Since re-taking the White House 11 days ago, President Donald J. Trump has taken dramatic steps to dismantle DEI (diversity, equity, and inclusion) programs in workplaces nationwide.  President Trump’s executive orders targeting DEI programs pose particular challenges, though, for employers doing business in California, where state and local laws continue to require compliance with broad, progressive measures intended to protect applicants and employees, including those from communities that have been historically disadvantaged.  This post provides California employers with initial thoughts on navigating the new terrain.

The most consequential executive order to date impacting private sector DEI programs is President Trump’s order signed January 21, 2025, titled, “Ending Illegal Discrimination and Restoring Merit-Based Opportunity” (the “EO”)[1].  

The EO characterizes DEI initiatives as “dangerous, demeaning, and immoral” programs that “illegally” give “preference” to applicants and employees based on their race, color, gender or national origin.  The EO takes the point of view that DEI programs violate federal civil rights laws, including Title VII of the Civil Rights Act of 1964.  The EO has as an express objective ending DEI programs in the private sector to the extent possible.

The EO, in part, charges the U.S. Attorney General with identifying targets (employers) in the private sector for potential investigation, litigation or regulatory action.  The EO requires that federal agencies immediately stop using DEI-based considerations.  The groundwork for the EO was laid by the U.S. Supreme Court in its 2023 decision striking down race-based admissions policies, Students for Fair Admissions v. Harvard.

The EO does not define the DEI programs or activities it deems “illegal”.

The Actions to Come Under the January 21 Executive Order

Section 4 of the EO, titled “Encouraging the Private Sector to End Illegal DEI Discrimination and Preferences”, includes the following mandates:

  • No later than May 21, 2025, the U.S. Attorney General, after working with federal agencies and the Office of Management and Budget, must propose to the White House enforcement actions “and other appropriate measures” against companies that engage in “illegal discrimination or preferences, including DEI.”  In part, the Attorney General must identify specific litigation, regulatory action, and sub-regulatory guidance that will advance the objectives the EO, including ending DEI programs in use by private sector employers to the extent possible.
  • The Attorney General must also, no later than May 21, identify to the Trump Administration “the most egregious and discriminatory DEI practitioners” (employers) in sectors including “major corporations, financial institutions, the medical industry, large commercial airlines, law enforcement agencies, institutions of higher education”, and the federal government.  The Attorney General’s list of employers will, presumably, be used to identify targets for litigation, regulatory action,  and other steps.
  • The Attorney General must also submit to the White House by May 21 “a plan of specific steps . . . to deter DEI programs or principles” in the private sector.  The Attorney General’s plan must name up to nine potential targets (employers) – that is, up to nine for each executive department and agency subject to the EO – for federal investigation.  The targets are to be selected from publicly traded corporations, large nonprofits, foundations with assets of $500 million or more, state and local bar associations or medical associations, and universities with endowments of more than $1 billion.
  • Setting the Attorney General’s May 21 deadline aside, the EO mandates that all federal executive departments and agencies, with the Attorney General’s assistance, “take all appropriate action” on an ongoing basis to advance in the private sector “individual initiative, excellence, and hard work” over hiring and promotion policies, for example, that include DEI considerations.

California-Specific Implications

California employers must reconcile the about-face in federal law enforcement made by the EO with state and local laws that continue to require that they maintain equity and diversity in the workplace.  Examples of California state legal schemes to consider include:

  • California’s Stance on Affirmative Action – Unlike some states where affirmative action policies were common in employment, California has long prohibited public sector affirmative action under Proposition 209 (1996), which bars preferential treatment based on race, sex, color, ethnicity, or national origin in public sector employment, education, and contracting.  However, private sector employers have historically maintained DEI initiatives within the bounds of state and federal non-discrimination laws.
  • FEHA and DEI Programs – The California Fair Employment and Housing Act (FEHA) continues to impose strict anti-discrimination requirements and to require anti-discrimination training for employees.  While the EO seeks to abolish race- and sex-based workplace policies at the federal level, FEHA still requires that employers prevent workplace discrimination and harassment.  Employers should be careful to ensure that any changes to DEI initiatives remain consistent with California’s legal framework.
  • Pay Equity Considerations – California has some of the strongest pay equity laws in the country, including the California Equal Pay Act, which requires equal pay for substantially similar work regardless of race, gender, or ethnicity.  Companies that move away from structured DEI initiatives should still maintain fair pay practices to mitigate risks under state law.
  • State-Level Regulatory Scrutiny – While the federal government may seek to investigate DEI policies as discriminatory, to date, California’s Civil Rights Department (CRD) remains committed to enforcing workplace equity laws.  Employers should anticipate continued state-level enforcement of non-discrimination and equal opportunity law, regardless of federal directives.

Initial Considerations for California Employers

The January 21 Executive Order raises new and important questions for employers, including whether existing DEI policies may expose them to regulatory scrutiny or litigation.  Since the order does not explicitly define “illegal discrimination or preferences,” it remains unclear how broadly enforcement actions might be applied.  DEI principles are integral, and in some cases central, to the mission of many California-based companies.  Some organizations may wish to take a more cautious approach, choosing to modify or discontinue certain programs, while others may opt to maintain their course and continue initiatives that may attract attention from the Administration, Attorney General, or relevant agencies.  The calculus will largely depend on the employer’s priorities, values, and tolerance for risk.

Given the complex interplay between federal and state laws, California employers should take a measured approach when evaluating their DEI programs.

  • Review DEI Initiatives for Compliance – Employers should assess whether their existing DEI policies and activities comply with both federal and state laws.  While certain race- or sex-based preferences may now face heightened federal scrutiny, general diversity efforts—such as mentorship programs, broad recruitment strategies, and pay equity assessments—can likely continue without legal risk.
  • Ensure Hiring and Promotion Policies Are Merit-Based – While California law supports workforce diversity, employers’ hiring and promotion decisions should be based on job-related qualifications rather than demographic factors.  Notably, nothing in the EO prohibits efforts to attract diverse candidates, as long as final hiring decisions are based on qualifications (rather than protected characteristics) and do not involve what the EO terms “illegal preferences”.  Employers should therefore focus on inclusive recruitment strategies that encourage a diverse candidate pool while ensuring that final decisions rest on objective criteria independent of DEI considerations.
  • Monitor Litigation and Regulatory Risks – Beyond federal enforcement, California employers should remain aware of potential private lawsuits alleging discrimination or reverse discrimination under both federal and state law.  Legal challenges to employer DEI policies and practices may increase, particularly in industries where such initiatives have been heavily implemented.  The EO could embolden individuals to file discrimination claims against employers based on perceived disadvantages resulting from DEI initiatives.
  • Stay Informed on State-Level Developments – With California often diverging from federal employment policies, businesses should monitor updates from the California Civil Rights Department (CRD) and other state agencies to ensure ongoing compliance with state requirements.

Looking Ahead

The Trump administration’s fierce opposition to DEI programs, combined with recent U.S. Supreme Court precedent, undeniably bring a consequential swing in how diversity policies, recruitment, hiring, promotions, and other functions will be evaluated and enforced.  California employers now face a complicated landscape where federal policies now more than before conflict with the state’s progressive employment laws.  While the EO may command a rollback of DEI initiatives at the federal level, California will likely remain committed to workplace equity through FEHA, pay equity laws, and broader non-discrimination protections.  Employers should take proactive steps to assess their policies, mitigate legal risks, and ensure compliance with both state and federal regulations.  Particularly, organizations that fall within the five categories outlined for federal compliance investigations should evaluate their current DEI initiatives and determine whether adjustments align with their business priorities and risk tolerance.

For guidance on navigating these changes, California businesses should consult experienced employment counsel.  Attorneys with Fox Rothschild’s Labor & Employment Department are closely tracking how federal and state authorities approach DEI policies under the Trump Administration.  For further assistance, please contact your Fox attorney or the author of this post.


[1] See January 27, 2025 Fox Rothschild alert: Trio of Trump Executive Orders Take Aim at DEI and Gender Policies (Trio of Trump Executive Orders Take Aim at DEI and Gender Policies)