Executive Order Targets “Illegal” Private Sector DEI Practices

President Trump issued an Executive Order titled "Ending Illegal Discrimination and Restoring Merit-Based Opportunity" on January 21. The EO seeks to eliminate diversity, equity, and inclusion (DEI) initiatives within federal agencies, contractors, and the private sector that are perceived as violating federal anti-discrimination laws such as Title VII.

Why it matters: The EO ends most affirmative action requirements for federal contractors. While it does not change existing law for private sector employers beyond that, it increases legal and reputational risks for DEI practices.

Key Provisions:

• Federal Contractor Affirmative Action Requirements Nixed – The EO rescinds Executive Order 11246 and related affirmative action requirements. Contractors will no longer have to submit and adhere to affirmative action plans.

  • Contractor affirmative action requirements under the Rehabilitation Act and the Vietnam Era Veterans' Readjustment Assistance Act (VEVRAA) remain in effect.

• Federal Contractor Compliance Certifications – The EO requires federal contractors to certify that they are in compliance with federal anti-discrimination laws and do not have any DEI programs that violate such laws.

  • These types of certifications have been used in previous administrations for labor and employment law compliance; as in those instances, this requirement could theoretically lead to quasi-blacklisting measures or effects and could be subject to a court challenge.

• Private Sector Oversight – The Order directs federal agencies to enforce anti-discrimination laws by investigating DEI practices that illegally discriminate. The language of the Order is careful not to push beyond what is considered “illegal” (but that term is not yet defined – see below).

• Report on Unlawful DEI Practices, Future Actions – The Order requires the Attorney General to work with all federal agency heads to submit a report of recommendations “to encourage the private sector to end illegal discrimination and preferences, including DEI,” by the end of April which will include:

  • A list of companies or organizations that are “the most egregious and discriminatory DEI practitioners in each sector of concern;”

  • Identification of up to nine publicly traded corporations, non-profits, associations, or foundations, by each agency, for potential civil compliance investigations;

  • Recommendations for litigation against companies and organizations that have unlawful DEI practices; and

  • Recommendations for further regulatory action or guidance to end unlawful DEI practices. 

What is an “unlawful DEI practice?” The impact of the EO will largely hinge on how the administration defines “unlawful DEI practices.” The administration’s interpretation could potentially encompass some current common DEI programs, such as scholarships or targeted outreach programs, which have already been the subject of several lawsuits. Whether federal courts agree with any such interpretation remains to be seen – for now, the law remains unchanged.

EEOC offers mixed reaction: Responses to the Order from Commissioners at the Equal Employment Opportunity Commission, the primary agency enforcing workplace anti-discrimination laws, varied widely.

• In a statement released upon being named Acting Chair, Republican Commissioner Andrea Lucas declared that “my priorities will include rooting out unlawful DEI-motivated race and sex discrimination.”

• The three Democratic commissioners released a joint statement stating that the Executive Order “undermines” the goals of the EEOC and anti-discrimination law, and that “common sense practices, such as monitoring hiring and promotions decisions, skill-based hiring, standardized interview practices, and robust recruitment, remain lawful and important ways” to create diverse and inclusive workplaces.

Implications for HRPA Members:

1. The law has not changed – DEI practices that are compliant with federal anti-discrimination laws are still permissible.

2. The EO may result in new regulations, including for federal contractors – stay tuned.

3. In the meantime, consider an audit of current DEI practices to ensure legal compliance.