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Recent executive actions by the Trump administration have reshaped the legal landscape for workplace diversity, equity, and inclusion (DEI) programs and created a legal minefield for companies in both the public and private sector.
Navigating a path which honors a commitment to equality without attracting the ire of right-wing zealots is challenging but not impossible as Bloomberg Law’s latest report shows.
The orders signal a dramatic shift in how DEI and the law intersect. At the heart of the new approach are Executive Orders (EO) 14151 and 14173, both of which take aim at what the administration labels “illegal DEI”, a term that, while undefined in statute, is gaining form through litigation and enforcement.
EO 14173 directs federal agencies to investigate and dismantle DEI efforts that it alleges violate anti-discrimination laws. Though the private-sector enforcement provision was temporarily blocked, an appeals court has allowed its implementation to resume. The implications are already being felt and major companies have begun removing diversity language from their 10-K filings, and employee groups, while diversity goals are rapidly vanishing across industries.
A risk-based framework for DEI programs
In response to the regulatory ambiguity, legal analysts and Bloomberg Law have identified a risk barometer to help employers assess which DEI initiatives may be most vulnerable under the current legislation around DEI firings. Programs are now being evaluated across three categories: high, medium, and low risk.
High-risk
This means programs that include any job opportunity or development initiative that is explicitly reserved for individuals based on race, sex, or other protected characteristics. It encompasses many internships, mentorships, and leadership initiatives that have traditionally sought to address historical inequities. Legal challenges from anti-DEI groups have already pushed companies to retreat from such exclusive models, with a growing trend toward modifying or eliminating eligibility criteria that are tied to protected classes.
Medium-risk
Includes efforts around employee resource groups (ERGs), business resource groups (BRGs), and affinity collectives focused on shared identities. While not inherently unlawful, such groups become legally precarious when they provide business or career advancement benefits tied to membership, particularly if there are implicit or explicit barriers to entry. Informal EEOC guidance and DOJ commentary suggest that administration officials are monitoring whether such groups promote exclusion or preferential treatment based on protected traits.
Low-risk
Initiatives include equal employment opportunity (EEO) and anti-harassment training designed to comply with federal law. These are considered foundational to preventing discrimination and are generally shielded from legal scrutiny unless they include content that negatively stereotypes any protected group. The administration has criticized elements such as unconscious bias and micro-aggression training, but courts have set a high bar for plaintiffs to prove harm under Title VII based solely on training content.
Strategic retrenchment and litigation trends
The federal crackdown has already triggered significant corporate changes. In the weeks following Executive Order 14173, DEI disclosures in 10-K filings fell by nearly half compared to the same period in 2023. Companies including PepsiCo, Bank of America, and Citigroup have rolled back diversity goals, while others like Booz Allen Hamilton swiftly complied with the order’s mandates for federal contractors.
A driving force behind this pullback is America First Legal (AFL), a right-wing advocacy group founded by former White House Deputy Chief of Staff, Stephen Miller. AFL has filed EEOC charges against multiple Fortune 500 companies, alleging that race and gender-based promotion or hiring targets breach Title VII. Nearly 75% of the companies targeted had published such targets.
The legal challenges are not confined to corporate boardrooms. DEI-related executive orders have been subject to 19 federal lawsuits across multiple jurisdictions, with the highest concentration in the DC Circuit. Eight cases name the Office of Management and Budget as a defendant, followed by the Departments of Education, Justice, Labor, and Health and Human Services.
Although no case has yet reached a decision on the merits, early rulings on motions for temporary restraining orders (TROs) and preliminary injunctions are instructive. Of the nine cases that have progressed past procedural stages, all resulted in at least partial victories for the plaintiffs. Only two appellate courts have intervened to allow enforcement of the executive orders, and those outcomes remain fluid as appeals continue.
A legal shield for federal contractors
Federal contractors face additional exposure under EO 14173, which now requires them to certify that their DEI programs comply with anti-discrimination law. In light of this, many are considering conducting internal DEI audits under attorney-client privilege to mitigate legal risk.
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The approach offers two advantages. First, it shields sensitive data from government investigators under the attorney-client privilege and work product doctrines. Second, it helps satisfy the standard under the False Claims Act (FCA), which requires certifying employers to avoid “deliberate ignorance” or “reckless disregard” of the legality of their programs. A privileged audit may help affirm a contractor’s good-faith effort to comply with the law.
Ironically, while the Trump administration’s order has reduced transparency by revoking EO 11246’s affirmative action audit requirements, it may have opened the door for contractors to protect more information from disclosure. Where EO 11246 compelled federal contractors to submit hiring and compensation data during compliance audits, EO 14173 now allows that same data to be reviewed in a legally protected manner.
Bar associations test the boundaries
The law around DEI firings and enforcement also extends to professional organizations. Mandatory state bar associations (required membership bodies in 32 jurisdictions) have mostly retained their DEI programming, citing constitutional protections. Courts have repeatedly held that mandatory bar activities are permissible if they are “germane” to regulating the profession and improving legal services.
Recent rulings in Texas, Utah, and the Ninth Circuit show that DEI initiatives tied to lawyer competency, access to justice, or courtroom fairness can pass constitutional muster. It’s a key distinction in that while bar associations must avoid non-germane activities, DEI efforts that aim to eliminate bias in legal practice are still considered legitimate. A DEI Continuing Legal Education (CLE) requirement, for example, is often categorized under professionalism standards.
Even under EO 14173, bar associations continue to walk this line. In North Dakota, for instance, a canceled LGBTQ+ CLE webinar was reinstated after member objections, with the bar asserting its commitment to professional education. So long as programming stays within constitutional boundaries, bar associations may be in a stronger position than private employers to defend their DEI efforts.
As chaotic and intimidating the administration’s haste to remove DEI from organisations may be, it has to be based on the rule of law and therefore there is a legal framework within which it is possible to navigate increasingly treacherous terrain without stepping on a landmine.
