On March 26, 2026, President Trump issued an executive order entitled Addressing DEI Discrimination by Federal Contractors (the “Order”).
The Order provides, “DEI activities are not only unethical and often illegal, but also cause inefficiencies, waste, and abuse within entities that engage in such practices. Specifically, DEI activities impose artificial costs in hiring, promotion, and operations by precluding implementation of merit-based principles; creating excessive workforce turnover by elevating immutable characteristics over job performance; and jeopardizing the sort of employee collaboration and problem-solving that is essential to fostering efficient and high-quality work.”
Further, the new Order states that “DEI activities also create unnecessary costs by reducing the pool of available labor by artificially limiting companies to hiring or promoting certain individuals, suppliers, or intermediaries based on their race or ethnicity.”
The Order prohibits federal contractors from engaging in any racially discriminatory DEI activities and it requires each agency head to report its compliance. Thereafter, each agency head must regularly review and take appropriate measures to ensure compliance. The Order defines “racially discriminatory DEI activities” as disparate treatment based on race or ethnicity in the recruitment, employment (e.g., hiring, promotions), contracting (e.g., vendor agreements), program participation, or allocation or deployment of an entity’s resources.
Although the Order only applies to federal contractors, it’s important for private employers to be mindful of the continuing trend of the current administration in targeting DEI programs in the workplace. As always, employers should ensure their DEIA policies comply with federal, state, and local laws. It is advisable that employers conduct an audit of all DEI-related policies, programs and initiatives and identify and remediate policies and practices that could potentially have an unlawful disparate impact on current and prospective employees.
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