Fourteen months after launching a full-throttled attack on diversity, equity and inclusion initiatives (DEI) as “unlawful,” which prompted multiple lawsuits, injunctive actions, and stalled enforcement initiatives, the Trump administration issued a new, comparatively restrained Executive Order on March 26, 2026, that specifically targets defined examples of discrimination based on race or ethnicity. 

The order defines discrimination as “disparate treatment based on race or ethnicity in the recruitment, employment (e.g., hiring, promotions), contracting (e.g., vendor agreements), program participation, or allocation or deployment of” a federal contractor’s resources.  It clarifies that “program participation” includes access to training, mentoring, leadership development programs and other educational opportunities; membership in clubs and  associations; and similar opportunities that are sponsored or established by the contractor or subcontractor.   

The new order thus echoes themes that the Department of Justice and Equal Employment Opportunity Commission have expressed in letters, guidance, and public statements over the past year (as we discussed here and in this series), but focuses on more overt examples of partiality and exclusion.  In so doing, the Executive Order still upsets the approach that some organizations had taken of remediating past examples of historic discrimination by offering preferences and opportunities to individuals in certain historically marginalized groups (particularly the “BIPOC” community).  However, the Executive Order’s narrower scope also aligns more closely with the Supreme Court’s analysis in its 2023 decision invalidating racial preference in university admissions decisions. (For a refresher on that decision and a deep analysis of the initial Trump Executive Orders on DEI, refer to our DEI in Crisis series). 

New Compliance Certification 

The new Trump Executive Order directs executive departments and agencies, to include a new compliance certification in all federal contracts and subcontracts that covers the following six points: 

1.  The contractor will not engage in any racially discriminatory DEI activities, as defined by the new Executive Order; 
2.  For compliance purposes, the contractor will furnish all information and reports, including providing access to books, records, and accounts, as required by the contracting agency pursuant to the Executive Order; 
3.  The contract may be canceled, terminated, or suspended for noncompliance with this clause and the contractor or subcontractor may be declared ineligible for further federal contracts; 
4. The contractor will report and address any subcontractor’s noncompliance; 
5. The contractor will let the agency know if it is being sued by a subcontractor challenging this clause; and
6. The contractor recognizes that compliance with the requirements of this clause are material for purposes of the False Claims Act. 

The order further directs the agency actions needed to implement and enforce this requirement.  In contrast to prior executive orders on this subject that called for legal action to be taken against specific industries or particularly notable employers, the new order more moderately directs that “additional guidance on best practices” be prepared for those economic sectors that government agencies identify as posing a particular risk of noncompliance based on current or past conduct. 

What Now 

Any federal contractor that has not already evaluated its workplace practices to remove racial preferences should do so immediately.  As I outlined previously in response to then Attorney General Bondi’s memo on this subject, employers should avoid the following: 

1. Do Not Use Race or Ethnicity as a Key to Entry 

Diversity initiatives that make available special programs, facilities, resources, or opportunities based on someone’s racial or ethnic group, are considered unlawful no matter the rationale.  Offering internships, scholarships, mentoring, and similar programs using race or ethnicity as a qualifying consideration risk violate the new compliance certification. 

1. Do Not Consider Race or Ethnicity in Hiring and Promotions 

Hiring and selection criteria that prioritize individuals who possess certain protected characteristics are generally considered unlawful.   

1. Check How You Run Training Programs 

Training programs that stereotype, diminish or demean the experience of, or otherwise exclude certain individuals based on protected characteristics, such as those targeting white individuals, are considered unlawful.   

By Tracey I. Levy