Remind me, what’s an executive order?

Executive orders are instructions ordered by the president of the United States that direct government firms and officials to take specific actions. While they are not laws, they have the force of law and effect how existing laws are executed or enforced.

Executive orders impact the companies of the executive branch and for that reason do not require the approval of Congress. They must be within the president’s constitutional authority and may be challenged in court if considered unconstitutional.

Executive orders might be rescinded, reversed by future presidents, or challenged in court, and enforcement concerns can alter during any administration.

The new administration’s actions have significant results beyond executive orders. For more on mitigating risk, international companies can take new chances by remaining active.

Implications of the executive orders for DEI initiatives and employment in private-sector companies

On Jan. 21, President Trump released “Ending Illegal Discrimination and Restoring Merit-Based Opportunity,” which reverses different prior executive orders and memoranda, consisting of Executive Order 11246 (EO 11246) checked in 1965 by President Lyndon B. Johnson.

EO 11246 required every federal government agreement to include a statement that the contractor will not discriminate against any employee or candidate for employment based on race, creed, color, or national origin.

Despite President Trump’s brand-new executive order, the underlying federal anti-discrimination law stays the same for private-sector workers.

However, the executive order signals that there might be altering enforcement concerns in the new administration. The order directs all federal firms to “fight prohibited private-sector DEI choices, requireds, policies, programs, and activities.”

In December 2024, President-elect Trump tapped Harmeet K. Dhillon to lead the Justice Department’s civil liberties office, indicating his record of “taking legal action against corporations who utilize ‘woke’ policies to discriminate versus their employees.”

In addition to revoking EO 11246, the Jan. 21 executive order advises each agency of the federal government to identify “up to 9 potential civic compliance examinations” of economic sector entities within 120 days of the order - by May 21, 2025.

The private sector entities based on these investigations consist of publicly traded corporations, big nonprofits - including bar associations - large foundations, and universities whose endowments exceed US$ 1 billion.

Organizations that may be targeted should ask:

- What is my organization’s risk tolerance?
- How will workers respond to the business’s actions?
- How will clients and stakeholders react?
What in-house counsel ought to consider:

Assess any federal agreements and grants

- Determine if they consist of any terms or conditions associated with DEI that might contrast with existing laws and guidelines
Review your organization’s existing DEI policies to comprehend your threat

- Prepare for increased examination and possible civil compliance investigations
Document, file, file

- Hiring and recruitment procedures
- Performance examinations and promotion decisions
- Training products and presence records
- Any changes to DEI policies
Implications for federal specialists

To name a few measures, the Jan. 21 Executive Order needs the heads of federal agencies to include specific terms in every agreement or grant award:

- “A term requiring the legal counterparty or grant recipient to concur that its compliance in all aspects with all suitable Federal anti-discrimination laws is product to the government’s payment choices for purposes of area 3729( b)( 4) of title 31, United States Code”