This executive order revokes previous affirmative action-based executive orders, including EO 11246, that required federal contractors and subcontractors to take affirmative action in their hiring practices with respect to minorities and women. EO 11246 was intended to slowly transform a contractor’s workforce to reflect the gender, racial and ethnic profile of the labor pools from which the contractor recruited and hired. However, this program was perceived by some to encourage preferential treatment in hiring not strictly based on qualifications and merit and was discarded. As of April 27, 2025, federal contractors and subcontractors were to cease complying with EO 11246 and instead embrace this executive order.

EO 14173 also directs the Office of Federal Contract Compliance Programs (OFCCP) within the Department of Labor to immediately cease (a) promoting diversity and holding federal contractors and subcontractors responsible for taking affirmative action in employment and (b) allowing federal contractors and subcontractors to engage in workforce balancing based on race, color, sex, sexual preference, religion or national origin. Further, it requires all federal contract or grant award recipients to certify that they are in compliance with all anti-discrimination laws and that they do not operate any DEI programs that violate federal anti-discrimination laws. Their certification is deemed material to the federal government’s payment decision for the purposes of the False Claims Act, which imposes civil and criminal penalties on persons and companies who defraud governmental programs.

EO 14173 is also aimed at private employers beyond federal contractors and subcontractors. It recites that major corporations, financial institutions, the medical industry, large commercial airlines and others that have adopted race- and sex-based preferences under the guise of DEI may violate the federal civil rights laws. It orders the attorney general, in consultation with the heads of all federal agencies, to submit recommendations for enforcing the federal civil rights laws and a proposed enforcement plan identifying (1) key sectors of concern for each agency; (2) the most egregious and discriminatory DEI practitioners; (3) steps and measures to deter DEI programs (whether labeled DEI or otherwise) that constitute illegal discrimination or preferences, including identifying up to nine potential civil compliance investigations of publicly traded corporations, large nonprofit corporations and other large institutions; (4) strategies to encourage the private sector to end illegal DEI discrimination and preferences; and (5) litigation that would be potentially appropriate for federal lawsuits, intervention or statements of interest. Additionally, on Jan. 21, 2025, the acting head of the EEOC announced that one of her priorities would include rooting out unlawful DEI-motivated race and sex discrimination.

The executive order above does not define unlawful DEI practices. However, a memorandum issued on Feb. 5, 2025, by the acting director of the U.S. Office of Personnel Management gives some indication. First, it states that unlawful discrimination related to DEI includes taking any employment action motivated in whole or part by protected characteristics. Second, it includes diversity requirements for the composition of hiring panels, as well as the composition of candidate pools. While outlining what is likely “illegal DEI” under the executive order, the memorandum specifically states that accessibility or disability accommodations do not fall within the purview of illegal DEI. These practices appear to be directed more toward affirmative action programs than corporate efforts to employ a diverse workforce, but EO 14173 has implications for private employers who are not government contractors.

A federal district court in Baltimore enjoined certain provisions of this order, but the injunction was stayed by a federal appellate court pending appeal. This and EO 14151 have been challenged in federal district courts in Illinois, Washington, D.C. and Pennsylvania.