On January 21, 2025, President Donald Trump issued an Executive Order (Ending Illegal Discrimination and Restoring Merit-Based Opportunity) targeting DEI efforts in the private sector. It requires government contractors to certify that they do not “operate any programs promoting DEI that violate any applicable Federal anti-discrimination laws” and directs agency heads to take all appropriate action with respect to the operations of their agencies to end DEI practices in the private sector.

The Order also directs the Attorney General to work with other agency heads to provide recommendations on civil rights law “to encourage the private sector to end illegal discrimination and preferences, including DEI.” The Attorney General must release a report that contains a proposed strategic enforcement plan identifying:

  • Key sectors of concern within each agency’s jurisdiction;
  • 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 (whether specifically called “DEI” or otherwise) that constitute illegal discrimination or preferences. As part of this plan, each agency shall identify up to 9 potential civil compliance investigations of publicly traded corporations, large non-profit corporations or associations, foundations with assets of $500 million or more, State, and local bar and medical associations, and institutions of higher education and endowments with over 1 billion dollars;
  • Other strategies encouraging 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

The Order seems to target “race- and sex-based preferences under the guise of [DEI].” Race or sex-based hiring preferences are currently illegal under federal Title VII and various state laws, meaning no DEI or similar program can incorporate those preferences. It also includes a general directive for agencies to “enforce our longstanding civil-rights laws and to combat illegal private-sector DEI preferences…” which could be interpreted more broadly. It does not include a definition of what constitutes “illegal DEI.” Right now, however, it appears the Order only targets programs that involve practices that are already illegal, like incorporating race-based hiring preferences.

What is an Executive Order?

The US Constitution gives the president the obligation to “take care that the laws be faithfully executed.” An executive order is a written directive, signed by the president, that orders the government to take specific actions to ensure “the laws be faithfully executed.”

An EXO is not a law – the president cannot write a new statute, but they can tell federal agencies how to implement a statute. For example, if Congress passed a law making certain drugs illegal, the president could issue an executive order directing the Department of Justice how to prioritize drug arrests.

Often, executive orders require a federal agency to write a report, undertake an investigation, or create a new regulation. These steps can take months, and sometimes years.

Will your small business be investigated?

If you are not a government contractor, there is likely no large risk of federal investigation at this time. Right now, the plan calls for civil compliance investigations of publicly traded corporations, large non-profit corporations or associations, foundations with assets of $500 million or more, State and local bar and medical associations, and institutions of higher education and endowments with over $1 billion dollars. It is unlikely that the federal government will begin targeting small, local businesses and/or nonprofits.

If you are a government contractor or subcontractor, the Order requires you to eliminate DEI focus from all trainings or materials.  This includes any companies that either directly contract with the federal government, or to others that receive government grants (for example, the US Agency for International Development contracting or healthcare services to the public). Within 60 days of the issuance of the EO, companies that employ federal contactors must:

  • Eliminate DEI-related offices and positions
  • Terminate equity-related Action Plans, Programs and Contracts
  • Remove DEI-related Performance Requirements
  • Submit Certifications ensuring they are not running DEI programs that constitute illegal discrimination or preferential treatment.

 

Written by Gabriel Neuman (he/him), GSBA Policy Counsel and Government Relations Manager

The information is intended to inform the GSBA community about legal and policy developments. Nothing in this post should be construed as legal advice or a legal opinion, and readers should not act upon the information contained in this article without seeking the advice of legal counsel.