Memo: President Trump’s Executive Order Rescinding DEI Programs

Date Issued: January 20, 2025
Government Next Steps: Federal agencies will remove Diversity Equity and Inclusion (“DEI”) requirements from contracts and agency policies within 90 days, and all DEI offices and positions shall be terminated within 60 days.
Anticipated Outcomes: Increased scrutiny of corporate DEI programs, potential lawsuits from affected employees, and shifting state-level regulations.¹

Executive Order Overview

On January 20, 2025, President Trump signed an executive order rescinding all Diversity, Equity, and Inclusion (DEI) programs in federal agencies. The order prohibits federal funding for DEI initiatives, disbands government DEI offices, and instructs agencies to revise contracts and grants to eliminate DEI-related requirements.

Key Legal Considerations for In-House Counsel

1. Review Federal Contracts & Grants: Companies with government contracts or federal grants should review agreements to identify any DEI-related clauses that may be impacted.
2. Assess Internal DEI Policies: If your company maintains internal DEI programs that are impacted by DEI-related clauses in government contracts or federal grants, evaluate whether these policies align with new federal guidance while ensuring compliance with any applicable state and local laws that still require DEI initiatives.
3. Monitor Litigation Risks: Employees or advocacy groups may challenge DEI rollbacks as discriminatory—consult HR to ensure equitable workplace policies remain in place.
4. Stay Updated on State-level DEI Laws: States like California, New York, and Illinois may reinforce mandatory DEI requirements, creating a complex compliance landscape.

How LinkSquares Can Help Manage DEI Compliance Risks

1. Flag and categorize contracts utilizing Custom Smart Values within Analyze to track compliance requirements, including: 
   1. Applicable jurisdictions and state-specific requirements; 
   2. Contracts with existing specific DEI-related requirements (i.e., Federal Acquisition Regulation (FAR) clauses, OFCCP compliance requirements);
   3. Annual diversity certification maintenance requirements.
2. Develop automated alerts via Task Creation in Analyze for contracts requiring renegotiation or potential termination due to DEI provisions that require review or removal; 
3. Leverage the Clause Library to store and manage updated language compliant with DEI regulations for amendments and compliance tracking; 
4. Create Drafting Rules within the Finalize Word Add-In to assist with contract review and escalations related to DEI-related contractual obligations and requests;
5. Establish a real-time dashboard within Analyze tracking DEI-related contractual risks and mitigation strategies.

Next Steps for Businesses

• Conduct an internal compliance review of DEI-related policies and contractual obligations.
• Engage with external counsel to navigate potential legal risks.
• Develop a communication strategy for employees and stakeholders.

¹  On February 8, 2025, the Federal Communications Commission (FCC) announced an investigation into Comcast Corporation and NBC Universal to assess whether their Diversity, Equity, and Inclusion (DEI) initiations conflict with federal regulations following President Trump’s January 20, 2025, executive order rescinding DEI programs.