Many Open Questions for Employers in a Rapidly Changing Environment
In a matter of days, the White House issued multiple significant Executive Orders (“EOs”) regarding Diversity, Equity and Inclusion (“DEI”) programs. The situation is highly fluid.
On February 3, several groups filed suit in federal court in Maryland to enjoin the EOs and declare them unconstitutional. The outcome of this lawsuit could pivot the White House’s approach to DEI. A hearing as to plaintiffs request to enjoin the EOs was held yesterday, February 19. In addition, a separate lawsuit challenging the EOs was filed yesterday in federal court in Washington, D.C.
Left in place, these EOs have an immediate impact on federal employees and federal contractors but, in the near future, are likely to extend in some fashion to private employers. On February 11, the Federal Communications Commission launched an investigation into the DEI practices at Comcast and NBC Universal. By March 1, the Department of Justice is expected to submit a report containing recommendations to deter DEI in the private sector, including proposals for criminal investigations and up to nine potential civil compliance investigations.
Despite their broad and significant impact, however, these EOs offer no guidance about implementing or reconciling them with conflicting federal, state and local laws. Given the importance and broad scope of the issues raised, we are sharing current observations about some of the rapidly changing questions on employers’ minds.
January 21, 2025 -- Executive Orders
On January 21, 2025, the President issued two EOs entitled, Ending Illegal Discrimination and Restoring Merit-Based Opportunity and Ending Radical and Wasteful Government DEI Programs and Preferencing. The EOs suspended or upended existing EOs, some of which had been in place for 60 years.
The January 21 EOs mandated that, among other things:
- All DEI programs in the federal workforce and in federal contracting and spending terminate;
- Federal contractors have 90 days to dismantle their DEI efforts and affirmative action plans;
- The Office of Federal Contract Compliance Programs (“OFCCP”), “immediately cease promoting ‘diversity’”, or requiring federal contractors to have affirmative action programs related to women and minorities, or “allowing or encouraging federal contractors or subcontractors to engage in workforce balancing based on race, color, sex, sexual preference, religion or national origin.”;
- All investigative and enforcement actions by the OFCCP under the rescinded orders halt immediately; and
- Private sector employers are encouraged to cease DEI efforts.
The immediate impact on federal contractors is significant. These entities should be evaluating their programs and contracts. Standard clauses and representations as to equal opportunity and affirmative action will no longer be permitted, and contractors should be careful to review their current contracts to ensure they meet changed (and changing) requirements.
Private Employer Sector Impact
Private sector employers are not outside the reach of the EOs, which are explicit about the plan to focus on those who have voluntarily instituted DEI initiatives. One of the EOs provided that within 120 days, the Attorney General, working with federal agencies, must submit a report to the President making 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 is to identify “the most egregious and discriminatory DEI practitioners” and lay out a plan that focuses on “sectors of concern” and specific steps to deter DEI. The Attorney General is directed to identify up to nine potential “investigation targets” in the private sector.
On February 5, within hours of being sworn in, the Attorney General issued a memorandum indicating that this report would be provided by March 1, and as noted above, will include recommendations for both criminal and civil investigations. Also as noted above, as of February 11, the FCC is investigating DEI practices at Comcast and NBC Universal. Just a few days later, on February 13, the Attorneys General of several states, including Massachusetts, Illinois, Arizona, California, Connecticut, Delaware, Hawaii, Maine, Maryland, Minnesota, Nevada, New Jersey, New York, Oregon, Rhode Island, and Vermont issued a multi-state guidance on Diversity, Equity, Inclusion, and Accessibility employment initiatives in “creating and maintaining legally compliant and thriving workplaces.”
Education Sector Impact
Also, within 120 days, guidance is directed to be sent to all state and local educational agencies and institutions of higher education that receive federal funds and grants, including student loan assistance, to comply with these mandates.
Employer Action Steps
While the EOs are directly focused on DEI initiatives and programs, the scope of exactly what is or will be considered “illegal” is unclear. Many private employers have adopted voluntary programs aimed at promoting DEI in their workplaces through training, policies, and other mechanisms. Critically, even the definition of what constitutes a “DEI program” is unclear, creating a gap for employers.
Notably, these recent actions do not alter the existence of federal laws prohibiting discrimination in the workplace, ranging from Title VII of the Civil Rights Act of 1964, to the Age Discrimination in Employment Act or Americans with Disabilities Act. Employer obligations to comply with these laws still exist. It remains to be seen how the disbanding of DEI programs plays out in the court system, especially where employers have explained or justified certain actions by pointing to their need to comply with then-existing but now-stricken EOs.
Review Programs and Changes to Those Programs Carefully Before Implementing
There is no guidance advising how these EOs can be reconciled with the federal, state and local laws against discrimination or court-ordered affirmative action plans. Collective bargaining agreements may require DEI efforts. Many state laws, including New York, require anti-sexual harassment workplace trainings and policies. The takeaway is that employment-related decisions that impact an employee in a class previously protected by an EO should be given a deeper look before they are implemented.
It also remains to be seen whether these EOs are themselves lawful, as some similar state laws have been struck down as unconstitutionally vague or infringing on free speech. As noted above, there are several legal challenges pending which d seek to block these EOs.
When to Seek Counsel
If you are a private sector employer, our counsel is to watch carefully. If you are considering changing your current approach to DEI, it would be prudent to seek counsel. We do note that the EOs speak to “unlawful” DEI initiatives, implying the possibility that some DEI initiatives are lawful. Again, there is no clear answer as to where that line is drawn.
If you are a federal government contractor with a DEI program, it is imperative that you review it now, although the lack of guidance may make it difficult to determine the full scope of changes required.
This is a highly fluid situation, and it is imperative that you remain up to date on new developments. We expect that for the foreseeable future, there will be more questions than answers, but it is critical to consider the questions thoughtfully.
[View source.]
