March 2025 HR Update

EEOC and DOJ Issue Guidance on DEI-related Discrimination

On March 19, 2025, the U.S. Equal Employment Opportunity Commission (EEOC) and the U.S. Department of Justice (DOJ) issued joint guidance on illegal and discriminatory diversity, equity and inclusion (DEI) practices. The EEOC also issued frequently asked questions (FAQs) regarding DEI-related discrimination. The guidance clarifies the agencies’ position on what may constitute illegal DEI and offers steps employees may take to report violations.

Background

On January 20, 2025, and January 21, 2025, President Donald Trump issued executive orders (EOs) 14151 and 14173, respectively, seeking to terminate all illegal DEI mandates, policies, programs, preferences, and activities. However, neither EO defines what practices or programs may constitute illegal DEI. The EEOC and DOJ guidance provides some clarity as to the agencies’ positions on illegal DEI.

Overview of DEI-related Discrimination Guidance

Under Title VII of the Civil Rights Act (Title VII), employers with 15 or more employees may not discriminate based on an individual’s protected trait (e.g., race, color, religion, sex or national origin). The EEOC FAQs and the EEOC and DOJ joint guidance state that DEI programs may be unlawful under Title VII if they are motivated, in whole or in part, by an employee’s protected trait. The guidance identifies specific instances of potential DEI-related discrimination in the workplace, including:

• Disparate treatment in employment actions (e.g., hiring, firing, compensation, access to training, mentoring or workplace networking, and selection for interviews, including inclusion in a candidate pool) that is motivated by a protected trait;
• Limiting, segregating or classifying employees based on a protected trait in a way that deprives them of employment opportunities (e.g., limiting membership in workplace groups, such as employee resource groups or affinity groups, to members of a particular protected class);
• Engaging in workplace harassment based on a protected trait (e.g., DEI training may constitute illegal harassment if it is so severe or frequent as to be intimidating, hostile or abusive) and
• Retaliating against employees who engage in protected activity (e.g., objecting to DEI-related discrimination, participating in an investigation or filing a charge).

The guidance further clarifies that unlawful discrimination occurs even if a protected trait is just one factor among several rather than the sole factor. Additionally, employers may not justify an employment action based on a protected trait because they have a business interest in diversity, including a client or customer preference. Finally, the guidance provides steps employees may take to file a discrimination claim with the EEOC.

Employer Takeaway

Although the EEOC and DOJ guidance does not alter existing law (which bans consideration of an individual’s protected trait in employment decisions), it provides insight into how such agencies will evaluate claims of DEI-related discrimination and how employers may prevent such claims. In light of the guidance, employers may consider reviewing existing DEI practices to ensure they do not discriminate based on a federally protected trait. For example, employers may wish to review existing hiring and interview selection practices, employee resource and affinity group or training program membership guidelines, and workplace training to confirm they do not have a disparate impact on any protected class.

Health Care Cost Spotlight: GLP-1 Medications

According to industry surveys and reports, employers anticipate healthcare costs to increase by 7-8% in 2025. As a result, employer-sponsored healthcare plans will continue to cost more per employee, impacting employers and employees alike.

With glucagon-like peptide-1 (GLP-1) drugs gaining popularity among plan participants, they are a key driver of rising healthcare costs. This Health Care Cost Spotlight article focuses on GLP-1s and how they impact healthcare costs this year and beyond.

The Growing Demand for GLP-1s

The U.S. Food and Drug Administration (FDA) approved the first GLP-1 medication for Type 2 diabetes in 2005. Still, clinical trials revealed that patients experienced significant weight loss, leading to the first GLP-1 approved for weight loss in 2014. Innovation continued, and GLP-1 use has risen to prominence as a weight loss tool in recent years.

Obesity is a disease that can result from personal behaviors, medication use, dietary patterns, family history and genetics. Yet, other contributing factors, such as increasing food portions, inactivity and increased food insecurity, also tend to put Americans at risk for obesity or worsening obesity. Obesity can lead to many other illnesses, such as Type 2 diabetes, heart disease and certain cancers. More than 2 out of 5 adults in the country have obesity. While long-term weight loss is possible with lifestyle, diet and mindset changes, many are turning to weight loss drugs instead.

A KFF poll revealed that 1 in 8 Americans have already used a GLP-1 drug, while 6% are currently taking one, and experts expect this number to rise. J.P. Morgan estimates that 9% of the U.S. population could be on GLP-1s for weight loss by 2030, as the popularity of these drugs increases as more patients become aware of GLP-1s and take action to improve their health.

GLP-1 drugs are already proving popular, with plan participants eager to lose weight and improve their overall health. Mounjaro (which has the active ingredient tirzepatide), Ozempic and Rybelsus (which both use the active ingredient semaglutide) are approved for treating diabetes but are commonly prescribed off-label for weight loss. Zepbound (tirzepatide) and Wegovy (semaglutide) are drugs that use the same active ingredients but are approved to treat obesity for qualifying patients. Most recently, Ozempic was approved to reduce the risks of kidney disease worsening, kidney failure and death due to cardiovascular disease in adults with Type 2 diabetes and chronic kidney disease. In addition to these conditions, the active ingredients in GLP-1 medications have shown promise for treating other conditions, including Alzheimer’s disease, heart disease and even sleep apnea. While these use cases are still undergoing clinical trials for approval, the potential applications of GLP-1s could lead to these costly drugs being used to treat even more patients.

Additional GLP-1 drugs will hit the market by 2026, which could further drive up employers’ health plan costs. GLP-1s suppress appetite, which usually leads to an energy deficit and muscle loss. As such, muscle loss is a concern for many people taking anti-obesity medication and manufacturers are working to create drugs that can help preserve muscle while dropping weight. As pharmaceutical companies recognize the success of semaglutide and tirzepatide, more than 100 drugs are in clinical development for obesity.

Furthermore, 15 drugs—including Ozempic, Rybelsus and Wegovy—were recently selected for the second Medicare Drug Price Negotiation Program cycle. Once drug companies confirm their participation, negotiations will continue through 2025. While Part D negotiations will help lower costs for seniors, this move may also have more significant implications for drug access, insurance coverage, supply and total healthcare spending.

The Cost of GLP-1s

On average, GLP-1 treatment costs around $1,000 per individual each month. When considering covering weight loss drugs, many employers are concerned that they must be used for extended periods to be effective, requiring a long-term commitment.

A Business Group on Health survey validated that heightened interest and spending on GLP-1 drugs are major drivers of rising healthcare costs in 2025. Large employers covering 17.1 million Americans participated in Business Group on Health’s annual healthcare strategy survey. These employers predicted their healthcare costs would increase about 7.8% in 2025 before plan design changes, primarily due to pharmacy costs. More than half (56%) of respondents said that GLP-1 spending was “driving health care costs to a great or very great extent.”

Cost-mitigation Strategies for Employers

Although employers have historically not covered GLP-1s for weight loss, increased demand from workers and obesity concerns among U.S. adults are forcing employers to reconsider comprehensive obesity care benefits. While most employers cover GLP-1s for approved uses to treat Type 2 diabetes, decision-makers have hesitated to cover them for weight loss. KFF found fewer than 1 in 5 organizations with 200 or more employees covered the drugs in 2024. Furthermore, only 3% of large firms that currently don’t cover GLP-1s are “very likely” to do so in 2025. About one-quarter of large companies say they are “somewhat likely” to cover the drugs. Similarly, consulting firm Mercer reported that about 44% of U.S. employers with 500 or more employees covered medications for weight loss in 2024, up from 41% in 2023. Additionally, 64% of employers with over 20,000 employees covered weight loss drugs in 2024, compared with 56% in 2023. While employers are cautious about covering weight loss drugs, more are doing so as the treatments gain popularity among today’s workforces.

While employers largely cover these drugs due to employee demand, they often experience the advantages of a healthier workforce. Employees with obesity are likely to incur more medical costs, file workers’ compensation claims and take more sick days than other employees. Add those things up, and they can be pricey for employers. Obesity cost employers more than $400 billion in 2023. Employees who are overweight or obese can cost between $1,200 and $6,700 per year in excess costs. However, these excess costs may not sway all employers due to the higher price tags and the need for the employee to take GLP-1s indefinitely.

Rising healthcare costs may be unavoidable, but some employers are pursuing the following strategies to lower expenses related to GLP-1s:

• Choose whether to cover GLP-1 medications for obesity or strictly provide coverage for Type 2 diabetes.
• Raise the body mass index (BMI) threshold for plan participation. For example, some employers may require either a 30 BMI or a 27 BMI in addition to other relevant health conditions to qualify.
• Introduce employee guardrails or controls, such as prior authorization, step therapy or other actions, before gaining coverage for GLP-1 use.
• Combine weight loss drug coverage with wellness programs. Research suggests GLP-1s are more effective when combined with physical activity and dietary changes, so some employers offer wellness programs focusing on overall lifestyle changes. These types of programs may also help users who want to stop taking the medication but sustain weight loss.
• Take advantage of prescription drug-saving programs, such as rebates, coupons and other pharmacy options.
• Adjust cost-sharing arrangements, such as increasing employees’ deductibles, coinsurance, copayments or premium contributions

Employers can consider which strategies can have a tangible impact on their health care spend, specifically concerning GLP-1 medications. Pursuing the right initiatives can have a sizeable effect on an organization’s bottom line and the financial health of its employees.

Employer Takeaway

The popularity of weight loss drugs has soared in the United States and will likely be a key driver of rising healthcare costs in 2025. This trend has even made its way into the workplace as employees ask their employers to cover weight loss drugs. Given the priciness of GLP-1 drugs and their long-term commitment, employers may still be on the fence about whether they should cover the drugs despite demand. Staying current on developing market trends in this fast-moving space can help employers stay educated and inform their decisions.