MAY 22, 2025

Trump’s Executive Orders on DEI: Impact and Guidance for Employers

As legal counsel committed to helping businesses navigate complex regulatory changes, I am providing this analysis of President Trump’s executive orders targeting Diversity, Equity, and Inclusion (DEI) programs.

Key Executive Orders Affecting DEI in the Workplace

President Trump has issued several executive orders that significantly impact how employers can approach DEI initiatives:

Executive Order 14173: “Ending Illegal Discrimination and Restoring Merit-Based Opportunity”.

This order makes several critical changes affecting employers:

• Rescinds Executive Order 11246: Federal contractors “are no longer required to create affirmative action plans for females and minorities”. Contractors had until April 20, 2025, to continue existing affirmative action plans for these groups.

• Requires Certification: The order mandates that federal contracts and grants include:
  1. A requirement that contractors and grantees certify they do not “operate any programs promoting DEI that violate any applicable Federal anti-discrimination laws”.
  2. A requirement that contractors agree their “compliance in all respects with all applicable Federal anti-discrimination laws is material to the government’s payment decisions” for False Claims Act purposes. 
  3. Creates an Enforcement Plan: The order “instructs the U.S. Attorney General to prepare a strategic enforcement plan to target and ‘end illegal discrimination and preferences, including DEI,'” identifying sectors of concern and “the most egregious and discriminatory DEI practitioners in each sector”.

Executive Order 14151: “Ending Radical And Wasteful Government DEI Programs And Preferencing”

While this order primarily targets DEI programs within the federal government, it provides insight into the administration’s perspective on DEI practices:

• Section 2(a) directs that “Federal employment practices, including Federal employee performance reviews, shall reward individual initiative, skills, performance, and hard work and shall not under any circumstances consider DEI or DEIA factors, goals, policies, mandates, or requirements”.
• The order requires federal agencies to “terminate, to the maximum extent allowed by law, all DEI, DEIA, and ‘environmental justice’ offices and positions”.

Which Companies Are Affected?

Understanding the scope of these executive orders is critical for compliance:

1. Federal Contractors and Grantees: These organizations face the most direct impact. They are no longer required to create affirmative action plans for females and minorities and must certify that their DEI programs don’t violate federal anti-discrimination laws.
2. All Private Sector Companies: While some aspects of Trump’s executive orders apply only to the federal government, EO 14173 applies to all companies in the private sector and has additional implications and requirements for federal contractors and grantees. This means all companies should be aware of the increased scrutiny of DEI programs.
3. High-Profile Targets: The order specifically directs agencies to identify “potential civil compliance investigations of publicly traded corporations, large non-profit corporations or associations, foundations with assets of 500 million dollars or more, State and local bar and medical associations, and institutions of higher education with endowments over 1 billion dollars”

What Employers Should Know About DEI in the Workplace

Despite the policy changes, maintaining appropriate DEI initiatives remains important for several reasons:

Legal DEI Programs Remain Permissible

It’s crucial to understand that “EO 14173 does not change the law on DEI programs. If a DEI program was lawful under federal antidiscrimination laws before EO 14173, it remains lawful afterwards”. The executive order does not require companies to eliminate lawful DEI programs.

The Value of Inclusive Workplaces

Well-designed DEI initiatives benefit all employees and the organization as a whole. Despite misconceptions, DEI isn’t about hiring unqualified candidates or discriminating against any group—rather, it’s about creating equitable opportunities and addressing barriers that have historically affected certain groups.

Effective DEI programs focus on merit while reducing unconscious bias in recruitment, promotion, and retention processes. Research consistently shows that diverse and inclusive workplaces perform better financially, demonstrate greater innovation, and enjoy higher employee engagement.

DEI Programs That May Face Increased Scrutiny

Companies should review DEI programs that may attract greater attention under the new executive orders, including:

• “Internships/fellowships/mentoring programs that are exclusive to or targeted towards certain genders, races, or other protected characteristics”
• “Employee resource or affinity groups that are only open to certain races, genders, or other protected characteristics”
• “DEI aspirational targets or goals based on race, gender, or other protected characteristics”
• “Tying director, officer, or manager compensation or performance reviews to achieving certain DEI objectives or goals”
• “Diverse slate hiring or promotion practices”

The Risks of Overcorrection

Companies should “avoid eliminating certain anti-bias DEI programs or rolling back their DEI programs too far because it could create other legal and business risks. For example, removing DEI programs targeted at eliminating bias (e.g., pay equity studies, reviewing promotion practices for systemic issues)” could potentially increase liability for discrimination claims.

Importance of DEI and Compliance with State and Local Laws

Even with changing federal policies, there are compelling reasons to maintain appropriate DEI initiatives:

State and Local Laws Remain in Effect

It’s crucial to remember that companies also must continue to comply with antidiscrimination laws at the federal and state level, so they should continue to review their policies and practices for bias or discriminatory barriers”. Many states and localities have their own laws regarding discrimination and DEI practices that are unaffected by these executive orders.

Recommended Actions for Employers

To navigate these changes while maintaining valuable DEI efforts, consider:

1. Conduct a DEI Risk Audit: Because this administration will likely take a broad view of what DEI programs are ‘illegal,’ it is critical now to inventory and audit existing and proposed DEI programs and policies with an attorney.
2. Document Employment Decisions Carefully: Review procedures for documenting employment decisions to ensure they are sufficient to document the legitimate business reasons for those decisions, especially to show decisions were based on merit without consideration of race or other protected characteristics.
3. Train Managers: Equip leadership with guidance on handling DEI-related concerns and accommodation requests appropriately.
4. Maintain Compliance with All Applicable Laws: Continue adhering to federal, state, and local anti-discrimination laws, some of which may be more robust than federal requirements. Rolling back DEI too far can invite traditional discrimination claims.

Conclusion

While federal policy regarding DEI is evolving, the fundamental goals of creating fair, inclusive workplaces remain important both legally and for business success. Companies should thoughtfully review their DEI initiatives to ensure compliance with the new executive orders while continuing to foster environments where all employees can thrive.

Remember that “many DEI programs remain lawful under existing federal antidiscrimination laws, including mentorship/fellowship/internship programs that do not use race, gender, or other protected characteristics and employee resource groups that are open to all”. By taking a measured, legally informed approach to DEI, companies can navigate these changes while continuing to support inclusive workplaces that benefit all employees.

How we can help

As a law firm focused on helping employers maintain effective and legally compliant DEI initiatives, our office is uniquely positioned to guide your organization through this period of significant regulatory change. We offer comprehensive services specifically designed to help employers navigate the complex intersection of DEI values and evolving federal regulations.

Our specialized services include:

• Privileged DEI Risk Audits: We conduct thorough reviews of your existing DEI programs, policies, and communications under attorney-client privilege to identify potential compliance issues while preserving your core DEI objectives. This assessment provides actionable intelligence to help you mitigate risk while upholding your organization’s values.
• Certification Support for Federal Contractors: We help federal contractors and grantees prepare for the new certification requirements by assessing DEI programs against federal anti-discrimination laws, reducing your exposure to False Claims Act liability .
• Policy Development and Revision: Our team assists in crafting DEI policies that comply with both federal directives and state/local anti-discrimination laws, ensuring your organization maintains appropriate DEI initiatives without crossing legal boundaries.
• Management Training: We provide tailored training for executives, managers, and HR professionals on responding to DEI-related complaints, handling religious accommodation requests, and documenting employment decisions in ways that demonstrate merit-based decision-making .
• Ongoing Compliance Monitoring: As federal enforcement priorities and state laws continue to evolve, we provide regular updates and guidance to help your organization adapt its DEI approach appropriately.

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