Trump Administration Executive Orders Take Aim at DEI in Government and Private Sector

Ending the Federal Government’s DEI Initiatives
First, in his January 20, 2025, Executive Order titled “Ending Radical And Wasteful Government DEI Programs And Preferencing” (EO 14151), President Trump addresses DEI initiatives within or closely linked to the federal government’s own activities. He orders that “to the maximum extent allowed by law,” each federal agency should eliminate all federal DEI, DEIA, and “environmental justice” offices and positions, specifically including Chief Diversity Officer positions; equity action plans that were developed in the Biden administration; “‘equity’ actions, initiatives, or programs, ‘equity-related’ grants or contracts; and all DEI or DEIA performance requirements for employees, contractors, or grantees.”

EO 14151 also directs agency heads to compile lists of “Federal contractors who have provided DEI training or DEI training materials to agency or department employees” and “Federal grantees who received Federal funding to provide or advance DEI, DEIA, or ‘environmental justice’ programs, services, or activities since January 20, 2021.” Agency heads are also directed to recommend actions to “align agency or department programs, activities, policies, regulations, guidance, employment practices, enforcement activities, contracts (including set-asides), grants, consent orders, and litigating positions” with the Trump administration’s opposition to DEI activities. Although this section of EO 14151 has no direct impact on federal contractors or grantees, it signals that the Trump administration is prioritizing action plans to purge the federal government of involvement with contractor or grantee activities linked to DEI initiatives. Some agencies took prompt preliminary steps in response to the executive order. For example, meetings of research grant review panels and to review grant applications at the National Institutes of Health (NIH) were cancelled, according to published reports.

On January 27, 2025, in response to EO 14151 and other executive orders, the Office of Management and Budget (OMB) issued Memorandum M-25-13, temporarily pausing all agency grant, loan, and other financial assistance programs, effective January 28, 2025. The stated purpose of the pause is to allow federal agencies to complete a comprehensive analysis of all of their federal financial assistance programs to identify all “activities that may be implicated by [eight enumerated] executive orders, including, but not limited to, financial assistance for foreign aid, nongovernmental organizations, DEI, woke gender ideology, and the green new deal.” The pause applies to (i) issuance of new awards; (ii) disbursement of federal funds under all open awards; and (iii) “other relevant agency actions that may be implicated by the executive orders, to the extent permissible by law,” and remains in effect until OMB has reviewed and provided guidance to the agency, unless OMB provides for a case-by-case exception. The Memorandum specifies that, no later than February 10, 2025, agencies must submit to OMB detailed information on any programs, projects or activities subject to the pause. In addition to pausing agency financial assistance programs, the Memorandum calls for agencies to assign to a senior political appointee responsibility and oversight for each federal financial assistance program “to ensure Federal financial assistance conforms to Administration priorities.”

The White House press secretary, however, subsequently stated that the Memorandum was not a “blanket pause,” but rather would only affect federal funding relating to activities addressed in President Trump’s executive orders (including DEI). As of the date of this client alert, one lawsuit has already been filed against the OMB’s ordered pause, alleging that the action violates the First Amendment and the Administrative Procedure Act, and seeking a court order to block the pause in funding.

Deterring Private Sector DEI Activities
Second, in his January 21, 2025, Executive Order titled “Ending Illegal Discrimination And Restoring Merit-Based Opportunity” (EO 14173), President Trump turned the focus to private-sector DEI-related activities. The first section of the Executive Order states that “influential institutions of American society, including the Federal Government, major corporations, financial institutions, the medical industry, large commercial airlines, law enforcement agencies, and institutions of higher education have adopted and actively use dangerous, demeaning, and immoral race- and sex-based preferences under the guise of so-called” DEI or DEIA. The Executive Order asserts that “illegal DEI” policies “not only violate the text and spirit of our longstanding federal civil-rights laws, they also undermine our national unity, as they deny, discredit, and undermine the traditional American values of hard work, excellence, and individual achievement in favor of an unlawful, corrosive, and pernicious identity-based spoils system.”

Curtailing OFCCP Enforcement of Federal Contractor Affirmative Action
Perhaps the most far-reaching component of EO 14173 is the rescinding of Executive Order 11246 (EO 11246), which was signed by President Lyndon B. Johnson in 1965 to incorporate civil rights priorities into the federal contracting process.[2] Among other things, this now-rescinded order required that every government contract include a statement that “[t]he contractor will not discriminate against any employee or applicant for employment because of race, creed, color, or national origin” and required contractors to include a similar statement in their job postings. As amended, EO 11246 also prohibited government contractors from retaliating against an employee or applicant for having “inquired about, discussed, or disclosed the compensation of the employee or applicant or another employee or applicant.” EO 11246 also required contractors to collect data and to file compliance reports with the Department of Labor.

The implementing regulations enforced by the Department of Labor’s Office of Federal Contract Compliance Programs (OFCCP) under EO 11246 have required covered federal contractors and subcontractors to collect applicant and employee demographic data, to conduct regular analyses of employment practices for disparate impacts, and to engage in outreach efforts, with the goal of eliminating impediments to equal employment opportunities for women and for racial and ethnic minorities. Although the OFCCP regulations refer to these activities as “affirmative action programs,” the “affirmative action” engaged in by federal contractors prohibits quotas and race- or sex-based preferences in any employment selection actions.[3] The OFCCP has enforced its EO 11246 regulations through investigating complaints and conducting periodic compliance audits of federal contractors, with these enforcement activities occurring during both Democratic and Republican administrations, including the first Trump administration.

Although EO 11246 was revoked upon President Trump’s signing of EO 14173, this new Executive Order provides that, for a 90-day period, federal contractors are permitted to “continue to comply with the regulatory scheme in effect on January 20, 2025.”[4] EO 14173 directs the OFCCP to “immediately cease … 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.”

In practical effect, this Executive Order has substantially weakened the central role of the OFCCP as the enforcer of civil rights for federal contractors. The agency still retains some jurisdiction over federal contractors, as it also enforces two statutes, which cannot be rescinded by means of an executive order: the Vietnam Era Veterans’ Readjustment Assistance Act (VEVRAA), as amended, and Section 503 of the Rehabilitation Act of 1973. Those statutes and their implementing regulation prohibit discrimination in employment against protected veterans (VEVRAA) and individuals with disabilities (Section 503) and also require covered contractors to take affirmative action to recruit, hire, promote, and retain those individuals. Notably, EO 14173 states that it “does not apply to lawful Federal or private-sector employment and contracting preferences for veterans of the U.S. armed forces or [blind] persons protected by the Randolph-Sheppard Act, 20 U.S.C. 107 et seq.”

To the extent that EO 14173 anticipates that the OFCCP will turn its enforcement attention to otherwise lawful measures that “allow … workforce balancing,” such as targeted outreach by federal contractors to develop a more diverse pool of qualified applicants, the Trump administration may face legal challenges to the Executive Order. Courts blocked the Biden administration’s efforts to mandate through executive orders that contractors adopt “vaccine or test” policies or comply with an increased federal contractor minimum wage requirement, ruling that these actions exceeded the President’s executive authority under the Procurement Act. The same principle may be cited in litigation against President Trump’s executive orders.

Federal Contract Terms
The Federal Acquisition Regulation (FAR) implemented EO 11246 through several contractual clauses that were required to be included in federal contracts. These clauses include FAR 52.222-23, Notice of Requirement for Affirmative Action to Ensure Equal Employment Opportunity for Construction; FAR 52.222-24, Preaward On-Site Equal Opportunity Compliance Evaluation; FAR 52.222-25, Affirmative Action Compliance; FAR 52.222-26, Equal Opportunity; and FAR 52.222-27, Affirmative Action Compliance Requirements for Construction. These clauses remain in existing contracts. Thus, while contractors may consider eliminating their affirmative action programs to comply with the new EO, contractors should exercise caution to avoid any question of violating their current contractual requirements. Contractors should work with their contracting officers during EO 14173’s 90-day non-enforcement period to address whether current contracts should be modified to address the conflict between their contracts and the new EO.

Notably, EO 14173 requires agencies to include terms within federal contracts that compel contractors to agree to all material applicable federal anti-discrimination laws and remove any affirmative action policies. This new EO mandates that agencies “include in every contract or award ... a term requiring the contractual counterparty or recipient to certify that it does not operate any programs promoting DEI that violate any applicable Federal anti-discrimination laws.” Contracts and awards must also state that compliance with “all applicable Federal anti-discrimination law” is material to the Government’s payment decision and must expressly reference the False Claims Act (FCA). Thus, violations of anti-discrimination laws by companies with DEI programs or trainings that promote diversity after the April 22 deadline will likely expose companies to FCA liability for new contracts or grants, or contracts or grants that are modified to include the newly mandated language. Contractors who do not comply with their contractual obligations generally face some FCA risk. The risk here, however, is amplified as the certification states that compliance is material and explicitly references the FCA. The clear message is that contractors should take note and comply.

Rulemaking to implement statutory requirements or executive order obligations can be a lengthy process. The timeline to implement EO 14173, however, may be truncated through agency-imposed “class deviations” that require contracting officers to insert language into contracts ahead of the full process to update the FAR clauses. This means that it would not be surprising to see contracts with clauses implementing the new Executive Order before issuance of a final rule implementing the FAR.

Proactive Compliance Measures for Contractors
EO 14173 likely has many contractors wondering what they should do to avoid running afoul of the law and their contractual obligations. As noted in the discussion below about the aspects of the Executive Order applicable to private sector organizations, identifying a compliant path forward is complicated by a lack of clarity in the order. EO 14173 does not categorically declare that all DEI and DEIA programs are inherently unlawful, but rather decries “illegal DEI and DEIA policies” and suggests that, as a general matter, such policies are a cover for an unlawful “identity-based spoils system” or “immoral race- and sex-based preferences.” In addition to contacting your legal counsel, we propose the following three actions:

• Evaluate Your Policies. Conduct a thorough review of all affirmative action, DEI programs, and related policies to ensure compliance with EO 14173 and existing antidiscrimination laws. We recommend this review focus on identifying any instances where these programs consider factors such as race, color, sex, sexual preference, religion, or national origin in a manner that may conflict with antidiscrimination regulations, such as by calling for benefits to be conferred or selection decisions made based on an individual’s demographic characteristics.
• Address Noncompliance. For any policies that are found to be noncompliant, take corrective action promptly. This may involve revising or eliminating policies to ensure alignment with the EO and applicable laws. Be mindful of potential risks associated with noncompliance, particularly regarding obligations tied to existing contract provisions and local laws.
• Coordinate with Contracting Officers. Contractors should engage with their contracting officers to confirm adherence to compliance obligations under current contracts. Maintaining open lines of communication is critical to ensuring contractual and regulatory compliance. This is particularly important where measures undertaken under EO 14173 may be in tension with state or local requirements.
• Review Company Contracts. Corporate counsel and compliance teams should review the company’s contracts with other entities—including vendor, supplier, and partnership agreements—to identify any DEI-related clauses and ensure that they do not unintentionally include now-prohibited selection criteria. Where applicable, teams should revise standard templates or flow-down clauses to ensure non-compliant provisions are modified.

By systematically addressing these areas, contractors can better navigate the complexities of compliance and mitigate risks associated with government contracting.

Encouraging the Private Sector to Abandon Voluntary DEI Measures
The focus of EO 14173 extends beyond federal contractors and grantees. Section 4 of the Executive Order is explicit about its plan to target private sector voluntary DEI initiatives—or, as the section is titled, “to encourage the private sector to end illegal DEI discrimination and preferences”—by threatening private sector entities, as well as institutions of higher education with endowments over one billion dollars, with investigations, litigation, and regulation. The section directs that, within 120 days of the issuance of the Executive Order, the Attorney General, in consultation with agency heads and the Director of the OMB, must submit a report containing recommendations “to encourage the private sector to end illegal discrimination and preferences, including DEI.” The report must include a proposed strategic enforcement plan that identifies, among other issues:

• “Sectors of concern” within each agency’s jurisdiction and then identify the “most egregious and discriminatory DEI practitioners” in each sector of concern;
• A plan of “specific steps or measures to deter DEI programs or principles … that constitute illegal discrimination or preferences”; as part of that plan, each agency must identify up to nine “potential civil compliance investigation targets,” focusing on publicly traded corporations, “large non-profit corporations or associations,” foundations with over $500 million in assets, State and local bar and medical associations, and/or higher education institutions with at least $1 billion endowments; and
• Potential federal litigation, regulatory action, and sub-regulatory guidance.

EO 14173 also directs that, within 120 days of issuance, the Attorney General and the Secretary of Education must issue guidance to State and local educational agencies that receive federal funds, as well as all institutions of higher education that receive federal grants or participate in the federal student loan assistance program, regarding the measures and practices required to comply with Students for Fair Admissions, Inc. v. President and Fellows of Harvard College, 600 U.S. 181 (2023).

A key open question is whether EO 14173’s references to “illegal DEI programs” is effectively characterizing all DEI programs as unlawful (as well as “dangerous, demeaning, and immoral”), or whether investigations and litigation will be launched only against DEI initiatives that may reasonably be recognized as unlawfully implementing preferences based on demographic characteristics, whether in employment (prohibited under Title VII), contracting (prohibited under 42 USC Section 1981 with respect to race), or other laws (such as Title IX for higher education institutions, with respect to sex). That very uncertainty may be cited in anticipated legal challenges to EO 14173. In other contexts, anti-DEI state laws have been blocked by federal courts as unconstitutionally vague or as infringing on Free Speech rights. (See, for example, this client alert discussing an injunction against Florida’s Stop WOKE Act, as well as a more recently filed lawsuit challenging Alabama’s ban on DEI programs in public colleges, local school boards, and state agencies).

Next Steps for Private Sector Entities without Federal Contracts or Grants
While the full impact of these executive orders remains to be seen, private sector entities that receive no federal funds in the form of contracts or grants may be considering what steps to take now. To the extent these entities—whether for-profit companies or nonprofit organizations—have adopted DEI policies or implemented programs in support of diversity, equity, and inclusion, they can prepare for potential inquiries by taking inventory of those measures. For these entities, voluntary measures that were lawful before President Trump signed these executive orders remain lawful, as of the date of this client alert. However, such measures may attract more scrutiny. Suggested next steps include:

• Decide on the Organization’s Stance Toward DEI
  Many companies and nonprofit organizations have publicly committed to supporting the values of diversity, equity, and inclusion, even to the extent of including DEI as a plank in their strategic plans or discussing DEI initiatives in their annual reports to shareholders. Some nonprofit organizations may consider diversity, equity, and inclusion to be closely tied to their missions. Each company and organization will need to decide based on their circumstances, priorities, and risk tolerances whether to adopt a wait-and-see approach, or to double down on the organization’s commitment to the values of DEI in statements to customers, members, employees, or other stakeholders, or to eliminate or reduce some of their DEI-related activities. Further developments may inform or lead to reevaluation of these decisions, including the extent to which agencies develop regulatory or other official guidance, and whether anticipated litigation challenging aspects of these Executive Orders results in injunctions blocking the orders or permits implementation of the orders to proceed.
• Conduct Internal Audits
  Entities are encouraged to conduct thorough, organization-wide audits to evaluate all internal and external DEI initiatives—from hiring protocols to supplier diversity requirements to social change programs—to evaluate whether they include elements that may not be in compliance with existing antidiscrimination laws (including federal, state, and local requirements). Such an audit should particularly focus on identifying any elements that include or could imply demographic-based preferences or that exclude any individual from participating based on demographic characteristics.
• Prepare for Inquiries
  Corporate counsel and compliance teams should prepare for inquiries and investigations, as executive agencies are instructed to identify potential offenders and initiate litigation where applicable. Organizations may develop or refine their protocols for responding to external audits, inquiries, or subpoenas related to DEI initiatives. Counsel and compliance teams should also consider providing targeted training for human resources, compliance, communications, and business leadership teams on how to adapt to this potentially heightened regulatory scrutiny.
• Monitor for Further Guidance
  Finally, entities should stay alert to evolving guidance from federal, state, and local agencies, and should consider adapting their DEI strategies as new rule changes or enforcement directives emerge. Organizations may assign an individual or committee to track guidance or enforcement activities, or organizations may engage counsel to assess new regulations or court rulings and recommend adjustments that align with current policy interpretations.

Pillsbury will continue to monitor these developments and has established a Trump 2.0 Resource Center featuring analysis of key Trump administration actions.

^{[1] The executive orders provide no definition of the term “accessibility” in this context. Nothing in the executive orders discussed in this alert purports to roll back existing legal protections for individuals with disabilities, such as under the Americans with Disabilities Act or the Rehabilitation Act of 1973.}

^{[2] EO 14173 also rescinded four other prior executive actions: a 1995 executive order that addressed environmental justice in minority and low-income populations; a 2011 executive order that established a coordinated government-wide initiative to promote diversity and inclusion in the federal workforce; a 2014 executive order that amended EO 11246 to add sexual orientation and gender identity as protected characteristics; and a 2016 Presidential Memorandum that promoted diversity and inclusion in the national security workforce.}

^{[3] “Affirmative action” in college and university admissions, by contrast, did permit consideration of race as part of a holistic selection process until the Supreme Court’s June 2023 ruling in Students for Fair Admissions v. Harvard and Students for Fair Admission v. University of North Carolina ended the previously lawful status of such practices, as described in this client alert.}

^{[4] The OFCCP website emphasizes that compliance with EO 11246 is now voluntary: “For 90 days from the date of [EO 14173], Federal contractors may continue to comply with the regulatory scheme in effect on January 20, 2025.” See https://www.dol.gov/agencies/ofccp (emphasis in original) (last accessed on 1/28/2025). Moreover, on January 24, 2025, the Department of Labor (DOL) issued Secretary’s Order 03-2025 directing all DOL employees, including the OFCCP, the Office of Administrative Law Judges, and the Administrative Review Board, not only to immediately cease and desist all investigative and enforcement activities under EO 11246 but also to notify any parties with impacted open reviews or investigations that the VEVRAA and Section 503 components of the review or investigation “are being held in abeyance pending further guidance.”}