The Potential Impact of President Trump’s Executive Order on DEI Programs

By Meaghan Murphy - Skoler Abbott P.C.

February 11, 2025

On January 21, 2025, President Donald Trump signed an Executive Order entitled “Ending Illegal Discrimination and Restoring Merit-Based Opportunity” (the “DEI Order”).  The DEI Order rescinds affirmative action requirements in government contracting that have been in place for 60 years, and directs federal agencies to take an aggressive approach toward “illegal” diversity, equity, and inclusion (DEI) or diversity, equity, inclusion, and accessibility (DEIA) programs and policies of both government contractors and private employers.

Notably, just one day later, President Trump issued a different Executive Order requiring all federal agencies to terminate their own “illegal” DEI programs and eliminate all Chief Diversity Officers and other DEI positions. Pursuant to that Executive Order, many federal employees involved in the federal government’s own DEI programs were placed on paid administrative leave ahead of expected layoffs. While this subsequent Executive Order only applies to federal agencies, it sends a clear message about this administration’s belief that DEI and DEIA programs violate federal civil rights laws.

These actions do not come as a surprise. During his campaign, President Trump spoke about his disdain for DEI and DEIA programs. In fact, even before President Trump issued these Executive Orders, several large, well-known companies announced plans to roll back their DEI or DEIA programs, including McDonald’s, Meta, and Wal-Mart.  Now that President Trump has taken action to implement his campaign promises, it is imperative that private employers across the country – regardless of whether they are government contractors – understand the potential impact of the DEI Order on their businesses. Here is what employers need to know:

What the Executive Order Says

In the DEI Order, President Trump ordered all federal agencies “to terminate all discriminatory and illegal preferences, mandates, policies, programs, activities, guidance, regulations, enforcement actions, consent orders, and requirements,” and further ordered all federal agencies “to enforce our longstanding civil-rights laws and to combat illegal private-sector DEI preferences, mandates, policies, programs, and activities.”

While the DEI Order does not define “illegal” DEI, federal anti-discrimination laws generally prohibit the use of race, color, sex, religion, age, or national origin in hiring, promotion, firing, and other personnel decisions. The DEI Order specifically targets DEI or DEIA practices prioritizing race or sex over “individual merit, aptitude, hard work, and determination” in both the federal government and the private sector.

To accomplish its goals, the DEI Order revoked a number of DEI-focused executive orders issued over the years, including one from 1965, the year after the passage of the landmark Civil Rights Act of 1964. The DEI Order also requires the Office of Federal Contract Compliance Programs (OFCCP) within the U.S. Department of Labor to immediately cease (1) promoting diversity, (2) holding federal contractors responsible for taking “affirmative action,” and (3) allowing or encouraging federal contractors and subcontractors to engage in workforce balancing based on race, color, sex, sexual preference, religion, or national origin.

In terms of concrete actions, the DEI Order mandates that, within 120 days, the Director of the Office of Management and Budget is required to submit a report to the President’s Domestic Policy Advisor containing a proposed strategic enforcement plan. Each federal agency is also required to identify “the most egregious and discriminatory DEI practitioners” within its jurisdiction, and further identify the following:

• up to nine (9) potential civil compliance investigations of publicly-traded corporations or other private employers;
• other strategies to encourage the private sector to end illegal DEI discrimination and preferences and comply with all federal civil rights laws;
• litigation that would be potentially appropriate for federal lawsuits, intervention, or statements of interest; and
• potential regulatory action and sub-regulatory guidance.

Finally, the DEI Order mandates that businesses receiving federal grants must certify that their DEI programs do not violate federal civil rights laws.

Significantly, the Executive Order clearly states that federal agencies and private employers can continue to provide preferences for veterans of the U.S. armed forces.

Trump’s DOJ Has Spoken

On February 5, 2025, United States Attorney General Pam Bondi, who heads the U.S. Department of Justice, issued a memorandum titled “Ending Illegal DEI and DEIA Discrimination and Preferences” to all department employees (the “DOJ Memo”). The DOJ Memo specifically cited to the DEI Order and echoed that policies relating to DEI and DEIA may violate federal civil rights laws. Although the DOJ Memo is brief – less than 2 pages – it speaks volumes as to the DOJ’s intent to carry out the goals set forth in the DEI Order.

In the DOJ Memo, the Attorney General announced that the Department of Justice’s Civil Rights Division “will investigate, eliminate, and penalize illegal DEI and DEIA preferences, mandates, policies, programs, and activities in the private sector and in educational institutions that receive federal funds.” In addition to the civil penalties described in the DEI Order (see the bulleted list above), the DOJ Memo goes a step further, in that it contemplates the possibility of criminal penalties against private employers’ and educational institutions that maintain illegal DEI or DEIA policies. We do not know what the DOJ will consider egregious enough to warrant criminal penalties; we will have to wait and see.

Takeaways

President Trump’s DEI Order represents a significant shift in federal policy, but it does not have the same legal status as a law passed by Congress, a regulation published by a federal agency, or a decision by a court. Those sources of law have not changed (at least not yet). However, the DEI Order, combined with the subsequent DOJ Memo, represents a statement of the Trump administration’s policy on DEI or DEIA programs, and explains how it intends to use the executive branch of government to further that policy.

Whether and to what extent the DEI Order will survive legal challenges remains to be seen, but cautious employers can take action now to help reduce the chances that they will become a target.  Specifically, employers should carefully review internal diversity programs and policies, and consult with employment counsel to ensure that those programs and policies comply with both federal and state anti-discrimination laws.  Again, those laws have not changed, and DEI programs and policies are not a per se violation of either the DEI Order or the law, but some changes may need to be made to ensure that they do not illegally advantage one or more protected groups to the detriment of others.

Lastly, employers who are government contractors should prepare for the newly-required certifications to the government regarding “discriminatory” DEI practices, and be mindful of the risk of litigation in the event the government suspects that such a certification is false.

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