Labor & Employment Law Blog

At the start of his administration, President Donald Trump signed two executive orders aimed at putting an end to illegal “diversity, equity, and inclusion” (DEI) policies and programs, now referred to as “illegal DEI.” The executive orders, while mainly directed at federal government agencies, also impact other sectors, including private companies, educational institutions, and non-profit organizations. Accordingly, it is important that employers from all industries stay updated with the current state of DEI because although the executive orders do not change the existing law regarding discrimination, they have prompted scrutiny, suspicion, investigation and enforcement activities on DEI programs and policies.

First, Executive Order 14151, titled “Ending Radical and Wasteful Government DEI Programs and Preferencing,” asserts that the Biden Administration has “forced illegal and immoral discrimination programs, going by the name ‘diversity, equity, and inclusion’ (DEI) …” The order directs, among others, “the termination of all discriminatory programs, including illegal DEI and ‘diversity, equity, inclusion, and accessibility’ (DEIA) mandates, policies, programs, preferences, and activities in the Federal Government …” Executive Order 14151 also directs federal agencies, departments, and commission heads to “terminate, to the maximum extent allowed by law … ‘equity-related’ grants or contracts; and all DEI or DEIA performance requirements for employees, contractors, or grantees.”

Second, Executive Order 14173, or “Ending Illegal Discrimination and Restoring Merit-Based Opportunities,” revokes several prior orders aimed at equal employment opportunity and the promotion of diversity and inclusion in the workplace. One of Executive Order 14173’s directives are to the heads of all agencies to submit a report, within 120 days of the order (by May 20, 2025), “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.” The report must include “the most egregious and discriminatory DEI practitioners in each sector of concern” and a “plan of specific steps or measures to deter DEI programs or principles … that constitute illegal discrimination or preferences.” 

The executive orders do not define “illegal DEI,” and currently, at least two lawsuits had been filed challenging these orders. However, despite the legal challenges, the executive orders have prompted many major companies to scale back or dismantle their DEI programs altogether. While the impact of these measures on the workplace remains to be seen, it is clear government agencies will be looking for “illegal DEI” and there is a potential increase in litigation with lawsuits testing the definitions of the executive orders’ terms and provisions. 

On March 19, 2025, the Equal Employment Opportunity Commission (EEOC) and the Department of Justice (DOJ) jointly released two technical assistance documents that was said to be “focused on educating the public about unlawful discrimination related to ‘diversity, equity, and inclusion’ (DEI) in the workplace.” The jointly released document titled, “What To Do If You Experience Discrimination Related to DEI at Work,” describes what “DEI-related discrimination” can look like and who can be affected by it. Among the description of DEI-related discrimination include:

(1) disparate treatment, “where an employer takes an employment action motivated (in whole or in part) by race, sex, or another characteristic;”

(2) limiting, segregating, and classifying employees based on race, sex, or other protected characteristics, “such as Employee Resource Groups (ERG) or other affinity groups” that limit membership in workplace groups to certain protected groups and “separating employees into groups based on race, sex, or another protected characteristic when administering DEI or other trainings;”

(3) “workplace harassment, which may occur when an employee is subjected to unwelcome remarks or conduct based on race, sex, or other protected characteristics”; and

(4) “retaliation by an employer because an individual has engaged in protected activity under the statute, such as objecting to or opposing employment discrimination related to DEI …”

The technical assistance document also noted that “[d]epending on the facts, DEI training may give rise to a colorable hostile work environment claim” and “[r]easonable opposition to a DEI training may constitute protected activity if the employee provides a fact-specific basis for his or her belief that the training violates Title VII.” The EEOC and DOJ do not provide any examples of these facts that may give rise to workplace harassment or retaliation based on DEI, but it is fair to anticipate that sooner rather than later, we will see lawsuits testing what those facts are.

While President Trump’s first two executive orders aimed at DEI has increased the potential for litigation with challenges to DEI policies or programs, there is one theory of liability that the Trump Administration has aimed to eliminate: “disparate-impact” discrimination.

On April 23. 2025, President Trump signed Executive Order 14281, titled “Restoring Equality of Opportunity and Meritocracy,” which aims “to eliminate the use of disparate impact liability in all contexts to the maximum degree possible.” “Disparate impact” liability is a legal theory where an employer can be held liable for facially neutral policies or practices that have a disparate impact on a group of applicants or employees based on a protected characteristic, even without intentional discrimination. According to the executive order, disparate impact liability “requires individuals and businesses to consider race and engage in racial balancing to avoid potentially crippling legal liability. It not only undermines our national values, but also runs contrary to equal protection under the law and, therefore, violates our Constitution.”

However, while Executive Order 14281 directs federal agencies to “deprioritize enforcement of all statutes and regulations to the extent they include disparate-impact liability,” it does not immediately change the law, and disparate impact remains a recognized theory of liability. Accordingly, employers should continue to monitor their policies and practices for potential disparate impact.

Moreover, employers with existing DEI policies or programs should conduct an audit, preferably by an attorney, of their DEI policies and programs to identify potential risks. Again, while the executive orders do not define “illegal DEI,” based on the EEOC and DOJ technical assistance document, employers should consider that any recruitment policy or program that sets quotas for persons of certain protected characteristics, or any program that limits, segregates or classifies applicants or employees based on race, sex or other protected characteristics, are risky and likely to lead to lawsuits.

Finally, employers have responded in various ways to President Trump’s executive orders, from scaling back to dismantling their DEI programs, to reaffirming their commitment to DEI. Based on these various responses, it is uncertain what the future of DEI will look like. The only certainty for now is that the fight for and against DEI continues. The scrutiny and investigation into DEI policies and programs continues and more lawsuits will likely follow. Therefore, it is important for companies to stay updated with new developments in this area of the law. Consult your counsel with questions you may have about your DEI policies and programs.

This AALRR publication is intended for informational purposes only and should not be relied upon in reaching a conclusion in a particular area of law. Applicability of the legal principles discussed may differ substantially in individual situations. Receipt of this or any other AALRR publication does not create an attorney-client relationship. The Firm is not responsible for inadvertent errors that may occur in the publishing process.

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