Beyond DEI: The Future of Inclusive Business Practices
A New Era for DEI—What Business Owners Need to Know
If you’re a small business owner or microenterprise leader, you’ve likely heard about the latest shake-up: President Trump’s executive order eliminating federal DEI programs. Whether you support or oppose these changes, one thing is certain—your business needs a strategy to navigate the new regulatory landscape.
But here’s the key point: Title VII of the Civil Rights Act is still in full force. That means workplace discrimination protections remain intact, but DEI-related practices—especially those tied to federal funding—are under scrutiny.
So, what does this mean for small businesses? How do you stay compliant, protect your brand, and maintain a diverse, inclusive workforce—without risking legal headaches? Let’s dive into the key takeaways, business trends, and strategies that will keep you ahead of the curve.
What Is an Executive Order? And Why Should You Care?
An executive order is a directive issued by the President that guides federal agencies on policy implementation. Unlike laws passed by Congress, executive orders can be reversed by future administrations and don’t override federal laws (such as Title VII).
What does this mean for you?
If you’re a federal contractor or receive federal funding, these DEI restrictions will impact you directly.
If you’re a privately owned business, you’re not legally bound to eliminate DEI programs, but the risk of litigation has increased.
Breaking Down Trump’s Executive Order on DEI
Trump’s executive order targets DEI initiatives across the federal government, eliminating:
DEI-related training programs for federal employees
“Equity action plans” and diversity hiring targets
Chief Diversity Officer roles within federal agencies
Federal contracts that prioritize DEI initiatives
Additionally, federal agencies must report all past DEI expenditures and identify companies that provided DEI-related services. Translation: If your business has provided DEI training, consulting, or services to the government, expect increased scrutiny.
Who Will Enforce This?
Expect the DOJ (Department of Justice), OPM (Office of Personnel Management), and OMB (Office of Management and Budget) to lead enforcement. These agencies will audit compliance, investigate discrimination claims, and potentially pursue legal action.
Which Businesses Are Most Affected?
If your business falls into any of the following categories, you need a game plan ASAP:
Federal Contractors & Grant Recipients – Compliance is now mandatory. DEI-related hiring incentives and programs need an overhaul.
Businesses with Government Partnerships – If your company provides training, recruitment, or consulting services to federal agencies, expect scrutiny.
Organizations with Race-Based DEI Programs – If you offer grants, scholarships, or hiring incentives explicitly tied to race or gender, these programs may need to be reframed.
Large Employers with Public DEI Commitments – Major brands could face reverse discrimination lawsuits if DEI efforts are perceived as preferential treatment.
State Laws: Will They Override Federal DEI Rollbacks?
The federal rollback doesn’t mean all DEI efforts are dead. State laws still apply, and some states (like New York and California) have stronger workplace discrimination protections than federal law.
✅ New York, California, and Illinois: Maintain robust anti-discrimination laws, meaning businesses must continue compliance at the state level.
❌ Florida and Texas: Have already restricted race-based DEI programs in schools and public workplaces, aligning with the new federal stance.
Business owners should review state laws to ensure compliance beyond federal guidelines.
Reframing DEI: From Race-Based to Economic-Based Programs
So, how do you protect your business from legal risk while maintaining an inclusive culture? Reframe your DEI initiatives to focus on economic opportunity.
❌ Old DEI Program: A mentorship program for “Black and Latinx entrepreneurs.”
✅ New DEI Program: A mentorship program for first-generation business owners and entrepreneurs from underserved communities.
This shift ensures continued support for marginalized communities while reducing legal exposure under the new policies.
Key Terms Business Owners Should Know
Title VII – The federal law prohibiting workplace discrimination based on race, color, religion, sex, or national origin. Still active!
Merit-Based Hiring – Hiring based on skills, experience, and performance, with no consideration of DEI factors.
Reverse Discrimination – A term used in lawsuits where majority-group employees claim unfair treatment due to DEI policies.
Affirmative Action – Policies that consider race, gender, or ethnicity to address past discrimination. Federal affirmative action mandates are now eliminated.
What Small Business Owners Should Do Next
Audit Your DEI Policies & Training Programs
Identify any programs that explicitly mention race, gender, or ethnicity.
Consider restructuring initiatives to be income-based or geographically inclusive.
Document Clear Hiring & Promotion Standards
Define “merit” for your business (skills, experience, education, etc.).
Create a written hiring rubric to protect against discrimination lawsuits.
Review Your Federal Contracts & Funding
If you do business with the government, ensure compliance with the new order.
Prepare for audits and be ready to justify past DEI spending.
Stay Informed on State Laws & Legal Challenges
Some states are reinforcing DEI protections, which could override federal changes.
Monitor lawsuits against the executive order—it could be reversed in court.
Final Thoughts: A Smart, Strategic Approach to DEI
While Trump’s executive order changes the federal approach to DEI, it doesn’t ban diversity initiatives in the private sector. Businesses can still foster inclusive work environments while minimizing legal risks by:
✔ Focusing on economic opportunity instead of race or gender.
✔ Aligning hiring and promotion policies with clear, merit-based standards.
✔ Staying informed about evolving state laws and federal enforcement.
The best businesses adapt to change—and with these strategies, yours can continue to thrive while navigating this new landscape.
What’s Next?
How is your business adjusting to these changes? Let’s continue the conversation in the comments below!
If you need expert guidance on compliance, hiring policies, or strategic business planning, About Stewart is here to help. Reach out today for a consultation!
