EEOC Acting Chair Rolls Back Guidance Related to Unlawful Discrimination and Harassment Based on Gender Identity
On January 28, 2025, U.S. Equal Employment Opportunity Commission (EEOC) Acting Chair Andrea R. Lucas rolled back much of the EEOC’s Biden-era guidance related to issues of gender identity discrimination and harassment against LGBTQ+ individuals, marking a policy shift aligned with President Donald Trump’s recent executive order (EO) on gender.
Quick Hits
EEOC Acting Chair Andrea R. Lucas rolled back much of the EEOC’s guidance on gender identity, leaving in place certain documents that were issued with majority approval of the five-member Commission.
In line with President Trump’s recent executive order on gender, the EEOC’s policy shift prioritizes biological definitions of “sex” in compliance and enforcement actions, removes gender identity–related resources, and ends the use of non-binary gender markers and honorifics in EEOC processes.
The EEOC’s January 28, 2025 announcement outlined a shift in sexual harassment and sex-based discrimination compliance and enforcement policy under Acting Chair Lucas, whom President Trump tapped for her new role on January 21, 2025.
The EEOC is now moving away from what is being referred to as “gender ideology,” aligning with President Trump’s EO 14168, titled “Defending Women From Gender Ideology Extremism and Restoring Biological Truth to the Federal Government,” which the president signed on January 20, 2025, Inauguration Day. That EO directed federal agencies to “enforce laws governing sex-based rights, protections, opportunities, and accommodations to protect men and women as biologically distinct sexes.”
The EEOC confirmed it is removing materials on such concepts from its internal and external websites and references from other public documents, including webpages, statements, social media, forms, and training.
The announcement came a day after news broke that President Trump had removed Democratic Commissioners Charlotte A. Burrows and Jocelyn Samuels from the EEOC and discharged EEOC General Counsel Karla Gilbride.
Removing Gender Identity
To implement EO 14168, Acting Chair Lucas has:
made defending biological and binary definitions of sex and related rights an agency priority for compliance, investigations, and litigation;
removed the agency’s “pronoun app” for network profiles, which had enabled EEOC employees to identify and display their pronouns in both internal and external communications;
removed the “X” gender marker for filing a discrimination charge and the prefix “Mx.” as an option for filing discrimination charges and related forms;
initiated a review of the EEOC’s “Know Your Rights” poster, which was last revised in June 2023 and lists “sexual orientation” and “gender identity” as bases for unlawful discrimination;
removed information “promoting gender ideology” from the EEOC’s internal and external websites and media platforms; and
added banners to publicly accessible documents explaining why they “cannot be immediately removed or revised” and have “not yet brought into compliance.”
The EEOC noted that certain documents, despite being subject to the EO 14168, could not be removed or modified unilaterally since they had been approved by a majority of the Commission. Currently, the EEOC lacks a quorum to act following the removals of Commissioners Burrows and Samuels, and it will continue to lack a quorum until new Commissioners are confirmed. Those documents include the EEOC’s:
“Enforcement Guidance on Harassment in the Workplace,” which was issued by a 3–2 vote in April 2024;
“Strategic Plan 2022–2026,” which was issued by a 3–2 vote in August 2023; and
“Strategic Enforcement Plan Fiscal Years 2024–2028, which was issued by a 3–2 vote in September 2023.
New Priorities
In recent years, the EEOC has issued several guidance documents interpreting the Supreme Court of the United States’ 2020 holding in Bostock v. Clayton County, Georgia, in which the court held that protection against discrimination as a result of firing an employee on the basis of sex pursuant to Title VII of the Civil Rights Act of 1964 prohibits discrimination on the basis of sexual orientation and gender identity.
Acting Chair Lucas reiterated her opposition to the portions of the EEOC’s “Enforcement Guidance on Harassment in the Workplace” to the extent that the guidance took the enforcement position that unlawful harassment under Title VII included the “denial of access to a bathroom or other sex-segregated facility consistent with [an] individual’s gender identity” and the “repeated and intentional use of a name or pronoun inconsistent with [an] individual’s known gender identity.”
Acting Chair Lucas said in her statement, “It is neither harassment nor discrimination for a business to draw distinctions between the sexes in providing single-sex bathrooms or other similar facilities which implicate these significant privacy and safety interests. And the Supreme Court’s decision in Bostock v. Clayton County does not demand otherwise: the Court explicitly stated that it did ‘not purport to address bathrooms, locker rooms, or anything else of the kind.’”
Next Steps
The EEOC’s recent policy shift prioritizes biological definitions of sex in compliance and enforcement actions, removing resources related to gender identity and ending the use of non-binary gender markers. The change contrasts with the previous administration’s stance, particularly following the Bostock decision.
Moreover, while Acting Chair Lucas is unable to rescind guidance previously approved by the majority of the five-member Commission, President Trump’s recent removal of two commissioners (with new commissioners due to be nominated and confirmed) may ultimately provide the votes needed to rescind all the EEOC’s guidance regarding gender identity. Without the removals, the Democrats would have retained a majority on the Commission through the end of Commissioner Samuels’s term in July 2026.
UPDATE: US DOL Order Directing Departments to Cease Enforcement of Affirmative Action Requirements of EO 11246
Following President Trump’s Executive Order “Ending Illegal Discrimination and Restoring Merit-Based Opportunity,” on January 24, acting U.S. Department of Labor (DOL) Secretary Vincent Micone issued an agency Order instructing DOL employees to cease and desist “all investigative and enforcement activity” under Executive Order 11246 (Equal Employment Opportunity) as the Secretary said the DOL “no longer has any authority” under the rescinded order. The Secretary further stated that the order applies to “all DOL employees, including the OFCCP, OALJ, and ARB.”
Specifically, the order instructed all DOL employees to:
Cease and desist all investigative and enforcement activity under the rescinded Executive Order 11246 and the regulations promulgated under it. This includes all pending cases, conciliation agreements, investigations, complaints, and any other enforcement-related or investigative activity.
And to:
Notify all regulated parties with impacted open reviews or investigations by January 31, 2025, that the EO 11246 component of the review or investigation has been closed and the Section 503 and VEVRAA components of the review or investigation are being held in abeyance pending further guidance.
The Secretary’s Order follows an official statement issued on January 23 by the Office of Federal Compliance Programs (OFCCP) reiterating President Trump’s revocation of EO 11246 and adding that Federal contractors may continue to comply with the regulatory scheme in effect on January 20, 2025 for 90 days from the date of Trump’s Order. OFCCP also emphasized that that a federal contractor’s obligations under Section 503 of the Rehabilitation Act, 29 U.S.C. 793 (Individuals with a Disability), and the Vietnam Era Veterans’ Readjustment Assistance Act, or VEVRAA (Veterans), 38 U.S.C. 4212, which are separate statutes, “remain in effect,” noting that both laws are “enforced by OFCCP.”
While contractors’ affirmative action obligations related to women and minorities are no longer required, the Secretary’s Order indicates that compliance reviews under Section 503 and VEVRAA (Protected Veterans) are on hold until further notice. Acting Secretary Micone appears to be examining the application of President Trump’s Order with respect to VEVRAA and Section 503. While any interpretation of EO 11246 that broadly expands the Order to VEVRAA and Section 503 almost certainly is an overreach, the use of OFCCP’s authority to investigate and enforce a contractor’s obligations under each law is within the Secretary’s purview. This suggests – but remains to be confirmed – that OFCCP will not require contractors to continue with an open VEVRAA or Section 503 compliance review or check. We think this does not mean a contractor’s obligation to comply with VEVRAA and Section 503 is no longer required, or that OFCCP will necessarily be prohibited from enforcing these and other anti-discrimination laws (more is likely to come). As noted in the General Services Administration’s (“GSA”) January 22 memorandum, Federal contractors must still comply with all nondiscrimination requirements under existing federal laws, which includes VEVRAA, the Rehabilitation Act, Title VII of the Civil Rights Act, the ADEA, the ADA and others.
Questions remain about how OFCCP will manage contractor’s employee data it has collected to date (including affirmative action analyses and EEO-1 data) as well as what effect the Secretary’s ‘cease and desist’ order will have on OFCCP’s response to cases involving EEO-1 freedom of information requests, for example, by the Center for Investigative Reporting (see related court orders in this case here). While we can safely say EO 11246 is no longer in effect, it may be best to wait for additional guidance from the DOL before drawing any final conclusions regarding the procedural and practical implementation of the Order’s revocation as well as further action by the GSA, Department of Defense (DoD) and/or NASA to issue directives and ultimately modify the Federal Acquisition Regulation (FAR) labor standards under FAR Subpart 22.8. GSA has already indicated in its memorandum that “it intends to take immediate action to begin forbearing enforcement of all contract clauses, provisions, terms, and conditions, related to ‘diversity, equity, and inclusion (DEI)”.
Avoiding Probate Pitfalls
Proactive Strategies for Asset Protection in Nevada Navigating the complexities of estate planning can be challenging, particularly when it comes to avoiding the pitfalls of probate. In Nevada, as in many states, probate can be a lengthy and costly process that can significantly impact the value of an estate. Fortunately, there are proactive strategies that […]
Trump Executive Order Takes on DEI in the Workplace: Practical Considerations for Private Employers
President Trump has issued a flurry of wide-ranging executive orders intended to shake up the employment landscape. One of those orders, entitled “Ending Illegal Discrimination and Restoring Merit-Based Opportunity” (the “Executive Order”), takes aim at non-compliant DEI programs and policies. It also creates a momentous change in the federal contractor landscape by revoking Executive Order 11246, which has, for the past sixty years, served as the foundation for non-discrimination and affirmative action requirements in the federal contracting space. Although the Executive Order’s mandates are vague in many places and raise more questions than they answer, at bottom, the Executive Order appears designed to attempt to effectively stamp out DEI programs and policies in the federal workforce, while putting private sector employers on notice and pushing them to proactively modify, narrow or even end their DEI initiatives. But as we’ll discuss more below, these developments do not compel private employers to rescind their DEI programs and policies entirely; instead, employers should use the Executive Order as an opportunity to review their existing programs and policies to ensure that they (i) continue to align with their mission and organizational goals, (ii) are legally compliant in light of the change in administration, and (iii) whether subsequently modified or not, thereafter are effectively communicated to stakeholders.
What The Executive Order Says
The Executive Order explicitly orders “all executive departments and agencies . . . to terminate all discriminatory and illegal preferences, mandates, policies, programs, activities, guidance, regulations, enforcement actions, consent orders, and requirements.” In a nod to the private sector, it further orders “all agencies to enforce our longstanding civil-rights laws and to combat illegal private-sector DEI preferences, mandates, policies, programs, and activities.” The Executive Order (and other associated actions taken in the first days of this new administration) takes aim at “illegal discrimination” from several different angles.
First, it revokes executive orders and other actions from previous presidential administrations specifically intended to bolster diversity, equity and inclusion efforts (and/or affirmative action programs) in the federal workforce. Although President Trump’s directives in the federal sector are the most far-reaching and impactful (including that certain federal departments/offices will be dismantled and the employees of those departments ultimately terminated), this post remains focused on the Executive Order’s implications for private employers.
Next, the Executive Order attempts to “streamline” the federal contracting process to “comply with our civil-rights laws.” As part of this, the Executive Order revokes longstanding Executive Order 11246, issued by President Johnson in 1965, which: (i) prohibited discrimination by federal contractors against employees or applicants on the basis of race, color, religion, sex, or national origin; and (ii) created affirmative action obligations with respect to race and sex for such contractors. As a result:
The Office of Federal Contract Compliance Programs within the Department of Labor (“OFCCP”) cannot promote “diversity” (which the Executive Order does not further define), hold federal contractors and subcontractors responsible for taking “affirmative action,” or allow or encourage federal contractors and subcontracts to engage in workforce balancing based on race, color, sex, sexual preference, religion, or national origin.
Federal agency contracts and grants must include language requiring the contractor or grant recipient to certify as a material term for payment purposes that it is in compliance with all applicable federal anti-discrimination laws and that it does not operate any programs “promoting DEI that violate any applicable federal anti-discrimination laws.”
Executive Order 13279 of December 12, 2002 (Equal Protection of the Laws for Faith-Based and Community Organizations) is expanded to include race, color, sex, sexual preference, and national origin (in addition to religion), meaning federal contractors and subcontractors may not consider these characteristics in their employment, procurement, and contracting practices.
Federal contractors will have 90 days (until April 21, 2025) to phase out compliance with prior OFCCP affirmative action obligations.
The Office of Management and Budget (the “OMB”) is tasked with excising references to DEI principles (notably “under whatever name they may appear”) from federal acquisition, contracting, grants, and financial assistance procedures, with the stated purpose of “streamlin[ing] those procedures, improv[ing] speed and efficiency, lower[ing] costs, and comply[ing] with civil rights laws.” Under the Executive Order, the OMB must also terminate all mandates, requirements, programs, and activities surrounding “diversity,” “equity,” “equitable decision-making,” “equitable deployment of financial and technical assistance,” “advancing equity,” and the like.
Third, the Executive Order directs the Attorney General, in partnership with agencies and the Director of the OMB, to submit a report to the Trump Administration by May 21, 2025 with recommendations on measures to “encourage the private sector to end illegal discrimination and preferences, including DEI.” This report is expected to have the following features:
Identifying the key private sectors of “concern” for each agency (and within each sector, identifying the most “egregious” and “discriminatory” DEI practitioners);
Stating specific steps and measurements to “deter” private sector DEI programs and principles (whether specifically denominated as DEI or otherwise);
Charging each agency with identifying up to nine potential civil compliance investigations of corporations (both publicly traded and non-profit), higher education institutions (with endowments over $1 billion), foundations (with assets over $500 million), and bar and medical associations;
Identifying other strategies to encourage the private sector to end “discriminatory” DEI practices and preferences;
Identifying litigation appropriate for federal government involvement (e.g., by way of filing lawsuits, statements of interest, etc.); and
Suggesting other potential regulatory action and sub-regulatory guidance.
Lastly, the Attorney General and Secretary of State will issue guidance by May 21, 2025 to local and state educational agencies that receive federal funds, along with higher education institutions that receive federal grants or participate in the student loan assistance program under Title IV of the Higher Education Act, as to steps “required” to comply with the Students for Fair Admissions, Inc. v. President and Fellows of Harvard College, 600 U.S. 181 (2023) (“Students for Fair Admissions”) decision. That Supreme Court decision rejected the use of racial quotas in affirmative action programs used in some higher education contexts.
What Should Private Employers Do Now?
Consider a Measured Response: The Executive Order does not mandate that private employers shut down all diversity efforts, including ending diversity programs, policies and practices; it does not order the termination of staff that focus on DEI programming, or do anything remotely similar. Rather, while there is certainly a component that aims to pressure employers to do just that (or to otherwise limit their DEI programs substantially), the Executive Order more generally is aimed at ending illegal DEI practices – in other words, DEI practices that are already not legally compliant. Employers must, therefore, be even more deliberate in their compliance efforts and how they communicate about DEI in the workplace in light of this Executive Order (and the continued evolving legal and political landscape). As part of this response, employers should consider implementing regular evaluation of their DEI programs to ensure that they are thoughtful, meaningful, meet organizational objectives, and, of course, legally compliant.
Pay Close Attention To Continued Legal and Political Developments: The portion of the Executive Order aimed at providing “encouragement” to private sector employers to end discriminatory DEI practices immediately led to raised eyebrows, particularly among the wide array of private sector employers in varied industries that have long promoted programs and initiatives aimed at supporting various underrepresented groups in legally permissible ways. Applicable government guidance and judicial case law up until this point has indicated that – while there are very real limitations to employer efforts that might operate in a way that violates anti-discrimination laws (e.g., by having diversity hiring or promotion quotas) – common corporate approaches to “DEI” efforts (such as the maintenance of inclusive employee affinity groups and recruitment efforts to create candidate opportunities in underrepresented communities, etc.) have been found legally permissible where those efforts are motivated by legitimate, non-discriminatory business priorities. Employers who decided to continue to make space for DEI in their workplace will need to monitor these developments and understand: (i) how far the Trump Administration intends to go in curbing private sector DEI practices; (ii) the possibility that this Administration could seek enforcement activity (including investigations or even litigation) against employers that espouse DEI values despite longstanding legal precedent allowing for lawful initiatives; and (iii) the legal limitations on targeting private companies that are subject to federal anti-discrimination laws (such as Title VII) but which are not explicitly covered by federal government-focused executive actions (like the Executive Order). Given the lack of specific definitions and practices that the Executive Order considers prohibited, employers will need to be prepared to continue to adjust their programs and practices as the Executive Order (and any future orders and directives) is implemented by agencies and interpreted by the courts after expected legal challenges.
Redouble Focus on the Legal Viability of DEI Programs: As noted above, the Supreme Court’s 2023 Students for Fair Admissions decision squarely rejected the use of racial quotas in some education-based affirmative action programs. But racial quotas have long been held to be discriminatory in the workplace under laws like Title VII. Expecting that the Students for Fair Admissions decision would one day extend into the private sector workplace, many employers revisited their DEI programs to reconfirm and further enhance legal viability. For example, some employers have considered how to better expand recruitment efforts, including how to broaden the recruiting of previously underrepresented community members, while others looked to non-traditional approaches that focus on socioeconomic factors instead of protected categories. Some employers have also rebranded their efforts – “Access and Opportunity” instead of “Diversity, Equity, and Inclusion” for instance. The Executive Order insinuates that these rebranding efforts alone will not insulate employers from scrutiny under the order. But, regardless of the path an organization takes, there will likely be continued government and stakeholder scrutiny, and these programs, whatever their name, must be tailored appropriately to meet organizational objectives while ensuring legal compliance. For now, even under the Executive Order, efforts to increase and retain diverse representation that are appropriately focused are permissible provided they do not “violate any federal anti-discrimination laws,” which has been a legal requirement since the passage of Title VII. Employers should continue to monitor how federal law interpretation evolves, especially as President Trump appoints Commissioners to the U.S. Equal Employment Opportunity Commission (“EEOC”), the federal agency that interprets and enforces anti-discrimination laws. Notably, the Executive Order does contain a carve out that defers to the authority of executive departments and agencies, and the heads thereof, which leaves an open question as to how agencies (such as the EEOC) will go about interpreting and implementing these changes.
Review (and Reconsider) Contracts with the Federal Government: To the extent that an employer contracts with the federal government, the Executive Order indicates that programs which otherwise promote “DEI in violation of federal anti-discrimination law” will be under increased scrutiny. Though enforcement and implementation of this stated goal is yet to be seen, employers should review future contracts and grants to determine the extent of the certifications that may be required and what sort of DEI efforts employers can engage in while accurately attesting to such certifications.
Allow for the Wind Down of Federal Contractors’ Race and Sex-Based Affirmative Action Programs While Maintaining Disability and Veteran Affirmative Action Programs: Absent a successful legal challenge or some intervening guidance from OFCCP to the contrary, federal contractors with affirmative action programs that have existed under Executive Order 11246 (related to race or sex affirmative action) will need to disband those programs by April 21st. This is a seismic shift for federal contractor compliance, particularly as the Executive Order 11246 framework (and associated OFCCP regulations) have existed for decades and President Trump’s first administration left these programs untouched. Further, while the Executive Order has the effect of eliminating affirmative action programs based on race and sex, it is silent as to whether there will be any impact on affirmative action programs on the basis of disability, and the Executive Order explicitly exempts veterans from its reach. Neither is surprising given that contracting preferences based on disability and veteran status are governed by statutes, not executive orders. (The Rehabilitation Act of 1973 governs disability affirmative action and the Veterans’ Readjustment Assistance Act of 1974 governs veteran affirmative action.) Accordingly, affirmative action programs on the basis of disability or veteran status (both of which are addressed by statutes outside the scope of Executive Order 11246) may remain intact, although there are some questions around this issue given directives to federal agencies against the promotion of “diversity,” workforce balancing, or responsibility for taking “affirmative action.” Federal contractors should look to potential OFCCP guidance as to winddown efforts but also as to continued affirmative action efforts to ensure compliance.
Continue to Account for Existing Federal Anti-Discrimination Laws: While this may be obvious, we believe it worth mentioning, given some of the early market reactions to the Executive Order: federal anti-discrimination laws that apply to private employers, including Title VII, the ADA, the ADEA, and other measures, are still the law of the land and employers should make sure to reinforce their existing anti-discrimination policies and programs. Similarly, but importantly, certain employers (at present) are still required to comply with employee demographic data reporting via the federal EEO-1 process (which large employers submit in the second quarter of each year) – this compliance obligations remains unaffected by the Executive Order.
Continue to Account for State and Local Anti-Discrimination Laws: Likewise, the Executive Order does not purport to preempt state/local law obligations employers may have related to non-discrimination in the workplace. Just by way of example, although some federal contractor compensation disclosure requirements will fall away in the absence of Executive Order 11246, many states and localities have salary disclosure and wage transparency laws, some of which require employee demographic data reporting, and employers will need to continue to comply with these requirements.
Consider an Appropriate Communications Strategy: Employers continue to increasingly find themselves on the front lines of many social issues, and the issuance of the Executive Order is no exception. Employers will need to decide quickly whether and how they might address this latest development (and similar Trump-related workforce developments), both internally and externally, as public reaction has been, and is likely to remain, strong across the political spectrum. Employees, board members, investors, clients, vendors and other important business relationships may advocate for companies to take (or not take) a visible position on this issue. Employees may also wish to speak up themselves, including on employer platforms. Whether to speak and if so, what to say, should be evaluated in light of variables such as reputational risk, talent acquisition and employee retention priorities, investor sentiments, community focus, and other business interests. Of course, not speaking at all remains an option – some organizations have decided that no message is their best message in response to divisive or politically challenging issues – particularly given the blitz of these issues over the past several years and the fatigue associated with current events. But many others will speak out and due consideration should be given, and important stakeholder feedback sought, on how best to communicate on this latest development, including in a manner that adheres to the law while optimizing stakeholder relationships.
Consider the Executive Order in the Context of Corporate Disclosures: The Executive Order does not explicitly provide any direction to private employers regarding DEI practices through corporate disclosure statements. For years, many public companies that file corporate disclosure statements have voluntarily shared information about the companies’ diversity efforts, demographic statistics, and other similar information to provide investors information about the company’s human capital risks, planning and oversight. As part of the overall communication strategy, employers should work with employment and corporate disclosure counsel to ensure that the latest upcoming and future rounds of disclosures reference (or do not reference) company DEI programs appropriately and otherwise signal ongoing compliance with applicable law, particularly given the Executive Order’s directive to target publicly traded corporations for potential civil compliance investigations.
Use Legal Counsel and other Key Stakeholders as an Important Asset During This Process: Legal compliance, while of course necessary and critical, alone will not drive this process. While employers should consult legal counsel to better understand the (evolving) legal framework applicable to DEI and to ensure legally complaint DEI program design and implementation, it’s just as important that employers partner with all stakeholders, including human resources professionals, key business stakeholders (such as the C-suite and senior management, as well as the board) who can provide critical advice about what is needed to achieve the employer’s corporate mission and goals, while accounting for the current political environment around this issue.
White House Temporarily Pauses Certain Federal Financial Assistance Programs But U.S. District Judge Pauses Pause Until February 3
On January 27, the White House ordered a temporary pause, via an internal memorandum, on certain grants and loans disbursed by the federal government in order for each federal agency to review their federal financial assistance programs to identify if any of those programs have been impacted by President Trump’s Executive Orders.1
OMB has stated that any program that is not implicated by the above-referenced Executive Orders is not subject to the funding freeze. The temporary pause was set to take effect January 28, 2025, at 5 PM EST, but was stayed by U.S. District Court Judge Loren AliKhan until February 3, 2025, at 5 PM EST. Judge AliKhan issued the stay in order to maintain the status quo while further litigation plays out. The original pause would have temporarily impacted the National Telecommunications and Information Administration’s (NTIA) Broadband, Equity, Access, and Deployment (BEAD) Program and the Federal Communications Commission’s (FCC or Commission) USF Programs, including the Lifeline Program while those programs are reviewed.
Bottom Line: The White House was set to temporarily paused federal financial assistance programs that are implicated by certain Executive Orders. However, U.S. District Court Judge AliKhan issued an administrative stay of the temporary pause until February 3, 2025, at 5 PM EST. As we await clarification from the FCC and NTIA, as well as the courts, it is unclear the extent to which this funding freeze will last if it is implemented after February 3. In the short term, it may temporarily impact the funding stream of the federal broadband programs such as the FCC’s USF Programs, the Secure Networks Act Reimbursement Program, and NTIA’s BEAD Program. But luckily for USF recipients, Universal Service Administrative Company (USAC) payments will be processed this Friday, January 31, 2025, before the temporary funding freeze is implemented. Federal agency reports are currently still due by February 10, 2025, but OMB has noted that the temporary pause for certain programs could be as short as a day depending on the agency’s ability to coordinate with OMB. Furthermore, OMB states that any payment required by law will be paid without interruption or delay.
Background
Since being sworn into office, President Trump has issued a series of executive orders covering various issues such as trade, immigration, U.S. foreign aid, energy, civil rights, and federal worker requirements, and health care. While some of the executive orders are more symbolic, others do have immediate policy impacts.
Federal Funding Freeze
The White House issued a temporary funding freeze on all federal financial assistance programs until federal agencies have determined the impact of President Trump’s Executive Orders on such programs, effective January 28, 2025, at 5 PM EST.2 Specifically, under the now-stayed White House memorandum, each federal agency is required to complete and submit a comprehensive analysis to the Office of Management and Budget (OMB) by February 10, 2025, identifying programs, projects and activities that may be implicated by any of President Trump’s Executive Orders, including “financial assistance for foreign aid, nongovernmental organizations, DEI, woke gender ideology, and the green new deal.” This temporary freeze would also apply to all activities associated with open Notices of Funding Opportunity, such as conducting merit review panels.
The White House memorandum explains that this temporary funding freeze will provide the Administration time to review federal agency programs and “best uses of the funding for those programs consistent with the law and the President’s priorities.” But before conducting their analysis, federal agencies must identify any legally mandated obligations for their assistance programs that will arise during the temporary pause and report such information to OMB. The funding freeze would remain intact for federal agencies until OMB has reviewed the submitted information and provided guidance to such agency.
Federal Agency Review
In conducting the comprehensive analysis, federal agencies for each federal financial assistance program must assign responsibility and oversight of the analysis to a senior political appointee to ensure that the financial assistance conforms to Administration priorities. In addition, each federal agency must: (1) review any currently pending programs to ensure that Administration priorities are addressed; (2) modify in accordance with Administration priorities any unpublished financial assistance announcements, subject to statutory authority; and (3) withdraw any announcements already published consistent with Administration priorities. Federal agencies have also been directed to initiate investigations when warranted to identify any underperforming federal financial assistance recipients and cancel awards that are in conflict with Administration priorities.
Exceptions
The memorandum states that OMB is allowed to grant exceptions to this temporary freeze, on a case-by-case basis, for federal agencies to issue new awards or take other actions. It is possible that the USF program and Secure Networks Act Reimbursement Program will fall under this exception. Furthermore, to the extent required by law, federal agencies would be allowed to continue certain activities such as the closeout of Federal awards, pursuant to 2 C.F.R. 200.344, or maintaining certain recording obligations.
Additional OMB Guidance
OMB issued additional guidance noting that any program not implicated by the following Executive Orders is not subject to the funding pause: (1) Protecting the American People Against Invasion (Jan. 20, 2025); (2) Reevaluating and Realigning United States Foreign Aid (Jan. 20, 2025); (3) Putting America First in International Environmental Agreements (Jan. 20, 2025); (4) Unleashing American Energy (Jan. 20, 2025); (5) Ending Radical and Wasteful Government DEI Programs and Preferencing (Jan. 20, 2025); (6) Defending Women from Gender Ideology Extremism and Restoring Biological Truth to the Federal Government (Jan. 20, 2025); and (7) Enforcing the Hyde Amendment (Jan. 24, 2025). While reports are due to OMB by February 10, 2025, from each federal agency, OMB will continue to work with federal agencies to determine whether certain federal financial assistance programs are implicated by the above-referenced Executive Orders. Thus, funding pause for a particular program could be as short as a day. OMB has already approved an undisclosed number of federal financial assistance programs to continue their funding processes even before the pause would have gone into effect.
Administrative Stay of Funding Freeze
U.S. District Court Judge AliKhan has issued an administrative stay of the White House’s temporary funding freeze that was set to be effective January 28, 2025. However, Judge AliKhan’s administrative stay will expire on February 3, 2025, at 5 PM EST. Judge AliKhan reasoned that the administrative stay was necessary to maintain the status quo while further litigation on the White House’s funding freeze is ongoing.
Nonprofit and public health organizations had argued that the funding freeze could result in devastating outcomes for people who rely on federal funds and intruded on First Amendment rights by seeking to block funding for groups that engage in DEI programs. In response, the U.S. government argued that the organizations failed to show that they needed an immediate halt to the temporary pause on federal financial assistance and that the OMB’s additional guidance alleviated concerns about cutting off essential programs. Nonetheless, Judge AliKhan ruled that the temporary pause on federal financial assistance has a “specter of irreparable harm.”
Impact on Broadband-Related Programs
We note that after President Trump’s separate Executive Order titled Unleashing American Energy, which directed federal agencies to pause Inflation Reduction Act and Infrastructure Act funding related to the energy sector, OMB provided guidance on January 21, 2025 that this Executive Order only applies to certain energy projects, not broadband-related spending. We believe further guidance will also be forthcoming from OMB and the FCC. However, it appears that the DEI Executive Order will impact Infrastructure Act programs such as NTIA’s State Digital Equity Planning Grant Program, State Digital Equity Capacity Grant Program, and Digital Equity Competitive Grant Program which all have DEI elements.
Since the BEAD Program is separately funded under the Infrastructure Act from the broadband-related State Digital Equity programs, the DEI aspects of those programs will not impact the BEAD Program. But there are certain DEI initiatives required under the BEAD NOFO, such as requiring that states and territories coordinate with their local communities, Tribal governments, and worker organizations to ensure full representation by underrepresented communities throughout the planning and deployment process, that could be impacted by NTIA’s review. At the least during any temporary funding freeze, because States and Territories are not subject to the Executive Order, state and territory broadband offices should be able to continue conducting their BEAD Program-related processes until federal funding is needed to award selected broadband projects. It is also unclear whether other NTIA programs such as the Tribal Broadband Connectivity Program will be impacted by President Trump’s Executive Orders due to what may be characterized as DEI goals. Arguably, this program is geographic based and provides benefits to anyone living on Tribal land regardless of ethnicity.
Regarding the FCC’s federal financial assistance programs, without clarification from the Commission, it is unclear how President Trump’s Executive Orders will impact the FCC’s funding programs. It is especially unclear whether programs such as the Secure Networks Act Reimbursement Program will even be subject to the funding freeze as reimbursements do not clearly fall within the federal regulation’s definition of federal financial assistance.3 However, the temporary freeze could have delayed the receipt of funds for recipients of the FCC’s USF Programs that depend on frequent disbursements from USAC given that the next one is scheduled for January 31, 2025, but such recipients got a reprieve due to the temporary stay and lasting at least until Monday, February 3.
We will provide updates as they become available.
1The listed Executive Orders include Protecting the American People Against Invasion (Jan. 20, 2025), Reevaluating and Realigning United States Foreign Aid (Jan. 20, 2025), Putting America First in International Environmental Agreements (Jan. 20, 2025), Unleashing American Energy (Jan. 20, 2025), Ending Radical and Wasteful Government DEI Programs and Preferencing (Jan. 20, 2025) (“DEI”), Defending Women from Gender Ideology Extremism and Restoring Biological Truth to the Federal Government (Jan. 20, 2025), and Enforcing the Hyde Amendment (Jan. 24, 2025).2The White House memorandum does note that this pause does not affect assistance programs that provide funds directly to individuals, such as Social Security, Medicare, Medicaid, and SNAP. In addition, funds for small businesses, farmers, Pell grants, Head Start, rental assistance, and other similar programs will not be paused.3See 2 C.F.R. 200.1 (“Federal financial assistance means: (1) Assistance that recipients or subrecipients receive or administer in the form of: (i) Grants; (ii) Cooperative agreements; (iii) Non-cash contributions or donations of property (including donated surplus property); (iv) Direct appropriations; (v) Food commodities; and (vi) Other financial assistance…”).
Trump DEI Order: How Could the Administration’s Plans to Target Private Sector Impact Employers? (US)
In just his first days in office, President Donald Trump has signaled that his Administration’s efforts to curb Diversity, Equity, and Inclusion (DEI) practices will start with the federal government but may soon have sweeping impacts on the private sector. This post details President Trump’s Executive Order that directs the U.S. Department of Justice, and other agencies, to begin preparing to combat the DEI initiatives of private employers, and what’s to be expected in the months ahead.
Executive Order Details Private Sector Enforcement
Through a January 22, 2025 Executive Order, the Trump Administration directed all federal government departments and agencies to end DEI practices internally, and DEI federal employees were placed on leave. Additionally, agencies were directed to eradicate “illegal private-sector DEI preferences, mandates, policies, programs, and activities.”
The Executive Order specifically tasked the Attorney General, in concert with other agency leaders, with crafting a report containing a strategic enforcement plan and “recommendations for enforcing Federal civil-rights laws and taking other appropriate measures to encourage the private sector to end illegal discrimination and preferences, including DEI.” The report must be delivered to the President within four months.
The private sector strategic enforcement plan must identify the following:
• key sectors “of concern” within each agency’s jurisdiction;• the “most egregious and discriminatory DEI practitioners” in each sector of concern;• a plan of specific steps or measures to deter DEI programs or principles (whether specifically denominated “DEI” or otherwise) that constitute illegal discrimination or preferences;• up to nine potential civil compliance investigations (per each agency) 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 one billion dollars; and• other federal litigation and regulatory opportunities.
The Administration already provided some indication as to which industries it believes are “of concern” when it pointed out in the order, “influential institutions of American society, including the Federal Government, major corporations, financial institutions, the medical industry, large commercial airlines, law enforcement agencies, and institutions of higher education” have adopted and actively use DEI policies. Requirements specific to the education sector, in alignment with Students for Fair Admissions, Inc. v. President and Fellows of Harvard College, 600 U.S. 181 (2023), also were highlighted.
What to Expect Moving Forward
A number of Trump appointees already have vowed to make rooting out DEI one of their top priorities. To carry out these promises, President Trump’s Order declares DEI eradication will be achieved through the enforcement of existing federal civil rights laws. Among the most commonly evoked federal civil rights laws, which employers must continue to comply with, are the Civil Rights Act of 1964, the Americans with Disabilities Act (ADA) and the Age Discrimination in Employment Act (ADEA). Title VII of the Civil Rights Act specifically prohibits employment discrimination based upon race, color, religion, sex and national origin.
Although it may be difficult to predict what the Administration’s strategic enforcement plan will look like in four months, several developments may inform the trajectory of federal anti-DEI ambitions in the days ahead including: (1) the U.S. Supreme Court’s decision in Ames v. Ohio Department of Youth Services; (2) the willingness of lower courts to apply federal civil rights laws to current anti-DEI cases; and (3) the priorities of new leadership at the U.S. Equal Employment Opportunity Commission (EEOC).
(a) Ames v. Ohio Department of Youth Services.
This U.S. Supreme Court case, set to be heard in late February, could make it easier for “majority-group plaintiff[s]” to bring some employment discrimination lawsuits, which may be used to resist DEI programs in the private sector. Ames tackles the issue of whether majority groups in “reverse discrimination” cases should be subjected to a higher standard to bring a claim under Title VII of the Civil Rights Act. A handful of federal circuit courts of appeal require such plaintiffs to show “background circumstances to support the suspicion that the defendant is that unusual employer who discriminates against the majority.” While Ames is not applicable to all Federal circuits, if the Court lowers the burden for assessing what constitutes illegal bias, non-minority workers will face fewer hurdles to state a claim in a number of jurisdictions, including in anti-DEI cases which typically involve “majority-group plaintiff[s].”
(b) Currently Litigated Anti-DEI Claims.
A number of challenges to DEI policies already have been lodged in courts across the country, under Title VII of the Civil Rights Act and similar state laws. These claims typically are brought as disparate treatment, hostile-work environment and retaliation actions. The majority of the cases have only been brought within the last two years. So, legal precedent concerning their issues remains undeveloped. Some patterns have emerged though, including the survival of specifically alleged DEI-related discrimination claims challenged by a motion to dismiss for failure to state a claim, and the lack of courts to whole-heartedly apply Students for Fair Admission in the employment discrimination context.
Specific DEI Discrimination Claims Survive Early Dismissal. General opposition to DEI policies typically has been insufficient to support a discrimination claim, but specific acts of discrimination alleged in concert with a DEI policy can help a claim survive a motion to dismiss.
• De Piero v. Pennsylvania State Univ., (E.D. Pa. 2024) – In this case, a hostile work environment claim based on a series of “anti-racism” trainings survived a motion to dismiss for failure to state a claim. The court found the plaintiff properly alleged he was “obligated to attend multiple conferences or trainings that discussed racial issues in essentialist and deterministic terms—ascribing negative traits to white people or white teachers without exception and as flowing inevitably from their race.” Among the instances the court considered were a professional development meeting on multiculturalism that included “supposed examples of ‘racist’ comments” where every hypothetical perpetrator was white, and an event called “Arts and Humanities as Activism,” where the plaintiff alleged the facilitator “condemn[ed] white people for no other reason than they spoke or were simply present while being ‘white.’” The court stated that whether there is any merit to the plaintiff’s claims was an inquiry for another day, based on the specific motion. See also Johnson v. Oregon (D. Or. 2024).
• Sharpe v. Primex Garden Ctr., (E.D. Pa. 2024) – Allegations that a new company policy, which a plaintiff claimed was based on “woke” principles, viewed in concert with a manager’s decision to soften the blow of his firing by acknowledging that he “underst[ood] that white people [the plaintiff’s] age grew up in a different time” were satisfactory to survive a motion to dismiss based on disparate impact theory.
• Diemert v. City of Seattle, (W.D. Wash. 2023) – A plaintiff stated a plausible claim of retaliation based on incidents he alleged occurred as part of the city’s Race and Social Justice Initiative, when he claimed he was treated adversely following his filing of a related EEOC complaint.
• Weaver v. Ohio Farmers Ins. Co., (9th Dist. Ct. Ohio 2022) – The mere fact that an employer had a DEI policy that included a goal of increasing the number of women and minorities in leadership positions did not alone support a discrimination claim. See also Young v. Colorado Dep’t of Corr., (10th Cir. 2024) (A hostile work environment claim failed because the plaintiff did not allege specific harassment other than being “offended by the [diversity] training,” and “upset by the Department’s response when he complained about the [diversity] training.”
Limited Applicability of Students for Fair Admission. In Students for Fair Admission, Inc. v. President & Fellows of Harvard College, the U.S. Supreme Court held race-based college admissions programs violated the Equal Protection Clause of the Fourteenth Amendment of the U.S. Constitution. Following the 2023 case, courts have yet to fully endorse the holding of Students for Fair Admissions as applicable to DEI-related discrimination claims.
For example, the court in Dzibela v. BlackRock Inc., a 2024 District of New Jersey case, stated that Students for Fair Admissions did not consider the DEI policies of private employers, much less rule that such efforts were unlawful. So, an argument that Students for Fair Admission is a “precursor to much more sweeping elimination of all racial discrimination …, including DEI hiring practices by private employers under Title VII” was not considered persuasive. Despite this, applicability of Students for Fair Admission to the employment discrimination context has been discussed by courts in concurring opinions, such as the Sixth Circuits’ decision in Smyer v. Kroger Ltd. P’ship I.
(c) New Leadership at the EEOC
Tasked with guiding enforcement of federal employment antidiscrimination laws, the new Acting Chair of the EEOC may become one of the most influential people in Washington D.C. when it comes to the Trump Administration’s crackdown on “illegal private-sector DEI.” Andrea Lucas was appointed to that role on January 21, 2025. In a press release, the EEOC outlined Lucas’ day one priorities including, “rooting out unlawful DEI-motivated race and sex discrimination[.]”
Exactly how Lucas will institute private sector enforcement is unknown, but the Acting Chair has discussed her thoughts related to the topic, including diversity initiatives like voluntary affirmative action programs. In a May 2024 speech, Lucas acknowledged voluntary affirmative action programs were lawful, but further described such policies as an “extremely narrow exception to the rule.”
While the lawfulness of voluntary affirmative action programs ultimately rests with the courts, Lucas’ stated DEI priorities and a narrow reading of the law may equate to stricter enforcement related to voluntary affirmative action programs compared to prior presidential administrations.
The Squeeze is the Juice – Utilization of The False Claims Act in the DEI/Government Contracting Executive Order
On January 21, 2025, President Trump signed an Executive Order (“EO”) purporting to “End[ ] Illegal Discrimination and Restoring Merit-Based Opportunity.” This wide ranging EO contains several provisions directly affecting government contractors—one of which appears to open up government contractors to False Claims Act (“FCA”) liability relating to DEI activities.
The “Ending Illegal Discrimination and Restoring Merit-Based Opportunity” Executive Order generally requires Federal departments and agencies to terminate all discriminatory and illegal preferences, mandates, policies, programs, activities, guidance, regulations, enforcement actions, consent orders, and requirements. Among the EO’s many provisions it:
rescinds executive orders and Presidential memoranda related to federal actions and initiatives to promote diversity and inclusion, including Executive Order 11246 (Equal Employment Opportunity, September 24, 1965), which required government contractors to adhere to equal employment and affirmative action requirements;
directs the Office of Federal Contract Compliance Programs to immediately cease promoting diversity and holding federal contractors and subcontractors responsible for taking affirmative action; and
requires each agency head to include in every contract or grant award a term/provision that makes compliance with all applicable Federal anti-discrimination laws material to the government’s payment decisions, which includes a certification that the contractor/recipient does not operate any DEI programs that violate any applicable Federal anti-discrimination laws.
Under this last provision, each Federal contractor will be required to certify “that it does not operate any programs promoting DEI that violate any applicable Federal anti-discrimination laws.” Thus, the EO appears to create a cause of action under the FCA against companies that operate DEI programs.[1]
Although the EO will make proving a FCA violation easier, the Government will still face hurdles, especially due to the heightened knowledge (scienter), materiality, and causation requirements in the event a case is litigated. For example, “DEI” is in the EO, but the term is not defined, which could lead to challenges to the scope of prohibited DEI activities (as well as the EOs more broadly).
The Government’s assertion, moreover, that a statement is “material” does not, in fact, make it so. As the Supreme Court held in a unanimous opinion authored by Justice Thomas, materiality is a “demanding” standard that is not necessarily satisfied even where a contractor violates an express condition of payment or the Government could have declined to pay the claim had it known of a contractor’s violation of a legal requirement. Universal Health Servs. v. United States ex rel. Escobar, 579 U.S. 176, 194 (2016). The Escobar decision identified some facts that would be relevant to, albeit not necessarily dispositive of, materiality, such as whether the Government “regularly pays a particular type of claim in full despite actual knowledge” of violations. Although materiality is a fact-specific issue subject to considerable litigation and a Court should not grant undue weight to the Government’s own self-serving and unsupported declaration, some Courts are, alas, likely to do so.
Despite potential liability hurdles, the risk of FCA liability is real: a Federal contractor’s false certification that it does not operate any DEI programs now creates the potential for lawsuits, investigations, treble damages—potentially of all dollars received under Federal awards after certifying—and penalties of $28,619 per false claim. The financial consequences of non-compliance get very real, very fast. Even an investigation, as anyone on the receiving end of a FCA Civil Investigative Demand (“CID”) knows, is costly and distracting; litigation is more so.
The EO’s FCA provisions may serve to incentivize an entire class of whistleblowers to file suits under seal against companies with DEI programs. Whistleblower complaints identifying such companies may also be useful to implementing the EO’s provision requiring every Government agency to “identify up to nine potential civil compliance investigations of publicly traded corporations” and other entities, as well as to further anti-DEI actions likely to be taken by the current administration.
Government contractors should be aware that, as a result of the EO, the risk of potential whistleblowers is high and take action accordingly. And, even if the Government still faces challenges in successfully proving at trial FCA violation relating to a DEI certification, a “compliance” investigation under this EO—or other EOs and regulations likely to follow—and/or a CID pursuant to the FCA and resulting Government investigation is likely to be disruptive, costly, and the subject of media and public attention.
FOOTNOTES
[1] The FCA was originally designed to combat, waste fraud, and abuse of Government dollars spent from the federal fisc.
Resetting the EEOC: President Trump Removes Two EEOC Commissioners
President Donald Trump removed Democratic U.S. Equal Employment Opportunity (EEOC) commissioners Charlotte A. Burrows and Jocelyn Samuels, upending the Democratic voting majority on the EEOC. This development could potentially lead to the rescission of more of the EEOC guidance pertaining to gender identity, including portions of the EEOC’s Enforcement Guidance on Harassment in the Workplace, issued in April 2024.
Quick Hits
President Trump removed two of the three Democratic commissioners on the EEOC.
The removals leave the EEOC with two remaining commissioners and likely will lead to a Republican majority that will push the president’s agenda, including recent executive orders.
The unprecedented action is likely to lead to legal challenges regarding the grounds for removing the EEOC commissioners.
According to media reports, on January 28, 2025, Commissioners Burrows and Samuels said that the White House had informed them on the evening of January 27 that they were being removed from their positions. Their removals now shift the political majority on the five-member board, as Democrats would have retained a majority through Commissioner Samuels’s term, which was to have ended in 2026.
Commissioner Burrows, who previously served as commission chair from January 2021 through the end of the Biden administration on January 19, 2025, had served as a commissioner since 2015, most recently being confirmed in November 2023 to a third term that was set to expire on July 1, 2028.
Commissioner Samuels was first appointed by President Trump in 2020 during his first term and later nominated by then–President Joe Biden for a second five-year term that was not set to end until July 1, 2026.
Two EEOC commissioners remain: Commissioner Andrea R. Lucas, whom President Trump designated as acting chair shortly after taking office, and Commissioner Kalpana Kotagal, a President Biden–appointee whose term expires in July 2027.
The removal of an EEOC commissioner without identified cause is historically unprecedented and will likely be challenged in court. Commissioners for the independent, bipartisan agency are appointed by the president and confirmed by the U.S. Senate for staggered five-year terms. According to Title VII of the Civil Rights Act of 1964, “not more than three [commissioners] shall be members of the same political party.”
While Title VII does not explicitly outline the grounds or process for removing EEOC commissioners, it has generally been understood that commissioner removal would require cause, such as neglect of duty or malfeasance. Historically, after changeovers in presidential administrations, commissioners have remained in position until their terms have ended.
In her statement posted on social media, Commissioner Samuels said that the “White House critiqued [her] views on [diversity, equity, inclusion, and accessibility (DEIA)] and sex discrimination.”
Burrows’s and Samuels’s removals coincide with President Trump’s removal of National Labor Relations Board (NLRB) member Gwynne Wilcox and the discharge of NLRB general counsel Jennifer Abruzzo.
Next Steps
Without the EEOC removals, the Democrats would have retained a majority on the Commission through the end of Commissioner Samuels’s term in 2026. However, with the removals, Acting Chair Lucas will potentially gain the votes needed to revoke more of the EEOC’s guidance regarding gender identity. The EEOC reportedly has already pulled down from its website some information and employers on LGBTQ+ worker protections.
In recent years, the EEOC has interpreted the Supreme Court of the United States’ 2020 holding in Bostock v. Clayton County, Georgia that Title VII’s protection against discrimination on the basis of sex includes discrimination on the basis of sexual orientation and gender identity. Specifically, in April 2024, the EEOC issued new workplace harassment guidance for employers, titled, “Enforcement Guidance on Harassment in the Workplace.” The guidance, which was approved by the EEOC by a 3–2 vote, recognized that the Bostock holding applied to unlawful harassment based on sexual orientation and gender identity.
More broadly, the removals come as part of President Trump’s shake-up of the federal government, including the leadership of independent federal agencies, and align with efforts to roll back many of former President Biden’s initiatives. The removals of the EEOC commissioners without identified cause, along with the removal of NLRB member Wilcox, will likely result in lengthy court battles that could reach the Supreme Court and have significant implications for the powers of the president and independent federal agencies.
DEI and Affirmative Action Programs Blitzed, While Executive Order 11246 Is Revoked
In one of his first acts as President in his second term in office, Donald Trump signed an executive order on January 21, 2025, entitled “Ending Illegal Discrimination and Restoring Merit-Based Opportunity” (“Order”).
Claiming that “critical and influential institutions of American society … have adopted and actively use dangerous, demeaning, and immoral race- and sex-based preferences under the guise of so-called ‘diversity, equity, and inclusion’ (DEI), or ‘diversity, equity, inclusion, and accessibility’ (DEIA),” the Order directs all executive departments and agencies of the federal government to terminate “all discriminatory and illegal preferences, mandates, policies, programs, activities, guidance, regulations, enforcement actions, consent orders, and requirements.” Departments and agencies are also directed to enforce the country’s long-standing civil rights laws and to combat “illegal” private-sector DEI preferences, mandates, policies, programs, and activities. As part of the reset, President Trump revoked Executive Order 11246 (“EO 11246”), which contractually required covered federal government contractors and subcontractors (collectively, “contractors”) to meet certain affirmative action obligations.
Termination of “Illegal” Discrimination in the Federal Government
As part of the Order, President Trump revoked a number of prior executive orders that addressed diversity and equal opportunity in employment.[1] In addition, the Order requires the head of each federal agency to include in every contract or grant award (i) a term requiring all contractual counterparty or grant recipients to agree that their compliance in all respects with all applicable federal anti-discrimination laws is “material” to the government’s payment decisions, and (ii) a term requiring the counterparty or recipient to certify that it does not operate any programs promoting DEI that violate any applicable federal anti-discrimination laws. This is a highly significant representation to be required of all contractors and grantees.
The Trump administration has repeatedly emphasized a disdain for DEI programs. President Trump signed a second executive order entitled “Ending Radical and Wasteful Government DEI Programs and Preferencing,” which requires the Director of the Office of Management and Budget (OMB), assisted by the Attorney General (AG) and the Director of the Office of Personnel Management, to coordinate the termination of all discriminatory programs, including illegal DEI and DEIA mandates, policies, programs, preferences, and activities in the federal government. This order directs the OMB Director to review and revise, as appropriate, all existing federal employment practices, union contracts, and training policies or programs to comply with this order. The order also requires that federal employment practices, including federal employee performance reviews, will reward individual initiative, skills, performance, and hard work and will not under any circumstances consider DEI or DEIA factors, goals, policies, mandates, or requirements. Further, the order mandates agency, department, and commission heads, within 60 days, to terminate all DEI and DEIA offices and positions; all “equity action plans”; all “equity” actions, initiatives, or programs; all “equity-related” grants or contracts; and all DEI or DEIA performance requirements for employees, contractors, or grantees.
Private Sector Encouraged to End Illegal DEI Discrimination and Preferences
President Trump’s Order aimed at ending illegal discrimination also targets the private sector’s DEI programs by encouraging the private sector to “end illegal discrimination and preferences.” According to the Order, illegal DEI and DEIA policies violate federal civil rights laws, undermining national unity and threatening the safety of Americans “as they deny, discredit, and undermine the traditional American values of hard work, excellence, and individual achievement in favor of an unlawful, corrosive, and pernicious identity-based spoils system.”
To that end, the Order directs the heads of all agencies “to advance in the private sector the policy of individual initiative, excellence, and hard work.” In addition, the Order directs the AG to consult with agency heads to propose a strategic enforcement plan that identifies (i) “sectors of concern” within each agency’s jurisdiction, (ii) the “most egregious and discriminatory DEI practitioners in each sector of concern,” and (iii) specific measures to “deter DEI programs or principles (whether specifically denominated “DEI” or otherwise) that constitute illegal discrimination or preferences.” The Order specifically requires that the AG’s report include recommendations from every federal agency that identify up to nine potential civil compliance investigations of publicly traded corporations, large nonprofit corporations or associations, foundations with assets of $500 million or more, state and local bar and medical associations, and institutions of higher education with endowments over $1 billion. It also seeks recommendations for other strategies to encourage the private sector to “end illegal DEI discrimination and preferences and comply with all Federal civil-rights laws,” including litigation that would be “potentially appropriate for Federal lawsuits, intervention, or statements of interest” and potential regulatory action and sub-regulatory guidance.
Revocation of Executive Order 11246
The Order revoked EO 11246, citing a need to ensure that the federal contracting process is “streamlined” to enhance speed and efficiency and reduce costs, and still require contractors to comply with civil rights laws.
Signed into law by President Lyndon B. Johnson on September 24, 1965, nearly 60 years ago, and a year after the passage of the Civil Rights Act of 1964, EO 11246 was intended to complement Title VII and require contractors to take positive steps to ensure that all individuals had an equal opportunity in employment, without regard to race, color, religion, sex, and national origin (the specific characteristics of sexual orientation and gender identity were added by President Barack Obama on July 21, 2014). To accomplish this, EO 11246 required contractors to create affirmative action programs (AAPs) that would serve as a management tool with the central premise that, absent discrimination, over time, a contractor’s workforce would reflect the gender, racial, and ethnic profile of the labor pools from which the contractor recruited and selected its employees.
Federal law, under Title VII, continues to require that all qualified candidates have equal opportunities for employment. However, by revoking EO 11246, the Trump administration has eliminated contractors’ affirmative action obligations. Contractors have until April 21, 2025 (90 days from the Order’s date of issuance) to wind down their AAPs. In addition, the Department of Labor’s Office of Federal Contract Compliance Programs (OFCCP), which enforced EO 11246, must immediately cease promoting “diversity,” holding contractors responsible for taking “affirmative action,” and permitting contractors to engage in “workforce balancing based on race, color, sex, sexual preference, religion, or national origin.”
While a Fact Sheet addressing the Order “directs all [federal] departments and agencies to take strong action to end private sector illegal DEI discrimination, including civil compliance investigations,” it remains to be seen how the OFCCP will operate moving forward. This includes its enforcement of the affirmative action provisions of the Rehabilitation Act of 1973 (the “Rehabilitation Act”) and the Vietnam Era Veterans’ Readjustment Assistance Act (VEVRAA), neither of which are addressed in the Order and, as a result, presumptively remain in effect.
What Employers Should Do Now
Private-sector employers should expect the Trump administration’s efforts to eliminate DEI programs to fuel legal challenges to DEI efforts, including via “reverse discrimination” lawsuits.
Private-sector employers should promptly review any DEI/DEIA plans, programs, and policies, as well as their AAPs, to determine whether they contain any aspects that could be deemed unlawful under Title VII or any other federal, state, or local civil rights law, and consider whether to take any action to modify such plans, programs, or policies, including the names of such plans, programs, or policies, in consultation with employment counsel.
Employers that include affirmative action and/or DEI/DEIA goals as a rating factor in employees’ (and particularly managers’ or supervisors’) performance or salary reviews should consider removing any such factors.
Contractors should take steps to ensure that they are able to wind down their EO 11246-required AAPs and seek direction from counsel as we await clarification about the OFCCP’s authority, how the Rehabilitation Act and VEVRAA AAPs will be monitored and enforced, the status of pending compliance reviews, and how reporting obligations will be addressed. This could include EEO-1 reports, which are required pursuant to Title VII but are shared with and used by the OFCCP.
Employers that are state and municipal contractors should keep in mind that they may have some remaining obligations around affirmative action under their government contracts.
Although affirmative action as we knew it pursuant to EO 11246 may no longer exist, Title VII remains the law of the land and all employment decisions should continue to be made without consideration of race, color, religion, sex, or national origin, as well as other factors protected by federal, state, and local law. Employers should continue to ensure that management and staff are providing equal opportunity in employment and are being trained accordingly.
Employers should be advised that nothing in President Trump’s executive orders bars employers from taking race- and gender-neutral steps in connection with recruiting, such as casting a broad applicant net considering applicants’ varied experiences, perspectives, and viewpoints, or offering scholarships or work/study programs based on financial need, so long as any such strategies and programs do not promote preferences to applicants based on factors such as race or sex.
There is clearly more to come, including the possible elimination of the OFCCP. Stay tuned—we will update you as further developments unfold and outstanding questions are addressed.
****
Staff Attorney Elizabeth A. Ledkovsky contributed to the preparation of this Insight.
ENDNOTE
[1] The Order revoked the following executive orders: (i) Executive Order 12898 (Federal Actions to Address Environmental Justice in Minority Populations and Low-Income Populations, February 11, 1994); (ii) Executive Order 13583 (Establishing a Coordinated Government-wide Initiative to Promote Diversity and Inclusion in the Federal Workforce, August 18, 2011); (iii) Executive Order 13672 (Further Amendments to Executive Order 11478, Equal Employment Opportunity in the Federal Government, and Executive Order 11246, Equal Employment Opportunity, July 21, 2014); and (iv) The Presidential Memorandum (Promoting Diversity and Inclusion in the National Security Workforce, October 5, 2016).
How to Survive the Administration’s Focus on Deporting Illegal Immigrants
As reported in all forms of media, the Trump administration has launched a nationwide blitz of immigration enforcement that is not likely to abate in the short term. Raids, which the administration has characterized as focused on detaining and deporting those who pose a threat to public safety and national security, have been conducted in New York City, Chicago, Newark, New Jersey, the suburbs of Atlanta, Boston, Denver, Los Angeles, San Francisco, and Austin and San Antonio, Texas, among other places. More than 2,000 arrests have been reported by Immigration and Customs Enforcement (“ICE”), with close to 1,000 detainers (a request that a law enforcement agency hold an inmate for another agency) lodged since this past weekend. Significantly, while immigration enforcement was typically handled almost exclusively by ICE, the recent raids have seen participation by agents of the Federal Bureau of Investigation (“FBI”), Drug Enforcement Administration (“DEA”), the Bureau of Alcohol, Tobacco, Firearms and Explosives, as well as the U.S. Marshals Service.
In another development, ICE has reversed a policy in place during the Biden administration and now permits its agents to raid “sensitive locations” including schools, hospitals, and churches, leading the U.S. Conference of Catholic Bishops to condemn the new policy as “contrary to the common good” and to declare that it would “turn places of care, healing, and solace into places of fear and uncertainty for those in need, while undermining the trust between pastors, providers, educators, and the people they serve,” and “will not make our communities safer.”
It is inevitable that the administration’s focus on securing the borders and preserving employment opportunities for individuals who are lawfully authorized to work in the country will spill over to the workplace, especially in industries that traditionally employ significant numbers of immigrant workers. We anticipate that there will be enhanced enforcement of the Immigration Reform and Control Act of 1986 (“IRCA”), with emphasis on audits of I-9 forms and removal of undocumented individuals from the workplace. Enforcement actions focusing on the employment relationship can take the form of scheduled document (I-9) audits, which are preceded by receipt of a Notice of Inspection that gives the employer three business days to provide requested documents, as well as unscheduled workplace raids. The remainder of this alert will provide guidance to employers when an agent of ICE, or other law enforcement personnel, show up at a worksite seeking documents or access to the entity’s workers.
WHAT TO DO BEFORE IMMIGRATION AGENTS SHOW UP AT YOUR DOOR
There are certain action items all employers should take now in anticipation of a visit from ICE or Customs and Border Protection (“CBP”). They include:
Appoint a person with authority to be the primary contact in the event of a visit by ICE/CBP or other federal, state, or local law enforcement agencies and conduct necessary training to ensure the point person is prepared to:
Review warrants,
Contact counsel for advice, and
Monitor agents while they are on site and document what occurs during the visit.
Perform an internal audit of I-9s and other documents that an agent may request to review.
Confirm you have I-9s for all current employees and those who recently have been terminated from employment (and ensure that they have been properly completed and that the forms, as well as any documents that the employee presented in support of their I-9 declarations and maintained by the employer, are stored apart from personnel files), destroying those forms that the employer is no longer required to maintain;
Make sure you have a list that contains the names of all current employees and should have access to payroll records as well as quarterly wage and hour reports;
To the extent you use E-Verify, have confirmations available.
Consider utilizing E-Verify, a web-based system that allows enrolled employers to confirm the eligibility of their employees to work in the United States, for all new hires.
If you utilize contractors, leased workers, or temporary employees, review your vendor contract to ensure the requisite safeguards are in place confirming service providers are legally authorized to work in the United States.
To the extent you have a question about an employee’s immigration status, do not panic or jump to conclusions. Have a conversation with the employee and come up with a plan of action.
IF YOU RECEIVE A NOTICE OF INSPECTION (BY CERTIFIED MAIL OR DELIVERED IN PERSON)
Review the Notice of Inspection to identify what documents are being requested and share with counsel to review what needs to be produced. Don’t panic.
Gather the documents requested in the Notice within the three-business day window and do not plan to offer any additional documents or information other than those required for inspection; do not waive your right to the three-day waiting period.
Make copies of all documents being made available for inspection, as the ICE agent will want to review originals.
Make a record of all documents that are provided to the agent for inspection.
Make notes of any alleged noncompliance raised by the agent during the inspection and do not make any untruthful statements about the company’s immigration policies or I-9 collection processes.
Review any identified compliance issues with counsel.
IF AN ICE AGENT OR AGENT OF ANOTHER FEDERAL, STATE, OR LOCAL ENFORCEMENT AGENCY SHOWS UP AT YOUR DOOR
Demand to see a judicially issued warrant permitting a search. If there is none, then you can refuse ICE/CBP entry into your workplace.
If there is a warrant, then review it with counsel to ensure it is valid. This includes checking that it is signed by a judge or magistrate, has the correct address for the workplace to be searched, provides a duration for the search, and describes the scope of the search.
There are different types of warrants or subpoenas that might come into play, including:
A judicial warrant, which allows ICE/CBP to conduct any search as authorized by the warrant. You must comply with a valid judicial warrant.
An administrative warrant, which allows ICE/CBP to conduct an arrest or seizure. Administrative warrants do not authorize searches and therefore you do not need to permit a search in this instance.
A judicial subpoena, which allows an enforcement agency to request information and/or documents from third parties, like you the employer. Unless you have a legitimate basis to oppose the subpoena, you should generally comply with it.
An administrative subpoena, which similarly allows ICE/CBP to request information and/or documents from third parties, like you the employer. You do not need to comply with an administrative subpoena, penalties may occur only after the issuer takes additional steps to enforce the subpoena in federal court.
If the judicial warrant is valid, you should comply with the request for inspection.
During the inspection, you should watch the agent the entire time.
Document everything:
Record the names and ID numbers of all agents, and
Memorialize any conversations with agents.
If any employee is arrested, ask the agent where the employee is being taken.
The Administration’s emphasis on enforcement of immigration laws can be costly for employers, since fines and penalties for I-9 noncompliance are significant, and the disruption of work caused by removal of employees from the workforce can be devastating.
State of Play: Temporary Pause of Agency Grants, Cooperative Agreements, Loans, and Other Financial Assistance Programs
UPDATE: As of 5:00 PM EST on January 28, a federal judge has temporarily blocked the Trump administration from enforcing the freeze detailed below. This situation is ongoing and clients should still prepare accordingly.
On Monday evening, the Office of Management and Budget (OMB) ordered all federal agencies to temporarily suspend grants, cooperative agreements, and loan payments, with the exception of Social Security, Medicare, and “assistance provided directly to individuals.” In the internal memo, OMB’s Acting Director, Matthew Vaeth, calls for each agency to undertake a comprehensive analysis to ensure all financial assistance programs comply with the Administration’s Executive Orders. The pause applies to an estimated 2,600 accounts across the federal government, and details are still being worked out on federal funding that is statutorily obligated.
While intended to be temporary, the duration of the pause may vary by Department and program. Each federal department and agency are likely to interpret its scope and requirements differently and prioritize review of certain programs before others. This pause may have a profound effect on clients who were expecting to receive federal funds within the next two to six weeks. While the pause has the potential to affect any business or entity receiving federal funding, clients receiving such funds as part of programs related to DEI initiatives, foreign aid, or federal clean energy investments, specifically electric vehicles, may be most impacted.
Some of the questions agencies must answer in the report for OMB include whether or not the program supports illegal immigrants, if the program supports abortion, gender ideology or DEI initiatives, or if the program supports activities that impose an undue burden on the identification, development, or use of domestic energy resources. It is important to note that only a handful of President Trump’s cabinet secretaries and agency heads have been confirmed, making this process all the more complicated.
Key Facts
All affected federal assistance will be paused starting today, January 28, at 5:00 pm ET.
This affects ALL federal agencies.
The government-wide freeze is temporary and is intended to allow each agency to conduct a comprehensive analysis of all federal financial assistance programs to identify programs, projects, and activities that may be implicated by any of the President’s Executive Orders.
Agencies have until February 10, 2025, to submit to OMB detailed information on each program subject to this pause.
The freeze will include:
Issuance of new awards;
Disbursement of Federal funds under all open awards; and
Other relevant agency actions that may be implicated by Trump’s Executive Orders until OMB has reviewed and provided guidance based on what is received.
Could this Affect You?
Yes, if your business receives federal grants, cooperative agreements, or loans, the pause will almost certainly affect you until at least February 10th and potentially beyond. If your company is concerned about the funding pause, or you are impacted by any of the recent Executive Orders, it is critical to determine the risk posed by the pause or Executive Order and to develop a response that evaluates both their legal and political options.
How Risky Are DEI Programs Under Trump 2.0?
President Trump’s January 21, 2025, executive order titled “Ending Discrimination and Restoring Merit-Based Opportunity” (“Executive Order”) directs the termination of federal government practices and policies that protect and promote diversity and inclusion; the Executive Order also addresses diversity and inclusion initiatives in the private sector. Less than a week later, an internal memo from the White House budget office “temporarily paused” grants and loans by the federal government while the government assesses whether the distributions are consistent with certain executive orders and other Trump administration objectives.
The Executive Order specifically targets diversity, equity, and inclusion (DEI) and diversity, equity, inclusion, and accessibility (DEIA) programs, describing them as “dangerous, demeaning, and immoral,” which “violate the text and spirit of our longstanding Federal civil-rights laws” and “undermine our national unity, as they deny, discredit, and undermine the traditional American values of hard work, excellence, and individual achievement in favor of an unlawful, corrosive, and pernicious identity-based spoils system.” The Executive Order uses broad, sweeping language and does not describe the types of DEI or DEIA initiatives that violate existing federal civil rights laws, leaving uncertainty as to which programs the administration will target but leaving no uncertainty about the chilling effect the Executive Order will have.
The Executive Order Targets Large Companies
The Executive Order requires the attorney general to submit a report within 120 days (May 21, 2025) that includes a proposed strategic enforcement plan identifying, among other things, (i) key sectors of concern within each agency’s jurisdiction, (ii) the most egregious and discriminatory DEI practitioners in each sector of concern, and (iii) a plan of specific steps or measures to deter DEI programs or principles (whether specifically denominated “DEI” or otherwise) that constitute illegal discrimination or preferences. Moreover, the Executive Order directs, “As a part of this plan, each agency shall 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.” As such, large or otherwise prominent organizations should be particularly on guard.
The Executive Order has immediately impacted the broader enforcement context. For example, on January 23, 2025, Texas Attorney General Ken Paxton and nine other state attorneys general warned several major financial institutions that DEI and environmental, social, and governance (ESG) commitments could lead to enforcement actions if they are found to violate state or federal laws. Following the release of the attorney general report described above, we may see an uptick in warnings made by other state attorneys general and/or similar warnings issued to organizations in sectors of concern identified in the forthcoming attorney general’s report.
To be sure, existing federal antidiscrimination law controls. That means while the Trump administration may view certain DEI programs as unlawful, it does not mean judges will. Read on for specific takeaways for entities with DEI programs.
The Executive Order Targets Recipients of Government Funding
Recipients of federal government funding already should be familiar with the False Claims Act (FCA), 31 U.S.C. §§ 3729 – 3733, which provides that any person who knowingly submits, or causes to submit, false claims to the federal government is liable for three times the government’s damages, plus penalties.
The Executive Order uses the FCA to target DEI initiatives of government funding recipients. First, federal contractors and subcontractors are prohibited from considering race, color, sex, sexual orientation, religion, or national origin in their employment, procurement, and contracting practices. Second, every contract or grant award issued by a federal agency — which will include government contractors as well as health care entities that participate in federal health care programs, and research institutions that receive federal grant money — must include the following provisions:
“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];” and
“A term requiring such counterparty or recipient to certify that it does not operate any programs promoting DEI that violate any applicable Federal anti-discrimination laws.”
With these provisions, the Department of Justice or private qui tam relators could pursue an FCA case utilizing a false certification theory, meaning a party could be held liable under the FCA for submitting false or fraudulent claims to the government if the party falsely certifies that it has complied with federal requirements when, in fact, they have not. For a claim to be fraudulent under this theory, the false certification must be material to the government’s decision to pay the claim.
The Executive Order essentially requires parties who wish to do business with the government to agree that a violation of a federal antidiscrimination law — e.g., maintaining a DEI program that violates federal antidiscrimination laws — is material to the government’s decision to pay under the FCA. However, it is unclear that “agreeing” a requirement is material makes it so. For “materiality,” compliance with the provision actually must be material to the government’s decision to pay the claim or its decision to award the contract. In 2016, the Supreme Court held that “designating” a “legal requirement an express condition of payment” is not sufficient to establish materiality under the FCA. Universal Health Services, Inc. v. United States ex rel. Escobar, 579 U.S. 176, 192 (2016). However, the Trump administration will likely argue that its recent halting of federal funding, as the government takes stock of whether the spending complies with its executive orders and policies, is evidence that the antidiscrimination requirement is material to the government’s decision to pay. Crucially, however, the halt of federal funding does not apply to Medicare, nor does it direct that payment be terminated to a contractor for the reason of their DEI program. It does direct the termination of payment as related to DEI actions, initiatives, or programs.
As so often occurs in the FCA arena and elsewhere, many practices targeted by the Department of Justice or relators ultimately will be defensible. In the DEI context, absent a settlement, a court would have to determine the DEI program in question violates current federal antidiscrimination law, and the Department of Justice or relator would have to prove each element of an FCA violation, including materiality and scienter (that the defendant knew or recklessly disregarded or deliberately ignored in its certification that its representation of compliance with federal antidiscrimination laws was false).
As such, it is yet to be seen what kind of teeth the Executive Order will ultimately have. The administration could be counting on a chilling effect, with the potential costs of investigations, enforcement action, and litigation outweighing companies’ willingness to go to battle for their DEI programs in court.
Takeaways for Companies with DEI Programs
We expect more details from the administration, such as regulatory and sub-regulatory actions, in the days and months to come. In the meantime, we recommend companies take action now to mitigate potential risk, even if their programs are ultimately defensible. For example, we recommend the following immediately:
Companies — federal contractors and private sector alike — should consult DEI and labor and employment experts to assess whether their DEI policies and practices may be construed to be out of compliance with existingfederal antidiscrimination laws under a Trump-era lens and what changes (if any) in their policies and practices are necessary to ensure compliance or mitigate risk.
Companies should be cognizant of new developments as they arise under the Trump administration. To assist in this endeavor,
Companies should reach out to legal counsel to discuss how the Executive Order, and likely future orders, may impact their businesses and what specific steps should be taken now to best protect them from any future liability and enforcement actions.