President Trump’s Recent Executive Orders and Their Potential Impact on Social Initiatives
President Trump started his second term by signing executive orders that covered a number of environmental, social, and governance (ESG)-related issues, such as eliminating diversity, equity, and inclusion (DEI) programs in departments and agencies in the executive branch, repealing DEI directives from the Biden administration, requiring enhanced vetting and screening processes for individuals seeking U.S. citizenship, limiting the enforcement of federal civil rights law and labor law, among others. The effects of President Trump’s executive orders have already begun as an United States Office of Personnel Management (OPM) memo placed DEI officers on immediate leave and set a January 31, 2025, deadline for agencies to submit plans to dismiss the employees that were put on leave.
This article focuses on executive order Ending Illegal Discrimination and Restoring Merit-Based Opportunity, as it is the order most likely to have a significant impact on the private sector’s human capital management initiatives. That executive order noted that major companies, as well as other entities, are engaging in “race- and sex-based preferences under the guise of” DEI programs that may be in violation of federal civil rights laws. The order further encouraged federal agencies and the Attorney General to take the necessary steps to promote “individual initiative, excellence, and hard work.” The order also tasked the Attorney General and Director of the Office of Management and Budget to prepare a report that outlines (a) ways to leverage federal laws and “other appropriate measures to encourage the private sector to end illegal discrimination and preferences, including DEI,” (b) key areas of concern, (c) “[t]he most egregious and discriminatory DEI practitioners in each” area of concern, (d) plans and strategies “to deter DEI programs or principles . . . that constitute illegal discrimination or preferences,” and (e) litigation and potential regulatory action that can be taken. Of note, the order instructs executive departments and agencies to identify at least nine civil investigations that may be taken of public companies, “large non-profit corporations, . . . foundations with” more than 500 million in assets, medication associations, and other entities.
With respect to the federal government, the order, among other things, requires “executive departments and agencies” to cease “discriminatory and illegal” initiatives and enforcement proceedings and mandates that these departments and agencies “combat illegal private-sector DEI preferences, mandates, policies, programs, and activities.” There were also a host of items in the order directed to federal contractors or grant recipients, including a requirement to certify that they do not have DEI programs in violation of federal law.
Impact on the Private Sector
Before the recent executive orders, several Fortune 500 companies ended or reduced their DEI initiatives. The recent executive orders, particularly the order on Ending Illegal Discrimination and Restoring Merit-Based Opportunity, will likely drive more companies to pare back their DEI programming (or expedite their prior plans to reduce those initiatives). That said, as was the case before the executive orders, there will continue to be some companies that maintain their DEI initiatives until a court decision or law compels a different approach. Further clarity on the scope of what may be considered illegal discrimination beyond existing case law may be elucidated by the Attorney General’s report, which need not be submitted until May 21st. During the time that the report is being prepared, government officials will be identifying candidates for potential investigations. Further, we expect litigation to test the bounds of what constitutes illegal discrimination.
Adding to the complexity of the situation, on the state level, attorney generals are taking action in the DEI arena. For example, after Costco rejected a shareholder proposal to analyze the risks of its DEI policies, 19 Republican attorney generals demanded that within 30 days the company announce that it has repealed its DEI policies or explain why not. Conversely, a group of 13 attorneys general publicly noted their concerns with attempts to paint DEI initiatives as illegal. That group of attorneys general cited to a statement from the Equal Employment Opportunity Commission that confirmed that DEI programs remain legal. Put simply, companies may find themselves pulled in opposite directions by federal and state regulators while simultaneously confronting litigation in this area from private actors. Public companies may also see increased shareholder action with respect to DEI initiatives.
Next Steps
The DEI-related executive orders are poised to have a significant impact on the private sector at this time (and in the foreseeable future) as companies grapple with identifying the contours of what is permitted and safe from legal challenge (or at least defensible in the event of a lawsuit or governmental inquiry). In this rapidly evolving DEI landscape (which will almost certainly evolve yet again once the Attorney General’s report is issued), it is important that companies evaluate their contracts, internal and external policies and procedures, and messaging. Companies should also train their personnel on any changes to their DEI initiatives. Because this area is rapidly developing, it will also be crucial for companies to ensure they have reliable methods to track developments in the sector.
Beltway Buzz, February 14, 2025
The Beltway Buzz™ is a weekly update summarizing labor and employment news from inside the Beltway and clarifying how what’s happening in Washington, D.C., could impact your business.
Congress: Big Picture Legislative Update. The 119th Congress is revving up, and the Buzz is monitoring two major legislative issues:
Government funding expires on March 14, 2025—one month from today. Clearly, there is plenty of political acrimony between the parties, along with consternation among Democrats concerning how the administration has operated during its first several weeks. There are no clear signs yet about whether we are heading for a government shutdown, and anything can happen, as we saw during the final week of 2024.
This week, the U.S. Congress officially started the budget reconciliation process that it will use to pass Republican legislative priorities, such as tax cuts, border security, defense spending, and energy promotion. As the Buzz has previously discussed, this complicated process will allow the Republicans to avoid the legislative filibuster in the U.S. Senate and pass legislation on a party-line basis. The process is likely to take up much of Congress’s time in the coming weeks and months.
AG Issues Memos on Private-Sector DEI. On February 5, 2025, Pam Bondi, the newly confirmed attorney general, issued two memoranda to U.S. Department of Justice (DOJ) employees instructing them on steps that they must take to implement Executive Order (EO) 14173, “Ending Illegal Discrimination and Restoring Merit-Based Opportunity.” The memos are as follows:
“Ending Illegal DEI and DEIA Discrimination and Preferences.” This memo instructs the DOJ’s Civil Rights Division and Office of Legal Policy to jointly draft and submit a report containing recommendations “to encourage the private sector to end illegal discrimination and preferences, including policies relating to [diversity, equity, and inclusion (DEI) and [diversity, equity, inclusion, accessibility (DEIA)].”
This report must contain “specific steps or measures to deter the use of DEI and DEIA programs or principles that constitute illegal discrimination or preferences, including proposals for criminal investigations and for up to nine potential civil compliance investigations of [private-sector] entities.” (Emphasis added.) This likely refers to provisions of EO 14173 that invoke the False Claims Act, which allows for criminal penalties, treble damages, attorneys’ fees, and private citizen “whistleblower” actions. Lauren B. Hicks, T. Scott Kelly, and Zachary V. Zagger provide an analysis of the implications of EO 14173 for organizations doing business with the federal government that will be subject to potential liability under the False Claims Act.
“Eliminating Internal Discriminatory Practices.” This memo primarily instructs DOJ officials to terminate internal discriminatory programs and policies relating to DEI and DEIA. This includes the elimination of positions, programs, grants, contracts with vendors, etc., relating to DEI. It also directs DOJ officials to make recommendations on how to align the agency’s enforcement activities, litigation positions, consent decrees, regulations, and policies with the EO.
The memo further instructs DOJ officials to develop new guidance that “narrow[s] the use of ‘disparate impact’ theories” and emphasizes that “statistical disparities alone do not automatically constitute unlawful discrimination.”
DOL Nominees Announced. The Senate has already confirmed sixteen of President Trump’s agency nominees, but the employment-related agencies (i.e., the U.S. Department of Labor (DOL), the U.S. Equal Employment Opportunity Commission, and the National Labor Relations Board (NLRB)) are a bit behind. There was some news this week, however, relating to DOL nominees:
Secretary of Labor Hearing. The Senate Committee on Health, Education, Labor and Pensions was scheduled to hold a hearing this week on the nomination of former U.S. Representative Lori Chavez-DeRemer of Oregon to be secretary of labor. But due to a snowstorm in the Washington, D.C., area, the hearing has been rescheduled for February 19, 2025.
DOL Subagency Nominees. Potentially filling in the leadership positions of the DOL’s subagencies, are the following nominees who were announced this week:
David Keeling has been nominated to be the assistant secretary of labor for occupational safety and health. Keeling has held several positions overseeing private-sector employers’ workplace safety programs.
Wayne Palmer has been nominated to be the assistant secretary of labor for mine safety and health. Palmer held the same position during the first Trump administration.
Daniel Aronowitz, an insurance industry executive, has been nominated to lead the Employee Benefits Security Administration.
Henry Mack III has been nominated to lead the Employment and Training Administration. Mack previously served in the Florida Department of Education.
CFPB Halts Activity. Activity at the Consumer Financial Protection Bureau (CFPB) was effectively stopped this week while the Department of Government Efficiency reviews the agency’s internal operations. The CFPB, which “enforces Federal consumer financial law and ensures that markets for consumer financial products are transparent, fair, and competitive” stretched its reach over the last several years as part of former President Joe Biden’s “whole of government” approach to promoting unionization. For example, in 2023, the CFPB entered into an information sharing agreement with the NLRB “to address practices that harm workers in the ‘gig economy’ and other labor markets.” Pursuant to that agreement, the CFPB also focused on “employer-driven debt” that allegedly results from employee expenses related to “employer-mandated training or equipment.” Created by Congress in the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, CFPB has long been criticized by Republicans.
H-1B Registration Period Announced. U.S. Citizenship and Immigration Services has announced that the fiscal year 2026 H-1B cap registration period will open at noon ET on Friday, March 7, 2025, and close at noon ET on Monday, March 24, 2025. Nicole Fink and Philip K. Sholts have the details on the increased fees, the second go-round of the beneficiary-centric selection process, and other need-to-know aspects of the process.
Remembering Justice Scalia. Supreme Court of the United States Justice Antonin Scalia passed away this week in 2016 at the age of seventy-nine. While an incredible amount has been written about Justice Scalia and his legal philosophy, at the Buzz, we remember his jurisprudence related to labor and employment law. For example, Justice Scalia took part in decisions holding that union “salts” were employees under the National Labor Relations Act (NLRA) and that the NLRB was precluded by the Immigration Reform and Control Act of 1986 from awarding backpay to undocumented workers—even if their employment termination was otherwise unlawful under the NLRA. With the opportunity to write for the Court, Justice Scalia authored opinions emphasizing the need for sufficient commonality between potential members of a class action, particularly in employment law cases, as well as an opinion holding that the Federal Arbitration Act preempted state laws prohibiting class action waivers in arbitration. Finally, in Oncale v. Sundowner Offshore Services, Inc., Justice Scalia wrote that Title VII of the Civil Rights Act of 1964’s prohibition of discrimination “because of … sex” applied to same-sex sexual harassment claims.
McDermott+ Check-Up: February 14, 2025
THIS WEEK’S DOSE
Senate Confirms RFK Jr. as HHS Secretary. He was approved by a vote of 52 – 48. Sen. McConnell (R-KY) joined all Democrats in voting no.
House, Senate Budget Committees Hold Budget Resolution Markups. The House and Senate must pass a unified budget resolution for reconciliation to move forward.
Sen. Tina Smith (D-MN) Announces She Won’t Run for Reelection. This announcement comes on the heels of Sen. Gary Peters’ (D-MI) announcement that he also will not run for reelection.
House Ways & Means Health Subcommittee Holds Hearing on Modernizing Healthcare. Members and witnesses expressed concerns regarding the healthcare system.
House Oversight Healthcare Subcommittee Examines Welfare Programs. Members expressed differing views on the state of US welfare programs, including Medicaid.
House Oversight DOGE Subcommittee Holds First Hearing. The hearing discussed improper payments and fraud, with healthcare mentions focused on Medicaid.
Senate Aging Committee Examines How to Optimize Longevity. The hearing focused on how Americans can live longer, healthier lives.
Trump Nominates Additional Healthcare Personnel. The Trump administration’s US Department of Health and Human Services (HHS) and healthcare personnel continue to fill out, including a nomination for US Drug Enforcement Administration administrator.
NIH Issues Guidance Capping Indirect Costs. A federal court subsequently granted a temporary restraining order.
President Trump Issues EO to Reduce Federal Workforce. The executive order (EO) aims to drastically cut the federal workforce, including at HHS.
Legal Challenges Continue Against Trump Administration Actions. Lawsuits have been filed over health agency webpages, the federal funding freeze, and federal employee buyouts.
CONGRESS
RFK Jr. Confirmed as HHS Secretary. In a 52 – 48 Senate vote, Robert F. Kennedy (RFK) Jr. was confirmed as the next HHS secretary. All Democrats voted no, and Sen. McConnell (R-KY) was the only Republican to join them. He issued a statement explaining that he believed RFK Jr. spreads conspiracy theories and is unfit to lead HHS. Sen. McConnell also voted no on the confirmation of Tulsi Gabbard as the director of national intelligence, and on Pete Hegseth as secretary of the US Department of Defense. With RFK Jr. now officially leading HHS, we are especially attuned to the likelihood of new healthcare EOs and other administrative actions. On the same day as RFK Jr.’s confirmation, President Trump signed an EO establishing a Make America Healthy Again Commission.
The Senate will now move forward on the confirmation process for Mehmet Oz, MD, to be administrator of the Centers for Medicare and Medicaid Services (CMS). The Senate Finance Committee confirmation hearing could be scheduled as soon as early March.
House, Senate Budget Committees Hold Budget Resolution Markups. As a first step toward reconciliation, the House and Senate must pass a unified budget resolution. That process began in earnest this week when the Senate Budget Committee passed a budget resolution on a party-line vote that would bring forth a smaller reconciliation package to include immigration, defense, and energy policies. This approach is of interest to those in healthcare, because health programs could become part of the policies that help pay for this package if it moves forward. Senate Finance Chairman Crapo (R-ID) has said that the Finance Committee would likely rescind the Biden administration’s nursing home staffing regulation, which the Congressional Budget Office has scored as saving $22 billion, as his committee’s contribution to the effort.
The House Budget Committee is taking a very different approach. On February 13, it held a markup of its budget resolution, with the goal of passing one large reconciliation bill this year to address all priorities, including immigration, energy, defense, and tax cut extensions. This differs from the Senate’s intention to pass two separate reconciliation bills. The House budget resolution includes directions to the House Energy and Commerce Committee to find at least $880 billion in savings, which would likely include Medicaid reforms. The resolution passed by a party-line vote and included two Republican-led amendments. Notably, one amendment, intended to secure votes from members of the Freedom Caucus, would decrease the amount of tax cuts that could be included if $2 trillion in spending is not cut.
Senator Tina Smith (D-MN) Announces She Won’t Run for Reelection. Sen. Smith sits on the Senate Finance and HELP Committees and is active on healthcare issues. This announcement comes on the heels of Sen. Peters’ (D-MI) recent announcement that he also won’t run for reelection. These two key Democratic seats will be open for the 2026 midterm elections. Democrats and Republicans will both work to recruit top-tier candidates to enter these races.
House Ways & Means Health Subcommittee Holds Hearing on Modernizing Healthcare. The hearing included a panel of experts who discussed ways to promote healthy living, including wellness programs, early screenings, and flexible healthcare options (such as health savings accounts and individual coverage health reimbursement arrangements for small business owners). Democrats focused their questions on the recent National Institutes of Health (NIH) guidance capping indirect costs and the impact it would have on future treatments and cures, while Republicans focused on the cost of chronic conditions and their impact on the US healthcare system.
House Oversight Healthcare Subcommittee Examines Welfare Programs. During the hearing, witnesses discussed their views on safety net and welfare programs, including Medicaid, housing benefits, and nutrition programs. Republicans expressed concerns about the growth of these programs. They specifically discussed fraud, waste, and abuse in Medicaid, citing concerns over continuous enrollment and spending on illegal immigrants. They raised policies such as Medicaid block grants and work requirements as potential solutions. Democrats expressed their views that more barriers to accessing benefits should not be added, and some shared their personal experiences with welfare programs.
House Oversight DOGE Subcommittee Holds First Hearing. The newly formed subcommittee is chaired by Rep. Green (R-GA), and Rep. Stansbury (D-NM) is the ranking member. The first hearing included a panel of witnesses who discussed improper payments and fraud in federal programs. Republicans emphasized tackling waste and improper payments in federal programs, particularly Medicaid and Medicare, while Democrats highlighted the negative impact of proposed cuts on low-income and working-class people.
Senate Aging Committee Examines How to Optimize Longevity. Witnesses at the hearing discussed their concerns regarding the rise in chronic conditions and how a focus on healthy lifestyles – including eating a good diet, exercising regularly, and taking preventive efforts – could increase lifespans and improve health outcomes among older Americans. Democrats emphasized the importance of addressing social determinants of health, such as access to affordable healthcare, stable housing, financial security, and walkable communities. Republicans focused on the inefficiency of the current healthcare system, which they believe is reactive rather than preventive, and the need for more longevity-focused care.
ADMINISTRATION
Trump Nominates Additional Healthcare Personnel. President Trump nominated Gary Andres, former staff director for key House healthcare committees, and Gustav Chiarello III, an antitrust lawyer, as HHS assistant secretaries. President Trump nominated Michael Stuart, a West Virginia state senator, to be the HHS general counsel. Trump nominated Terry Cole, the secretary of public safety and homeland security for the commonwealth of Virginia, to be administrator of the US Drug Enforcement Administration, after his first pick Chad Chronister withdrew in December 2024. These nominees will all need to be confirmed by the Senate. Tom Engels returned to the Health Resources & Services Administration, a role he held for two years in the first Trump administration. Peter Nelson, formerly with the Center for American Experiment, will lead the Center for Consumer Information and Insurance Oversight, which has jurisdiction over the Affordable Care Act. These last two positions do not require Senate confirmation, and the individuals are now working in these roles.
NIH Issues Guidance Capping Indirect Costs. Late on February 7, the NIH issued guidance capping indirect cost rates for NIH award recipients at 15%. Indirect costs support grantees’ overhead and administrative costs. The guidance stated that the policy would apply to any new grants issued and to future expenses for existing grants from February 10 onward. As a justification, the NIH stated that the average indirect cost rate has been around 27% and that many organizations’ rates are higher, reaching 50% or 60%. Stakeholders issued statements opposing the policy, including hospitals, the Association of American Medical Colleges (AAMC), and lawmakers from both parties, including Sen. Collins (R-ME), the chair of the Senate Appropriations Committee.
On February 10, when the policy was supposed to go into effect, a group of 22 Democratic state attorneys general filed a federal lawsuit arguing that the change is illegal since Congress passed legislation in 2018 to prevent changes to indirect cost rates. The court granted a temporary injunction the same day, blocking the policy from going into effect in the 22 states that filed suit. AAMC subsequently joined the suit, and on February 11 the judge broadened the injunction to apply nationwide. The American Council on Education, the Association of American Universities, and the Association of Public and Land-grant Universities filed an additional federal lawsuit on February 10. This is an ongoing issue, but it is worth noting that lawmakers could advance a similar indirect costs cap in future appropriations bills or in reconciliation.
President Trump Issues EO to Reduce Federal Workforce. The EO requires agencies to implement a workforce optimization initiative, stating:
Each agency can hire no more than one employee for every four employees that depart.
Agency heads, in consultation with their DOGE team lead, must develop a hiring plan that meets the following requirements:
New career appointment hiring decisions must be made in consultation with the agency’s DOGE team lead.
If the DOGE team lead determines that a career appointment vacancy should not be filled, that vacancy may not be filled unless the agency head decides otherwise.
DOGE team leads must provide the DOGE service administrator with a monthly hiring report.
Agency heads should prepare for large-scale reductions in force, particularly in offices that perform functions not mandated by statute and include employees working in DEI initiatives.
Agency heads must submit a report identifying statutes that establish the agency, or subcomponents of the agency, as required entities. Of note, the authorization for NIH expired after 2020 and has not been reauthorized by Congress, although appropriations have continued.
COURTS
Legal Challenges Continue Against Trump Administration Actions. Lawsuits continue to be filed against actions taken by the Trump administration, including EOs and other administrative actions. In addition to the lawsuits against the NIH indirect costs guidance noted above, lawsuits have been filed in relation to the following:
Health Agency Webpages. On February 11, a federal judge issued a temporary restraining order directing HHS agencies, such as the Centers for Disease Control and Prevention and the US Food and Drug Administration, to restore certain health data on their websites.
Federal Funding Freeze. In late January, a judge blocked Office of Management and Budget (OMB) guidance ordering agencies to pause federal funding that didn’t comply with certain Trump EOs, and OMB subsequently rescinded the guidance. On February 10, a federal judge who previously ruled on the matter granted an additional motion stating that the Trump administration was violating the previous decisions and ordering agencies to restore funding.
Federal Employee Buyout. In the original deferred resignation offer, federal employees had until February 6 to make a decision. The federal judge who originally issued an order to extend the deadline issued an additional extension but then dissolved the temporary restraining order, putting the buyout back in place.
Gender Affirming Care EO. In response to a lawsuit filed by the PFLAG National, GLMA, and transgender individuals and their families, a federal judge on February 13 entered a 14-day nationwide temporary restraining order that prohibits the defendants from “conditioning or withholding federal funds on the fact that a healthcare entity or health professional provides gender affirming medical care to a patient under the age of nineteen.”
QUICK HITS
GAO Publishes Report on Medicaid Enrollment of Individuals Formerly in Foster Care. In response to a request from Senate Finance Committee Ranking Member Wyden (D-OR), the Government Accountability Office (GAO) report summarized efforts by states to enroll children who age out of foster care.
Democratic Healthcare Leaders Urge OIG to Investigate DOGE Access to Sensitive Health Information. House Energy & Commerce Committee Ranking Member Pallone (D-NJ), Senate Finance Committee Ranking Member Wyden, and House Ways & Means Committee Ranking Member Neal (D-MA) requested that the HHS Office of Inspector General (OIG) review actions taken by DOGE when accessing data at CMS and HHS. They also wrote a letter to the acting HHS secretary and acting CMS administrator seeking responses to questions about the DOGE access.
Republicans on Energy & Commerce Committee Announce Data Privacy Working Group. The group includes Vice Chair Joyce (R-PA) and Reps. Griffith (R-VA), Balderson (R-OH), Obernolte (R-CA), Fry (R-SC), Langworthy (R-NY), Kean (R-NJ), Goldman (R-TX), and Fedorchak (R-ND), and aims to explore a legislative framework on data privacy.
CMS Announces Reduction in Marketplace Navigator Funding. For the next four years, navigators will receive $10 million per year, which is a cut from $98 million in 2024. This matches the funding provided in the first Trump Administration. Read the press release here, where CMS notes this will allow the agency to focus on more effective strategies to improve Exchange outcomes and reduce premiums.
NEXT WEEK’S DIAGNOSIS
The House is in recess next week. The Senate will be in session following the President’s Day federal holiday on Monday. The Senate is expected to continue working on confirmations for cabinet secretaries and may also take up the budget resolution reported by the Senate Budget Committee. The Senate Homeland Security & Governmental Affairs Committee will hold a nomination hearing for Deputy Director of OMB nominee Dan Bishop, and the Senate Judiciary Committee will markup the HALT Fentanyl Act, which passed the House in a bipartisan vote earlier this month.
New York City to Require Employers to Physically and Electronically Post Lactation Room Accommodation Policy
New York City employers will be required to physically and electronically post a copy of their written lactation room accommodation policy under recent amendments to New York City’s lactation accommodations law set to take effect on May 11, 2025.
Quick Hits
New York City employers will be required to physically and electronically post a written lactation room accommodation policy to employees.
The recent amendment also aligns New York City law with New York State law requirements to provide paid break time for employees who need to express or pump breast milk.
The changes take effect on May 11, 2025.
The new amendments in Int No. 0892-2024, which became law on November 12, 2024, change existing language under the New York City Human Rights Law requiring employers to “develop and implement a written policy regarding the provision of a lactation room.”
Under the new amendments, employers will be required to “make such written policy readily available to employees, by, at a minimum, conspicuously posting such policy at an employer’s place of business in an area accessible to employees and electronically on such employer’s intranet, if one exists.” This requirement is in addition to an employer’s obligation to distribute a written policy to all employees “at the commencement of employment.”
The new amendment also incorporates recent changes to New York State’s lactation break law that went into effect in June 2024, requiring covered employers to provide paid thirty-minute breaks for employees who need to express breast milk for a nursing child. In addition to providing such paid break time, employers must also provide a statement in their written policy that they will provide “30 minutes of paid break time, and … permit an employee to use existing paid break time or meal time for time in excess of 30 minutes to express breast milk.” (Emphasis added).
New York City Lactation Laws
In 2018, New York City enacted Local Law 185 and Local Law 186, requiring employers to provide lactation accommodations for employees who need to express or pump breast milk at work and establish a written policy for using lactation rooms.
Local Law 185 requires employers to provide a dedicated “lactation room” that is “a sanitary place, other than a restroom, that can be used to express breast milk shielded from view and free from intrusion.” The lactation room must include “an electrical outlet, a chair, a surface on which to place a breast pump and other personal items, and nearby access to running water.” Covered employers must also provide “a refrigerator suitable for breast milk storage in reasonable proximity to such employee’s work area.”
Additionally, Local Law 186 requires covered employers to develop a written lactation room accommodation policy that includes, among other things, an explanation for how employees can submit requests to use the lactation room, a procedure for when two or more employees request to use the room, and a statement that employers will respond to requests within a “reasonable amount of time,” which is not to exceed five business days.
Next Steps
New York City employers may want to carefully review and revise their current break policies and practices to ensure compliance with this amendment. Specifically, New York City employers may want to ensure their lactation room policies are electronically and physically posted and include a statement regarding an employee’s right to an additional thirty minutes of paid break time to express breast milk.
States Take Action Against DEI – Missouri v. Starbucks
On Tuesday, February 11, the State of Missouri sued Starbucks for violations of federal and state laws prohibiting race discrimination. In a statement regarding the lawsuit, Attorney General Andrew Bailey said, “[r]acism has no place in Missouri. [The State] fil[ed] suit to halt [a] blatant violation of the Missouri Human Rights Act in its tracks.” This lawsuit comes just weeks after President Trump issued several executive orders targeting Diversity, Equity, and Inclusion (“DEI”) programs. The lawsuit was filed in the United States District Court for the Eastern District of Missouri.
Missouri asserts that the Supreme Court’s holding in Students for Fair Admissions v. Harvard, where university affirmative action programs were deemed to violate anti-discrimination laws, should be applied to “not only to college admissions, but also…to employment decisions.” The complaint alleges that Starbucks’s DEI programs are mere pretexts for unlawful discrimination.
Specifically, it alleges that Starbucks makes hiring and promotion decisions based on its reported numerical targets, which include having Black, Indigenous, or people of color (“BIPOC”) in 40% of all retail jobs and 30% of all corporate positions. The complaint also alleges that Starbucks ties its executive compensation to its achievement of desired diversity goals. Finally, it alleges that Starbucks targeted preferred groups for additional training and job advancement opportunities.
Most of Missouri’s causes of actions arise under Title VII and Mo. Rev. Stat. § 213.055, both of which protect against employment discrimination. Missouri also asserted a cause of action under 42 U.S.C. § 1981, alleging that Starbucks’s discriminatory practices illegally interfere with the rights of white or non-BIPOC individuals from “making and enforc[ing]” employment contracts with Starbucks.
Missouri seeks many forms of relief, including a declaration that Starbucks’s employment practices are unlawful, an injunction preventing Starbucks from engaging in its alleged discriminatory practices, monetary damages, an order instructing Starbucks to change its written policies, and an order mandating that Starbucks issue a statement to all employees regarding the unlawfulness of its practices.
Federal contractors should pay close attention to this case as it starts to unfold. Missouri alleges that Starbucks is a federal contractor, so this case will provide an informative first look as to how courts will treat challenges to DEI programs following President Trump’s anti-DEI executive orders.
Does The Stock Market Believe That California’s Board Diversity Mandates Enhance Firm Value?
In 2018 and 2020, California enacted laws mandating that publicly held corporations (as defined) having their principal executive offices in California have specified minimum numbers of directors who are female and from “underrepresented communities”. Supporters of these mandates contended that these mandates would improve firm value, but what did the stock market think?
University of Pennsylvania School of Law Professor Jonathan Klick tackled this question in a recent paper. He focused on the dates when these laws were found to be unconstitutional by the courts – April 1 2022 (underrepresented communities mandate) and May 13, 2022 (female mandate). Professor Klick’s conclusion?
When California judges found AB 979 and SB 826 to be in conflict with the equal protection clause of the state’s constitution, firms headquartered in California appreciated in value, with non-compliant firms gaining more than compliant firms. Because the court decisions arguably had no repercussions for other changes in corporate law and regulation in the state, which cannot be said with as much confidence for the original adoption of these mandates, these results improve confidence in the conclusion that board diversity mandates do not improve firm value and, perhaps, they even lead investors to lower their valuations.
While Professor Klick’s study tells us how the market reacted, he is careful to note that the study does why the market reacted in the way that it did.
Stonewall Inn’s Stacy Lentz Criticizes Trump Admin’s Erasure
Stonewall Inn’s Stacy Lentz Criticizes Trump Administration’s Removal of LGBTQ+ Symbols. Stacy Lentz, the co-owner of the historic Stonewall Inn, has voiced her deep concerns over the recent actions of the Trump Administration, particularly its move to erase LGBTQ+ symbols from the Stonewall Inn National Monument website. The monument, which became the first national park […]
What Federal Contractors and Grant Recipients Need To Know About EO 14173’s Certification and Non-Discrimination Requirements Concerns
Executive Order (EO) 14173 “Ending Illegal Discrimination and Restoring Merit-Based Opportunity” creates new obligations that could carry significant risks for any organization doing business with the United States federal government. Federal contractors, subcontractors and recipients of federal grant money are or will soon be subject to potential liability under the False Claims Act (FCA).
Quick Hits
EO 14173 is raising potential compliance concerns for organizations during business with the federal government under the FCA, subject to civil and criminal penalties.
Organizations doing business with the federal government now have obligations to certify that they do not operate any programs promoting diversity, equity and inclusion that violate any applicable Federal anti-discrimination laws..
These same organizations also must agree that their compliance with all federal nondiscrimination laws in any federal contract, subcontract, or grant recipient and makes that certification a “material” term for purposes of the FCA.
Organizations doing business with the federal government may want to consider steps to take to minimize compliance risks under the FCA, which can open the door to civil and criminal exposure.
EO 14173, which was signed on January 21, 2025, and other executive actions have raised questions for employers doing business with the federal government as to what programs the government may target and whether efforts to maintain compliance with still-existing federal civil rights and antidiscrimination laws could pull them within federal regulators’ crosshairs. Notably, EO 14173 appears to implicate potential civil or criminal liability for private companies and federal contractors under the FCA, one of the government’s primary tools for combating fraud against the federal government.
The FCA imposes liability on individuals or companies that defraud the federal government by making materially false or fraudulent statements to influence the government to pay out. Those statements must be material to the government’s decision to make the payment. It also includes a “qui tam” provision that allows private individuals, known as “relators” or “whistleblowers,” to file lawsuits on behalf of the government and potentially receive a portion of any recovered damages.
The U.S. Department of Justice (DOJ) has said it collected more than $2.9 billion in settlements and judgments in all fraud claims brought under the FCA in the last fiscal year ending on September 30, 2024, with more than $2.4 billion stemming from qui tam suits.
Specifically, EO 14173 states that agency heads must “include in every contract or grant award: 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 the FCA.
That language requires organizations doing business with the government to certify that they do not have any DEI programs that are unlawful under federal antidiscrimination laws and seeks to make such a certification a material term for purposes of the FCA. Of particular concern is that such claims under the FCA could come not only from the government but also from individuals inside and outside of the organization in qui tam suits.
Next Steps
These actions put employers doing business with the federal government on notice that the new administration is empowering interested individuals, such as applicants, employees, and others to join or possibly replace traditional federal employment agencies, such as the Equal Employment Opportunity Commission (EEOC) and the Office of Federal Contract Compliance Programs (OFCCP), as watchdogs on compliance obligations.
Employers may want to review or audit all their existing DEI or Diversity, Equity, Inclusion, and Accessibility (DEIA) programs or initiatives and to determine if they align with lawful practices under applicable federal anti-discrimination laws.
Employers doing business with the federal government may also want to consider options to create active, robust, and ongoing compliance programs to assist with this new obligation and certification under the FCA. Employers may consider thorough analysis protected by the attorney-client privilege as part of these compliance programs.
New York Federal Court Ruling Highlights a Potential Pitfall in Settlement Agreement Enforcement
On January 8, 2025, the U.S. District Court for the Eastern District of New York held that an employee’s refusal to sign a confidentiality and nondisparagement acknowledgment form annexed to a settlement agreement resolving discrimination and retaliation claims invalidated the entire agreement.
Quick Hits
New York’s General Obligations Law (GOL) § 5-336 and Civil Practice Law and Rules (“CPLR”) § 5003-B both impose strict requirements on nondisclosure clauses in matters involving discrimination claims, including that the inclusion of such clauses in a settlement agreement be at the plaintiff’s preference.
The U.S. District Court for the Eastern District of New York recently held that an unsigned GOL § 5-336 and CPLR § 5003-B acknowledgment form annexed to a settlement agreement did not constitute a separate settlement agreement; rather, it was “a material component of the broader [s]ettlement [a]greement,” as its execution was required to make the settlement agreement “effective.”
Employers may want to consider how they structure settlement agreements involving discrimination claims subject to GOL § 5-336 and CPLR § 5003-B and ensure all material components of such agreements are fully executed to avoid settlement enforceability issues.
Separ v. County of Nassau: Background and Ruling
In Separ v. County of Nassau, the parties entered into a settlement agreement to resolve allegations of discrimination and retaliation. The agreement complied with New York’s statutory requirements under GOL § 5-336 and CPLR § 5003-B by including provisions for a twenty-one–day consideration period and a seven-day revocation window, both exercisable by the plaintiff, Anne Separ. However, the settlement’s enforceability hinged on the execution of an acknowledgment form annexed to the agreement documenting Separ’s preference for confidentiality and nondisparagement. While Separ signed the agreement itself, she refused to sign the acknowledgment, leading the employer to seek judicial enforcement of the agreement.
The U.S. District Court for the Eastern District of New York rejected the employer’s argument that the acknowledgment was “separate and apart” from the settlement agreement and “ha[d] no bearing on whether the [a]greement itself [was] binding and enforceable on the parties.”
Finding that the acknowledgment was a material component of the broader agreement and that enforceability depended on all required components being fully executed, the court held that the execution of the acknowledgment acted as a condition precedent to effectuate the settlement per the “effective date” provision contained in the agreement.
Considerations for Employers
The Separ decision emphasizes the importance of careful drafting and execution of settlement agreements, particularly when including nondisclosure provisions subject to GOL § 5-336 and CPLR § 5003-B. Moving forward, employers in New York may wish to review and update their internal settlement templates to ensure compliance with the Separ framework to avoid unintended pitfalls. Some suggestions include:
considering how the settlement agreement is structured;
ensuring all material components of the settlement agreement that require execution are fully executed; and
ensuring compliance with the consideration and revocation periods mandated by both GOL § 5-336 and CPLR § 5003-B.
Does Chicago’s Municipal Code Make Everyone A Minority?
Recent posts have discussed a registration statement filed Bally’s Chicago, Inc. for an offering that would impose a stockholder qualification based on race, gender and ethnic status. This qualification requirement is intended to satisfy the requirements of a Host Community Agreement entered into with the City of Chicago. The agreement defines “minority” pursuant to Section 2-92-670(n) of the Municipal Code of Chicago which, among other things, defines “minority” as including African Americans, American Indians, Asian Americans, and Hispanics. The MCC then adds:
individual members of other groups, including but not limited to Arab-Americans, found by the City of Chicago to be socially disadvantaged by having suffered racial or ethnic prejudice or cultural bias within American society, without regard to individual qualities, resulting in decreased opportunities to compete in Chicago area markets or to do business with the City of Chicago
What the authors of the Host Community Agreement apparently missed is that the effect of the Host Community Agreement is to bring everyone else within the definition of a “minority” because the allocation share ownership opportunities to specific racial and ethnic groups disadvantages others “without regard to individual qualities”.
Even more invidiously, the explicit inclusion of Arab-Americans while omitting Jewish Americans is manifestly anti-Semitic in effect, if not intent.
Trump Administration Says Title IX Does Not Apply to NIL Pay, Rescinds Recent Guidance
On February 12, 2025, the U.S. Department of Education under the Trump administration rescinded recent guidance that name, image, and likeness (NIL) payments to college athletes implicate the gender equal opportunity requirements of Title IX of the Education Amendments of 1972.
Quick Hits
The Department of Education has rescinded recent guidance that had warned NCAA schools that NIL payments could trigger the equal opportunity obligations of Title IX.
This announcement indicated that the department interprets Title IX as not applying to how revenue-generating athletics programs allocate compensation among their athletes.
On February 12, 2025, the U.S. Department of Education’s Office for Civil Rights (OCR) announced that it had rescinded the nine-page Title IX guidance on NIL payments previously issued on January 16, 2025, in the final days of the Biden administration.
“The NIL guidance, rammed through by the Biden Administration in its final days, is overly burdensome, profoundly unfair, and goes well beyond what agency guidance is intended to achieve,” Acting Assistant Secretary for Civil Rights Craig Trainor said in a statement.“Without a credible legal justification, the Biden Administration claimed that NIL agreements between schools and student athletes are akin to financial aid and must, therefore, be proportionately distributed between male and female athletes under Title IX.”
“Enacted over 50 years ago, Title IX says nothing about how revenue-generating athletics programs should allocate compensation among student athletes,” Assistant Secretary Trainor’s statement continued. “The claim that Title IX forces schools and colleges to distribute student-athlete revenues proportionately based on gender equity considerations is sweeping and would require clear legal authority to support it. That does not exist. Accordingly, the Biden NIL guidance is rescinded.”
The move comes as the National Collegiate Athletic Association (NCAA) and major college sports conferences have agreed to pay nearly $2.8 billion in back pay to former athletes as part of a proposed settlement to end NIL litigation and to establish a revenue-sharing framework to share more than $20 million annually with athletes.
The rescinded Biden-era guidance had warned NCAA schools that NIL compensation provided by a school, even if provided by private third parties, would be considered by the department as “athletic financial assistance,” which must be distributed in a nondiscriminatory manner under Title IX. The guidance had assumed that “the receipt of financial assistance does not transform students, including student-athletes, into employees,” but it opened the possibility to reevaluate that position.
The Education Department announcement also follows the NCAA’s announcement that it is banning transgender athletes from competing in women’s sports to align with President Trump’s recent executive order (EO), EO 14201, titled “Keeping Men Out of Women’s Sports.” That order directed the Secretary of Education to “take all appropriate action to affirmatively protect all-female athletic opportunities and all-female locker rooms and thereby provide the equal opportunity guaranteed by Title IX.”
Next Steps
The Department of Education’s announcement will have significant implications for NCAA schools, which have been adjusting to the quick evolution of college athletics in recent years. Changes have included the removal of restrictions on athletes earning NIL pay, loosening restrictions on athlete transfers, and the potential for revenue-sharing between schools and their athletes. Such changes have raised concerns under Title IX, particularly with potential disparities in NIL pay between athletes in men’s and women’s sports.
While the prior guidance had interpreted NIL pay as subject to Title IX, the Department of Education under the Trump administration appears to interpret NIL payments, and even potentially revenue-sharing, as outside of the typical athletic financial assistance governed by Title IX. This could open the door for more payments to athletes in the sports that tend to generate the most revenue, typically college football and men’s basketball.
The announcement further signals more potential changes by the Trump administration with the enforcement of Title IX.
However, the rescission of the prior Title IX guidance may not be the end of the road. While some are praising the decision, others continue to argue that inequitable distribution of the settlement funds between men’s and women’s sports will violate Title IX. This could result in legal challenges as schools evaluate how best to distribute the payments.
The Future of Gender-Affirming Care: Legal, Ethical, and Practical Considerations for Providers
Recent policy shifts have placed gender-affirming care at the center of a legal and political battle that has profound implications for healthcare providers, patients, and institutions. A newly issued executive order has created uncertainty for hospitals, medical schools, and healthcare systems that provide these critical services, raising concerns about potential restrictions tied to federal funding, regulatory enforcement, and ethical obligations.
At its core, gender-affirming care encompasses a range of medical and psychological interventions that support transgender and nonbinary individuals. Major medical organizations, including the American Medical Association, the American Academy of Pediatrics, and the Endocrine Society, have long affirmed that these services are not only necessary but also life-saving for many patients. Treatments such as puberty blockers, hormone therapy, and surgical interventions have been standard components of medical care for gender-diverse individuals, following decades of research and clinical best practices. Despite this, the current policy climate has introduced new risks and challenges for providers and institutions committed to evidence-based care.
One of the most immediate concerns is the potential threat to federal funding for institutions that continue to offer gender-affirming services to minors. Federal research grants, medical education funds, and Medicare and Medicaid reimbursements could all be leveraged as enforcement mechanisms to discourage or prevent the provision of this care. The executive order signals an intent to use regulatory measures to impose restrictions, but it remains unclear how agencies will interpret and enforce these directives. Providers and institutions will need to monitor how federal agencies, such as the Department of Health and Human Services and the Centers for Medicare & Medicaid Services, implement these policies and whether legal challenges will limit or delay enforcement.
The legal landscape surrounding gender-affirming care is complex. Federal agencies have broad discretion in setting funding conditions, but they cannot do so in ways that violate constitutional protections or existing statutory laws. The Affordable Care Act’s Section 1557, for example, prohibits discrimination in healthcare settings based on gender identity. Recent court rulings have reinforced these protections, and legal challenges to any new restrictions will likely invoke these precedents. Several states and civil rights organizations have already initiated lawsuits, arguing that the executive order infringes on medical autonomy, equal protection rights, and existing federal nondiscrimination laws.
Beyond the legal and financial implications, healthcare institutions must also consider the ethical and reputational consequences of their response. Many hospitals and health systems have made public commitments to diversity, equity, and inclusion. A decision to scale back or eliminate gender-affirming services could undermine these commitments and erode trust within the communities they serve. For providers, the ethical obligation to deliver medically necessary care remains paramount. Professional organizations have repeatedly warned that restricting access to gender-affirming care can lead to severe mental health consequences, including increased rates of anxiety, depression, and suicidal ideation among transgender youth.
In light of these challenges, healthcare institutions should take proactive steps to prepare for potential regulatory changes and legal disputes. A critical first step is conducting a thorough review of federal funding streams to assess how dependent the organization is on grants, Medicaid, and Medicare reimbursements. Understanding the precise legal and financial risks will help inform decision-making. Institutions should also engage with legal and policy experts to explore compliance strategies that align with their commitment to patient care. In addition, collaboration with state and local governments may offer alternative funding mechanisms and legal protections that can mitigate federal enforcement risks.
Healthcare leaders must also consider the broader implications for access to care. In states where gender-affirming services remain protected under state law, institutions may still face federal pressure but will have legal support to continue providing care. In states where gender-affirming care is already restricted or under attack, providers may need to explore partnerships with out-of-state institutions, telehealth models, and other innovative solutions to ensure patients can still access the care they need.
As legal and policy battles over gender-affirming care continue to evolve, healthcare institutions will need to remain adaptable. The shifting regulatory environment requires a careful balance between compliance, financial sustainability, and institutional commitments to patient care. The coming months will likely bring new legal challenges, agency guidance, and policy shifts that could further shape the landscape. Healthcare leaders should proactively assess their organizational risk, consult legal and policy experts, and remain engaged in discussions about how best to navigate these complexities while ensuring access to appropriate care within the bounds of applicable laws.
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