US president Trump signs Executive Order. Image credit: GettyImages.
Introduction
On January 20 and 21, 2025, almost immediately after his inauguration, the US President Trump issued Executive Order 14151 and Executive Order 14173, both of which focus on ending what the administration describes as "illegal discrimination" and "preferencing" under Diversity, Equity, and Inclusion (DEI) initiatives.
- Executive Order 14151: “Ending Radical and Wasteful Government DEI Programs and Preferencing” issued on January 20, 2025.
- Executive Order 14173: "Ending Illegal Discrimination and Restoring Merit-Based Opportunity” issued on January 21, 2025
While these orders aim to align government policies with federal civil rights laws, they raise significant concerns about their impact on workplace DEI programs, both in the government and in the private sector.
This blog post breaks down the key provisions of both executive orders, analyzes their implications for various types of organizations, and outlines actionable steps that organizations can take to comply while maintaining their DEI commitments.
Key Provisions of Executive Orders 14151 and 14173
Executive Order 14151 (January 20, 2025)
- Elimination of DEI Programs in the Federal Government: Directs all federal agencies to terminate DEI and related programs, including "equity action plans" and "environmental justice" initiatives.
- Abolishment of DEI-Related Federal Positions: Orders the removal of DEI-related roles in the federal government, such as Chief Diversity Officers, and the cessation of equity-related grants or contracts.
- Restrictions on Federal Employment Policies: Prohibits federal agencies from considering DEI factors in hiring, promotions, and employee performance reviews.
- Reporting and Compliance Measures: Mandates that agencies report on past DEI initiatives, expenditures, and relabeled programs to ensure full termination.
Executive Order 14173 (January 21, 2025)
- Revocation of DEI Mandates in Federal Agencies: Orders federal departments to cease any DEI-related policies deemed inconsistent with civil rights laws.
- Rescission of Prior DEI Orders: Revokes previous executive orders that promoted DEI in the federal workforce, including EO 12898, 13583, 13672, and 11246.
- Changes to Federal Contracting: Prohibits federal contractors from engaging in affirmative action or workforce balancing based on race, sex, or other protected categories.
- Private Sector Oversight: Directs the Department of Justice to identify and investigate companies or institutions maintaining DEI programs perceived as discriminatory.
- Guidance for Higher Education: Instructs federal agencies to issue compliance guidelines for educational institutions in alignment with recent Supreme Court rulings.
How These Two Executive Orders Relate to Each Other
While EO 14151 focuses on dismantling DEI within the federal government, EO 14173 expands beyond government agencies to influence federal contractors, the private sector, and higher education institutions. Together, these orders represent a broad rollback of DEI-related policies across multiple sectors. Key intersections include:
- Both orders emphasize merit-based hiring and employment practices, rejecting affirmative action and identity-based workforce balancing.
- EO 14151 primarily restructures federal employment and agency policies, while EO 14173 extends enforcement to the private sector and federal contractors.
- The combined effect creates legal uncertainty for companies and educational institutions with established DEI initiatives that may now face regulatory scrutiny.
Implications for Organizations
1. Government Agencies and Federal Contractors
Organizations that rely on federal funding or contracts must quickly assess their policies to ensure compliance. The termination of DEI mandates and the removal of affirmative action policies under EO 14173 mean federal contractors will need to adjust hiring and workforce policies accordingly.
2. Private Sector Businesses
While EO 14151 does not directly affect private companies, EO 14173 signals heightened scrutiny of DEI programs in major corporations and nonprofits. Businesses must ensure that their DEI policies do not contradict federal civil rights laws to avoid potential investigations.
3. Higher Education Institutions
Colleges and universities receiving federal funding must comply with new guidance on admissions and hiring. Institutions that previously relied on affirmative action frameworks may need to adjust recruitment and selection strategies.
4. Small and Midsize Enterprises (SMEs)
SMEs engaging in voluntary DEI programs are less likely to be directly impacted, but those pursuing federal contracts should reevaluate their compliance status.
5. Employees and Job Seekers
These orders may shift how businesses approach hiring and promotions. Companies must prioritize merit-based recruitment while fostering inclusivity in ways that comply with legal requirements.
Recommended Actions for Organizations
1. Conduct a Legal Compliance Audit
Review all DEI-related policies, employee resource groups (ERGs), and hiring practices to ensure they comply with civil rights laws. Example: Law firm Littler Mendelson advises clients to document their DEI programs' legal justifications to prevent liability risks.
2. Reframe DEI Strategies Around Business Outcomes
Shift DEI initiatives toward skills-based hiring, mentorship programs, and leadership development. Example: Companies like Microsoft have transitioned their DEI efforts toward inclusive talent development rather than demographic-based quotas.
3. Train Leadership on Inclusive Management
Ensure executives and managers are trained to promote inclusion through mentorship and bias-free decision-making while staying within compliance. Example: Accenture has adopted leadership training that emphasizes workplace inclusion without explicit demographic mandates.
4. Maintain DEI Commitments Through Neutral Policies
Continue fostering inclusion by using data-driven insights on workplace culture and employee engagement rather than identity-based quotas. Example: Salesforce maintains pay equity initiatives as a legally sound DEI strategy.
5. Monitor Federal Guidance and Evolving Legal Landscape
Stay updated on DOJ and OFCCP enforcement strategies. Example: The U.S. Chamber of Commerce regularly updates businesses on regulatory changes affecting employment policies.
Conclusion: Navigating Change While Upholding DEI
Executive Orders 14151 and 14173 introduce significant regulatory shifts affecting DEI in federal agencies, private businesses, and higher education institutions. Organizations must take a balanced approach—adapting to compliance requirements while preserving the business benefits of diverse and inclusive workplaces.
As companies reassess their DEI strategies, they should prioritize legally sound, skills-based, and inclusive workplace policies that support employee retention, innovation, and overall business success. By doing so, businesses can continue to foster an equitable workforce while aligning with federal regulations.
What’s Next? Organizations should consult with their legal experts, HR professionals, trusted advisors, and business leaders to refine their strategies. Staying informed and proactive will be essential in navigating these regulatory changes while upholding inclusive workplace values.
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