President Trump signed an Executive Order March 26 prohibiting federal contractors and subcontractors from engaging in “racially discriminatory DEI activities.”

The new E.O., Addressing DEI Discrimination by Federal Contractors, defines racially discriminatory DEI 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 an entity’s resources.”

The E.O. directs federal agencies to include a new contract clause requiring contractors to refrain from such practices and to give the government access to all their records, books, and reports necessary to determine compliance. Potential consequences include audits, contract termination, debarment, and False Claims Act scrutiny.

Notably, the E.O. is limited to race and ethnicity and does not reference sex or other protected characteristics.

The Center for Workplace Compliance (CWC), our affiliated nonprofit membership association, will hold a virtual Member Roundtable on April 9 at 2:00 p.m. This members-only event will provide a candid discussion with CWC’s compliance experts on the E.O.’s likely impact on an organization’s compliance strategies, risk exposure, and employee relations efforts.

CWC can read more here.