Policy shifts, court challenges, and strategic considerations for organizations navigating federal directives on DEI.
Topics discussed:
- Understanding Trump’s EOs on DEI/DEIA
- Legal challenges to the executive orders
- Best practices for employers
- Implications for federal contractors and grant recipients
listen to audio here.
Content related to this discussion:
Transcript
The following transcript of this discussion was edited for clarity.
Danielle Reyes: This is New Directions, a series of discussions about the Trump administration’s first quarter in office and what to watch in the coming months. In this discussion, we’ll be talking about Trump’s executive orders [EOs] focused on diversity, equity, and inclusion [DEI] and on diversity, equity, inclusion, and accessibility [DEIA].
I’m Danielle Reyes, a partner in the Financial Services practice here at Goodwin, and I co-lead our ESG & Impact practice. I’m here with Goodwin partners Christina Lewis and Liza Craig.
Christina Lewis: Hi, everyone. I’m Christina Lewis, a partner in the Employment practice in the Boston office at Goodwin.
Liza Craig: And I’m Liza Craig, a partner out of the Washington, DC, office. I lead the firm’s Government Contracts & Grants practice. It’s a pleasure to be here with both Christina and Danielle. Let’s jump right in. I’m going to do a little bit of stage setting before I turn it over to my colleagues today.
As of April 9, President Trump has signed 111 executive orders. I believe that number has probably gone up by a few since then. A number of these orders have been focused on DEI. Our Goodwin team has published a number of alerts on the specifics of these executive orders. I would invite you, if you haven’t seen those, to check out our website and catch up.
These DEI-related executive orders have focused primarily on five goals: one, the elimination of federal personnel whose roles focus specifically on enhancing DEI programs within the federal government; two, the termination of all federal DEI programs and activities that promote or support DEI objectives; three, requiring federal contractors to eliminate internal DEI efforts to certify compliance with federal antidiscrimination laws and to refrain from operating what the administration has determined are “illegal DEI programs”; four, the return to merit-based practices by discouraging any forms of preference based on race or sex in hiring, promotion, or contracting processes; and finally, the fifth goal, to encourage companies that do not receive federal funding to end “illegal, discriminatory internal DEI efforts.”
In late January, just a couple of weeks after the Trump administration was sworn in, the Office of the Undersecretary of Defense signed a memorandum ordering all Department of Defense contracting officers to immediately cancel or amend pending solicitations and to terminate or partially terminate existing contracts, including those that have been set aside for small businesses that contained any DEI requirements. That was the first wave.
Not even a few weeks later, in early February, Attorney General Pam Bondi issued a memorandum directing the Department of Justice to initiate broad investigations of private companies for civil rights violations related to DEI practices. This memorandum directed the Civil Rights Division and the Office of Legal Policy within the Department of Justice to jointly submit a report to the associate attorney general no later than March 2025, the following month, and to seek proposals and recommendations for criminal investigations into companies that violate civil rights laws.
Finally, in mid-February, the US General Services Administration issued what’s known as a class deviation to the Federal Acquisition Regulation, which governs the award of contracts and the administration of federal contracts. This class deviation mandated that all executive departments and federal agencies cease enforcing affirmative action program requirements that, up until the new administration stepped in, were included in all federal contracts. This class deviation resulted in the unilateral modification of a number of existing federal contracts and mandated that federal contractors cease all affirmative action in DEI activities and programs.
We’re anticipating that the administration will be taking more action based on these executive orders in the coming weeks and months. We don’t see any cessation to this trend.
Danielle, I’ll turn it over to you now that I’ve set the stage.
Danielle Reyes: Thank you, Liza, for giving us that really helpful background. I’m going to discuss some of the legal challenges that we’ve already seen. These are early days still, so we’ll probably see more, and it’s important to stay on top of these developments because they really change from week to week. There are currently a number of active court cases pending in which various groups are challenging the EOs aimed at eliminating DEI programs, policies, and practices. These cases are still pending and subject to appeal, but we have seen some judges strike down parts of the executive orders on various grounds while others have upheld them or upheld parts of them.
To give you a sampling: We have the National Association of Diversity Officers in Higher Education v. Trump, in which plaintiffs are challenging the president’s orders calling for an end to DEI programs. We have Chicago Women in Trades v. Trump, in which a nonprofit for women in trade professions is seeking to block the order withdrawing federal support for programs that support DEI. We have the National Education Association v. the US Department of Education, in which the National Education Association is challenging a Trump administration memo ordering schools to end race-based practices of any kind or lose their federal dollars. And we have the Office of the Director of National Intelligence, in which intelligence officers are suing over the anti-DEI orders as well.
As you can see, we have a wide range of plaintiffs suing based on the effect of the DEI-related executive orders on their DEI-related programs. On February 13, 2025, 16 attorneys general issued a memorandum that encouraged employers in their respective states to maintain legal DEI programs, stating that companies should be fully confident that they can continue to implement DEI and DEIA policies and programs to advance business objectives and help ensure that they remain compliant with state and federal civil rights laws. In fact, that guidance actually said that the absence of such policies and programs could be an indication that such companies in those states should be investigated for violating the antidiscrimination laws in those states as well as federal antidiscrimination laws. The memorandum offers guidance on best practices, which the attorneys general believe are compliant with the law: “Policies and practices that promote diversity, equity, inclusion, and accessibility are not the same as preferences and individual hiring and promotion decisions that have been found to be unlawful.”
On the other side, conservative nonprofits have also brought suits against private employers, and a growing number of activist shareholders, often funded by conservative-backed organizations, have made a wave of demands and proposals seeking DEI policy retractions or reverse racial discrimination audits.
Speaking of the best practices that the attorneys general addressed in their memorandum, Christina, can you tell us more about best practices that we should keep in mind?
Christina Lewis: Thanks, Danielle. I’d be happy to. As Danielle mentioned, the attorneys general did list a number of best practices for employers. I have gone through and modified them slightly based on guidance that we received from the Equal Employment Opportunity Commission [EEOC] in March.
When you synthesize the two, what is clear is that employers should prioritize wide-scale recruitment efforts to attract a larger pool of applicants from a variety of backgrounds. Employers should involve multiple people in hiring and promotion recommendations. Employers should establish standardized criteria for assessing candidates and employees. And employers should ensure accessible recruitment and hiring practices, including by offering reasonable accommodations.
On the professional development and retention side, employers can conduct antiharassment and antidiscrimination training. Here’s where employers should be mindful of the EEOC guidance that was issued in March. The guidance indicates that employers can continue to provide workplace trainings related to certain DEI topics as long as the employers do not exclude employees from participating in such trainings based on their race, sex, or any other protected characteristic and as long as the employers don’t separate employees into groups based on race, sex, or any other protected characteristics while administering the trainings.
The second thing to be mindful of in the EEOC guidance is that it does say that DEI-related trainings on topics such as implicit bias, sensitivity, and DEI in general need to be reviewed carefully because they could give rise to colorable hostile work environment claims if those trainings step over the line and delve into topics that the EEOC views to be illegal DEI topics.
With respect to assessment and integration, it’s best practice to create protocols for reporting discrimination or harassment of any kind and make sure that there are avenues for employees to discuss those issues. I think employers are still encouraged and should promote belonging and unity across all of their employees.
I’ll stop there. Liza, I think now might be a good time to talk about takeaways for federal contractors and grant funding in particular.
Liza Craig: Thank you so much, Christina. A lot of folks are asking what all of this means for the entities that actually have the federal contracts, either if you’re getting the notification that your contracts are being amended in some places (or in some instances perhaps even canceled) or if you’re wondering what you’re supposed to do if you get that notification.
Companies need to continue performing until they receive written direction from the appropriate point of contact within the government to stop work. There’s a lot of information out there on social media and in the press about what the government is or is not doing. But companies need to remember that until they get that written notification from the contracting officer that they need to do something differently with respect to their federal funding, they need to continue to perform. Companies should document any impacts related to partial or total contract terminations. We’ve seen a few instances where contracts have been paused, then the government has opted to restart them, to turn the contracting work back on after further review. To the extent that these changes are impacting costs, performance, and your business, document those impacts in writing to be able to maintain positions for any recovery at a later point.
Companies should always, but especially now, document all exchanges with federal agency employees in writing. It’s probably not enough at this point to communicate via phone and take direction and rely on that — things are changing so rapidly. It’s best practice to confirm, even after a phone call, what your conversation was in writing and confirm that all parties are aware of what the next steps should be.
Companies need to examine their subcontracts or subawards that have been executed in conjunction with any contracts or awards that are partially or fully terminated and take action as appropriate. Make sure that if you are being told to stop work, you can flow this down to your subcontractors. If you cannot, if they’ve already performed and provided goods and services, check your contracts to see what types of recourse you may have in the event that your prime contract is terminated.
The Trump administration emphasized that federal assistance provided directly to individuals is excluded from what is covered by the executive orders. That’s an important takeaway. Not every entity or everyone that receives federal funding is going to be affected. The administration has specifically stated that it does not intend to affect Medicare, Medicaid, or Social Security benefits via these executive orders. But again, stay plugged in, because as Christina and Danielle have suggested, this is a rapidly changing area. What may be true today could be altered somewhat tomorrow.
Danielle Reyes: Christina and Liza, thank you so much for that overview. Obviously it’s important for all of us to stay on top of these really rapidly changing developments. You can keep following our content to stay on top of them yourself as well. Thank you so much for joining us. We’ll see you in the next one.
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