EMPLOYMENT LAW NEWS
Compliance Conundrum: Trump’s Executive Orders Rolling Back Federal DEI and their Impact on Private Employers
By Jana Bjorklund, GovDocs Senior Counsel and Director
Employment Law and Compliance
Published Feb. 11, 2025
Trump’s actions in his first few days in office have led to significant changes in the Department of Labor and a shift in how DEI initiatives must be structured going forward. Implications for all employers are ongoing, and this will continue to be a moving target.
In his first few days in office, President Trump issued three executive orders which targeted diversity, equity, and inclusion (DEI) and diversity, equity, inclusion, and accessibility (DEIA) practices that discriminate based on race or sex. While directed to federal employers, contractors and subcontractors, there are impacts for private employers.
In this article, we will cover:
What is an Executive Order?
An Executive Order is an official document issued by the President of the United States and is published in the Federal Register. They are used to direct and manage the Executive Branch of the Federal Government, which includes federal offices, departments and agencies. Presidents are authorized to issue executive orders under presidential powers issued under the Constitution and/or congressional statute, if applicable.
An Executive Order is not a law, but it is a directive that has the force of a law. Generally, state-specific agencies and private sector companies are not directly subject to the requirements of an executive order but there can be potential impact on private companies.
Overview of Executive Order 14173
On January 21, 2025, President Trump issued the Executive Order 14173 titled “Ending Illegal Discrimination and Restoring Merit-Based Opportunity” (the “Order”). This Order ends DEI practices in the federal government promoting diversity and practicing affirmative. This Order impacts federal employers, agencies, contractors and subcontractors.
Under the Order, the Office of Federal Contract Compliance Programs is charged with immediately ceasing the following:
- promoting diversity,
- holding federal contractors and subcontractors responsible for taking affirmative action, and
- allowing or encouraging federal contractors and subcontractors to engage in workforce balancing based on race, color, sex, sexual preference, religion or national origin.
Significantly, the Order revoked Executive Order 11246 initially issued by President Lyndon Johnson mandating affirmative action and non-discrimination obligations.
The Order also states it is “encouraging the private sector to end illegal DEI discrimination and preferences.” It directs the head of all agencies, with the assistance of the Attorney General, to “take all appropriate action with respect to the operations of their agencies” to “encourage the private sector to end illegal discrimination and preferences, including DEI.”
White House Fact Sheet and DOJ Memo
On the heels of the Order, the White House issued a fact sheet outlining their justification for the Order and confirms that the Order “directs all departments and agencies to take strong action to end private sector DEI discrimination, including civil compliance investigation.”
The Department of Justice Attorney General on February 5, 2025, issued a memo titled “Ending Illegal DEI and DEIA Discrimination Preferences” (the “DOJ Memo”). This memo is directed at private employers and the educational sector and targets DEI practices that discriminate based on race or sex. The DOJ Memo indicates that by March 1, 2025, the Civil Rights Division and the Office of Legal Policy will submit a joint report to the Associate Attorney General with recommendations for measures to take encouraging private sector employers to end policies relating to DEI.
So, while the Order is directed at federal employers, contractors, and subcontractors, there is a domino effect resulting from the Order’s “encouragement” to private sector employers to comply with ending DEI programs and by the Attorney General’s direction in the DOJ Memo.
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Suggestions for Private Sector Compliance
It seems clear from the DOJ Memo that DEI or DEIA efforts that exclude or discriminate on the basis of race or sex are unlawful. Merit-based practices in hiring, promotions, and employment decisions are reinforced in both the Order and the DOJ Memo. Employers may want to collaborate with legal counsel to assist them in reviewing their policies and practices and in interpreting the DOJ guidelines.
Additionally, here are some suggestions for private employers to consider:
- Review policies to ensure qualifications, skills and performance drive employment decisions.
- Revise policies as necessary to ensure alignment with federal civil rights laws.
- Conduct an audit of existing DEI or DEIA programs to identify and address compliance risks.
- Review and refine any messaging using language that reinforces unity and equal opportunity without crossing new legal boundaries.
- Make sure your HR team understands the legal implications of the Order and DOJ Memo and are educated on merit-based practices.
Federal Poster Updates Coming
The elimination of affirmative action under the Order and the revocation of the prior Executive Order 11246 will have an impact on posting requirements for all employers.
The Equal Opportunity Employment Commission (EEOC) requires all employers to display the Know Your Rights poster which includes information on affirmative action for federal contractors. It also lists gender identity as a protected status from discrimination. The term “gender identity” will likely be removed and potentially changed to “transgender status” as the result of another Executive Order issued by President Trump declaring the federal government will only recognize two sexes – male and female.
There have also been changes on the EEOC website and the EEOC has indicated it is reviewing the Know Your Rights poster, but they have not updated it yet.
Revocation of Executive Order 11246 will also potentially remove pay transparency requirements for federal contractors. There is a poster requirement for federal contractors regarding pay transparency. However, the pay transparency requirements are the result of federal regulations that cannot be removed by an executive order. The regulations must be either revoked or revised in order to change the requirements.
Conclusion
Trump’s actions in his first few days in office have led to significant changes in the Department of Labor and a shift in how DEI initiatives must be structured going forward. Implications for all employers are ongoing, and this will continue to be a moving target. We expect to see further guidance and direction from the EEOC and the DOJ in the coming months. For additional updates on executive orders impacting employers, subscribe to our Employment Law News blog.
This Employment Law News blog is intended for market awareness only, it is not to be used for legal advice or counsel.
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