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The Impact of Executive Order 14173 on Workplace Diversity Programs

On January 20, 2025, President Donald Trump signed Executive Order 14173, titled "Ending Illegal Discrimination and Restoring Merit-Based Opportunity." The order prohibits federal contractors from implementing Diversity, Equity, Inclusion, and Accessibility (DEIA) programs that favor hiring or promoting specific racial, gender, or ethnic groups.

The executive order explicitly revokes key provisions of the 1965 Equal Employment Opportunity (EEO) Order, a long-standing policy that required federal contractors to implement affirmative action measures to promote diversity in hiring.

Under Executive Order 14173, any company receiving federal contracts must demonstrate that hiring and promotion decisions are based solely on qualifications and merit, without regard for diversity considerations.

The Core Changes in Executive Order 14173

This executive order introduces new restrictions that could have far-reaching consequences for federal contractors:

Ban on DEI Hiring Preferences

Companies can no longer prioritize women or minority candidates in hiring or promotion decisions if they wish to retain federal contracts.
Diversity-focused hiring targets will be considered illegal discrimination under the order.

Revocation of Affirmative Action Policies

The executive order eliminates federal contractor obligations to promote diversity under previous affirmative action policies.
Companies that previously set diversity hiring goals must immediately discontinue these practices or risk contract termination.

Legal Ramifications for Federal Contractors

Employers may face penalties if they are found to be implementing race or gender-based hiring policies.
Government audits will be conducted to ensure compliance, and violations could result in legal action or loss of federal funding.

How Will This Impact Employers?

The elimination of affirmative action in federal contracting is a monumental shift that could alter how businesses approach hiring and workplace diversity.

1. Federal Contractors Must Reevaluate Hiring Practices

Companies that rely on federal contracts—including defense contractors, construction firms, tech companies, and healthcare providers—must immediately assess whether their current DEI programs comply with the new restrictions.

Hiring managers and HR departments should review job descriptions and remove any references to diversity hiring preferences.
Existing DEI training programs should be evaluated to ensure they do not violate the order’s new provisions.
Internal policies related to affirmative action should be rewritten to focus on merit-based hiring practices.

2. DEI Programs Could Face Increased Legal Scrutiny

With the rise of reverse discrimination lawsuits, companies that continue to prioritize diversity hiring could be exposed to legal risks under this new executive order.

Opponents of DEI initiatives may use the order to challenge hiring practices in court.
Employers must document hiring decisions to prove that they are based on merit rather than diversity factors.
Failure to comply could lead to lawsuits, contract cancellations, or federal penalties.

3. Potential Impact on Workplace Diversity

One of the biggest concerns raised by legal and civil rights advocates is that this order could significantly reduce workplace diversity.

Studies show that affirmative action policies have played a key role in increasing diversity within corporate and government jobs.
Critics argue that removing DEI mandates will result in fewer job opportunities for women, racial minorities, and other underrepresented groups.
Some companies may choose to scale back diversity programs entirely to avoid legal risks.

Legal Challenges and Opposition

In response to Executive Order 14173, several civil rights groups and legal advocacy organizations have announced immediate legal action to challenge the new policy.

The NAACP Legal Defense Fund and the American Civil Liberties Union (ACLU) have called the order "a direct attack on workplace equality."
Several Democratic state attorneys general are preparing lawsuits to block the order’s implementation.
Business leaders from major corporations—including Microsoft, Amazon, and Google—have expressed concerns that this will set back corporate diversity efforts.

Meanwhile, supporters of the executive order argue that it prevents reverse discrimination and ensures that hiring and promotions are based on qualifications, not identity factors.

What’s Next for Employers?

With legal challenges already underway, it is uncertain whether Executive Order 14173 will survive in the long term. However, until courts rule otherwise, federal contractors must comply with its provisions immediately.

What Employers Should Do Right Now:

Audit Hiring and Promotion Policies – Ensure that decisions are based on qualifications rather than diversity goals.
Review Federal Contract Obligations – Work with legal counsel to ensure all hiring practices align with the new executive order.
Train HR Teams on Compliance – Educate HR professionals on how to legally navigate hiring decisions without violating the new restrictions.
Monitor Legal Developments – Stay informed about potential court rulings that could block or alter the executive order’s provisions.

As legal battles continue, businesses must adapt to the changing legal landscape while ensuring they remain compliant with federal regulations.

Conclusion

Executive Order 14173 represents one of the most significant rollbacks of workplace diversity initiatives in decades. It eliminates affirmative action for federal contractors and places strict new limits on DEI programs.

While supporters argue it ensures fair hiring practices, opponents warn it will reduce diversity and create new barriers for historically marginalized groups.

As lawsuits unfold, federal contractors must act quickly to reassess hiring policies, train HR teams, and ensure compliance to avoid legal risks.

For companies that prioritize diversity but still want to comply with federal regulations, working with employment law attorneys is essential in navigating this evolving landscape.

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