Arizona Considers Legislation to Deter DEI Programs and Policies

Quick Hits

• Arizona House Bill 2135 proposes a private right of action allowing employees to seek statutory damages against employers for violating DEI policies.
• The legislation could expose employers to significant liability, with minimum damages set at $100,000, amid growing federal scrutiny of lawful DEI initiatives.
• It is unclear at this time whether it will be passed and signed into law by the governor.

Arizona House Bill (HB) 2135, titled “Prohibited Diversity, Equity and Inclusion Policies,” would create a private right of action under Arizona law against covered entities that violate state or federal laws prohibiting certain DEI “policies” or “concepts.” The Arizona House of Representatives passed the bill on February 23, 2026, and it was sent to the state Senate, where it is currently under consideration.

The legislation could raise further concerns for employers engaging in lawful DEI initiatives and practices. The Trump administration and the U.S. Equal Employment Opportunity Commission (EEOC), as well as other federal agencies, continue to intensify enforcement against “unlawful DEI,” which they consider a violation of Title VII of the Civil Rights Act of 1964. The EEOC and DOJ are also actively encouraging members of majority groups to file discrimination claims under federal antidiscrimination laws.

What the Legislation Would Cover

HB 2135 would broadly allow “a person whose rights are violated” to “commence a civil action against a covered entity.” “Covered entity” is defined as any “corporation, organization, institution or agency in [Arizona] that is subject to a state or federal law prohibiting a [DEI] policy.”

HB 2135 defines a “diversity, equity and inclusion policy” as “a policy that is known and practiced as DEI, critical race theory or anti-racism,” including several broadly defined concepts based on notions that one race or sex is inherently superior to another, that the United States is fundamentally racist or sexist, that individuals are inherently racist or oppressive by virtue of their race or sex, or that meritocracy and hard-work ethics are racist or sexist. The legislation would also apply to “race or sex stereotyping” and other forms of “race or sex scapegoating,” but it does not provide specific definitions of these terms.

Finally, the bill tracks the Trump administration’s federal policy (not federal law) that sex is binary and immutable, applying to any instances in which an individual is “compelled” by a covered entity “to believe in, and to speak in a manner consistent with, the concept that an individual can change the individual’s sex or gender.”

What It Could Mean for Employers

HB 2135 would create a new area of potential liability for covered entities—including employers—with significant economic consequences, as the legislation sets a minimum damages threshold of “at least $100,000.” If enacted, the legislation would also grant a prevailing plaintiff declaratory relief, injunctive relief, compensatory damages, court costs, and reasonable attorneys’ fees. Claims would be subject to a three-year statute of limitations.

Arizona’s push is part of a broader national trend of states seeking to ban DEI initiatives, even if lawful, and focus strictly on merit and meritocracy. While HB 2135 would not ban DEI outright (as some other states’ bills have sought to do), it is distinctive in creating a private right of action with a high minimum statutory damages amount—a framework that is more aggressive than other states’ approaches to date.

However, the bill is not clear about what standing a plaintiff would need to file a civil action. The right of action would be for “a person whose rights are violated,” which could include an employee of an employer with a DEI policy prohibited by the bill. It is not clear how this right of action could overlap or conflict with an employee’s right to file employment discrimination charges or civil actions under federal and state antidiscrimination laws, such as Title VII.

Next Steps

HB 2135 is progressing through the Arizona State Legislature and was read for a second time in the state Senate on March 3, 2026. The chances of enactment remain unclear. In 2025, Governor Katie Hobbs vetoed legislation that would have banned DEI programs within government employers, public schools, and public universities.

Employers may wish to continue performing privileged audits of their DEI programs, including those covered by the proposed legislation, should HB 2135 become law. Employers should remain mindful of all applicable federal, state, and local laws, including the Supreme Court of the United States’ ruling in Bostock v. Clayton County, Georgia, which prohibits making hiring or firing decisions based on sexual orientation or gender identity.

Ogletree Deakins’ Diversity, Equity, and Inclusion Compliance Practice Group and Workforce Analytics and Compliance Practice Group will continue to monitor developments and will provide updates on the Arizona, Diversity, Equity, and Inclusion Compliance, Employment Law, and Workforce Analytics and Compliance blogs as additional information becomes available.

This article and more information on how the Trump administration’s actions impact employers can be found on Ogletree Deakins’ Administration Resource Hub.

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