President Trump's executive order rescinding DEI policies in federal agencies and pressuring the private sector to do the same has triggered widespread anxiety among businesses. Legal experts say the order's language, while lacking legal enforcement power, creates a chilling effect and forces companies to re-evaluate their DEI programs for fear of potential legal repercussions.
President Donald Trump delivered a speech at the 2025 House Republican Members Conference Dinner at Trump National Doral Miami in Doral, Florida, on January 27, 2025. This speech came a day after he was sworn in for his second term, a term marked by the immediate rescinding of DEI (Diversity, Equity, and Inclusion) policies across the federal government .
Furthermore, Trump issued an executive order targeting the private sector to end what the order calls 'illegal DEI discrimination and preferences.' In the order, Trump claims DEI policies 'violate the text and spirit of our longstanding Federal civil-rights laws.' \The order emphasizes, 'Hardworking Americans who deserve a shot at the American Dream should not be stigmatized, demeaned, or shut out of opportunities because of their race or sex.' While the Trump administration lacks the legal authority to compel private businesses to abandon DEI policies, legal experts who advise companies and institutions on such matters told ABC News that the executive order's language utilizes the threat of potential legal action against certain companies with DEI policies to pressure them into compliance. \ Part of Trump's January 21 executive order directs the Attorney General, within 120 days, to submit a report containing recommendations for enforcing federal civil-rights laws and implementing other measures to encourage the private sector to cease illegal discrimination and preferences, including DEI. The order instructs federal agencies to identify up to nine potential civil compliance investigations targeting publicly traded corporations, large non-profit corporations or associations, foundations with assets exceeding 500 million dollars, State and local bar and medical associations, and institutions of higher education with endowments over 1 billion dollars. The agencies are also tasked with identifying 'key sectors of concern' and 'the most egregious and discriminatory DEI practitioners' within their jurisdiction, developing plans to deter DEI programs or principles. \This possibility of a legal battle with the federal government over DEI is already causing anxiety for numerous private businesses, experts revealed to ABC News. 'It's a powerful threat that companies are responding to it by taking another very close look at their programs to make sure that they are comfortable with them,' stated labor attorney Jason Schwartz, a partner and co-chair of the Labor and Employment Practice at Gibson Dunn in Washington, D.C., and leader of the firm's DEI task force. President Donald Trump speaks at the 2025 House Republican Members Conference Dinner at Trump National Doral Miami in Doral, Fla., Jan. 27, 2025. 'Nobody wants to be on that Donald Trump DEI blacklist,' Kenji Yoshino, a professor of constitutional law at NYU and director of NYU's Center for Diversity, Inclusion and Belonging, who also advises Fortune 500 companies on DEI matters, told ABC News. 'I worry that there's a very smart move and savvy move on the part of the executive branch to cast a fear through this kind of gesture of 'we are going to single you out,' or targeting so that a lot of companies are going to withdraw or pull back more than they needed to pull back, strictly legally.' 'I just don't want to be one of those nine,' Yoshino added, referring to the number of executive order's 'potential civil compliance investigations.' 'Until those nine are announced, it's going to cause others to be risk-averse,' Yoshino said. 'So there's a kind of, you know, preemptive compliance, you know, or obedience going on.'\Schwartz told ABC News that since Trump signed his executive order, companies have been frantically seeking legal advice regarding their DEI policies and whether they require revision. 'The phone is literally ringing off the hook,' he said, referring to the calls his firm is receiving. 'Companies are very concerned. They want to make sure, obviously, that they stay on the right side of the law.' Yoshino said that the phones at NYU's Center for DEI have also been 'ringing off the hook' with calls from companies seeking guidance on how to proceed with their DEI initiatives. For now, he advises a measured approach. 'The reflexive response is often to be like, 'Oh, if we shut it down, we will minimize risk,' and we regard that to be short sighted, both because there are smart ways to tweak these programs to lower the risk, or even lower to zero, eliminate the risk while still getting the same results,' Yoshino told ABC News
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