On January 21, 2025, the Trump Administration issued an executive order entitled “Ending Illegal Discrimination and Restoring Merit Based Opportunity.”^[1]

Certain Affirmative Action Mandates Are Revoked

This executive order drastically changes the obligations and potential liability for federal contractors and subcontractors.

The Trump Administration has revoked several executive orders implemented by previous administrations, including Executive Order 11246. These actions are taken with the stated goal of “terminating illegal discrimination in the federal government.” Prior to this, federal contractors and subcontractors had to develop written affirmative action plans (“AAPs”), produce corresponding statistical analyses, and meet other requirements that took “affirmative action” to prevent discrimination against historically marginalized groups. AAPs did not require quotas to be met but were aspirational in terms of affirmative action efforts that companies were expected to make in conjunction with their recruitment efforts. Those obligations are revoked effective immediately, at least with regard to women and minorities.

Moving forward, federal government agencies must include, in every contract or grant award, a term affirming that all parties to the contract are in compliance with all federal anti-discrimination laws, which includes affirming that the contractor or subcontractor does not operate any programs “promoting DEI that violate any applicable Federal anti-discrimination laws.” 

Businesses with federal contracts will want to seek legal counsel to evaluate how this executive order impacts existing hiring, recruitment and other internal programs.

Affirmative Action Policies Toward Veterans and Disabled Individuals Remain in Effect

The affirmative action obligations under the Vietnam Era Veterans’ Readjustment Assistance Act (“VEVRAA”) and Section 503 of the Rehabilitation Act are not revoked. These are statutes and are not revocable by executive order. These requirements include AAP preparation, hiring benchmarks, and record keeping, all of which remain in effect.

A contractor or subcontractor obligated to comply with VEVRAA and Section 503 of the Rehabilitation Act must still meet those requirements.

Anti-Discrimination Laws Are Not Going Anywhere

State and local government requirements for affirmative action and reporting requirements are also not effected by this executive order. Furthermore, this executive order does not affect state or local level anti-discrimination laws.

The Trump Administration views certain aspects of “DEI Policies” as unlawfully discriminatory towards individuals based on immutable characteristics, and therefore as violating federal anti-discrimination laws. Employer’s can rest assured that anti-discrimination laws, such as Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act (“ADEA”), and the Equal Pay Act, as well as enforcement agencies such as the Equal Employment Opportunity Commission (“EEOC”) are not going anywhere. Obligations under these laws, and state law equivalents, are still in effect.

The Next 120 Days – Private Sector Implications

Private sector employers need to be on alert and may have questions about their DEI policies. To be clear, having a “DEI policy,” by itself, is not illegal.

Through this order, President Trump has ordered “all agencies to enforce our longstanding civil-rights laws and to combat illegal private-sector DEI preferences, mandates, policies, programs, and activities.” Within 120 days, the Attorney General is to 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,” which includes identifying investigations of publicly traded corporations, large non-profit corporations or associations, foundations with assets of 500 million dollars or more, state and local bar and medical associations, and institutions of higher education with endowments over one billion dollars. 

More guidance is expected to come out from executive agencies.

Recently, this order was cited by a joint letter, signed by the Attorneys General from nineteen states directed to COSTCO.^[2] Written by the Iowa Attorney General, the joint letter asks for COSTCO to “do the right thing” and repeal its DEI policies. Neither the Trump Administration nor the Attorneys General make clear what would make a DEI policy “illegal.” Both the Trump Administration and the Attorneys General cite the 2023 Students for Fair Admissions^[3] decision in support of these recent developments. There, the decision by universities to use a characteristic, such as race, in admissions decisions was ultimately found to be unlawful.

While the uncertainty around these new developments are concerning, DEI policies are not per se illegal. Many DEI policies pursue merit and seek the best candidates without requiring quota systems or pursuing unlawful hiring practices under anti-discrimination laws. Just because a company has a “DEI policy” does not mean they are in violation of any law.

Now, while awaiting further guidance and for the dust to settle, companies may feel stuck between facing increased challenges to DEI policies and an earnest desire, and legal obligation, to provide equal opportunities in the workplace. Private sector employees should consult with their legal counsel through privileged communication and review their workplace policies to ensure compliance with the law.

Use Your Legal Counsel To Help Navigate These Tumultuous Times

These changes are broad and sudden. They are not, however, without legal challenges. Commentators expect that many of the executive orders issued by the Trump Administration will be challenged in court. Furthermore, political headwinds may shift, whether in this administration or the one to follow.

Given that this is an evolving situation that will likely be highly fact dependent, we encourage you to speak to your legal counsel to discuss how your business will be affected.

^{[1] https://www.whitehouse.gov/presidential-actions/2025/01/ending-illegal-discrimination-and-restoring-merit-based-opportunity/}

^{[2]https://content.govdelivery.com/attachments/IACIO/2025/01/27/file_attachments/3144563/FINAL%20Costco%20Lettet%20%281%29.pdf}

^{[3] Students for Fair Admissions, Inc. v. President & Fellows of Harvard Coll., 600 U.S. 181, 196, 143 S. Ct. 2141, 2155, 216 L. Ed. 2d 857 (2023).}

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