouraging American employees and job applicants who believe they have been discriminated against because they are American to file national origin discrimination charges with the agency. Similar to the agency's previous efforts encouraging White male workers to report alleged discrimination, the EEOC is now using social media and agency guidance to actively solicit claims of “anti-American” discrimination.

The EEOC identifies potential examples including job postings stating “H-1B preferred,” employers favoring visa holders over American workers in hiring or other employment opportunities, and workplace harassment based on being American. Lucas has said the agency will “vigorously enforce” Title VII protections for American workers.

Title VII's prohibition against national origin discrimination applies to Americans as well as workers of other national origins. The new campaign does not change that law, but reflects the categories of discrimination claims that the EEOC under Lucas is actively encouraging workers to bring to the agency.

See also: Federal Enforcement Campaign Targets Corporate DEI as Legal Standards Remain Unchanged (Issue 46); NAACP Sues EEOC Over Withheld Records on White Male Complaint Solicitation (Issue 68)