DEI Contracts: How to Stay Fluid & Compliant in Shifting Times

For years, companies have relied on diversity, equity, and inclusion (DEI)-focused initiatives to build better workplace cultures, expand talent pools, and strengthen relationships with diverse consumer bases. However, recent federal policy changes have created challenges for businesses, forcing them to balance DEI obligations with evolving legal requirements, particularly for federal government contractors who rely on federal funding.

While contract managers and in-house counsel still view DEI as an important pillar of social responsibility and corporate success, it now requires a more fluid and risk-averse approach. In this article, we’ll explore how organizations can stay agile in their DEI contracts and leverage digital tools like DocJuris to keep pace with the latest legal mandates.

Main takeaways from this article:

• Shifting federal policies means many existing DEI clauses might now carry legal risks if they conflict with updated regulations.
• Recent executive actions focus on rooting out what the administration deems “radical” DEI programs and emphasize “merit-based opportunity.”
• By using flexible DEI language and building frequent review cycles for contracts, companies can quickly pivot when new guidance emerges.
• Legal, compliance, and HR teams must work together to ensure that contract language reflects the latest policies.

What is DEI (diversity, equity, and inclusion)?

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Diversity, equity, and inclusion (DEI) is a framework designed to foster fair treatment, equal access to opportunities, and meaningful advancement for all individuals in the workplace. It also seeks to identify and eliminate systemic barriers that have contributed to inequities. While DEI efforts often begin within internal HR policies, they increasingly extend to external relationships—shaping how organizations engage with partners, clients, and suppliers to uphold company values, meet legal requirements, and promote inclusivity across the broader business ecosystem.

Understanding the evolving DEI landscape in 2025

In 2025, the debate around DEI continues to intensify. New executive orders published by the White House mark a departure from the approaches taken by the prior federal administration. These orders raise critical questions about government-funded and private-sector DEI programs that might include any form of “preferencing” based on protected characteristics.

Companies still want to encourage diversity and inclusion, acknowledging that diverse teams often prove to be more innovative and adaptable. On the other hand, the tightening legal framework and redefinition of “illegal discrimination,” particularly in hiring, training, and contracting, underscore the need for caution. Some programs, once considered a progressive approach to bolstering equity, may face legal scrutiny.

Because these executive orders could impact federal contract compliance and private agreements, many corporate counsel teams are paying close attention to how these orders influence agency policies, mandates, and best practices. 

While some businesses are revising their DEI strategies from the ground up, others are focusing on less significant adjustments to ensure they remain on the right side of federal law, particularly with personnel management and avoiding what could be labeled as wasteful government DEI programs.

Key changes in DEI policies by the federal government

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With two executive orders, “Ending Radical and Wasteful Government DEI Programs and Preferencing” and “Ending Illegal Discrimination and Restoring Merit-Based Opportunity” recently announced, the federal government has recalibrated its approach to DEI.

Despite the varying scopes of different measures, the overarching changes include:

• Elimination of certain government DEI initiatives: Programs once funded or promoted by federal agencies may now be halted or scrutinized for any elements viewed as preferential treatment or discriminatory toward non-protected groups.
• Emphasis on meritocracy: The administration’s position stresses the importance of hiring, promotion, and contracting based on merit, warning organizations to avoid setting quotas or engaging in “targeted selection” of underrepresented groups.
• Refined definition of discriminatory practices: Provisions that were previously regarded as supportive or remedial in nature may now be flagged as “illegal discrimination.” This shift is compelling in-house counsel to audit existing policies to ensure compliance.
• Increased enforcement and scrutiny: Government agencies are expected to step up their review of companies that receive federal funds or operate under government contracts, ensuring they are not perpetuating policies deemed discriminatory.

While these changes may trigger contract renegotiations and rewrites for many organizations, leadership teams must pay special attention to how DEI language is used in contracts to avoid accusations of preferential treatment or discriminatory intent (or other contract risk that may have been apprised due to the policy change).

How to stay agile in contract management during times of regulatory change

Successfully navigating DEI-related regulatory shifts requires organizations to adapt quickly and efficiently. Here are key strategies for staying agile in navigating these shifts:

Use adaptable language in DEI policies

When drafting contracts or DEI provisions, it is crucial to choose language that allows for reinterpretation or updates over time. Rather than specifying hard quotas or numeric targets, consider using broader commitments that promote equal opportunity “consistent with applicable federal, state, and local laws.”

By using adaptable language, you leave room to pivot in response to future legal guidance or policy shifts without having to rework the entire contract.

Build review cycles into contracts

DEI clauses can quickly become outdated if they reference government standards that shift from year to year. Including a clause requiring periodic reviews (e.g., every six months or annually) can help you stay on top of evolving regulations.

These review cycles might involve verifying compliance with new executive orders, reevaluating any “preferential” language, and confirming that existing DEI initiatives don’t drift into “illegal discrimination,” as the federal government has recently defined it.

Define a process for compliance adjustments

It's critical to establish a clear internal process on how to adjust compliance measures as regulations change. This process might outline:

• Triggers: What news, laws, or policies will prompt an immediate review?
• Roles: Who is responsible for leading the review and proposing contractual amendments?
• Timelines: How quickly should revisions be implemented across all relevant agreements?

Mapping out this process ensures that when new federal guidance or policy updates arise, your organization can adapt smoothly.

Collaborate with legal and compliance teams

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DEI is not strictly an HR matter. It intersects with legal, compliance, finance, and operations. Especially in the current climate, legal and compliance teams must work in tandem with HR and procurement to verify that DEI objectives align with any new regulations.

Encourage open communication channels and schedule regular touchpoints among cross-functional stakeholders. This ensures that contract updates reflect both legal requirements and corporate culture.

Leverage contract management software

Managing thousands of contracts to make sure that DEI language is updated requires reviewing every single word. Contract management platforms that use AI-driven analysis can be useful, as they can dramatically increase the speed at which the reviews are completed.

Such solutions can highlight sections of a contract that may contain legal risks, suggest standardized clauses, and provide central storage for documents. These technologies are ideal for organizations that must quickly respond to executive orders.

Stay informed on further guidance

Policy shifts at the federal level are rarely static. Additional regulations, interpretations, or case law can appear unexpectedly, requiring businesses to recalibrate again.

Keep a close eye on federal agencies, such as the Office of Federal Contract Compliance Programs (OFCCP), to see if they issue new guidance. Regularly consulting reputable law firms or industry associations can also help companies anticipate changes before they become urgent.

How DocJuris can help organizations stay compliant

As the legal and business community grapples with changing DEI requirements, digital solutions like DocJuris can simplify the process. DocJuris is an end-to-end contract management platform designed to help organizations maintain compliance, mitigate risk, and optimize their contract workflows.

AI-powered contract screening for DEI risks

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DocJuris offers intelligent contract analysis and screening, pinpointing language that may be misaligned with current DEI regulations. Whether you’re dealing with newly drafted clauses or legacy documents, DocJuris’s intelligent search and review functionality helps identify red flags—such as explicit quotas, preferential statements, or references that may violate updated executive orders.

Efficient policy management

When federal guidelines change, businesses often scramble to revise clauses across multiple contract repositories. DocJuris provides a centralized hub to update contract templates instantly, ensuring consistency and reducing the chance of outdated or legally risky language slipping through. By streamlining policy management, teams spend less time chasing contract versions and more time refining their DEI strategy.

Compliance tracking

DocJuris enables users to track changes over time, producing clear audit trails that reflect which versions of contract language were in use during specific periods. This feature can be crucial when providing evidence of compliance or responding to an external inquiry. By having a historical record, organizations can prove that they took timely steps to meet changing regulatory demands.

Stay ahead of shifting DEI regulations and ensure compliance with DocJuris

Organizations dedicated to fostering diversity and equity must remain vigilant and adaptable. By implementing smart contract management strategies and leveraging innovative technology like DocJuris, companies can thrive amid changing DEI policies and political landscapes.

With DocJuris, companies can keep a finger on the pulse of shifting DEI rules and swiftly adapt contracts. Real-time updates, automated alerts, and collaborative workflows empower cross-functional teams to make informed, rapid decisions. Rather than treating DEI as a static policy, DocJuris allows organizations to evolve policies, language, and procedures in line with the dynamic regulatory environment.

If you’re ready to streamline your DEI contract management, request a demo today.

FAQs

Why are companies getting rid of DEI?

Many companies are scaling back or re-evaluating their DEI initiatives due to recent government regulations that limit programs deemed overly aggressive or disconnected from merit-based principles. Some are concerned about potential legal repercussions if their DEI programs are viewed as “preferential,” while others are struggling with the cost and administrative burden of maintaining compliance under changing regulations.

What is “illegal DEI” as defined by the current administration?

Recent executive orders define "illegal DEI" as practices that promote discrimination in hiring or promotion processes, particularly those that prioritize diversity metrics over qualifications. This includes the use of quotas, preferential treatment based on race, gender, or other protected characteristics, or any initiative that may violate equal opportunity laws. Organizations are encouraged to pursue inclusive practices that align with merit-based decision-making and remain compliant with federal anti-discrimination regulations.

What does the DEI executive order mean to employers in the private sector?

For employers in the private sector, the executive order represents a paradigm shift toward merit-based evaluations. Companies must scrutinize their policies and contracts to ensure compliance while continuing to foster an inclusive workplace environment.