On January 19, 2026, Texas Attorney General Ken Paxton issued a blistering 74-page advisory opinion asserting the unconstitutionality of many common diversity, equity, and inclusion (DEI) initiatives in both the public and private sectors. While the opinion at times veers more towards policy signaling than fresh legal analysis, employers should take note, especially where it details specific policies ripe for targeting at the state level.

Here’s what employers need to know and how to respond strategically.

What does the memo say?

The memo is blunt in its assessment of DEI, offering a sweeping rebuke of such initiatives. Paxton offers a history of affirmative action’s evolution and explains why he believes it is outdated and harmful policy today.

  • Paxton summarizes some of the most recent developments in the law on affirmative action, including the Supreme Court’s June 2023 decision in Students for Fair Admissions v. Harvard, which held that Harvard’s race-conscious admissions program violated the Equal Protection Clause of the 14th Amendment.
  • He specifically targets Texas’ historically underutilized business (HUB) and Disadvantaged Business Enterprise (DBE) initiatives, asserting that they are unconstitutional because they employ explicit racial and sex-based classifications. In his view, “requirements for ‘good faith efforts’ to meet HUB utilization ‘goals’ create a de facto race- and sex-based quota system that fails strict scrutiny.”
  • A recurring theme is Paxton’s underlying philosophy that conferring a benefit on one race or sex creates a corresponding detriment to another race or sex. For example, in his assessment of the HUB program, he states that “[t]he procurement process is infused with race- and sex-based priority for HUBs over lower bids by competitors” and “HUB programs offer exclusive race- and sex-based assistance, training, outreach, and access to the detriment of non-HUBs.”
  • He warns that private companies engaging in “DEI initiatives related to hiring or compensation—like hiring goals or quotas, diversity board mandates, structured interview requirements, internships, fellowships, pipeline programs, and targeted recruitment” may be unlawful employment actions under Title VII and Chapter 21 of the Texas Labor Code.
  • Paxton does “acknowledge that the ‘mere existence’ of a DEI policy, in isolation, may not impose liability under Title VII.” He focuses on whether such a policy was “actually relied upon” in taking a specific employment action, and particularly homes in on diversity-related hiring goals or quotas.

As employers are likely aware, the Texas AG’s opinion didn’t emerge in isolation. We have previously written about a growing trend against DEI policies at the state and federal levels, including President Trump’s Executive Orders 14151 and 14171. More than anything, Paxton’s opinion adds to a chorus of voices decrying affirmative-action policies. Paxton particularly criticizes “initiatives [that] reflect a desire to achieve preferential demographic representation to the exclusion of others when ‘favoring one demographic trait necessarily means disfavoring those of another.’” As other federal and state officials have done in recent years, this opinion emphasizes merit-based decision-making and criticizes policies aiming to prioritize or benefit a particular race or sex.

It’s important to note that, despite Paxton’s impassioned language, this advisory opinion is non-binding on courts and does not create new law. AG opinions like this one, however, are an important indicator of the AG’s enforcement focus, signaling increased scrutiny on DEI initiatives in the private sector. The opinion likely also aims to increase employers’ reticence toward DEI initiatives.

Notwithstanding Paxton’s broad critique, employers must still comply with federal civil rights laws, including Title VII of the Civil Rights Act of 1964 (Title VII), which protects employees from discrimination based on protected characteristics.

Courts have repeatedly upheld lawful affirmative action and targeted outreach when properly structured. If an employer wishes to continue DEI efforts, it’s important to distinguish between illegal discrimination (which no business should engage in) and lawful diversity efforts aimed at widening the candidate pool and fostering inclusive workplaces. As Paxton’s opinion notes, businesses have many reasons for their continued interest in DEI initiatives, including perceived positive effects on workplace culture or collaboration. And again, Paxton “acknowledge[s] that the ‘mere existence’ of a DEI policy, in isolation’ may not impose liability under Title VII.” Quoting from the recent Western District of Michigan decision in Dill v. Int’l Bus. Machines Corp., Paxton highlights as unconstitutional:

Lawful DEI initiatives do not involve quotas or hierarchical preferences, however, and remain legal when correctly implemented.

When it comes to DEI, the one thing employers are used to is change. Here are some practical steps employers can take to make sure their practices are aligned with state and federal law:

  • Review your DEI policies.

Conduct a legal audit of existing DEI initiatives with the help of counsel. Identify any practices that explicitly set goals or impose stated preferences based on race, sex, or other protected characteristics.

  • Ensure compliance with federal law.  

Expand recruitment and retention practices in ways that remain neutral with respect to protected classifications, such as “blind” resume review, expanding hiring or interview pools, or finding ways to facilitate broad outreach.

  • Train HR teams on legal boundaries.

Provide training to HR professionals on the differences between inclusive practices that broaden the hiring pool and unlawful preferences that could expose your company to legal headaches.

  • Note future implications for initiatives such as HUB and DBE.  

If you plan to participate in the above initiatives or similar ones, make sure to stay abreast of potential changes.

  • As always, keep an eye on the legal landscape.  

With recent executive orders, U.S. Supreme Court decisions, and memos like Paxton’s challenging a variety of DEI initiatives, it’s safe to say this area is constantly evolving. Before you decide to change an existing workplace DEI initiative or to implement a new one, you should always consult with your legal counsel to ensure compliance with state and federal anti-discrimination laws.