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The Impact of New DEI Executive Orders on Organizations in the U.S.
On January 20, 2025, the new presidential administration enacted two executive orders related to Diversity, Equity, and Inclusion. One of the key actions taken was revoking Executive Order (EO) 11246, a measure that the Johnson administration established in 1965. The second was an executive order on gender that mandates single-sex spaces in the workplace, affirming “the binary nature of sex.”
Along with issuing these new executive orders, 78 executive orders, actions, and memoranda from the Biden administration were rescinded, including several related to federal DEI programs and LGBTQ+ issues.
What We Currently Know
Today, the reversal of Johnson’s executive order changes a lot of things. Firstly, federal organizations and federal contractors are directly impacted in these ways:
- A Ban on Certain DEI Trainings
- Enactment of Merit-Based Hiring and Promotions
- Elimination of DEI Initiatives
- Review of Agency Diversity Policies
Meanwhile, in the private sector, these executive orders have limited direct impact but still carry some influence. While there is no direct ban on private sector DEI programs, private companies are encouraged to avoid practices that could be seen as promoting divisiveness or that do not align with merit-based hiring. Also, if they work with the federal government, they would need to modify their training to be in compliance with the new EOs.
The Impact of the Executive Order on DEI Practices
The revocation of Executive Order 11246 is not just a shift in government policy—it also carries significant implications for how both federal contractors and private sector employers approach diversity, equity, and inclusion (DEI) initiatives.
The key message of the new DEI executive order is clear: it aims to eliminate race- and sex-based preferences in hiring, promotion, and contracting, both in federal agencies and private sector businesses. The order argues that DEI programs, while well-intentioned, can undermine merit-based systems and potentially violate civil rights laws by giving preferential treatment based on protected characteristics like race and sex.
For the private sector, the DEI EO raises significant legal questions about the future of DEI efforts. While it does not outright ban diversity-related programs, the order stresses that employers must prioritize qualifications and merit in their hiring and promotion decisions—rather than race, gender, or other protected characteristics.
These directives send a strong message that any diversity-related initiatives should avoid creating “illegal preferences” or discriminatory practices that could be seen as violating federal laws. As the new administration continues to enact changes, we will continue to stay on top of important news that will directly impact the American workforce.
Private Sector Impact: Legal and Operational Implications
While the federal government’s DEI Executive Order is unlikely to have a significant direct impact on private sector employers, the executive order on gender will directly affect private employers, as it instructs federal agencies like the US Equal Employment Opportunity Commission (EEOC) to focus enforcement efforts on protecting single-sex spaces in the workplace and addressing matters related to “the binary nature of sex.” It also mandates that federal agencies impose these priorities on federally funded entities, including contractors.
This EO emphasizes that workplaces must provide single-sex spaces (e.g., bathrooms, showers) based on biological sex (male or female) rather than gender identity. For private-sector employers, this means re-evaluating policies on restroom access, particularly for transgender employees.
While the implications of this EO are still not fully known, legal experts advise that employers should reevaluate policies in these areas with legal counsel:
- Restroom access
- Gender transitions
- Misgendering
- Gender-identity harassment
- Religious accommodations requests
Employers, especially federal contractors, should consult legal counsel to understand the full implications of this EO and ensure compliance with federal and state regulations. This is especially important in navigating conflicting state laws on gender identity.
State Laws vs. Federal Policy
In addition to these considerations, employers must be mindful of varying state laws. Some states require employers to allow restroom access based on gender identity, while others follow a more restrictive approach based on biological sex. Employers will need to navigate this conflict between federal and state laws, which may require separate policies depending on the jurisdiction.
Government Contractors and The New Executive Orders on DEI
Federal contractors are directly impacted by the revocation of Executive Order 11246, as they were previously required to implement affirmative action plans. Contractors have a 90-day grace period before the new rules apply, during which they should prepare for upcoming changes in their affirmative action obligations.
Implications for Nonprofits Regarding the DEI Executive Orders
Many nonprofit organizations, which often place a strong emphasis on DEI principles as part of their missions, may also feel the impact of the EO. These organizations will need to assess their DEI-related employment practices and programmatic activities to avoid government scrutiny. Some may choose to scale back or adjust their initiatives to align with the new policy direction.
What Should Private Sector Employers Do Now?
These new EOs create a level of legal uncertainty, particularly due to the lack of clear definitions regarding what constitutes “illegal discrimination or preferences.” This uncertainty leaves businesses in a difficult position when determining how to adjust their DEI programs. Employers should proactively evaluate their current practices to understand potential risks and plan accordingly.
In essence, private businesses and nonprofits must prepare for increased scrutiny of their DEI programs. While the aim is to create a more merit-based approach to hiring and promotion, companies are encouraged to focus on inclusive practices that don’t create preferential treatment or discriminatory practices based on protected characteristics.
FAQ #1: Is there a “safe harbor” or breathing period for federal contractors?
A safe harbor or breathing period is now in effect for federal contractors following the revocation of Executive Order 11246. During this 90-day period, which lasts until April 22, 2025, federal contractors may continue to comply with existing obligations under FAR 52.222-26 and other related provisions that stem from the now-revoked executive order.
This period allows contractors the time to carefully assess their compliance programs. They should review which components of their programs are tied specifically to the revoked Executive Order 11246 and which components are still based on other statutory or regulatory requirements. Contractors should use this time to make necessary adjustments to ensure ongoing compliance with applicable laws.
FAQ #2: Will federal contractors still be required to prepare affirmative action plans?
At some point in the future, federal contractors will no longer be required to prepare affirmative action plans or comply with the FAR clauses that implement now-withdrawn executive orders, including FAR 52.222-26, which addresses Equal Opportunity. While this change is expected to occur, it will not happen immediately.
The revocation of Executive Order 11246 opens the door for executive agencies to move away from the previous compliance requirements, but it is still unclear when exactly these shifts will take place. Federal agencies will likely revise their contracting and grant requirements, but the timeline remains uncertain.
FAQ #3: What are the new certification requirements for federal contractors?
Under the revocation of Executive Order 11246, the order directs executive agencies to include new certification requirements in all future federal contracts and grants. These new certifications will likely replace the previous affirmative action requirements tied to the revoked executive orders.
However, it is unclear whether agencies will begin immediately enforcing these new certification requirements or if they will wait for the FAR Council to develop and implement a uniform certification process. Until further guidance is issued, federal contractors should stay informed about any changes to certification protocols that may arise, as these certifications will likely play a key role in future federal contract and grant compliance.
Keeping a Close Watch on DEI
Though federal organizations are directly impacted, employers in the private sector should be vigilant about further executive actions from the Trump-Vance administration. It’s completely understandable to have questions on what implications these changes will have in the future, so we will keep a close eye on news that have a direct impact in the recruitment space.
