In January, President Donald Trump signed Executive Order 14173 entitled “Ending Illegal Discrimination and Restoring Merit-Based Opportunity,”¹ which ordered federal agencies to end all diversity, equity and inclusion initiatives or policies that are discriminatory or provide illegal preferences and to enforce federal civil rights laws.

The Trump EO follows the rationale of the U.S. Supreme Court in the Harvard and University of North Carolina student admissions cases in 2023. In those cases, the Supreme Court found that using racial preferences in various stages of the college admissions process violates the equal protection clause of the 14th Amendment. The Court reasoned that you cannot have preferences for a certain racial group without harming another. Thus, race-based affirmative action (e.g., racial quotas, lower test scores or seeking to admit a certain percentage of students based on their race) is no longer permitted in higher education institutions that accept federal funding.

The Trump EO also rescinded prior Executive Orders 11246 and 13672, which required certain federal contractors to protect women and minorities with affirmative action initiatives and prohibited federal contractors from discriminating against workers on the basis of sexual orientation and gender identity.²

EO 11246 prohibited federal contractors from engaging in discrimination and further required certain federal contractors to take affirmative action and develop written affirmative action plans based on sex and race. It covered federal contractors with 50+ employees and government contracts valued at $50,000 or more. The implementing regulations consistently defined a government contract as any agreement between any contracting agency and any person for the sale or use of nonpersonal services, including fund depositories. Financial institutions were considered covered federal contractors if they had federal share and deposit insurance or if they issued or paid on U.S. savings bonds and savings notes. Thus, most financial institutions were required to comply with EO 11246.

The Trump EO does away with EO 11246, including the obligation to develop affirmative action plans, and strips the Office of Federal Contract Compliance Programs of its authority to enforce compliance. The Trump EO also prohibits “illegal DEI and DEIA policies” in the private sector and demands that the OFCCP stop promoting diversity and allowing or encouraging contractors to engage in “workforce balancing.”³ The Trump EO does not define what constitutes an illegal DEI initiative or program. Federal contractors were given 90 days (until April 21, 2025) to comply with the Trump EO and submit certification that they are not participating in illegal DEI initiatives or affirmative action programs. A false certification can give rise to liability under the federal False Claims Act.

A federal lawsuit was filed in late February, National Association of Diversity Officers in Higher Education, et. al v. Donald J. Trump, et. al, challenging the constitutionality of key provisions of the Trump EO and another Trump administration executive order regarding DEI entitled “Ending Radical and Wasteful Government DEI Programs and Preferencing.”⁴ The federal district court entered a partial nationwide preliminary injunction. Specifically, the district court blocked the federal contractor compliance certification and prohibited federal agencies from targeting private employers based on perceived violations of DEI-related laws or bringing enforcement actions. The government appealed that order and sought a stay of the preliminary injunction. On March 14, 2025, the U.S. Court of Appeals for the Fourth Circuit granted the government’s motion and lifted the preliminary injunction, thereby allowing the Trump administration to enforce the Trump executive orders while the lawsuit is pending.

How the case will ultimately be decided remains uncertain. Employers should keep a close eye on this case and any further developments. A number of other lawsuits have been filed challenging the Trump EO; however, unless an injunction is reinstated or entered, covered federal contractors must be prepared to comply with the Trump EO. Employers should review their existing affirmative action plans/programs and DEI initiatives to ensure compliance with the Trump EO and anti-discrimination laws and consult with experienced legal counsel. Also keep in mind that some states and local municipalities may have DEI and affirmative action requirements that impose additional or different obligations.

The Equal Employment Opportunity Commission recently issued a press release warning employers against unlawful DEI-related discrimination. The EEOC and Department of Justice also issued technical guidance on what to know about DEI-related discrimination and the actions a person should take if they experience DEI-related discrimination at work. The federal agencies warned that any employment action that is motivated, in whole or in part, by a person’s race, sex or other protected characteristic is unlawful, including using quotas or “balancing” the workforce based on those characteristics. The DOJ also issued a statement expressing their commitment to end illegal DEI initiatives, policies and programs.

Employers are cautioned that when implementing policies and deciding on hiring practices, training programs, promotions, etc., they should not consider race, sex, ethnicity or other protected characteristics. Those decisions should be based upon merit and other non-discriminatory factors.

Information in this article is provided for general information purposes only and does not constitute legal advice or an opinion of any kind. You should consult with legal counsel for advice on your institution’s specific legal issues.