Is DEI out? What employers need to know about recent Executive Orders

Federal contractors impacted most

The order, along with a separate EO issued on January 20, titled “Ending Radical and Wasteful Government DEI Programs and Preferencing,” also rescinds EO 11246, which required federal contractors and subcontractors with at least 50 employees and a federal contract or subcontract of at least $50,000 to:

• Develop affirmative action programs,
• Perform annual audits of placement and pay practices, and
• Assess their outreach and recruitment programs for underrepresented members of their workforce.

These requirements have been eliminated by the EO, which says:

“The Office of Federal Contract Compliance Programs within the Department of Labor shall immediately cease:

• (A) Promoting ‘diversity’;
• (B) Holding federal contractors and subcontractors responsible for taking ‘affirmative action’; and
• (C) Allowing or encouraging federal contractors and subcontractors to engage in workforce balancing based on race, color, sex, sexual preference, religion, or national origin.”

As of January 31, federal contractors must still:

• Comply with affirmative action regulations for individuals with disabilities and protected veterans,
• File EEO-1 reports, and
• Comply with all existing state and local affirmative action and EEO reporting requirements.

Impact on private employers

The EO contains a section titled “Encouraging the Private Sector to End Illegal DEI Discrimination and Preferences.” In this section, the heads of all agencies, with the assistance of the U.S. Attorney General, are ordered enforce federal civil rights laws and combat illegal DEI practices in the private sector.

The EO states, “This enforcement includes identifying key sectors of concern, the most egregious DEI practitioners, and specific steps to deter DEI programs that constitute illegal discrimination or preferences. Agencies are also required to identify potential civil compliance investigations of large corporations, non-profits, foundations, bar and medical associations, and institutions of higher education.”

Private employers with DEI programs may want to:

1. Review all DEI programs: Make sure policies and initiatives comply with federal civil rights laws by not prioritizing race or sex over individual merit and aptitude in hiring or other employment actions. Promoting tolerance and respect in a diverse workforce is not the target of this EO, as long as it doesn't result in preferential treatment based on membership in a protected class.
2. Be ready for a compliance check: Prepare for the possibility of being investigated by federal agencies, especially if your business is a large corporation, non-profit, or educational institution.

Key to remember: DEI programs are under the scrutiny of the new administration. Employers should review their policies and procedures to make sure they comply with federal civil rights laws. Employers must keep in mind that federal, state, and local discrimination laws still apply.