Contributors

Ryan D. Evans

Principal

For 60 years the U.S. Government favored the idea that employers should take into account the minority status of employees to foster diversity in the workplace and remedy past discrimination. In a dramatic reversal, the current President of the U.S. has decreed that all such programs should be illegal. At the same time, the laws that encourage diversity programs remain in place. So, what is an international business with a presence in the U.S. to do?

To begin, it’s important to define what we are talking about. What is DEI and what is an Executive Order.

What is DEI

DEI is a framework designed to increase representation, ensure fair access to opportunities, and foster inclusive environments in workplaces, government institutions, and society.

• Diversity refers to the presence of individuals from different racial, gender, socioeconomic, and cultural backgrounds. 
• Equity seeks to address systemic barriers and disparities to create fair opportunities for all.  
• Inclusion focuses on building environments where all individuals feel valued, respected, and empowered to contribute; to participate fully.

Where did DEI come from? It should be no surprise to anyone that since the time of slavery in the U.S. there has been widespread discrimination against racial minorities, which lead to Congress passing a series of laws in the 1960s, like the Civil Rights Act of 1964, that prohibited racial discrimination in all sorts of contexts, including public accommodation and employment. The Act also created a regulatory body, the Equal Employment Opportunity Commission, to enforce Title VII of the Civil Rights Act of 1964 in the public and private workplace. Around the same time, Congress passed the Equal Pay Act to ensure equal pay to men and women performing substantially the same work in the private and public workplace. The Age Discrimination in Employment Act was also passed by Congress to protect older workers from discrimination.

The focus was on preventing overt discrimination and ensuring basic civil rights rather than embracing diversity and multiculturism.

In 1965, U.S. President, Lyndon B. Johnson, coined the term “affirmative action” to mean the government would do more than merely passively stop discriminating; that it would affirmatively seek to hire racial minorities and women for the purpose of correcting historical systemic discrimination. He signed an Executive Order stating that the Government would take such affirmative action. And a little bit later we will get into what is an Executive Order and what it is not.

While private employers were not required to take affirmative action, many did. However, in response to growing lawsuits and verdicts holding that while a particular employment policy may not be discriminatory on its face, it had a disparate impact on racial minorities, women or older workers, and was therefore illegal, private business started taking affirmative action to prevent discrimination in order to comply with the law and avoid liability.

Over time anti-discrimination laws began to expand both at the state and federal level to include sexual orientation and gender identity. By the 1990s, there was a significant shift from merely complying with legal obligations to recognizing the business value of a diverse workforce. The term “multiculturism” gained prominence, emphasizing the recognition, appreciation, and celebration of different cultural backgrounds within organizations, which led to diversity training programs, multicultural teams and global market expansion.

Throughout this period the focus was really on the “D” of DEI – diversity – because businesses saw the business benefit of a diverse workforce in terms of public relations and the satisfaction of their employees leading to greater productivity.

Even during this period, there was some resistance to it. There began a cultural phenomenon in the U.S. of people believing that women or racial minorities who advanced through an organization did so only because of affirmative action programs favoring them and not because of merit. A Supreme Court Justice (the only black Supreme Court justice on the Court at that time), Clarence Thomas, railed against affirmative action for just this reason, because in his view affirmative action programs diminished the appearance of success of racial minorities because people believed minorities only got there through affirmative action. This was just part of the cultural milieu it was not a backlash – just some tension simmering in the background.

In the early 2000s the concept of “inclusion” emerged, emphasizing not just the numerical representation of diverse groups but also their full participation and integration into the workplace culture. This lead to multiculturalism becoming an integral part of DEI strategies as organizations recognized the importance of valuing different cultural perspectives. This lead to inclusive policies, cultural competence development training, and employee resource groups.

A shift occurred in the 2010s to focus on equity, intersectionality, and deepening multicultural initiatives. The conversation expanded to include the concept of “equity”, addressing systemic inequities affecting opportunities and outcomes for different groups. The concept of “intersectionality” gained prominence, recognizing that individuals have multiple overlapping identities – including cultural identities – that can compound experiences of discrimination or privilege. This was further integrated into DEI efforts through global DEI strategies, cultural celebrations and awareness and addressing unconscious bias.

At this point, this expansion led to what had been just a background tension to becoming a full-throated backlash against the very concept of using employment hiring and promotion practices for the purpose of diversifying the workplace.

This decade, the murder of George Floyd in which a white police officer was seen on video calmly suffocating a black man to death over the course of 9 minutes fed into the narrative that the majority, i.e., white men, have the position of dramatic superiority of everyone else, resulting in an immediate and dramatic expansion of the idea that more needed to be done to equalize the position of minorities throughout the U.S. and throughout the world. This stark understanding led the rise of the Black Lives Matter movement which spawned a worldwide movement to ramp up DEI programs in efforts to combat this injustice. Corporations, on their own, jumped on the cultural bandwagon and really pushed to the forefront their employee diversity committees and initiatives and it’s really when the concept of “equity” took off, which is different from “equality” in that “equity” is not what is equal, but what is fair (a much more subjective concept). The fact that this took place during a time when everyone was on lock-down during the pandemic, and looking at social media and being online, supercharged the phenomenon.

The backlash against the entire concept of “equity” happened almost immediately. People felt emboldened to say that I, as a non-racial minority, am not being treated fairly. For example, the Guardian reported a quote made in October by Darren Beattie, who now has a job in the U.S. State Department, that “Competent white men must be in charge if you want things to work,” Beattie wrote on X “Unfortunately, our entire national ideology is predicated on coddling the feelings of women and minorities and demoralizing competent white men.”

There is currently a raging debate about whether it is even a good idea to foster diversity, equity or this type of inclusion, and if it is a good idea, whether DEI programs accomplish that. And that debate has reached its apex with the current U.S. President issuing an Executive Order aimed at eliminating such programs.

Notably, Federal DEI programs have been dismantled, with staff overseeing them fired. Scientific research is under pressure as the NIH and CDC face directives restricting their work. Universities are being forced to strip research focused on diverse populations — including women — to keep their funding. Trump even falsely blamed DEI for January’s fatal plane crash in Washington D.C., claiming the FAA hired unqualified air traffic controllers. Meanwhile, the EEOC and Department of Justice are targeting law firms, universities, and private companies, demanding audits of their DEI efforts and implying discriminatory hiring practices. It’s a sweeping crackdown touching every sector of society.

What is an executive order?

An executive order is a statement by the President of that administration’s priorities, in particular about how it will go about carrying out its responsibility to execute the laws that Congress has enacted or the President’s responsibilities under the Constitution. An executive order also states the administration’s understanding of what a Congressional Statute requires them to do. With respect to anything outside of the federal government, it’s little more than a press release. But within the government, it is a directive from the President that tells federal agencies how they should execute the laws on the President’s behalf.

What an EO is not. It is not a law. It cannot create new rights and it cannot take away rights that are enshrined in laws that Congress has enacted. So, for example, Congress has said that it is unlawful for businesses to discriminate on the basis of age. A President could sign an EO saying that the administration does not intend to prioritize enforcement of that law and will instead focus on other priorities. But an EO could not take away an employee’s rights not to be discriminated against on the basis of age, nor could it take away an employee’s right to sue her employer if she is discriminated against.

EOs have shaped workplace policies, particularly in federal employment and contracting. Some administrations expanded diversity and inclusion initiatives, reflecting shifting federal priorities. 

So, what actions have Presidents taken that relate to DEI? President Lyndon B. Johnson issued EO 11246, prioritizing enforcement of the Civil Rights Act of 1964 and instructing federal agencies and federal contractors to take affirmative action to hire women and minorities to remedy past discrimination. It only applies to the government, not private citizens.

George W. Bush issued an EO prioritizing the enforcement of laws prohibiting the discrimination of persons based upon their religion.

Present Obama issued an EO stating his administration’s understanding that anti-discrimination laws making it illegal to discriminate on the basis of sex include discrimination against persons based on their sexual orientation and gender identity and prioritizing the enforcement of laws prohibiting that discrimination. In fact, after his presidency, the U.S. Supreme Court held that Title VII of the Civil Rights Act of 1964 prohibits discrimination based on sexual orientation or gender identity. So, President Obama’s EO ended up being consistent with what the U.S. Supreme Court itself felt the law to mean.

In the first days of his presidency, Donald Trump issued EO 14173. The EO notes that several federal statutes prohibit discrimination on the basis of a variety of factors. It goes on to say that any program that gives preference to someone based on any of these factors is by its nature discriminatory. The key sentence in the EO is “the Federal Government is charged with enforcing our civil rights laws. The purpose of this order is to ensure that it does so by ending illegal preferences and discrimination.”

This EO eliminates DEI programs in federal agencies and revokes Johnson’s and Obama’s EOs. It also prohibits federally funded DEI training that promotes identity-based hiring preferences.

The order further states that the federal government will encourage the private sector to eliminate discriminatory DEI programs – which he has said are programs that prioritize the hiring and promotion of persons based on protected characteristics. This is notable because it is a 180-degree shift from all of the previous EOs which were intended to enforce civil rights laws (and required federal agencies to do so) to now saying that any program that takes into account any protected characteristics violates those very same laws.

Given the current administration’s view that programs that take into account any protected characteristics violate civil rights laws, the EO goes on to state that it is the federal government’s responsibility to take action against any private company that has a DEI program. He has directed each federal agency to develop a list of at least 9 publicly traded corporations, any large non-profit corporation or association, any foundation with assets of $500M or more, state bar associations, state or local medical associations or educational institutions with endowments of over $1 Billion, and investigate whether they have a DEI program and if they do, enforcement action should be taken against them. He’s basically directed the government to go after the nation’s largest and most influential companies and organizations who have DEI programs.

A federal district court judge issued an injunction against the enforcement portions of this EO on the ground that it violated Due Process under the 5th Amendment because it was vague about what is “illegal DEI” and chills free speech under the 1st Amendment, among other things. But last Friday a Court of Appeal lifted that injunction. The federal agencies now have until May 21, 2025 to come up with their lists.

Recently, the EEOC issued new guidance for 2025 regarding discrimination under Title VII that significantly expands upon its 2024 stance by directly addressing legal risks tied to DEI programs. Unlike the prior guidance, which broadly covered workplace discrimination, the new update explicitly warns against race- or sex-based quotas, balancing, and the use of diversity goals as justifications for employment decisions. It firmly rejects the “business necessity” defense and stresses that all individuals—regardless of background—are protected under Title VII, making it clear that reverse discrimination claims are equally valid.

A key addition in 2025 is the emphasis on DEI trainings. While the 2024 guidance focused primarily on general workplace discrimination, the new update warns that DEI content could create a hostile work environment if it singles out individuals based on protected traits. The guidance also clarifies that customer or client preferences cannot justify discriminatory hiring or promotion decisions, reinforcing the principle that employment practices must be neutral and non-discriminatory.

Additionally, the 2025 guidance strengthens protections against retaliation, explicitly stating that employees who oppose unlawful DEI practices are safeguarded under Title VII. It provides clearer steps for affected employees to file complaints and reinforces the universal nature of these protections. By sharpening its focus on DEI-related employment policies, the EEOC signals increased federal scrutiny of workplace diversity initiatives.

We’ve discussed how businesses have expanded their DEI programs in response to the needs and desires of their workforces, beyond just legal compliance. This is because the private sector has recognized the business case for DEI.

McKinsey & Company is a top global consulting firm known for data-driven insights that shape corporate strategy.   McKinsey data shows diverse companies outperform their peers. Gender-diverse executive teams are 25% more likely to see above-average profits, with firms having over 30% women executives significantly outpacing those with fewer. The profitability gap between the most and least gender-diverse companies is 48%. 

Ethnic diversity has an even bigger impact—top-quartile ethnically diverse companies outperformed the least diverse by 36%. Companies with inclusive cultures see higher employee satisfaction, retention, and productivity.

Given this data it appears that the private sector is between a rock and a hard place. On the one hand, DEI programs have become integral to their success and on the other hand adhering to these programs could invite an enforcement action from the federal government.

It’s additionally complicated because for 60 years everyone has said, from Congress to the Executive Branch to the Courts, that these programs are consistent with civil rights laws and further their purpose.

And a President cannot change the law. Businesses are required to comply with the law. While the President may state his interpretation of the law, it is the Courts who have the final say on what the law actually means.  

Even if a corporation or its lawyers believe that the previous understanding of civil rights laws and the legality of DEI programs is correct, the current administration’s threat to take action against businesses who have such programs is likely to have a chilling effect, leading many corporations to self-regulate or cut programs to avoid legal risks.

And all of this is within the backdrop of the corporate fiduciary duty to shareholders to maximize profits and if maximizing corporate profits requires a robust DEI program, therein lays the conflict. The cost of complying with the new interpretation of the law could be loss of profits and increased employee turnover caused by a loss of employee satisfaction.

Businesses have had to carefully balance between long-standing civil rights laws that they’ve followed for decades — and benefited from — and the Trump Administration’s newer, conflicting approach. Here’s how one international company managed to do that.

Deloitte is pulling back on DEI in the U.S., like many companies adjusting to the administration’s DEI policy shifts. Deloitte told U.S. employees working on government contracts to remove pronouns from their emails. It’s worth noting that the EO would make it unlawful for Deloitte to force or encourage its employees to put their pronouns in their emails, but nothing in that EO makes it any kind of problem for the employee to do it on their own – because that’s not a company telling an employee what to do. And yet here’s a company who has told the employee not to put their pronouns on their emails not because it’s unlawful under the EO, but because it doesn’t want to ruffle any feathers in the U.S. Government that could cause cancellation of their government contracts. This is the chilling effect I was talking about earlier.

But across the Atlantic, it’s a completely different story. Deloitte’s U.K. leadership is doubling down on diversity, making it clear that U.S. politics won’t change its approach abroad. Unlike in the U.S., U.K. laws require diversity reporting, so companies can’t just scale back without consequences. 

This puts global companies in a tough spot. In the U.S., they’re walking back DEI to avoid legal risks, while in the U.K., they have to keep pushing diversity to stay compliant. 

The real challenge? Keeping up with clashing laws while staying true to corporate values. If Deloitte’s U.K. strategy doesn’t meet legal standards, it could face compliance issues. The divide between the U.S. and U.K. therefore is getting wider. 

As illustrated by the Deloitte example, the UK and EU are moving in the opposite direction from the U.S. on DEI. Employers there are facing more regulation, not less. 

In the UK, the government is pushing new diversity laws, including mandatory ethnicity pay gap reporting and DEI requirements for financial services firms. The EU has several directives prohibiting discrimination in employment, similar to the U.S., and is rolling out gender quotas for boards and a pay transparency directive forcing employers to disclose salaries and fix disparities. 

The EU interprets these laws the same way the U.S. has interpreted them for the past 60 years. In fact, from the European Personnel Selection Office website: “EU institutions and bodies are very committed to employers when it comes to diversity and inclusion.” And every single EU agency has a mission statement that includes a statement that they promote diversity and inclusion in their hiring practices, not merely non-discrimination.

The Trump Administration has been very bullish on making the rest of the world view issues the way it does so. Based on Trump’s conduct to date in his Presidency, it would be interesting to see whether he directs the federal government to cease to do business with any company operating in the U.S. who even abroad has a DEI program, forcing them to cease their DEI programs worldwide or putting pressure on foreign governments to rollback their diversity laws.

However, some US companies are pushing back. For example, on April 23, 2025, Levi Strauss & Co. shareholders voted overwhelmingly — with over 99% in favor — to uphold the company’s diversity, equity, and inclusion (DEI) initiatives. The proposal to dismantle DEI, brought by a conservative group, was rejected with less than 1% support. Levi’s leadership, including CEO Michelle Gass, reaffirmed that DEI is central to the company’s identity and business success.

What are businesses to do?

• Employers need to review DEI compliance as legal landscapes shift. For global companies, this means navigating two completely different legal landscapes. In the EU, if ethnicity pay gap reporting becomes law, companies will need to prove they’re addressing disparities—broad inclusion efforts won’t cut it.
• Reframe the program keeping in mind business goals. Framing matters. How we talk about DEI shapes how it’s seen—and how it’s regulated. EOs may fuel reverse discrimination claims and clamp down on DEI. Reframe DEI as “inclusion for all,” expanding initiatives to include parenting groups, men’s mental health, and allyship programs. Shift from identity-based hiring to workforce development. Forget quotas—focus on culture, leadership, and equal access to opportunities. Make it clear: diversity isn’t about favoritism—it’s about better business. 
• Be smart about messaging, keep diversity efforts tied to business goals, not political narratives. 

In conclusion, the DEI environment in the U.S. is undergoing a significant transformation, driven by EOs, legal challenges, and corporate responses. The overall trend signals increased scrutiny of DEI initiatives, particularly for companies with U.S. operations or federal contracts.  For international businesses, the key takeaway is strategic adaptability—balancing U.S. regulatory compliance with global DEI expectations. That means: 

• Regularly reviewing policies to ensure they align with both federal restrictions and international frameworks. 
• Focusing on compliance and risk management to avoid unnecessary legal exposure. 
• Monitoring ongoing litigation to stay ahead of potential regulatory shifts. 

The coming months will be critical, as further legal decisions and potential policy adjustments could reshape how businesses approach DEI. By taking a proactive, legally sound approach, organizations can continue fostering diverse and inclusive workplaces while minimizing risk.