The Business Impact Of New York's New DEI Constitution Compliance
James Felton Keith is CEO at Inclusion Score Inc. and Labor Economist at Keith Institute. His latest book is #DataIsLabor.
Among other complications, companies are now having to navigate a maze of new executive orders and political pressures. But here's the kicker: Despite all the headlines and debates in Washington, D.C., the actual federal laws haven't changed. What has changed is the level of risk, and New York just made that risk very real.
While much of the country was focused on the presidential race during the 2024 election, New Yorkers voted on something I see as equally transformative: Proposal 1. Known as the Equal Rights Amendment (ERA), this ballot initiative amended the state constitution to explicitly prohibit discrimination based on ethnicity, national origin, age, disability, sex, sexual orientation, gender identity and expression, pregnancy and reproductive healthcare access. This isn't just symbolic. It's law—and it carries real teeth.
I followed this amendment closely, believing it represented a significant legal and cultural shift. It's no coincidence the state-level ERA shares a name with the long-fought federal Equal Rights Amendment, which aimed to protect women's rights for nearly a century. The last administration described it as a would-be 28th Amendment after the 38th State Legislature ratified it. Though the federal version has faced hurdles, New York is moving forward, leading the way as it often does.
New York isn't just any state—it's the financial heartbeat of the planet. When New York updates its constitution, it doesn't just affect public offices and schools. It impacts any business tied to the state through regulation, funding and contracts.
We've seen this move before. Back in 2017, New York led the charge on cybersecurity regulation in response to the GDPR and skyrocketing insurance premiums. The Department of Financial Services rolled out "the Cyber Regulation," allowing it to audit nearly any business with financial ties to the state. That meant banks, insurers, manufacturers and even IT shops with a handful of employees in New York all found themselves under scrutiny. The result? Compliance became non-optional.
Let's draw a powerful parallel. According to IBM, 95% of cyber breaches are caused by human error. The easiest way to cut cyber risk? Improve your people practices.
But here's the twist: Human risk isn't just a cyber issue—it can also be seen as a DEI issue. A disengaged or harassed employee can be a business liability. And with DEI-related grievances, it's not just reputational risk at stake—it's financial. Insurance claims tied to discrimination or retaliation often trigger massive payouts through Directors & Officers (D&O) or Employment Practices Liability (EPL) coverage—two markets now worth over $30 billion globally, with Gallagher reporting that they are growing at 10% to 25% annually.
Ignoring inclusion isn't just a moral misstep anymore; it's a balance sheet problem.
If your business fits any of the following categories, there's a chance you could be impacted:
• Receive New York State funding.
• Contract with New York State.
• Earn over $7.5 million annually from New York residents.
• Employ 15 or more people in the state.
In short: If you touch New York in any meaningful way, this law touches you.
Here's the bottom line. While DEI programs have come under increased scrutiny in some federal discussions, for now, the legal foundation remains largely unchanged. Scaling back inclusive practices as a legal precaution could, paradoxically, increase exposure to risk from employees or regulators.
We're entering a new era where efforts of deliberate equity and inclusion will have to be more explicit instead of vague. Don't take it from me, take it from the lawyer who helped develop DEI, Dawn D Bennett-Alexander, who, in an article I co-authored, writes that "organizations do not need to abandon DEI" and should continue "evidence-based DEI strategies."
Forbes Business Council is the foremost growth and networking organization for business owners and leaders. Do I qualify?
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