The first 100 days of President Trump’s second term have been action-packed with the President issuing 43 Executive Orders within hours of his inauguration – and an additional 46 that soon followed. Two Executive Orders in particular – Executive Order 14151, “Ending Radical and Wasteful Government DEI Programs and Preferences,” and Executive Order 14173, “Ending Illegal Discrimination and Restoring Merit-Based Opportunity,” – have received significant attention. These Orders mark a significant shift from prior administrations, and aim to redefine the role of DEI not only within the Federal Government, but also within the private sector. What follows is a brief overview of these Orders and how they likely affect – or will affect –businesses.

What do the DEI Executive Orders Actually Require?

The DEI-related Executive Orders identify 5 objectives:

• The elimination of Federal personnel whose roles focus on enhancing DEI programs within the Federal Government;
• The termination of all DEI programs and activities that promote or support DEI objectives;
• Requiring Federal Contractors to eliminate internal DEI efforts, certifying compliance with federal anti-discrimination laws and affirming they do not operate “illegal DEI” programs;
• A return to merit-based practices, discouraging any form of preference based on race or sex in hiring, promotion, or contracting processes; and
• Encouraging companies that do not take federal dollars to end their internal DEI efforts.

Since January, we have seen the Administration pursue these objectives using all tools at its disposal, including closing Federal DEI offices, placing Federal employees on leave, rescinding Executive Orders issued by predecessors (including the well-known Executive Order 11246), defunding grant programs and terminating contracts that emphasize DEI objectives, directing the non-enforcement of existing DEI-related requirements, and expanding the Department of Justice’s (DOJ) authority to investigate non-compliance these initiatives.

What is “Illegal DEI”?

One of the primary open questions surrounding compliance with these Executive Orders is the lack of guidance on exactly what constitutes “illegal DEI.”

On February 5, 2025, Acting OPM Director Charles Ezell provided additional insight into how OPM, at least, views the scope of the President’s Orders. According to the OPM memorandum, the following activities likely constitute “illegal DEI”:

• “Recruiting, interviewing, hiring, training or other professional development, internships, fellowships, promotion, retention, discipline, and separation, based on protected characteristics like race, color, religion, sex, national origin, age, disability, genetic information, or pregnancy, childbirth or related medical condition….”
• Diversity requirements “for the composition of hiring panels, as well as for the composition of candidate pools (also referred to as “diverse slate” policies).”
• Employee Resource Groups (ERGs) “that . . . advance recruitment, hiring, preferential benefits (including but not limited to training or other career development opportunities), or employee retention agendas based on protected characteristics.”
• ERGs that are open only to “certain racial groups but not others, or only for one sex, or only certain religions but not others.”
• Events that limit attendance to only members of an ethnic group, or that permit employees to discourage attendance by those outside the ethnic group.
• Social or cultural events or other “inclusion-related” events or trainings that segregate “participating employees into separate groups of ‘White’ and ‘People of Color’ (or other compositions based upon protected characteristics).”

Conversely, the memorandum suggests the following activities do not constitute “illegal DEI”:

• Activities required by statute or regulation “to counsel employees allegedly subjected to discrimination, receive discrimination complaints, collect demographic data, and process accommodation requests.”
• Accessibility or disability-related accommodations, assistance, or other programs that are required by those or related laws.”
• Affinity/resource group events that allow “employees to come together, engage in mentorship programs, and otherwise gather for social and cultural events.” The Memorandum cautions, however, that discretion must be exercised to ensure such events do not cross the line into “illegal DEI.” The Memorandum offers this specific warning to Government officials: “When exercising this discretion, agency heads should consider whether activities under consideration are consistent with the [EOs] . . . and the broader goal of creating a federal workplace focused on individual merit.” The Memorandum warns that, for any activities that are retained, “agencies must ensure that attendance at such events is not restricted (explicitly or functionally) by any protected characteristics, and that attendees are not segregated by any protected characteristics during the events.”

Last month, the Equal Employment Opportunity Commission (“EEOC”) published two additional memoranda (“What to do if you Experience Discrimination Related to DEI at Work” and “What You Should Know About DEI-Related Discrimination at Work”) that provide additional pieces to help solve the “illegal DEI” puzzle. According to the EEOC, the following activities may be unlawful under Title VII (and therefore likely would constitute “illegal DEI”):

• Disparate Treatment, including discrimination against applicants or employees on the basis of sex or race;
• Harassment, including subjecting employees to “unwelcome remarks or conduct based on race, sex, or other protected characteristics.”
• Limiting, Segregating, and Classifying, including limiting membership in workplace groups to specified individuals or “separating employees into groups based on race, sex, or another protected characteristic when administering DEI…”
• Retaliation, including 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, participating in employer or EEOC investigations, or filing an EEOC charge.”

Though the Administration is signaling that not all DEI programming is illegal, without clear definitions and guidance from the Administration, federal contractors and grantees face uncertainty in their compliance obligations. At least one court case pending in Maryland hinges largely on the absence of concrete definitions and guidance for companies – perhaps opening the door for other courts to weigh in on this topic.[1]

How will the Federal Government Enforce these Requirements?

The Trump Administration has indicated its intent to utilize every tool at its disposal to execute on its DEI priorities, including using the False Claims Act (“FCA”). In particular, the Executive Orders direct government contracts and grant agreements to include:

1. A term requiring the contractual counterparty or grant recipient to agree that its compliance in all respects with all applicable Federal anti-discrimination laws is material to the government’s payment decisions for purposes of section 3729(b)(4) of tile 31, United States Code [the FCA]; and
2. A term requiring such counterparty or recipient to certify that it does not operate any programs or promot[e] DEI that violate any applicable Federal anti-discrimination laws.

In sum, this language adds a new certification and pre-ordained “materiality” finding, designed to make it easier for the Government to bring civil enforcement actions under the FCA against contractors – essentially removing from the playbook the typical “materiality” defense.

Federal contractors and grant recipients are not the only entities at risk of enforcement action. The Executive Orders also direct Federal agencies to “identify up to nine potential civil compliance investigations of 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 1 billion dollars.” The DOJ has since indicated that it will initiate, where appropriate, criminal investigations against these companies.

Conclusion

Though the DEI Executive Orders are in some cases expansive, it is important to remember that their overall scope is limited by the Administration’s ability to act without Congressional intervention. For example, where some Federal contractor Affirmative Action Plan requirements are predominantly administrative in nature – stemming from the now defunct Executive Order 11246 – others, such as non-discrimination provisions addressed by the Civil Rights Act of 1964, the Rehabilitation Act, VEVRAA, and even the Small Business Act, cannot, by law, be eliminated by Executive Order alone.

Still, the DEI Executive Orders represent a significant shift in federal policy, with wide-ranging implications for government contractors and private organizations. The ongoing legal challenges emphasizes the need for clear guidance and thoughtful compliance strategies. Organizations must stay vigilant and adaptable as they navigate this complex regulatory environment.

FOOTNOTES

[1] See, e.g, Nat’l Assoc. of Diversity Officers in Higher Ed. v. Trump, D. Md., No. 1:25-cv-00333.