As we reported previously, President Trump's January 21 Executive Order (EO) 14173, "Ending Illegal Discrimination and Restoring Merit-Based Opportunity," terminated certain affirmative action requirements applicable to government contracts and federally-funded construction contracts. The EO also mandates that new provisions be included in all government contracts and all grants, certifying that counterparties do not have diversity, equity and inclusion (DEI) policies that violate federal anti-discrimination law. We noted that, in absence of additional government guidance, there was some challenge in identifying what DEI programs may be permissible going forward.
The EO requires a report from the Attorney General within 120 days to clarify the new administration's position on these issues. Some government contractors had concern that report might not come before expiration of the 90-day grace period from the date of the EO to comply with the regulatory scheme previously in effect. Helpfully, on February 5, Attorney General Bondi issued this memo directing that at least the enforcement strategy component of that report be submitted to the Associate Attorney General by March 1, meaning there will be more clarity (hopefully) well before for the expiration of the 90-day period. In a footnote, the memo also clarifies that while discrimination, exclusion, and division of individuals based on race or sex are prohibited, celebration of diversity is not:
This memorandum is intended to encompass programs, initiatives, or policies that discriminate, exclude, or divide individuals based on race or sex. It does not prohibit 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.
Importantly, the memo also states that the Department of Justice's (DOJ's) Civil Rights Division "will investigate, eliminate, and penalize illegal DEI and DEIA [diversity, equity, inclusion and accessibility] preferences, policies, programs, and activities in the private sector and in educational institutions that receive federal funds," and these enforcement actions by DOJ may be starting now. For this reason, among others, most government contractors and grant recipients are moving to significantly revise or terminate the DEI programs in ways that, at a minimum, apply the principles from the Supreme Court's 2023 admissions decision, Students for Fair Admission v. Harvard. At a minimum, companies are eliminating quotas based on immutable characteristics. Many are also terminating race, gender, or sexuality-based employee groups as well as ending involvement, financial or otherwise, with focus on the promotion of specific groups identified by immutable characteristics.
Further calibration of diversity-focused programs relating to hiring, promotion, retention, and supplier selection, among other practices, will almost certainly be needed as the new administration's position on what are acceptable DEI practices becomes clearer. We recommend that government contractors and grant recipients work with stakeholders as well as employment and government contract counsel to carefully and objectively review their DEI-related policies to ensure there are no elements that arguably violate federal anti-discrimination.
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