How to Adjust Your DEI Initiatives Under Trump’s New Guidelines

Now is the time for private companies to review policies and initiatives associated with diversity, equity, and inclusion (DEI) programs to ensure they comply with long-standing anti-discrimination laws, in light of President Donald Trump’s recent executive order on ending illegal discrimination and restoring merit-based opportunity. 

“SHRM is mobilizing to empower HR professionals, CEOs, and business leaders to ensure inclusion and diversity [I&D] remain a priority and initiatives are lawful,” said Anuradha Hebbar, president of CEO Action for Inclusion & Diversity at SHRM. 

SHRM recommends that “all private companies evaluate their inclusion and diversity initiatives to ensure they provide equal access to opportunities, skills development, and do not give special advantages to one person or group over another, avoiding any perception of identity-based favoritism,” she said. “They should also review their initiatives to determine whether they foster inclusivity or inclusive workplace cultures.”

Inclusion—defined as making sure that every employee is given the necessary support and tools to achieve their performance goals, perform at their highest levels, and bring their whole selves to work—is a central hallmark of a nondiscriminatory policy, said Anthony Haller, an attorney with Blank Rome in Philadelphia. “Leading with inclusion in that sense, so long as it is clearly defined, is beneficial and supportive of a merit-based system,” he said.

Executive Order’s Provisions

The Jan. 21 executive order on ending illegal discrimination and restoring merit-based opportunity states that, within 120 days, the U.S. attorney general should submit a report identifying “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.” 

The order also directs each agency “to identify up to nine potential civil compliance investigations of publicly traded corporations, large nonprofit corporations or associations, foundations with assets of $500,000,000 or more, state and local bar and medical associations, and institutions of higher education with endowments over $1,000,000,000.”

In addition, Trump has directed all federal agencies—within 20 days of the order and with the assistance of the U.S. attorney general—to:

• Identify the most egregious and discriminatory DEI practices.
• Develop a plan or specific steps or measures to deter DEI programs or preferences that constitute illegal discrimination.
• Establish strategies, including litigation, to encourage the private sector to end illegal DEI discrimination and preferences.

“The executive order does not attack all DEI initiatives,” said Jonathan Segal, an attorney with Duane Morris in Philadelphia and New York City. “It purports, by its plain words, to attack only DEI practices that are illegal.”

What Constitutes ‘Illegal’ DEI Provisions?

An example of an unlawful practice would be a quota, Segal noted. A practice that is not per se unlawful but carries with it high legal risk is setting aspirational goals related to I&D and linking an employee’s pay to the achievement of those goals, he added.

Beyond quotas, Segal cautioned that two other practices, among others, are unlawful per se: 1) set-asides (e.g., reserving a vacant position for someone other than a white man), and 2) preferences (e.g., giving a “plus” to a woman or a person of color because of their protected characteristic, even if the plus is given to break a tie).

Although the executive order specifically references publicly traded companies or large nonprofits, small companies are not absolved from compliance, Haller said. “The executive order is a statement of administration policy that affects every company, regardless of the size or industry,” he said. 

While smaller companies and institutions may not be the focus of the government’s immediate attention, there is nothing to suggest a smaller company may not be the subject of a charge of discrimination or that a small entity is insulated from a compliance investigation. “While the focus may start with public companies and large educational institutions, the risk will trickle down, sooner rather than later, and certainly within the next four years.”

Those types of charges are often filed with the U.S. Equal Employment Opportunity Commission (EEOC), which stands at the ready to adjudicate them, said Andrea Lucas, the EEOC’s acting chair, after the order was released. 

 “Consistent with the president’s executive orders and priorities, my priorities will include rooting out illegal DEI-motivated race and sex discrimination; protecting American workers from anti-American national origin discrimination: defending the biological and binary reality of sex and related rights, including women’s rights to single-sex spaces at work; protecting workers from religious bias and harassment, including antisemitism; and remedying other areas of recent underenforcement,” Lucas said. 

Enforcement efforts are expected to increase soon, noted Britney Torres, an attorney with Littler in Sacramento, Calif. However, because the executive order does not purport to be a change in the law, those enforcement efforts will be based on long-standing federal civil rights laws, she said.

Federal contractors and subcontractors nonetheless should ensure that they are no longer applying affirmative action or improper workforce balancing, said Robert Hinckley Jr., an attorney with Buchalter in Los Angeles and Denver.

SHRM Webcast: Navigating the Two DEI Executive Orders

Conduct Reviews in Response to the Executive Order

Employers may want to audit their practices under attorney-client privilege to help protect their conclusions “and to think creatively about how to make changes without making admissions,” Segal said.

“Some employers are considering changing the umbrella name of their DEI efforts to Inclusion only,” he said. “If I were writing on a blank slate, that’s where I would start. But most employers are not writing on blank slates.”

If an employer changes the name or eliminates “equity” from the name, it should be prepared to explain the reason for the change, Segal said. “The messaging here is important, or some employees will believe either that your current program is unlawful and/or you are retreating from your commitment to having a more diverse workforce,” he noted.

The executive order seeks to end reverse discrimination caused by DEI policies, such as hiring preferences, goals, and quotas, Haller said. For example, a quota that at least 30% of new hires in 2025 must identify as women discriminates against applicants who identify as men, he said. “Likewise, the administration views a company’s stated policy to increase the representation of minority groups in leadership positions by a defined percentage as discrimination against white applicants and employees,” Haller said.

Focus on Race- and Gender-Neutral Lines

Challenges of race-restricted internship programs may become more prevalent following the executive order, predicted Samia Kirmani, an attorney with Jackson Lewis in Boston. Employers will need to dig in and do what they’ve done forever, vetting their policies and practices and staying in tune with what employees are saying, she stated. Expect more claims challenging DEI programs not just from the government but from employees, she added.

Employers should make sure their initiatives are not being used as a proxy for hiring or promoting minorities or women without regard to merit, Haller cautioned. “Diversity should be defined broadly to include, for instance, first-generation college graduates, persons with disabilities, veterans, disadvantaged backgrounds, and other categories that cut across racial and gender lines,” Haller stated.

Companies should take steps to clearly state and define that all hiring and promotion decisions will be based on merit to bring the best talent available to contribute to overall success, he added. Training for managers should reinforce the merit-based underpinning of any continuing I&D program, Haller said.

“HR is in the center of the current storm,” Segal said. “But that also means HR can play a consequential role.”