January’s DEI Executive Orders Will Have Impact for Years to Come

Two recent diversity, equity, and inclusion (DEI) executive orders (EOs) will have a far-reaching impact on the federal government and the private sector, speakers said during a Feb. 12 SHRM webcast, “Diving Deeper into Affirmative Action and Federal Contractor Compliance: Key Insights and Critical Actions.”

Jan. 20 Executive Order

The first EO, which President Donald Trump issued Jan. 20, is titled “Ending Radical and Wasteful Government DEI Programs and Preferencing.” It requires the director of the Office of Management and Budget (OMB), assisted by the attorney general and the director of the Office of Personnel Management (OPM), to “coordinate the termination of all discriminatory programs.” That includes “illegal DEI and ‘diversity, equity, inclusion, and accessibility’ (DEIA) mandates, policies, programs, preferences, and activities in the federal government, under whatever name they appear.”

To carry out this directive, the OPM’s director, with the assistance of the attorney general, was ordered to review and revise all existing federal employment practices, union contracts, and training policies or programs to comply with the EO. “Federal employment practices, including federal employee performance reviews, shall reward individual initiative, skills, performance, and hard work and shall not under any circumstances consider DEI or DEIA factors, goals, policies, mandates, or requirements,” the order said.

During the SHRM webcast, Martina Bradford, founder and CEO of Palladian Hill Strategies in Washington, D.C., said the EO resulted in the dismissal of federal employees who oversee DEI programs, even though those employees are protected by civil service procedures. These layoffs will be challenged, she said.

Meanwhile, the “business community is removing DEI from business reports,” while some organizations look the other way and waiting to see what happens, Bradford added.

The order requires each agency, department, or commission head—in consultation with the attorney general, the director of the OMB, and the director of OPM—to, within 60 days, “terminate to the maximum extent allowed by law, all DEI, DEIA, and ‘environmental justice’ offices and positions (including but not limited to ‘chief diversity officer’ positions); all ‘equity action plans,’ ‘equity’ actions, initiatives or programs, ‘equity-related’ grants or contracts; and all DEI or DEIA performance requirements for employees, contractors, or grantees.”

In addition, each agency must provide to the director of the OMB within 60 days a list of whether programs in existence on Nov. 4, 2024, “have been misleadingly relabeled in an attempt to preserve their pre-Nov. 4, 2024, function.” A list must be provided as well of “federal contractors who have provided DEI training or DEI training materials to agency or department employees.”

Jan. 21 Executive Order

The next day, Trump issued another sweeping executive order, titled “Ending Illegal Discrimination and Restoring Merit-Based Opportunity.”

This EO did many things, including revoking Executive Order 11246, which had required federal contractors to practice affirmative action based on race and gender. Federal contractors have a 90-day grace period in which they can continue to comply with EO 11246. But the Office of Federal Contract Compliance Programs within the U.S. Department of Labor was ordered to immediately cease taking several steps, including holding federal contractors and subcontractors responsible for taking affirmative action. 

The Jan. 21 EO also encouraged the private sector “to end illegal DEI discrimination and preferences.” Within 120 days of the order, the attorney general must submit a report to the assistant to the president for domestic policy containing recommendations for enforcing federal civil rights laws and taking “other appropriate measures to encourage the private sector to end illegal discrimination and preferences, including DEI.” 

As a part of the plan, each federal agency is to identify up to nine potential civil compliance investigations of publicly traded corporations, large nonprofit corporations or associations, foundations with assets of $500 million or more, state and local bar and medical associations, and institutions of higher education with endowments over $1 billion.

In a Feb. 5 U.S. Department of Justice memo, Attorney General Pam Bondi indicated that private-sector initiatives may be subject to potential criminal investigation.

As a result of this EO, which along with the Jan. 20 one is being challenged in court, “federal contractors must submit certifications that they are not engaging in illegal DEI programs and unlawful preferences,” said O’Kelly McWilliams III, an attorney with Holland & Knight in Washington, D.C., during the webcast.

He added that federal contractors are “waiting for guidance on what is legal DEI.” But federal contractors are much more vulnerable now to False Claims Act claims, McWilliams cautioned, saying this “raises the bar” with respect to potential risks.

However, the Jan. 21 EO leaves in place affirmative action for veterans and individuals with disabilities, he noted. 

In addition, Title VII of the Civil Rights Act of 1964’s prohibition on discrimination based on race, color, religion, sex, or national origin still applies. In a 2020 ruling, the Supreme Court interpreted Title VII to include protections from discrimination based on sexual orientation and gender identity or expression, McWilliams noted. 

However, the Jan. 21 order also eliminated Executive Order 13672, which had added sexual orientation and gender identity as protected classes, he added. “There is some conflict between the [new] executive order and the Supreme Court decision,” McWilliams said.

Nick Schacht, SHRM’s chief commercial officer, said the Jan. 21 EO raises an important question: Does it mean that any efforts to engage in affirmative action will be illegal? 

Stan Soloway, president and CEO of Celero Strategies LLC in Washington, D.C., noted that he wasn’t a lawyer, but he expected the order “will have that effect. Yes, in practice.”

However, if a contractor or subcontractor has an affirmative action clause in a contract, it should “adhere to the clause,” Soloway added.

Make Inclusion an Operational Strategy, Not a Standalone Program

Takeaways

In closing, Schacht asked what recommendations the webcast speakers had for organizations that do business with the government.

“Identify risks and risk tolerance with DEI,” McWilliams said.

Bradford had similar advice. “Assess risks. Don’t be precipitous with changes,” or else you might look like you’ve made an admission, she said. “Lay low.”

Soloway suggested employers “engage workforce stakeholder groups,” cautioning against acting in a “vacuum” of risk assessment.