Trump Administration's First Week Signals Huge Changes to DEI Rules for Employers

In its first week, the Trump Administration has taken multiple actions that promise to fundamentally change how the issues of diversity, equity and inclusion (“DEI”) are incorporated into the American workforce. These actions have immediate impact on any federal contractor employer, but also signal a larger effort to eliminate DEI programs in the private sector.

On January 21, 2025, President Donald Trump issued an Executive Order that revoked two prior Executive Orders, EO 11246 and EO 13672. EO 11246, which was originally implemented in 1965 and amended in 1967 and 2014, required any federal contractor to agree to “not discriminate against any employee or applicant for employment because of race, color, religion, sex, sexual orientation, gender identity, or national origin.”  EO 11246 further required that federal contractors “take affirmative action to ensure that applicants are employed, and that employees are treated during employment, without regard to their race, color, religion, sex, sexual orientation, gender identity, or national origin.” EO 13672, passed in 2014, prohibited federal contractors from discriminating on the basis of sexual orientation or gender identity. 

Prior to the January 21 Executive Order, EO 11246 was enforced by the Office of Federal Contract Compliance Programs (OFCCP). The OFCCP monitors federal contractors to ensure that they comply with certain contractual terms, including Executive Order 11246. The OFCCP has the power to audit and inspect contractors to ensure their compliance and to seek remedies for noncompliance. Larger contractors were required to maintain written “affirmative action programs” with the OFCCP that generally outline their workforce demographics, identify areas that may be of concern from a diversity perspective and explain what corrective actions would be taken to address areas of concern.

President Trump’s new Executive Order promises to drastically change the scope and mission of the OFCCP.  The Order states that the OFCCP shall immediately cease “promoting diversity,” “holding federal contractors and subcontractors responsible for taking affirmative action” and “allowing or encouraging federal contractors and subcontractors to engage in workforce balancing based on race, color, sex, sexual preference, religion, or national origin.”  The Order also requires that every federal contract or grant must require contractors to agree that it “does not operate any programs promoting DEI [diversity, equity, and inclusion] that violate any applicable Federal anti-discrimination laws.”

President Trump’s Executive Order states that federal contractors are permitted to operate under the OFCCP’s prexisting rules for 90 days. After this period, federal contractors should be prepared to operate under the new rules imposed by the OFCCP with regard to DEI. Additionally, on Friday, January 24, 2025, the Secretary of the Department of Labor issued an order requiring the OFCCP to “immediately cease and desist” activity under EO 11246, including all pending cases, conciliation agreements and investigations. 

It is important to note that the January 21 Executive Order does not address the requirements of federal contractors to comply with Section 503 of the Rehabilitation Act and the Vietnam Era Veterans Readjustment Assistance Act, which prohibit discrimination and requires affirmative action for individuals with disabilities and veterans. However, the Secretary of Labor’s January 24 order advises that all components of open compliance reviews, including those based on the statutes not impacted by the Executive Order, are held in abeyance pending further guidance. 

In addition to immediately changing the way federal contractors are mandated to handle DEI programs, President Trump’s January 21 Executive Order also takes steps to eventually target DEI initiatives in the private sector. The Order requires agency heads to coordinate with the Office of Management and Budget to prepare a report within 120 days that identifies “the most egregious and discriminatory DEI practitioners” in the private sector as well as “a plan of specific steps or measures to deter DEI programs or principles. . . that constitute illegal discrimination or preferences.” As part of the plan, President Trump wants each agency to identify up to nine potential civil compliance investigations of publicly traded companies, large non-profit corporations, large foundations, state and local bar and medical associations and large institutions of higher learning. The forthcoming report will likely be used as part of the Trump Administration’s efforts to publicly identify and take action against employers that it believes are violating civil rights laws through their operation of DEI initiatives.

All employers should also note that rules and statutes other than EO 11246 and EO 13672 that impose legal requirements upon employers with regard to workplace discrimination—such as Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act and the Age Discrimination in Employment Act—remain in effect. Private sector employers should monitor future actions from the Federal Government with regard to DEI programs to ensure that they remain in compliance with the law. 

If you are a federal contractor or private sector employer with questions about how to remain compliant with applicable rules and regulations regarding DEI given the rapidly-changing legal landscape, contact your Dinsmore attorney.