As Nike Inc. digests the impact of a $7.5 million gender discrimination case verdict, the footwear giant also is grappling with a federal investigation into its diversity, equity and inclusion (DEI) policies.
It’s one of the most high-profile examples of a company being caught between a rock and a hard place in a heated political landscape.
Despite the Trump administration‘s vocal opposition of DEI, companies must still be mindful of discrimination laws, according to Margo Wolf O’Donnell, co-chair of the labor and employment practice at Benesch. “Complaints involving unfair treatment based on gender, race or other protected characteristics should be taken seriously…. Employment litigation has definitely not gone away, and with the accessibility of AI, employees have even more knowledge regarding the claims they can bring.”
And in deciding policy issues, companies also need to balance the risks between the federal dismantling of DEI policies and claims that could arise under state law that may put a firm’s policies in crosshairs of regulatory review or other public backlash. And Nike has found itself in exactly that position.
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On Wednesday, jurors in a federal case found that Nike violated federal and state laws and said that the sportswear giant discriminated against a former engineer because of her gender. The decision on workplace discrimination resulted in a finding of at least $7.5 million in punitive damages.
A Nike spokesperson said Wednesday: “Nike is committed to providing a workplace where employees are treated fairly, compensated competitively, and given opportunities to grow and succeed.” The company is evaluating its next steps and retains the right to file an appeal with the Ninth Circuit appellate court. It’s a move that could later change the direction of the case.
Benesch’s O’Donnell said that while the Nike “verdict is likely to be appealed, companies determining employment policy need to remember that it “is important to consider employee morale, to ensure a strong human resources function exists at your company, and that legal counsel is used strategically.”
In February, the U.S. Equal Employment Opportunity Commission (EEOC) filed an action for enforcement of an EEOC administrative subpoena against the athletic firm seeking the production of documents in connection to a discrimination probe. The EEOC is probing “systemic allegations” involving DEI-related intentional race discrimination against White employees and job applicants. EEOC cases focus on allegations made by someone and not on actual findings. A Nike spokesperson at the time described the move as a “surprising and unusual escalation,” given that it has had “extensive, good-faith participation” in the EEOC inquiry.
The New York Times reported that Nike already had signed a settlement agreement with the EEOC in the final weeks of the Biden administration that got withdrawn after Trump took office. Both sides are still fighting over the subpoena request.
So what’s a company to do in addressing discrimination policy when there’s a walk-back on DEI initiatives under the Trump administration?
“This is a no-win situation for companies,” Bryan M. Sullivan, partner at Early Sullivan Wright Gizer & McRae said. “The Trump administration may retaliate against a company for having strong DEI initiatives, but the Trump administration’s position on DEI doesn’t dictate what a jury will decide under separate state laws like Oregon, and companies will have to decide which risk they want to bear going forward.”
Sullivan also pointed out that while the “Trump administration only has two and a half years left, state laws will be around a lot longer.”
Back in February when the EEOC matter first came to light, Sullivan noted that a firm’s profile, such as Nike’s, can make it an easy focal point. “High-visibility companies with well-publicized DEI commitments are more likely to become test cases, regardless of whether their practices are meaningfully different from peers. In that sense, Nike may be less of an outlier and more of a bellwether for how these issues are being examined right now,” Sullivan told Footwear News at the time.
In fashion and retail, some companies such as Walmart Inc. and its mass competitor Target Corp. were already walking back on DEI to embrace the concept of “belonging” before Trump took office in January 2025. And others such as REI Co-op have indicated no plans to scale back DEI efforts.
