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After the DEI Executive Order

February 14, 2025

What Are the Compliance Requirements for Private Employers?

In January 2025, President Trump issued the “Ending Illegal Discrimination and Restoring Merit-based Opportunity” executive order, which significantly impacts private employers, particularly those that implement diversity, equity, and inclusion (DEI) programs. This order aims to curtail employment practices that provide preferential treatment based on race, sex, or other protected characteristics, reinforcing a strict adherence to merit-based hiring and advancement.


For private employers, especially federal contractors and organizations with established DEI initiatives, understanding the legal implications of this order is essential to ensure compliance while mitigating potential liabilities.

 

Key Legal Implications for Private Employers

  • Revocation of affirmative-action mandates for federal contractors. The order revokes prior mandates, including Executive Order 11246, which required federal contractors to adopt affirmative-action programs to address historical disparities in hiring. The revocation effectively eliminates federal obligations for contractors to develop workforce diversity plans or set hiring goals based on demographic representation.
  • Regulatory scrutiny of employment practices. Federal agencies, particularly the Department of Justice (DOJ) and the Equal Employment Opportunity Commission (EEOC), have been directed to investigate employment policies that could be deemed discriminatory under the new legal framework. Employers must ensure that any DEI initiatives remain neutral and do not grant or deny opportunities based on race, gender, or other protected classifications.
  • Merit-based employment enforcement. The executive order underscores the importance of meritocracy, requiring employers to justify employment decisions strictly based on qualifications, experience, and performance. Organizations implementing hiring quotas, targeted recruitment efforts, or employee resource groups may need to re-evaluate these programs to avoid potential litigation risks.
  • Compliance audits and investigations. The attorney general is tasked with formulating an enforcement plan that includes identifying employers whose DEI initiatives may conflict with federal non-discrimination laws. Employers should anticipate increased oversight, potential audits, and legal challenges if their policies include race- or gender-conscious hiring, promotions, or training programs.

 

Compliance Strategies for Employers

Given the legal uncertainties surrounding this order, private employers must take proactive steps to avoid violations and potential legal repercussions.

  • Conduct an internal policy review. Employers should undertake a comprehensive audit of all DEI programs, training materials, hiring practices, and workplace policies. Any language or initiatives that suggest preferential treatment based on race, gender, or ethnicity should be reassessed to ensure alignment with the updated legal framework.
  • Emphasize equal opportunity and non-discrimination. To remain compliant, companies should reaffirm their commitment to equal opportunity without the use of race- or gender-based preferences. Employee training programs should be reviewed to ensure they focus on compliance with federal anti-discrimination laws rather than implicit bias or identity-based initiatives.
  • Monitor federal guidance and legal challenges. Since the implementation of this order may lead to litigation and policy revisions, employers should stay informed of further legal developments from the DOJ, EEOC, and other regulatory bodies. It is advisable to consult employment-law attorneys to navigate these changes effectively.
  • Prepare for increased scrutiny and potential investigations. Employers, particularly those with government contracts, should be prepared for potential audits and legal reviews. Documentation demonstrating that hiring and promotion decisions are based solely on qualifications and performance will be crucial in defending against any claims of discriminatory practices.

 

Conclusion

The repeal of affirmative-action mandates and the increased focus on merit-based employment and advancement signal a substantial shift in workplace compliance requirements for private employers. Organizations that have historically engaged in DEI initiatives must carefully reassess their programs to ensure they do not run afoul of federal regulations. While diversity efforts are not outright prohibited, any policies that confer advantages or disadvantages based on protected characteristics may expose employers to legal liability.


To mitigate risks, employers should prioritize objective hiring and promotion criteria, eliminate race- or gender-based preferences, and stay informed on regulatory updates. Consulting legal experts and conducting internal audits will be critical steps in ensuring compliance with this evolving legal landscape.


Krupa Kotecha is an attorney who specializes in labor and employment-law matters at the Royal Law Firm LLP, a woman-owned, women-managed corporate law firm that is certified as a women’s business enterprise with the Massachusetts Supplier Diversity Office, the National Assoc. of Minority and Women Owned Law Firms, and the Women’s Business Enterprise National Council.


Krupa Kotecha wrote this article which was featured in Businesswest. Click here to visit their website.

April 2, 2025
A recent court decision in Pennsylvania offers clarification that employers cannot take adverse action for marijuana use against individuals who possess medical marijuana cards, at least under Pennsylvania’s Medical Marijuana Act. In this decision, an individual received a conditional job offer for a non-safety sensitive position, contingent on a drug test. The individual disclosed his state-certified use of medical marijuana to treat anxiety, depression and ADHD, assuring the employer that it wouldn’t affect job performance or safety. After a positive test for marijuana, the employer rescinded the offer, citing safety concerns. The individual sued the employer under the Pennsylvania Medical Marijuana Act (“MMA”) and disability discrimination under the Pennsylvania Human Relations Act (“PHRA”). The Court allowed the individual’s claim under the MMA to proceed, potentially creating substantial precedent for tolerance of individual medical marijuana use in non-safety sensitive positions. The Court specifically noted that MMA protects individuals not just from discrimination based on card holder status, but also for adverse actions based solely on lawful medical marijuana use. The Court otherwise dismissed the individual’s claims under the PHRA because the PHRA does not require employers to accommodate medical marijuana use, even if it is prescribed for a legitimate medical condition. While a Pennsylvania decision, this decision potentially has rippling implications that will affect Massachusetts employers and employers in states where medical marijuana use is allowed under state law, which is allowed in some manner in 44 states. Employer Takeaways Understand State-Specific Protections : Laws regarding medical marijuana use differ widely across states. In some areas, cardholder status is protected, while in others, it is not. Employers operating in multiple states must ensure their hiring and accommodation practices comply with the relevant laws in each state. Base Safety Concerns on Job-Specific Evidence : General or speculative safety concerns are insufficient, particularly in states with strict employee protections. Safety risks cited should be specific, evidence-based, and directly related to the essential functions of the job. Review Drug Testing and Accommodation Policies: Update your policies to reflect current state laws and clarify how your organization manages disclosures of medical marijuana use, especially during the hiring process .  If you have any queries regarding drug testing or other workplace accommodations following this ruling, it is prudent to contact legal counsel. If your business has any questions on this topic or any other matters, please do not hesitate to contact the attorneys at The Royal Law Firm at 413-586-2288.
March 28, 2025
The Royal Law Firm was a Finalist for Best Law Firm in The Best of The Valley Readers' Poll for 2025, as published by the Valley Advocate! Thank you to everyone who voted for us, and to those of you who trust us to help you in times of need. Click here to check out all of the category winners and finalists.
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