Implications of President Trump’s Executive Order on DEI for Private-Sector Employers
February 10, 2025
By: Colin A. Walker
On January 21, 2025, President Donald Trump issued Executive Order 2025-02097, “Ending Illegal Discrimination and Restoring Merit-Based Opportunity.” The Order terminated most Diversity Equity and Inclusion (“DEI”) initiatives in the federal government. It applies directly to federal departments and agencies, but it also has implications for DEI programs in the private sector. The Order is causing concern, confusion, and anxiety inside and outside of the federal government.
Among other things, the President ordered “all agencies to enforce our longstanding civil-rights laws and to combat illegal private-sector DEI preferences, mandates, policies, programs, and activities.” Thus, it specifically ordered agencies to combat illegal DEI programs in the private-sector. This would apply to investigation and enforcement actions by the EEOC and Department of Justice.
The Order states, “The head of each agency shall include in every contract or grant award:
(A) A term requiring the contractual counterparty or grant recipient to agree that its compliance in all respects with all applicable Federal anti-discrimination laws is material to the government’s payment decisions … ; and
(B) A term requiring such counterparty or recipient to certify that it does not operate any programs promoting DEI that violate any applicable Federal anti-discrimination laws.”
This strongly discourages organizations seeking federal grants from adopting DEI initiatives, as doing so could put their funding at risk.
The Order instructs the Attorney General to submit a report to the President within 120 days making recommendations for enforcement of civil rights laws, which includes:
“A plan of specific steps or measures to deter DEI programs or principles (whether specifically denominated ‘‘DEI’’ or otherwise) that constitute illegal discrimination or preferences. As a part of this plan, each agency shall identify up to nine 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…”
In other words, “each agency” is to submit a hit list of large companies, organizations, and associations for investigation of DEI programs.
The same section of the Order goes on to require the Attorney General to consider “litigation that would be potentially appropriate for Federal lawsuits, intervention, or statements of interest.” Thus, the Attorney General must not only investigate, but consider litigation regarding DEI programs. This is not limited to publicly-traded companies and large organizations and associations, but includes any company, organization, or association with a DEI program.
The Order also revoked a number of prior executive orders relating to DEI, some of them going back to the 1960s. The implications of this are beyond the scope of the post, and only careful analysis and time will reveal the full implications of these provisions of the Order.
DEI is not illegal following this Order. The section quoted above regarding federal grants is a good example. It requires the head of each agency to include in every contract or grant award a “term requiring such counterparty or recipient to certify that it does not operate any programs promoting DEI that violate any applicable Federal anti-discrimination laws.” Executive Order, section 3(b)(iv)(B) (emphasis added). Thus, DEI is not illegal, but DEI programs or practices which violate anti-discrimination laws are illegal. That is not new. Indeed, there have been some notable jury verdicts in recent years in favor of white males for such things as being replaced or passed over for promotion in favor of women and/or employees of other races. DEI programs that do that were on thin ice long before this Order.
In this author’s view, the significance of this Order for the private-sector is that federal departments and agencies have now been ordered by the President to look carefully at DEI programs, investigate them and, if appropriate, file lawsuits against those who use them. How aggressive they will be remains to be seen, but they are likely to be more aggressive than they have in the past.
Of course, it is impossible to predict how the federal departments and agencies will enforce and implement this Executive Order. In addition, as usual, a number of lawsuits have been filed asking courts to limit the Order or strike it down entirely. Here is what companies should focus on based on what we know up to this point:
- Companies, organizations, and associations with aggressive DEI programs (especially those receiving federal funding) should carefully review their DEI programs and practices and consult competent employment counsel—and they should do it now.
- Companies, organizations, and associations with reasonable DEI programs would also be wise to review their DEI programs and consult employment counsel, but… take a deep breath. Relax. The EEOC and DOJ are very unlikely to break down your front door and take away your DEI coordinator. The more likely scenario would be a letter or other communication from an agency inquiring about or requiring changes in the DEI program. At that point, of course, the employer should take immediate action, with the advice of legal counsel.