Editorial update — September 23, 2026 | Handbooks.io team: The executive orders discussed below do not create a general ban on lawful private-sector inclusion programs. The Fourth Circuit vacated the initial preliminary injunction in February 2026; that case was subsequently dismissed, while a separate challenge to Executive Order 14398 remains pending. Current case information. The newer federal-contracting requirements require review of covered contracts and subcontract clauses. Changes to federal enforcement priorities do not repeal Title VII’s statutory disparate-impact provisions. Different outcomes alone do not establish a violation. The clean-shaven example also requires a separate religious-accommodation assessment, including the applicable undue-hardship standard. The original article’s legal discussion should be read subject to these corrections, not as a complete statement of current law.
Policy
In January 2025, the federal government issued Executive Orders that may affect many businesses, including small and mid-sized companies. While the initial EOs focused on federal programs, their influence has already extended into the private sector. Businesses with existing Inclusion and Diversity Programs should take inventory of their initiatives, as legal interpretations and public perceptions have shifted.
In February, the Department of Justice issued a memo recommending an end to “illegal discrimination” related to accessibility, equity, diversity, and inclusion in federal programs. Legal challenges temporarily paused the enforcement of certain Inclusion and Diversity initiatives in the private sector, but those pauses were lifted shortly after, contributing to uncertainty for many business leaders.
In mid-March, the Fourth Circuit Court allowed enforcement of the new executive orders to continue while related litigation moves through the courts. The most recent Executive Order, Restoring Equality of Opportunity and Meritocracy, issued on April 23, 2025, directs federal agencies to eliminate the use of disparate-impact liability in enforcement. Disparate impact treats policies or practices as discriminatory if they result in different outcomes for certain groups, even when the policies themselves are neutral and there is no intention to discriminate.
Here’s an example to illustrate disparate impact:
Policy: A security firm requires all guards to be clean-shaven.
Impact: This may disproportionately affect certain religious groups (e.g., Sikhs or some Muslims) who grow beards for faith-based reasons.
If your business is considering implementing an Inclusion and Diversity program, it is recommended to consult with an experienced HR professional for guidance. In some cases, a comprehensive audit of existing programs, conducted in consultation with legal counsel, may also be advisable. Outlined below are a few general guidelines for businesses moving forward with an Inclusion and Diversity program in today’s environment:
Reaffirm and Document Your Core Values
- Identify whether inclusion, diversity, and merit-based opportunity are authentically part of your company’s mission and values.
- Ensure alignment between your Inclusion and Diversity efforts and your overall business mission, vision, and values.
- Assess whether inclusive practices are already reflected in your current workplace culture.
Equip Leadership with Updated Guidance
- Provide updated training for managers on current nondiscrimination requirements and regulatory changes.
- Ensure employees have a clear process for bringing forward workplace questions or concerns.
Audit Existing Programs
- Conduct a full audit of policies, practices, and both formal and informal programs, including external communications (websites, social media) and internal platforms.
- Review and fully evaluate any quotas, benchmarks, or initiatives within your program to ensure compliance with federal nondiscrimination laws.
- Confirm that all aspects of your programs are free from practices that could violate protections under federal law.
