President Trump’s Executive Order “Ending Illegal Discrimination and Restoring Merit-Based Opportunity” and Its Impact on Private Employers
On January 21, 2025, amid a flurry of executive orders, President Trump issued an executive order titled, “Ending Illegal Discrimination and Restoring Merit Based Opportunity,” representing a critical change in federal policy on affirmative action and diversity, equity, and inclusion (“DEI”) initiatives (the “Order”). The Order declares that DEI programs can violate civil rights laws and repeals prior executive orders requiring diversity and equal opportunity, including President Johnson’s 1965 order prohibiting discrimination in government employment and by federal contractors and President Obama’s 2011 order requiring federal agencies to implement a government-wide diversity and inclusion strategic plan.
What the Order Says
The Order directs the Office of Federal Contract Compliance Programs (“OFCCP”) within the Department of Labor to stop “promoting ‘diversity’” or requiring any “affirmative action” from federal contractors or subcontractors, and prohibits federal contractors and subcontractors from considering race, sex, or sexual preference when making employment decisions.
Notably, the Order does not limit its impact to public entities. President Trump has directed the attorney general, in consultation with heads of all federal agencies, to prepare a report within 120 days (i.e., May 21, 2025) with recommendations to encourage the private sector to halt DEI initiatives. The attorney general’s report will include a proposed enforcement plan, which will identify:
- key sectors of concern within each federal agency’s jurisdiction;
- the “most egregious and discriminatory DEI practitioners in each area of concern”;
- specific measures to deter DEI programs or principles, which the Order identifies as “illegal”;
- up to nine potential civil compliance investigations, for each federal agency, of:
- publicly traded corporations;
- large nonprofit organizations;
- foundations with $500 million or more in assets;
- higher education institutions with endowments over $1 billion; and
- state and local bar and medical associations;
- potential litigation “appropriate for Federal lawsuits, intervention, or statements of interest”; and
- potential regulatory actions.
Potential Risks to Employers
The ramifications of the Order are yet to be seen. President Trump’s administration’s efforts to eliminate DEI and affirmative action may fuel an increase in individual legal challenges to employer practices. Employers could also face increased enforcement activity by attorneys general, which at least 13 states’ attorneys general previously indicated they would support in a 2023 open letter to Fortune 100 companies.
The Current Landscape
Even before the Order, large companies prepared to roll back their DEI initiatives, in light of an increased focus on private litigation and in anticipation of action by the new presidential administration. For example, some companies retired aspirational representation goals or elected to no longer maintain DEI employee teams. Now, on the heels of the Order, other employers are following suit. However, there is no universal retraction of DEI programs. Numerous large employers are pushing to maintain their inclusion and diversity programs and policies.
Considerations for Employers
Federal contractors should continue to comply with regulations and requests from the OFCCP, including those related to the Vietnam Era Veterans’ Readjustment Assistance Act and Section 503 of the Rehabilitation Act. Federal contractors should closely review any new government contracts for terms related to discrimination and ensure compliance with evolving anti-discrimination certification obligations.
Private sector employers with DEI programs or practices, regardless of how they are titled, should review those policies with legal counsel to ensure compliance with nondiscrimination statutes and orders, and consider doing so periodically given the changing landscape of anti-discrimination law. The Order indicates that the organizations the administration may most scrutinize include “major corporations, financial institutions, the medical industry, large commercial airlines, law enforcement agencies, and institutions of higher education.” Employers that fall within one of these industries should be vigilant for shifts in the law on diversity and inclusion.
Despite the sweeping changes called for in President Trump’s executive order, employers — including federal contractors and private employers alike — must remain compliant with existing anti-discrimination laws, including Title VII of the Civil Rights Act, the Equal Pay Act, the Age Discrimination in Employment Act, and the Americans with Disabilities Act. Employers should be alert for challenges to the Order and any guidance issued by the attorney general or federal agencies.
AGG will continue to monitor developments on anti-discrimination laws. For more information and guidance on managing risk in this area of law, please contact any member of the AGG Employment team.
Related Services
- Edward P. Cadagin
Partner
- Theresa Y. Kananen
Partner
- Ashley Steiner Kelly
Partner and General Counsel
- Megan P. Mitchell
Partner
- Henry M. Perlowski
Partner
- Natalie L. Cascario
Associate