Diversity, equity, and inclusion (DEI) programs have been a feature in American workplaces for decades. It’s no secret, however, that they have become the most recent target of criticism from a certain segment of the population, including President Donald Trump.
In January 2025, the president issued multiple Executive Orders (EOs) taking aim at eliminating DEI programs in federal agencies. On January 21, 2025, however, he issued EO 14173—entitled “Ending Illegal Discrimination and Restoring Merit-Based Opportunity”—which targets DEI programs in the private sector. EO 14173 also dramatically changes the affirmative action requirements for private employers that are federal contractors. Failure by federal contractors to comply by April 22, 2025, could result in their federal contracts being suspended or terminated—or even worse, debarment of non-complying federal contractors from future federal contracts.
What EO 14173 Says
EO 14173 encourages private employers to end DEI programs that “illegally discriminate.” To accomplish this goal, the U.S. attorney general, upon consultation with the relevant federal agency heads, is charged with developing steps to deter DEI programs involving “illegal discrimination or preferences,” identifying “egregious and discriminatory DEI practitioners,” and evaluating litigation options against employers whose DEI programs are unlawful.
EO 14173 also revokes affirmative action requirements for federal contractors with respect to minorities and women. Federal contractors must still comply with affirmative action requirements with respect to veterans and individuals with disabilities. Further, EO 14173 requires federal contractors to certify that they don’t have DEI programs that violate federal anti-discrimination laws.
Zero Guidance
Notably, EO 14173 provides absolutely zero guidance regarding what makes a DEI program illegal or unlawful. To make matters worse, regardless of whether an employer retains, retools, or eliminates its DEI programs, it could face backlash from employees, making an already competitive labor market much more difficult. It could also face a public outcry in the form of boycotts.
Despite the lack of guidance, it’s clear the administration is targeting DEI programs that exist in the private sector. In trying to navigate both the legal and business risks, you should keep in mind that Title VII of the Civil Rights Act of 1964 is still the law of the land. In fact, EO 14173 cites to federal civil rights laws as a reason why the administration is focusing on DEI programs.
Steps to Minimize Your Risks
While the uncertainty surrounding EO 14173 and DEI is daunting, there are steps you can take now to minimize legal and business risks, including the following:
Measure your risk tolerance. While employers such as Amazon, Target, and Walmart have eliminated DEI programs, others have doubled down on them such as Costco, JP Morgan Chase, and Microsoft. Legal and business strategies related to DEI should be based on your risk tolerance and your desire to prevent illegal discrimination.
Document the purpose behind DEI programs. The documentation should outline the purpose behind your DEI programs. The purpose should include such factors as legal considerations (including federal, state, and municipal requirements), business demands, as well as finding and retaining highly skilled employees regardless of their demographic characteristics.
In regard to state requirements, while Arizona’s attorney general to date hasn’t taken an aggressive stance against EO 14173, 13 other state attorneys general have—California, Connecticut, Delaware, Hawaii, Illinois, Maryland, Massachusetts, Minnesota, New Jersey, New York, Rhode Island, Vermont, and Washington. According to a joint statement issued by these attorneys general on January 31, 2025, the president’s efforts to target DEI programs have nothing do with “combatting discrimination,” and DEI programs are “consistent with state and federal antidiscrimination laws.”
Review policies, procedures, and training materials. Policies, procedures, and training materials should focus on creating a workplace that is inclusive for all employees. You should also consider taking an expansive view of diversity, including factors such as different skill sets, educational backgrounds, work histories, and life experiences. In reviewing policies, procedures, and training materials, you should eliminate language that might be construed as overtly political or as a quota requirement.
Develop an internal and external PR strategy. A communications package to all stakeholders—including employees, shareholders, and the public—regarding your DEI-related actions is key. Communications should focus on your desire for a workplace that is welcoming to all and fosters the success of every employee.
Monitor the legal environment. You should be on the lookout for legal developments, including potential regulatory guidance, on what constitutes an unlawful or illegal program under EO 14173. Based on any future guidance, you should analyze your DEI programs and make any necessary adjustments.
Jennifer L. Sellers is a senior member with The Cavanagh Law Firm, P.A., and a contributor to Arizona Employment Law Letter. She practices employment and labor law with a focus on counseling and agency practice. She may be reached at jsellers@cavanaghlaw.com or 602-322-4134.