President Trump’s latest DEI executive order targets programs for ethnic and racial minorities

On Mar. 26, President Trump issued an executive order aimed at federal contractors with DEI initiatives. Unlike previous orders that were vague and failed to clearly define “DEI-related discrimination,” this new order provides slightly more clarity around potential violations and consequences.

The latest. The executive order states that within 30 days of the order, government contractors and subcontractors must sign a clause agreeing not to engage in “racially discriminatory DEI activities,” which it finally, if not broadly, defined as “disparate treatment based on race or ethnicity” when hiring, promoting, parsing out internal programs, and allocating business resources. Federal contractors must also provide the government with access to books and records that could pertain to the order. Major private companies, including Booz Allen, General Dynamics, and Boeing, have millions of dollars in federal contracts.

The order goes beyond previous executive orders, specifically targeting programs that could be viewed as intended for racial and ethnic minorities.

“This executive order just continues a pattern where the administration is trying to discourage anyone, but certainly private contractors, government contractors, from supporting diversity, equity, and inclusion,” Alphonso David, president and CEO of the Global Black Economic Forum, told HR Brew. “This executive order faces some of the same challenges that the old executive orders face, but the idea that the administration would continue to attack diversity is not a surprise.”

The director of the Office of Management and Budget, attorney general, the assistant to the president of the Domestic Policy Council, and the chair of the EEOC (Andrea Lucas) will be responsible for oversight and implementation. The White House also noted that companies that fail to comply may lose contracts or be investigated under the False Claims Act, which penalizes contractors for knowingly defrauding the government.

“For the first time, [this order] is going to attach some direct contractual consequences to the practices and federal contracting,” Scott Kelly, co-chair of the DEI compliance practice group at Ogletree Deakins, told HR Brew. However, just like “all federal executive orders, we have to wait to see how they’re going to be implemented.”

David said that the executive order is “intellectually disingenuous” and vague, and could qualify as “void for vagueness,” a principle that nullifies rules so vague that ordinary citizens cannot determine what’s permissible under them.

“What this executive order does is it seeks to instill fear in employers. It seeks to discourage employers who happen to be government contractors from supporting diversity, equity, and inclusion initiatives,” David said, adding that the order still does not explicitly define “racially discriminatory DEI activities.”

How employers may respond. Federal contractors should examine their workforce practices to make sure race and ethnicity are not part of decision-making processes, according to Kelly. “I also think it would be very important to be monitoring on a regular basis, your practices,” he said.

Kelly worries that the lack of specifics in the executive order may confuse federal contractors that have already conducted audits, making them think no further action is necessary. “To me this means you need to think about how you’re going to set up a compliance program internally to ensure that you can meet these annual certifications.”

David said he thinks that federal contractors will respond in one of three ways: challenging, complying, or continuing with their practices.

“For some of the federal contractors who have good legal counsel, they will continue doing what they’re doing,” he said. “They understand the law hasn’t changed, and their compliance with existing laws should not expose them to false claim back violation.”

While some may think this executive order means that federal contractors must kill all of their DEI efforts, Kelly disagrees. “There are very lawful, inclusive practices that employers can engage in to ensure that there aren’t barriers to equal opportunity,” he said. “A lot of employers will continue to do that. I just think you need to have a little bit more of a compliance in your DEI practices.”