Level set: The Executive Orders and federal retrenchment
In January 2025, President Trump signed a series of executive orders (EOs) aimed at unlawful DEI programs, revoking race, ethnicity and gender-based affirmative action requirements for federal contractors, and directing public and private entities to end policies that constitute "illegal DEI discrimination."
The EOs do not change existing federal discrimination laws, such as the bedrock prohibitions on discrimination in employment in Title VII of the Civil Rights Act of 1964 (Title VII). The EOs do not categorically ban any private employer DEI programs. Rather, the EOs direct federal agencies and deputize private citizens to root out (through investigations, enforcement actions, or False Claims Act (FCA) litigation) "illegal discrimination and preferences" and, for government agencies, to take particular actions. They reflect the policy view that many DEI policies violate federal anti-discrimination laws because these laws prohibit employment decisions based on certain demographic characteristics, while DEI may promote employment decisions on this basis. For more on the specific details of the EOs, read our blog, A Roadmap to Trump's DEI Executive Orders for US Employers.
Catching up: Legal challenges to the orders and their current status
The EOs have faced multiple legal challenges, with various organizations and entities suing the Trump administration. In one of the most significant cases, a federal district court in Maryland issued a nationwide preliminary injunction blocking enforcement of three key provisions from Executive Orders 14151 and 14173 in February. Then, in March, the Fourth Circuit Court of Appeals stayed the injunction, allowing the Trump administration to enforce the executive orders while litigation continues. This week, oral arguments are being heard before a panel of Fourth Circuit judges.
As of September 22, 2025, several courts have issued contradictory rulings on the constitutionality of the EOs. The Supreme Court also determined that federal courts generally lack authority to issue nationwide injunctions, in its June 27, 2025 decision in the Trump v. CASA. Accordingly, the path for the Trump administration to enforce the EOs remains open. Federal agencies' main enforcement mechanism under the EOs is terminating federal contracts and requiring federal contractors to certify that they do not operate any DEI programs that violate federal anti-discrimination law.
Following the timeline: Breaking down the guidance from federal agencies and recent enforcement activity
Over the last several months, federal agencies have been taking action to combat illegal DEI practices. Several agencies have sent companies requests to certify that they are not in violation of federal anti-discrimination law, and that this is material to the government's funding decision, per the EO's certification requirement.
Federal agencies, including the Equal Employment Opportunity Commission (EEOC) and the Federal Communications Commission (FCC), have also issued requests for information to certain companies (usually based on publicly available information) expressing concerns about their DEI practices. Requests have asked for information about various DEI-related topics, including hiring and promotion processes, diversity goals, application and selection criteria for fellowship programs, and participation in diversity internship programs.
In March, the FCC Chairman stated that the agency would use its "public interest" review of mergers and acquisitions to target companies with certain DEI programs. In response, several large telecommunications and media companies with pending mergers scaled back their DEI initiatives.
Also in March, the EEOC and the Department of Justice (DOJ) issued published a joint one-page technical assistance document entitled "What To Do If You Experience Discrimination Related to DEI at Work," which provides examples of potential DEI-related discrimination under Title VII and directs employees who suspect they have experienced DEI-related discrimination to promptly notify the EEOC. Simultaneously, the EEOC also published a longer technical assistance document ("What You Should Know About DEI-Related Discrimination at Work") with eleven questions and answers addressing the process for asserting a discrimination claim and the scope of protections under Title VII as they relate to DEI programs.
The joint guidance makes clear that any employment action motivated—in whole or in part—by an employee's or applicant's race, sex, or another protected characteristic, is unlawful discrimination, and the law does not distinguish between "reverse" discrimination against historically privileged groups and discrimination against minority or historically disadvantaged groups.[1] This guidance, while not binding, sets forth the agencies' interpretation of the law, and as a result has influenced employer risk assessments and prompted internal reviews of hiring and promotion practices. (More here in our blog, EEOC and DOJ Issue Joint Guidance on DEI-Related Discrimination.)
In April, President Trump issued Executive Order 14281 directing federal agencies like the EEOC and the DOJ to deprioritize enforcement of anti-discrimination laws using the "disparate impact" theory of legal liability. Disparate impact is legal doctrine in US anti-discrimination law that allows plaintiffs to bring discrimination claims with respect to facially neutral practices that have a disproportionately adverse effect on members of protected groups—such as racial minorities or women—even if there is no intent to discriminate. It was recently reported that the EEOC plans to close by the end of month all pending worker charges based solely on unintentional discrimination claims and issue "right to sue" notices allowing plaintiffs to pursue those claims in court. This would mark another significant enforcement shift for the agency in recent months. The EEOC has already curtailed litigating and processing claims of discrimination based on transgender status under Title VII.
In May, the DOJ launched the Civil Rights Fraud Initiative, which uses the FCA to target entities that misrepresent compliance with federal anti-discrimination laws to receive federal funds. The FCA's qui tam mechanism allows private citizens (relators) to sue on behalf of the federal government and share in any recovery. The DOJ has encouraged whistleblowers to come forward, and in recent weeks the DOJ has issued civil investigative demands (CIDs) to federal contractors and grantees seeking documents and information related to their DEI practices.
Most recently, on July 29, Attorney General Pam Bondi issued a memorandum to federal agencies entitled "Guidance for Recipients of Federal Funding Regarding Unlawful Discrimination" (DOJ Memo). The memo signals a substantial shift in how the DOJ intends to interpret and enforce federal anti-discrimination laws—particularly in relation to DEI initiatives. The memo itself does not have the force of law, instead it reflects how the DOJ interprets and intends to apply federal anti-discrimination law. While the memo is directed at educational institutions and private entities receiving federal funding, its examples of unlawful discrimination are relevant to all employers.
Key takeaways from the DOJ memo
- The memo asserts that many DEI programs—especially those that use race, sex, or other protected characteristics as criteria—may violate federal anti-discrimination laws. It emphasizes that labels like "equity" or "inclusion" do not shield practices from legal scrutiny. The DOJ warns that even facially neutral policies (e.g., "cultural competence" or "lived experience" requirements) may be unlawful if they function as proxies for protected traits.
- It outlines five categories of conduct that could violate anti-discrimination laws, triggering liability or loss of federal funding:
- Preferential Treatment Based on Protected Characteristics: including hiring, promotion, or contracting preferences for underrepresented groups unless they meet strict legal standards.
- Use of Proxies: the memo introduces the concept of "unlawful proxy discrimination," defined as the use of facially neutral criteria (e.g., "cultural competence," "lived experience," geographic targeting) that function as proxies for protected characteristics. If such criteria are designed or applied with the intent to advantage or disadvantage individuals based on race, sex, or other protected traits, they violate federal anti-discrimination law.
- Segregation: programs or spaces separated by race, sex, or other protected traits—even if voluntary.
- Candidate Selection Based on Traits: "diverse slate" hiring mandates or contract awards based on race or sex.
- Exclusionary Training Programs: DEI training programs that "stereotype, exclude, or disadvantage" individuals based on protected characteristics, or create a "hostile environment through severe or pervasive use of presentations, videos, and other workplace training materials that single out, demean, or stereotype individuals based on protected characteristics."
- The memo further offers "Best Practices," which include:
- Focusing on skills and qualifications in employment decisions and avoiding quotas or demographic targets.
- Scrutinizing neutral criteria: ensuring they don't function as proxies for protected traits.
- Ensuring inclusive access to programs and benefits, avoiding exclusionary training and ensuring all employees can participate in workplace learning.
- Establishing anti-retaliation protections for employees who object to potentially discriminatory practices.
Homework: A call for careful recalibration
The Attorney General's July 29 reinforces the federal government's enforcement priorities in the DEI space. For in-house counsel, this is a critical moment to reassess DEI-related policies and practices through a wide lens to advise business leaders, considering not just legal risk, but also potential implications for company brand and reputation, and impacts on workforce morale.
US-based multinationals can guard against undue legal risk by undertaking privileged risk assessments that evaluate the company's DEI communications, policies and programs (including how they are implemented in practice) in light of recent federal agency guidance, government enforcement activity, litigation trends, social media activism, as well as applicable state laws. While companies may have completed DEI health checks earlier this year, because the landscape is continually evolving, periodically checking in and reassessing where things stand is recommended.
[1] On June 5, 2025, the Supreme Court issued a unanimous decision in Ames v. Ohio Dep't of Youth, affirming this interpretation and holding that "reverse discrimination claims" under Title VII are not subject to heightened standards of proof.
