Written by Michael A. Hepburn , Michael J. Woodson, Laura Taylor, Deepa S. Menon, John T. Hays, Bonnie R. Burke and Annisa Chaudari From Eversheds Sutherland on February 18, 2025
The first month of President Trump’s second administration began with a flurry of Executive Orders, many of which directly affect various employment related issues. While many of the new administration’s Executive Orders (EO) impact federal employees, federal contractors and subcontractors directly, private employers are left wondering how these EOs impact them and what they should be doing.
“Harmful Executive Orders and Actions”
One of the Executive Orders President Trump issued entitled “Harmful Executive Orders and Actions” rescinds numerous Executive Orders issued during the outgoing administration’s term in office. This EO takes the position that
The injection of “diversity, equity, and inclusion” (DEI) into our institutions has corrupted them by replacing hard work, merit, and equality with a divisive and dangerous preferential hierarchy.
The Executive Order, therefore, rescinds a number of prior EOs from President Biden, which were designed to provide additional anti-discrimination measures and protections for certain groups. Employers should take note of the past EOs which have been rescinded. While unlawful DEI ideology has never been legal, private employers should be aware that the EO uses the term “radical” DEI programs, mandates, policies, or initiatives but has not defined the term. Private employers should be alert for any forthcoming guidance on this term.
“Defending Women from Gender Ideology Extremism and Restoring Biological Truth to the Federal Government”
Another EO likely to have some impact on private employers is the “Defending Women from Gender Ideology Extremism and Restoring Biological Truth to the Federal Government”. This EO states that it is the policy of the United States to recognize two sexes, male and female. The definitions provided for the interpretation of this EO include the following:
- “Sex” shall refer to an individual’s immutable biological classification as either male or female. “Sex” is not a synonym for and does not include the concept of “gender identity.”
- “Women” or “woman” and “girls” or “girl” shall mean adult and juvenile human females, respectively.
- “Men” or “man” and “boys” or “boy” shall mean adult and juvenile human males, respectively.
- “Female” means a person belonging, at conception, to the sex that produces the large reproductive cell. (Emphasis added.)
- “Male” means a person belonging, at conception, to the sex that produces the small reproductive cell. (Emphasis added.)
- “Gender ideology” replaces the biological category of sex with an ever-shifting concept of self-assessed gender identity, permitting the false claim that males can identify as and thus become women and vice versa, and requiring all institutions of society to regard this false claim as true. Gender ideology includes the idea that there is a vast spectrum of genders that are disconnected from one’s sex. Gender ideology is internally inconsistent, in that it diminishes sex as an identifiable or useful category but nevertheless maintains that it is possible for a person to be born in the wrong sexed body.
- “Gender identity” reflects a fully internal and subjective sense of self, disconnected from biological reality and sex and existing on an infinite continuum, that does not provide a meaningful basis for identification and cannot be recognized as a replacement for sex.
The EO states that the “erasure of sex in language and policy has a corrosive effect on women and the validity of the entire American system.” Therefore, the EO states, “the Executive Branch will enforce all sex-protective laws to promote” the two-sex policy.
The EO further directed that each federal agency and all Federal employees shall enforce laws governing sex-based rights, protections, opportunities, and accommodations to protect men and women as biologically distinct sexes. In doing this, they shall use the term “sex” and not “gender.” Further, all government-issued identification documents, including passports, visas, and Global Entry cards, must accurately reflect the holder’s sex (as “sex” is defined in the EO). This may be important for employers who have globally-mobile employees holding US passports. In this EO, all agencies are directed to remove all statements, policies, regulations, forms, communications, or other internal and external messages that promote or otherwise inculcate gender ideology and shall cease issuing such statements, policies, regulations, forms, communications or other messages.
The EO further directs the Attorney General to issue guidance that will likely impact private employers. The EO stated
The prior Administration argued that the Supreme Court’s decision in Bostock v. Clayton County (2020), which addressed Title VII of the Civil Rights Act of 1964, requires gender identity-based access to single-sex spaces under, for example, Title IX of the Educational Amendments Act. This position is legally untenable and has harmed women. The Attorney General shall therefore immediately issue guidance to agencies to correct the misapplication of the Supreme Court’s decision in Bostock v. Clayton County (2020) to sex-based distinctions in agency activities. In addition, the Attorney General shall issue guidance and assist agencies in protecting sex-based distinctions, which are explicitly permitted under Constitutional and statutory precedent
Employers will want to be alert for all such guidance as may be issued by the Attorney General.
The anticipated guidance from the Attorney General pursuant to this EO will rescind prior agency guidance, such as “The White House Toolkit on Transgender Equality”, the Department of Education’s guidance documents, the Attorney General’s Memorandum of March 26, 2021 entitled “Application of Bostock v. Clayton County to Title IX of the Education Amendments of 1972″, and the Equal Employment Opportunity Commission’s “Enforcement Guidance on Harassment in the Workplace” (April 29, 2024).
“Ending Radical and Wasteful Government DEI Programs and Preferencing”
The EO entitled “Ending Radical and Wasteful Government DEI Programs and Preferencing” primarily affects federal employees, agencies, and contractors (including subcontractors), by eliminating “illegal” DEI and DEIA (diversity, equity, inclusion, and accessibility) programs, mandates, policies, programs, preferences, and activities. The EO directs that
Federal employment practices, including Federal employee performance reviews, shall reward individual initiative, skills, performance, and hard work and shall not under any circumstances consider DEI or DEIA factors, goals, policies, mandates, or requirements.
Each [federal] agency, department, or commission head , in consultation with the Attorney General, the Director of OMB, and the Director of OPM, as appropriate, shall … terminate, to the maximum extent allowed by law, all DEI, DEIA, and “environmental justice” offices and positions (including, but not limited to “Chief Diversity Officer” positions), all “equity action plans”, “equity” actions, initiative, or programs, “equity-related” grants or contracts, and all DEI or DEIA performance requirements for employees, contractors, or grantees.
To this end, each Federal agency, department, or commission head is directed to provide to the Director of the Office of Management and Budget (OMB), a list of, among other things, all “Federal contractors who have provided DEI training or DEI training materials to agency or department employees”; and “Federal grantees who received Federal funding to provide or advance DEI, DEIA, or ‘environmental justice’ programs, services, or activities since January 20, 2021.”
“Ending Illegal Discrimination and Restoring Merit-Based Opportunity”
The EO entitled “Ending Illegal Discrimination and Restoring Merit-Based Opportunity” states that “[l]ongstanding Federal civil-rights laws protect individual Americans from discrimination based on race, color, religion, sex, or national origin. These civil-rights protections serve as a bedrock supporting equality of opportunity for all Americans.” Yet,
[c]ritical and influential institutions of American society, including the Federal Government, major corporations, financial institutions, the medical industry, large commercial airlines, law enforcement agencies, and institutions of higher education have adopted and actively use dangerous, demeaning, and immoral race- and sex-based preferences under the guise of so-called “diversity, equity, and inclusion” (DEI) or “diversity, equity, inclusion, and accessibility” (DEIA) that can violate the civil-rights laws of this Nation.
The EO declares that is “is the policy of the United States to protect the civil rights of all Americans and to promote individual initiative, excellence, and hard work” and all agencies are ordered to “enforce our longstanding civil-rights laws and to combat illegal private-sector DEI preferences, mandates, policies, programs, and activities.” The EO terminates a number of prior Executive Orders issued by the outgoing Biden administration and encouraged
[t]he heads of all agencies, with the assistance of the Attorney General, shall take all appropriate action with respect to the operations of their agencies to advance in the private sector the policy of individual initiative, excellence, and hard work identified … To further inform and advise me so that my Administration may formulate appropriate and effective civil-rights policy, the Attorney General, within 120 days of this order, in consultation with the heads of relevant agencies and in coordination with the Director of OMB, shall submit a report to the Assistant to the President for Domestic Policy containing recommendations for enforcing Federal civil-rights laws and taking other appropriate measures to encourage the private sector to end illegal discrimination and preferences, including DEI.
Private employers should continue to adhere to all federal and state anti-discrimination laws and review DEI policies and programs to ensure compliance.
Revocation of EO 11246 for Federal Contractors
President Trump also issued an EO that revokes EO 11246 of September 24, 1965 (Equal Employment Opportunity) that, among other things, required contractors to create affirmative action plans. Federal contractors are permitted to continue to comply with the regulatory scheme in effect on January 20, 2025 for an additional 90 days. At the conclusion of the 90 days, the Office of Federal Contract Compliance Programs within the Department of Labor shall immediately cease: (A) Promoting “diversity”; (B) Holding Federal contractors and subcontractors responsible for taking “affirmative action”; and (C) Allowing or encouraging Federal contractors and subcontractors to engage in workforce balancing based on race, color, sex, sexual preference, religion, or national origin.
The EO also revokes EO 13279 of December 12, 2002 (Equal Protection of the Laws for Faith-Based and Community Organizations), which previously governed the employment, procurement, and contracting practices of Federal contractors and subcontractors. Specifically, EO 13279 directed that Federal contractors and subcontractors are not to consider race, color, sex, sexual preference, religion, or national origin in ways that violate the Nation’s civil rights laws.
Anticipating Changes Related to Employee Benefits
Private employers seeking guidance on employee benefits related issues should be aware of the new administration’s shift toward deregulation which is likely to result in little new guidance from the Department of Labor or the Internal Revenue Service. President Trump issued an EO entitled “Unleashing Prosperity Through Deregulation” requiring: (A) that each agency identify ten existing rules, regulations or guidance documents to be repealed for every new rule, regulation or guidance document set forth; and (B) that there be no new net cost for all new regulations for fiscal year 2025. The Biden administration’s rule permitting plan fiduciaries to consider environmental, social and governance (ESG) factors when selecting investment options for employer-sponsored retirement plans under certain circumstances is one rule likely to be repealed by the Trump administration as part of its deregulatory agenda. While the new administration is expected to be hostile toward ESG investment options, it is expected to welcome investment into cryptocurrency. Under the Biden administration, the Department of Labor issued guidance warning plan fiduciaries against offering cryptocurrency as an investment option for employer-sponsored retirement plans, but this guidance is also likely to be rescinded. Private employers should be aware of changes in permissible investment options as employees are likely to inquire into the types of investment options available to them.
Further, outside of the EOs, there are several employee benefits related changes anticipated under the new administration that may be of interest to employers and their employees. First, the provision of the Tax Cuts and Jobs Act of 2017 (TCJA) suspending the income tax exclusion for moving expenses paid or reimbursed by an employer is set to expire at the end of 2025. However, Congressional Republicans have vowed to extend the TCJA which could result in moving expenses being taxable as income beyond 2025. Second, for the past few years, employer-sponsored high deductible health plans have been permitted to provide telehealth services before an employee has hit their deductible. However, this provision expired at the end of 2024, so any employee with a high deductible health plan who receives telehealth services pre-deductible may be ineligible to contribute to a Health Savings Account. Some employers may need to amend their health plans offered to employees and issue a communication to employees informing them of the change to coverage. Lastly, the Supreme Court is set to hear a case regarding whether the Affordable Care Act provision requiring employer-sponsored health plans to cover certain United States Preventive Services Task Force recommended preventive services without cost-sharing is constitutional. Depending on the Supreme Court’s holding, certain services may no longer be considered preventative care, so employers will have a choice whether to continue providing those services without cost-sharing (further impacting their high-deductible health plans).
What Private Employers Should Know
Private employers can consider appropriate action on a highly individualized basis and review the current business practices and goals of the company, the future business aspirations of the company, and the culture.
Employers may want to identify any major DEI markers within their company. This initial identification of items should likely be high-level and created in, by or at the direction of an attorney, as privileged work-product in preparation for potential enforcement activity. Consider handling such communications and writings as confidential and privileged with internal or external counsel. Appropriate next steps can be identified once an initial, high-level list of items is gathered. Employers should speak with their legal counsel. A specific course of action can be mapped to ensure ongoing compliance as the legal landscape continues to develop.
