By: Ali Abouesh, Associate & Jorge “Coco” Padilla, Associate

With every new administration comes a shift in policies, and President Donald Trump’s administration is no exception. Upon taking office on January 20, 2025, President Trump issued numerous executive orders, addressing a broad array of issues. One of the most significant for employers is the Executive Order titled “Ending Illegal Discrimination and Restoring Merit-Based Opportunity.”

Under the new order, federal contractors and subcontractors are expressly prohibited from considering race, color, sex, sexual orientation, religion, or national origin when making decisions about employment, procurement, or contracting, reinforcing the protections against discrimination under Title VII of the Civil Rights Act of 1964.

As drafted, the order applies only to federal contractors and subcontractors. However, the language of the order suggests that its scope may soon extend to private employers. Within 120 days, the U.S. Attorney General is tasked with submitting a report that will offer recommendations on how the private sector can reduce “illegal discrimination and preferences, including DEI (Diversity, Equity, and Inclusion).” Pam Bondi has been approved and sworn in as Attorney General and presumably is working on her report, and we will update this alert when that report is made public. Here is what private employers need to know about this executive order, its potential implications, and how to keep abreast of any upcoming changes:

A Brief History

Discussions on how the federal government and contractors working with the federal government should handle employment discrimination are hardly new. The first major step towards addressing employment discrimination came under President Franklin D. Roosevelt, with Executive Order 8802, which banned racial and ethnic discrimination in defense industries. This order set the tone for future policies by emphasizing that employers and labor organizations must ensure “full and equitable participation of all workers in defense industries, without discrimination.”

Under President Dwight D. Eisenhower, Executive Order 10479 expanded this principle by requiring federal agencies to include non-discrimination clauses in contracts with contractors and subcontractors. But it was President John F. Kennedy’s Executive Order 10925 which took things a step further by mandating that contractors take affirmative action to ensure equal treatment for all employees, regardless of race, creed, color, or national origin.

President Lyndon B. Johnson’s Executive Order 11246 then mandated that federal contracts cannot discriminate against employees based on race, religion, or national origin. It further required that federal contractors ensured equal employment opportunity in their hiring practices. President Barack Obama broadened the scope of protections in 2014 when he amended Executive Order 11246 to include gender identity and sexual orientation.

Summary of the New Executive Order

The newly issued Executive Order is broken into two main parts: (A) Terminating Illegal Discrimination in the Federal Government; and (B) Encouraging the Private Sector to End Illegal DEI Discrimination and Preferences. A bullet summary of pertinent directive is provided below.

Terminating Illegal Discrimination in the Federal Government

• The mandates of the new Executive Order must be followed beginning 90 days from the issuance of the order. In other words, federal contractors will need to adapt to the directives of the Executive order by April 21, 2025.
• The Office of Federal Contract Compliance Programs will no longer promote “diversity”; require federal contractors and subcontractors responsible for taking “affirmative action”; and allow or encourage federal contractors or subcontractors to engage in workforce balancing based on race, color, sex, sexual preference, religion, or national origin.
• Federal contracts will need to include contract terms requiring (1) the grant recipient agree that complying with all applicable federal anti-discrimination laws is material to the government’s payment decision; and (2) the grant recipient to certify that it does not operate any programs promoting DEI that violate any applicable federal anti-discrimination laws.
• The Office of Management and Budget is to remove references to DEI and DEIA principles from federal acquisition, contracting, grants, and financial assistance procedures.

Encouraging the Private Sector to End Illegal DEI Discrimination and Preferences

The Executive Order directs the Attorney General, in consultation with other agency heads and the Director of the Office of Management and Budget, to submit a report within 120 days containing recommendations on measures to encourage the private sector to end DEI initiatives. The report will identify:

• Key sectors of concern within each agency’s jurisdiction.
• The “most egregious and discriminatory DEI practitioners in each sector of concern”.
• Up to nine potential civil compliance 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 1 billion dollars.
• Other strategies to encourage the private sector to end DEI.
• Litigation that would be potentially appropriate for federal lawsuits; and
• Potential regulatory action and sub-regulatory guidance.

What is an Affirmative Action Program?

Federal contractors and subcontractors before President Trump’s executive order were obligated to take affirmative action to recruit and advance qualified minorities, women, persons with disabilities, and covered veterans. Affirmative action is based on the premise that absent discrimination, a contractor’s workforce will generally reflect the gender, racial, and ethnic profile of the labor pools from which contractor recruits and selects over time, and therefore federal contractors and subcontractors were previously required to evaluate the makeup of the relevant labor pools in comparison to the workforce of the contractor to ensure there was not a significant disparity, and to take steps to correct any disparities. Affirmative action plans can include training programs, internal auditing, and other positive steps aimed towards addressing underutilization.

Implications for “DEI” Initiatives

The Executive Order concludes that “diversity, equity, and inclusion” (DEI) or “diversity, equity, inclusion, and accessibility” (DEIA) can violate applicable civil-rights laws in the country. The Executive Order therefore takes steps to eliminate DEI, such as requiring federal contractors or grant recipients to certify that they do not operate any programs promoting DEI. It also requires the Director of the Office of Management and Budget to eliminate all references to DEI and DEIA principles from federal acquisition, contracting, grants, and financial assistance procedures. The Executive Order does not contain a specific definition for DEI, DEIA, or what it means to “promote” the same. However, it is likely that any efforts to promote DEI will be seen as unlawful under the Executive Order.

What Should Federal Contractors, Subcontractors, and Private Employers Do To Prepare?

Federal contractors and subcontractors have 90 days under the Executive Order to eliminate any affirmative action programs that encourage workforce balancing based on race, color, sex, sexual preference, religion, or national origin or otherwise violate U.S. Civil Rights Laws. Crucially, the obligations of contractors and subcontractors under the Vietnam Era Veterans’ Readjustment Assistance Act (regarding veteran status) and Section 503 of the Rehabilitation Act (regarding disability status) remain the same with regard to affirmative action plans. For any employer wishing to bid on a contract with the federal government, we would strongly recommend ensuring your policies and procedures are in compliance with the new Executive Order.

While the Executive Order does not currently apply to private employers, it signals a that the administration will more closely scrutinize affirmative action plans (AAP) and Diversity, Equity, and Inclusion (DEI) programs that involve discriminatory preferences. Each federal agency under the Order has been tasked with identifying “up to nine potential civil compliance 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 1 billion dollars.” Although these investigations are currently focused on larger public entities, this could set the stage for increased scrutiny of private employers in the future. Because the Executive Order may well eventually impact private employer DEI and AAP practices, particularly those that are discriminatory, it would be prudent for all employers to ensure compliance with the new Executive Order now to avoid potential headaches down the line.

Significantly, the Executive Order does not alter the legal obligations of all employers, whether they are contractors or not, regarding employment discrimination, and reinforces that all employers are prohibited from engaging in or permitting any discrimination in the workplace.

If you have concerns about your company’s compliance with the rule changes, please contact our Employment Counseling Practice Group, at EmploymentCounseling@ohaganmeyer.com.

O’Hagan Meyer Partner Contacts

Michael Barnsback
Alexandria | Virginia
mbarnsback@ohaganmeyer.com

Joan McKenna
Richmond | Virginia
jmckenna@ohaganmeyer.com

Kristine Phillips
Chicago | Illinois
kphilips@ohaganmeyer.com

Erica Rocush
San Francisco | California
erocush@ohaganmeyer.com