Reassessing DEI Programs After the March 26 Executive Order

04.07.26

On March 26, 2026, the administration issued an Executive Order addressing diversity, equity and inclusion practices among federal contractors and subcontractors. The Order does not create new discrimination laws. Instead, it signals that the federal government intends to more actively enforce existing anti discrimination requirements in this area.

For employers, the takeaway is straightforward. DEI efforts are not prohibited, but programs that involve decision making based on protected characteristics may face increased scrutiny. So what should companies do now?

What the Executive Order Means

At its core, the Executive Order reinforces an existing legal principle. Employment decisions must not be based on race, sex or other protected characteristics unless permitted under very limited circumstances.

The Order directs federal agencies to review contractor practices and ensure compliance with these requirements. It also signals closer coordination with enforcement agencies when potential violations are identified.

In practical terms, this means that workplace programs once viewed as low risk may now be examined more closely.

Why This Matters

Federal contractors are already required to comply with equal employment opportunity laws. The difference now is enforcement. Companies should expect greater scrutiny of:

• Hiring and promotion practices
• Compensation decisions
• Internship and leadership programs
• Internal policies and communications

Programs that explicitly factor in protected characteristics can create legal exposure if they are not carefully structured.

What Companies Should Do Now

The goal is not to eliminate DEI efforts. It is to ensure those efforts are legally compliant.

1. Review Existing Programs: Start with a careful review of current initiatives, including recruiting, internships, mentorship programs, and supplier diversity efforts.
2. Shift the Focus to Equal Opportunity: Employers can continue to support diverse workplaces by focusing on expanding access rather than granting preferences. Examples include:
   • Broadening recruiting pipelines
   • Using objective, job-related criteria
   • Offering mentorship and training opportunities open to all employees
3. Clean Up Policies and Messaging: Policies and internal communications should be reviewed carefully. Avoid language that suggests quotas, preferences or targets tied to protected characteristics. Even informal language can create risk if it does not align with actual practices.
4. Train Decision Makers: Managers play a critical role. They need to understand how to apply these principles in real time. Training should focus on:
   • Making consistent, documented decisions
   • Avoiding reliance on protected characteristics
   • Understanding the difference between inclusion and preferencs
5. Prioritize Documentation: If a decision is challenged, documentation will matter. Employers should be able to show that decisions were based on legitimate, nondiscriminatory factors and applied consistently across employees.

The Bottom Line

The March 26 Executive Order does not ban DEI. It raises the stakes on how those programs are designed and implemented.

For federal contractors, the safest path forward is a careful recalibration. Programs should focus on expanding opportunity, rely on objective criteria, and be supported by clear documentation.

Companies that take these steps now will be better positioned to manage risk while continuing to build strong and inclusive workplaces.