Executive Order 14173: Its Implications for

Private Employers

On January 21, 2025, President Trump issued Executive Order 14173, titled “Ending Illegal Discrimination and Restoring Merit-Based Opportunity” (“Executive Order”). While primarily targeted at federal employers, agencies, contractors, and subcontractors, the Executive Order’s reach significantly influences private-sector employers as well. The Executive Order specifically aims to end Diversity, Equity, and Inclusion (DEI) practices that promote affirmative action or workforce balancing, redirecting focus to merit-based opportunities.

Key Actions from the Executive Order

The Office of Federal Contract Compliance Programs (OFCCP) has been tasked with ceasing activities, including:

• Promoting DEI practices,
• Requiring affirmative action practices among federal contractors and subcontractors, and
• Encouraging workforce arrangements based on characteristics such as race, color, sex, sexual preference, religion, or national origin.

The Executive Order also revoked Executive Order 11246, a longstanding directive from President Lyndon Johnson mandating affirmative action and non-discrimination protocols for federal contractors.

Encouragement to the Private Sector

The Executive Order explicitly encourages the private sector to end DEI practices that could be considered discriminatory or preferential. It requires the heads of federal agencies, supported by the Attorney General, to take action within their operations to discourage private-sector employers from maintaining such policies.

Supporting Guidance from the White House and DOJ

The impact of the Executive Order has been augmented by additional guidance.

White House Fact Sheet

The White House released a fact sheet supporting the Executive Order, which highlights its measures to encourage private-sector compliance and confirms that departments may investigate DEI-related discrimination among private employers.

DOJ Memo

On February 5, 2025, the Department of Justice (DOJ) issued a memorandum titled “Ending Illegal DEI and DEIA Discrimination Preferences” (“DOJ Memo”). This document focuses on private employers and educational institutions, targeting DEI practices tied to race- or sex-based discrimination. According to the memo, the Civil Rights Division and Office of Legal Policy will deliver a joint report with recommendations by March 1, 2025, outlining actionable measures for aligning private-sector practices with theExecutive Order’s directives.

What This Means for Private-Sector Employers

DEI programs that promote practices determined to favor or exclude individuals based on race or sex are now being closely scrutinized. Both the Executive Order and DOJ Memo emphasize the importance of merit-based hiring and employment decisions.

Here are actionable steps private employers can take to align with these legal changes and reduce compliance risks moving forward:

1. Audit Current Policies and Programs

Conduct a comprehensive review of existing DEI or DEIA programs. Ensure that hiring, promotion, and performance evaluation processes are driven by skills, qualifications, and achievements.

2. Revise Practices to Comply with Federal Laws

Adjust policies to align with federal civil rights laws, removing language or initiatives that could be interpreted as preferential or discriminatory.

3. Educate and Train HR Teams

Provide training for HR personnel on the legal implications of the Executive Order and the DOJ’s guidelines. Focus on merit-based practices and clear, unbiased communication.

4. Update Messaging

Use language that emphasizes equal opportunity, inclusivity, and unity while ensuring compliance with the latest standards.

5. Consult Legal Counsel

Collaborate with labor and employment attorneys to assess potential exposure and refine policies in accordance with evolving regulations.

Potential Changes to Federal Posters for Private Employers

The revocation of Executive Order 11246 affects various compliance requirements, including posting obligations for employers.

Updates Likely to Occur

Know Your Rights Poster

The Equal Employment Opportunity Commission (EEOC) currently mandates this poster, which includes information on affirmative action for federal contractors and references protections such as gender identity. It is anticipated that references to “gender identity” may be replaced with “transgender status”, following another executive order recognizing only male and female sexes in federal law.

Pay Transparency Requirements

While Executive Order 11246’s revocation could influence pay transparency requirements, these are governed by federal regulations. These regulations would require formal amendments before any changes are implemented.

Employers should prepare for updates to EEOC compliance materials and monitor changes to ensure their information remains accurate.

Final Thoughts

Executive Order 14173 marks a significant shift in labor and employment policies for federal employers and contractors, with ripple effects that are already being felt across the private sector. Businesses must now reassess their DEI and affirmative action programs to avoid legal exposure and stay aligned with the latest regulatory guidance.

While these changes may seem daunting, proactive measures can help private employers maintain equitable, compliant practices. By focusing on merit-based decision-making and revisiting compliance policies, businesses can create a level playing field that fosters fair opportunity for all.

To stay ahead of these changes, monitor updates from the EEOC and DOJ, and consider seeking support from legal professionals to interpret new regulations effectively. These adjustments, while significant, present an opportunity to build stronger employment frameworks that prioritize fairness and compliance.