The Trump administration has released multiple directives squarely aimed at diversity, equity, inclusion, and accessibility (DEI and DEIA) activities both within and outside of the federal government. With announcements coming in fast succession from multiple federal offices, companies should take time now to evaluate existing DEI activities through a risk-based approach that considers various factors: continuing obligations under U.S. federal and state anti-discrimination statutes and regulations, DEI-related legal obligations and stakeholder expectations in other jurisdictions that may apply to the organization's global operations, and the enforcement risks under the new directives. 

Federal and state discrimination laws have not changed. It remains illegal for companies to discriminate on the basis of race, color, religion, sex (including pregnancy, sexual orientation, and transgender status), or national origin. And, in certain cases, employers may be obligated to make reasonable accommodations based on disability, religion, and pregnancy. Employers should not conflate DEI activity with their ongoing obligation to prohibit harassment and discrimination and provide a safe workplace for all employees. Doing so risks eliminating practices critical to compliance with applicable laws. In addition, multinational companies should also keep in mind that certain DEI activities may be legally required in non-U.S. jurisdictions and may be viewed as critical to companies' commercial results and access to capital based on the expectations and values of shareholders, management, employees, and other stakeholders. 

In this alert, we consider what the flurry of executive orders and related memoranda say, how federal agencies may be looking to change the enforcement landscape, and what companies should be doing in the wake of these pronouncements.

What Is the Government Saying?

The administration is looking to make an example out of "[t]he most egregious and discriminatory DEI practitioners." In a trio of January executive orders ("Ending Radical and Wasteful Government DEI Programs and Preferencing," "Ending Illegal Discrimination and Restoring Merit-Based Opportunity," and "Initial Rescissions of Harmful Executive Orders and Actions"), the administration took aim at DEI programs in both the public and private sectors. Most notably, the January 21 order ("Ending Illegal Discrimination and Restoring Merit-Based Opportunity") imposed new requirements on government contractors and directed executive agencies to take actions to discourage DEI practices across the private sector. 

Recipients of federal funding (e.g., grants and cooperative agreements) and federal contractors have additional obligations under the order. Many entities do not think of themselves as "government contractors" or "grantees," but upon further analysis are surprised to learn that some facet of their organization receives federal funding in some form. The order requires recipients of federal funds to certify that they do not operate any programs promoting DEI that violate applicable federal anti-discrimination laws and that compliance with such laws is material to the government's payment decisions. This certification opens up contractors, executives, and other entities to potential False Claims Act (FCA) liability. The potential for FCA liability is even higher in the current environment, where all it takes is one internal whistleblower to bring a federal action against an organization under the qui tam provisions of the FCA. See our prior alert for a more detailed discussion of the impact on federal contractors and entities receiving federal financial assistance. As to the private sector more broadly, the order directs the attorney general to submit a report "containing 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 DOJ has already started to put this directive into action. In her first hours in office on February 5, Attorney General Pam Bondi issued the "Ending Illegal DEI and DEIA Discrimination and Preferences" memorandum (Bondi DEI Memo), directing the Civil Rights Division and the Office of Legal Policy to submit a report to the Associate Attorney General (AAG) by March 1, 2025, not only containing recommendations for enforcement but also "including proposals for criminal investigations and for up to nine potential civil compliance investigations." This request builds on the executive order's demand that agencies "identify up to nine potential civil compliance investigations of publicly traded corporations, large non-profit corporations or associations, foundations with assets of 500 million dollars or more, State and local bar and medical associations, and institutions of higher education with endowments over 1 billion dollars." It also takes the significant additional step of flagging potential criminal investigations.

The administration has crafted the term "illegal DEI," and is seeking to define it broadly. On February 5, the Acting Director of the Office of Personnel Management (OPM) released a memorandum defining "illegal DEI" as "[u]nlawful discrimination related to DEI includ[ing] taking action motivated, in whole or in part, by protected characteristics." Existing laws and regulations prohibit unlawful discrimination related to protected characteristics, such as race, color, religion, sex (including sexual orientation and transgender status), national origin, age, disability, genetic information, or pregnancy, childbirth, or related medical conditions. However, the OPM memorandum asserts that "illegal DEI" practices include "unlawful diversity requirements for the composition of hiring panels, as well as for the composition of candidate pools (also referred to as 'diverse slate' policies)." The OPM memorandum also notes that federal agencies "should thus prohibit [employee resource groups (ERGs)] that promote unlawful DEIA initiatives or advance recruitment, hiring, preferential benefits (including but not limited to training or other career development opportunities), or employee retention agendas based on protected characteristics." Although the memorandum contends that "agency heads retain the discretion to allow employees to host affinity group lunches, engage in mentorship programs, and otherwise gather for social and cultural events," it is likely that the memorandum will have a chilling effect on such practices, and on any agency or employer funding of or reimbursement of costs for those activities.

The Bondi DEI Memo is narrower with respect to the protected classes it covers – it is targeted to the protected characteristics of race and sex, stating that its guidance "is intended to encompass programs, initiatives, or policies that discriminate, exclude, or divide individuals based on race or sex." It further states that "educational, cultural, or historical observances—such as Black History Month, International Holocaust Remembrance Day, or similar events—that celebrate diversity, recognize historical contributions, and promote awareness without engaging in exclusion or discrimination" are not prohibited. 

What Should Organizations Be Doing?

Federal equal employment statutes and the case law interpreting those statutes remain unchanged, alongside state laws prohibiting discrimination on the basis of protected characteristics. Organizations should remain focused on creating workplaces free of harassment and discrimination. While the executive directives are likely to be subject to legal challenges that will take time to resolve, they provide important insight into the enforcement priorities of the administration. So, what should companies be doing in light of this landscape?

1. Conduct a risk-based review of workplace policies, procedures, and activities that may touch (or be interpreted as touching) on race, gender, ethnicity, sexual orientation and identity to determine which of those policies, procedures, and activities are critical to comply with applicable laws and which may be vulnerable to scrutiny and enforcement under the new directives. 
2. Ensure that the organization's public statements and expressed commitments to stakeholders regarding such activities (including in regulatory filings, on the organization's website, and in press releases) are reviewed from a legal compliance perspective.  
3. Ensure the organization's compliance program promptly and effectively addresses allegations of discrimination and harassment. This obligation continues and should not be impacted by the assessment of DEI programs.
4. Be aware of evolving compliance risks and opportunities for mitigating risks. For example, the Equal Employment Opportunity Commission (EEOC) recognizes "coarsened social discourse outside the workplace" as a risk factor that "may make harassment inside the workplace more likely or perceived as acceptable," and "[i]ncreasingly heated discussion of current events occurring outside the workplace" as indicia of this risk factor. Discussion of these directives alone may lead to a heightened risk of harassment. Organizations can tailor communications and commitments to stakeholders to help mitigate evolving risks.
5. Check "federal funding" touchpoints. Sources of federal funding may expose your organization to heightened scrutiny and could require it to make new certifications that raise the specter of FCA liability, particularly in an environment teeming with potential FCA whistleblowers. As companies prepare to navigate the new world of DEI, all organizations should consider: (a) confirming if and how the organization receives funding from the federal government, (b) reviewing internal hotline and whistleblower procedures, and (c) forming a core team of contracts and legal professionals who can assess any DEI certifications or statements to the federal government. 

For more information, please contact:

Katherine E. Pappas, kpappas@milchev.com, 202-626-5816

Ann Sultan, asultan@milchev.com, 202-626-1474

Alejandra Montenegro Almonte, aalmonte@milchev.com, 202-626-5864

The information contained in this communication is not intended as legal advice or as an opinion on specific facts. This information is not intended to create, and receipt of it does not constitute, a lawyer-client relationship. For more information, please contact one of the senders or your existing Miller & Chevalier lawyer contact. The invitation to contact the firm and its lawyers is not to be construed as a solicitation for legal work. Any new lawyer-client relationship will be confirmed in writing.

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