What California Public and Private Sector Employers Need to Know about the Trump Administration’s Executive Orders on Diversity, Equity, and Inclusion
President Trump recently issued several Executive Orders aimed at Diversity, Equity, Inclusion and Accessibility (“DEI” or “DEIA”) initiatives. This alert examines two of the orders. On January 20, the President signed an order entitled “Ending Radical and Wasteful Government DEI Programs and Preferencing” (the “First Order”). On January 21, he signed an order entitled, “Ending Illegal Discrimination and Restoring Merit-Based Opportunity” (the “Second Order”).
These Orders represent a dramatic shift in the DEI landscape that will impact DEI initiatives launched by public and private sector employers in recent years. DEI workplace roles have increased significantly in the last five years. Many agencies also now include DEI goals in their strategic plans, in an effort to ensure that qualified candidates, regardless of race, gender, ethnicity, disability or sexual orientation have equal access to career opportunities.
How the Executive Orders will impact such programs is a complicated question. Immediate actions by the Trump administration include laying off all federal DEI personnel and directing all federal employees to remove pronouns from their signature blocks by 5:00 p.m. January 31, 2025.
The First Order
While predominately directed at agencies and employees of the federal government, the order also impacts (1) federal grantees who have received federal funding “to provide or advance DEI, DEIA, or ‘environmental justice’ programs, services, or activities since January 20, 2021,” and (2) federal contractors “who have provided DEI training or DEI training materials to agency or department employees.” As such, to the extent a public agency or private company receives federal grant funds or to the extent that a private company works as a federal contractor, its operations may be impacted.
The First Order includes the following provisions aimed at federal grantees and contractors. It dictates that, within sixty-days of the order’s issuances, federal agencies, departments, and commission heads, take the following actions.
- To “terminate, to the maximum extent allowed by law… ‘equity related grants or contracts, and all DEI or DEIA performance requirements” for contractors and grantees. In other words, if a public agency or private company received an “equity-related” grant under the Biden Administration, then it may receive an order of termination from the overseeing branch of the federal government as soon as February 9, 2024. The order does not define the term “equity-related”.
- To “provide the Director of the Office of Management and Budget (OMB) with a list of all “[f]ederal contractors who have provided DEI training or DEI training materials to [federal] employees”, and “[f]ederal grantees who received Federal funding to provide or advance DEI, DEIA, or ‘environmental justice’ programs, services, or activities since January 20, 2021.” This provision appears aimed at populating a list of private sector providers who have contracted with the federal government to provide DEI training and materials as well as “grantees”—which could include private and public entities—who have more broadly used federal funds to advance DEI and related programs and functions. The order does not address what executive action may be pursued as to public or private entities that are identified on this list.
The First Order further directs the OPM Director and a representative from each federal agency to meet monthly to inform and advise the President on certain metrics germane to this order so that the President “may formulate appropriate and effective civil rights policies for the Executive Branch.” These metrics include to “hear reports on the prevalence and the economic and social cost of DEI, DEIA, and ‘environmental justice’ policies” in contracts and grants, as well as in a broader array of governmental functions, including with respect to “regulations, enforcement activities, and litigating positions.”
The order concludes with a directive that it is to be implemented “consistent with applicable law and subject to available appropriations.” It remains to be seen the myriad of legal issues that could arise in connection with terminating the scope of federal grants and contracts implicated.
The Second Order
The Second Order revokes several executive orders previously in effect for decades, including a 60-year-old Johnson Administration Executive Order requiring federal contractors to maintain anti-discrimination programs and engage in equal opportunity hiring practices and a 31-year-old Clinton Administration Executive Order authorizing federal action to address environmental justice in low-income and minority communities.
The Second Order prohibits federal agencies from engaging in the following in awarding government contracts: promoting diversity, requiring contractors (including subcontractors) to practice affirmative action, and encouraging workforce balancing based on inherent characteristics. It also prohibits federal contractors from considering “race, color, sex, sexual preference, religion, or national origin in ways that violate the Nation’s civil rights laws.” (The order does not, however, explain the meaning of the italicized clause.) It further directs agencies to (1) “terminate all discriminatory and illegal preferences, mandates, policies, programs, activities, guidance, regulations, enforcement actions, consent orders, and requirements”; (2) enforce longstanding civil rights laws; and (3) combat “private-sector DEI preferences, mandates, policies, programs, and activities.”
Within 120 days of the Second Order’s issuance, the head of every federal agency must generate a report identifying “the most egregious discriminatory DEI practitioners in each sector of concern,” within each agency’s jurisdiction, and a plan with specific steps the agency will take to deter DEI practices—including regulatory action, litigation, and other strategies to “end illegal DEI discrimination and preferences and comply with all Federal civil-rights laws.” Each agency is responsible for identifying up to nine potential civil compliance investigations of the following types of entities:
- 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.
Additionally, all state and local educational agencies receiving federal funding, including all institutions of higher education that receive federal grants or participate in the federal student loan assistance program are required to comply with the holding in Students for Fair Admissions, Inc. v. President and Fellows of Harvard College, 600 U.S. 181 (2023) which prohibits using race as a criterion for admission but still permits an applicant to discuss “how race affected his or her life, be it through discrimination, inspiration, or otherwise.” The Harvard Court opined:
A benefit to a student who overcame racial discrimination, for example, must be tied to that student’s courage and determination. Or a benefit to a student whose heritage or culture motivated him or her to assume a leadership role or attain a particular goal must be tied to that student’s unique ability to contribute to the university. In other words, the student must be treated based on his or her experiences as an individual—not on the basis of race.
Notwithstanding any of the above, the order expressly allows public and private employers to retain employment and contracting preferences for veterans of the armed forces and persons protected by the Randolph-Sheppard Act, 20 U.S.C. 107 et seq., a 1936 law aimed at providing blind persons with remunerative employment, economic opportunities, and self-support through operation of vending facilities in federal buildings.
California Law
In some respects, the executive orders are reminiscent of California’s Proposition 209, passed in 1996, with which California public agencies have been required to comply for nearly three decades. Proposition 209 amended the California Constitution to generally prohibit public colleges and universities and other government entities from discriminating or granting preference based on race, sex, color, ethnicity, or national origin as criteria in public employment, public contracting and public education, with limited exceptions including for bona fide occupational qualifications based on sex, and actions necessary to prevent loss of federal funds. Some public employers have developed DEI initiatives that are designed to be compliant with Proposition 209. Accordingly, certain existing DEI polices may comply with the Orders, while other policies may not.
A plain reading of the First and Second Orders reflects the Trump Administration’s opinion that DEI Initiatives, in principle, violate federal law. For decades, however, public and private sector employers, particular in California where Prop 209 has been state law for almost 30 years, have crafted DEI programs and policies that are in furtherance of state and federal anti-discrimination laws, as reflected under California’s Fair Employment and Housing Act and the Civil Rights Act of 1964 (i.e., Title VII), the Americans with Disabilities Act, and the Age Discrimination and Employment Act, among others. The federal district courts, therefore, are the inevitable ground-zero for resolving these apparent conflicts, with appeals to higher courts likely as well.
Recommendations
There are many potential legal arguments to be made for and against the lawfulness of the Executive Orders. These are beyond the scope of this alert, however at least two points bear noting at this early stage.
First, “DEI” and “DEIA” are not self-defining terms, and may be defined or understood differently in different contexts by different actors, whether in favor of or opposed to such initiatives. The Executive Orders do not appear to state a single definition of what the administration considers to be “DEI” or “DEIA,” but do include a directive to federal agencies to “terminate all discriminatory and illegal preferences, mandates, policies, programs, activities, guidance, regulations, enforcement actions, consent orders, and requirements,” and “to enforce our longstanding civil-rights laws and to combat illegal private-sector DEI preferences, mandates, policies, programs, and activities.” California has regulations requiring California community colleges to develop DEIA criteria to be applied in employee evaluations and tenure review, and the California regulations set forth many defined terms that are specific to these requirements. The mere use of terminology such as “DEI” or “DEIA” does not necessarily make a program or initiative discriminatory or illegal. The more pertinent question is what criteria a program or employer actually uses to select applicants, admit students, provide services, commit resources, etc., and whether such criteria do or do not comply with existing anti-discrimination laws, including California’s Fair Employment and Housing Act, Title VII of the 1964 Civil Rights Act, the Americans with Disabilities Act and other laws prohibiting discrimination in employment, housing, education and other areas.
Second, an Executive Order has the force of law, but is subject to review by the Courts. Federal agencies also have discretion in how they interpret existing laws. As just one example, the United States Department of Education’s interpretation of Title IX has varied in recent years, depending on the administration.
For now, given the breadth of the DEI executive orders and their potential impact on the country’s workforce and various industries, we anticipate these orders will face legal challenges. But the more immediate practical question for many public agencies and other recipients of federal funds will be how federal agencies interpret and apply the executive orders. In other words, enforcement actions by federal agencies may have immediate or near-term practical consequences that cannot be reversed unless/until challenged successfully in court. In the short term, therefore, public colleges and universities, public agencies, and other recipients of federal funds should consult with counsel to review and revise their DEI programs to mitigate risk.
1. Evaluate DEI Programs and Practices
Review the content and implementation processes for DEI-related programs to avoid potential conflicts with the executive orders, including review of the content and processes of third-party vendors. Make certain any such trainings are consistent with Proposition 209 and other state and federal anti-discrimination and equal employment opportunity laws.
2. Evaluate Promotion and Hiring Practices
DEI initiatives for employers can be carried out in a lawful way, effectively navigating the executive orders while ensuring compliance with existing state and federal laws. Avoid prohibited practices, like setting specific diversity quotas or goals unless mandated by law. Audit hiring practices. Make sure criteria is based on job qualifications and performance, not prohibited demographic characteristics, and emphasizes the importance of merit-based practices. Consider whether the criteria from the Supreme Court’s recent Harvard decision could be incorporated into your hiring-related policies.
3. Evaluate Employee Policies and Procedures
Employee policies and procedures documents and/or handbooks may reference DEI initiatives or mission statements. Immediately review such documents to ensure any references to DEI-related activities comply with the executive orders to avoid the potential for possible enforcement actions.
4. Keep Detailed Records
Keep detailed records of hiring practices, training programs, and all DEI-related initiatives to demonstrate that employment practices comply with federal and state law. Openness regarding the implementation of diversity and inclusion efforts may shield potential liability.
5. Be Prepared
Stay informed about legal changes and potential shifts in judicial interpretations. Prepare to make any necessary adjustments to ensure employment practices remain legally compliant.
Both Orders are the first of several measures the Trump Administration will likely pursue on this topic. As things continue to develop, it is important to work closely with trusted legal counsel to ensure compliance with new laws and existing state and federal laws. AALRR knows how to structure DEI programs in a way that promotes inclusivity without violating anti-discrimination laws. Take the right steps now to reduce liability: review hiring practices, evaluate training content, and maintain detailed records.
Our experienced attorneys are here to help public and private sector employers navigate changes and maintain a legally compliant and inclusive place of work.
Employers with questions about any of the above may contact one of the authors or their usual counsel at AALRR.
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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