Note: Diversity, Equity, and Inclusion (DEI) initiatives continue to evolve as federal regulations and enforcement are released. Employers should ensure they remain compliant with the federal anti-discrimination laws surrounding DEI.

Businesses of all sizes implemented Diversity, Equity, and Inclusion (DEI) programs, policies, and initiatives within their workplace. However, as a result of recent executive orders from the Trump Administration starting in early 2025, programs and initiatives involving DEI practices have been put into question for many employers due to changes made at the federal level. A press release clarifying the legality of certain DEI-related initiatives was released by the Equal Employment Opportunity Commission (EEOC).

When evaluating DEI and how initiatives are being implemented, employers must navigate the topic with care and ensure they avoid potential penalties that may arise if certain policies are deemed unlawful. Here is what you need to know about the current status of DEI in 2026 and how your business should move forward.

What Are DEI Policies?

DEI policies are intended to create equal job opportunities and a fair / inclusive working environment.

Common aspects that businesses focus on regarding DEI policies and initiatives include: 

• Non-discrimination policies, including policies related to diversity recruitment and hiring
• Accommodations for employees with disabilities, such as flexible working conditions
• Training and development programs engineered to teach anti-discrimination behavior

However, it’s important to note that DEI does not have a clear legal definition according to the EEOC.

Recent DEI Policy Changes by the Federal Government

On January 21st, 2025, President Trump signed Executive Order 14173, which is designed to restrict DEI practices on the federal level and question practices amongst private sector employers that may conflict with merit-based opportunities or anti-discrimination standards. As such, the statement includes details regarding what is being targeted and the plan for ending DEI programs.

What Is Included in the DEI Executive Order?

The Trump Administration’s efforts towards DEI practices aim to restrict specific DEI objectives. The executive order specifically urges agencies and staff under the Trump Administration to:

• Terminate positions relating to DEI within the federal government
• Cancel grants and contracts related to equity
• End previous executive orders requiring contractors to use federal funds to implement anti-discrimination and employment barriers
• Enact contracts for federal employees that certify the end of DEI-related efforts
• Question the use of DEI within private sector businesses, institutions, and non-profits

Federal Contractors and DEI Restrictions

Under Executive Order 14398, effective March 26, 2026, a follow-up to the initial DEI regulations took place that enforced immediate boundaries on DEI-related discrimination in the workplace for companies that do business directly with the US government.

By April 25, 2026, companies involved with federal contracts must adhere to the following:

• All contracts, contract modifications, and subcontracts must include language that explicitly states that the company prohibits discriminatory DEI practices
• Reinforce restrictions on leadership development, mentoring, or training programs that show preferential treatment based on an individual's race or ethnicity
• Highlight the penalties of non-compliance, including immediate contract termination, debarment from future government contracts, and liability charges

What is Not Included in the DEI Executive Order?

Programs enacted through statutes or regulations that counter continuous discriminatory practices will still be in effect. These programs include:

• Equal Employment Opportunity Commission
• US Department of Justice under the Civil Rights Division
• US Merit Systems Protection Board
• Smaller dedicated departments against continued discrimination, such as the Department of Transportation’s Disadvantaged Business Enterprise Program

Impact on Title VII of the Civil Rights Act of 1964

DEI is a broad term that is not defined in Title VII of the Civil Rights Act, a federal law that prohibits employment discrimination. Generally, Title VII is unaffected by the DEI Executive Order.

However, as a result of Executive Order 14173 signed back in January 2025, DEI initiatives, policies, programs, or practices under Title VII may be unlawful if they involve discriminatory practices, including: 

• Hiring or recruiting employees, or making such decisions based only on race, sex, or any other protected class
• Separating groups of workers based on race, sex, or other protected classes, including when administering workplace training, regardless of whether the training is DEI-related

To further highlight the differences between Title VII and DEI policies and programs, it’s important to note that the following are still in effect as federal law under Title VII despite the executive orders on DEI:

• Protections against employment discrimination due to race, religion, sex, and other protected classes
• Protections against negative or retaliatory action from an employer regarding discrimination complaints or processes
• Employers may not discriminate in any aspect of employment, including but not limited to hiring and firing, compensation, recruitment, etc.

To get a better understanding of what is included in Title VII, more information on Title VII is provided on the US Department of Justice website.

Why Are Companies Rolling Back DEI Policies and Programs?

While federal agencies have already taken action to roll back certain DEI-related initiatives entirely, many private sector companies that have implemented previous DEI-related practices are also proactively starting to roll them back in preparation and direct response to what is outlined in Executive Order 14173: threatened legal action against companies with certain discriminatory DEI initiatives. Some examples of large employers scaling back DEI include Amazon, Google, and Goldman Sachs.

Many of these companies that plan to or have already begun rolling back certain DEI-related practices are doing so due to the following:

• Legal changes against DEI, as outlined in Executive Order 14173, that specify certain unlawful DEI initiatives that may favor preferential treatment over merit-based experiences when hiring
• Shifts in company priorities that are influenced by company shareholders or leadership
• The costs of providing DEI programs to employees

Frequently Asked Questions

How Should Businesses With DEI Initiatives Be in 2026 and Moving Forward?

When assessing the inherent risks associated with DEI, companies should remain cautious when considering adding or continuing DEI-related practices. However, for companies going forward with DEI programs, ensure your company understands how to navigate the legality of DEI and evaluate if the program can be considered unlawful by referring to the specifications detailed in the executive order.

To help safeguard your DEI initiatives, review that your company does not:

• Structure employee resource groups to be based solely on race, color, sex, or other protected classes; Or
• Make employment decisions motivated by DEI

Regardless of how your business plans to tackle the new DEI executive order, understanding the ins and outs of DEI management while balancing other workforce duties can be challenging, especially when considering the risks associated with DEI initiatives.

Contacting an HR outsourcing company can help your business safely navigate DEI and provide the advice you need to move forward. If your business needs guidance on how to navigate its DEI situation, contact us today. Or, continue learning about DEI strategies such as Diversity Hiring.