On January 21, 2025, President Trump issued an executive order titled “[E]nding Illegal Discrimination and Restoring Merit-Based Opportunity,” rescinding Executive Order (“EO”) 11246 – which required federal government contractors and subcontractors to develop and implement affirmative action programs. EO 11246 applied to federal government contractors and subcontractors with at least 50 employees and a contract of at least $50,000. Pursuant to EO 11246, federal government contractors and subcontractors were required to develop and implement affirmative action programs, perform annual audits of company placement, and pay practices, and assess outreach and recruitment programs aimed at underrepresented members of the applicable labor force.
President Trump’s new executive order requires the Department of Labor’s Office of Federal Contract Compliance Programs (OFCCP), which had been the government’s affirmative action enforcement arm, to immediately terminate its practices of promoting “diversity,” requiring federal contractors and subcontractors to implement “affirmative action” programs, and “[a]llowing or encouraging [f]ederal contractors and subcontractors to engage in workforce balancing based on race, color, sex, sexual preference, religion, or national origin.” In addition, all future federal government contracts and grants must include terms by which the contractor or grant recipient certifies it is no longer carrying out Diversity, Equity, and Inclusion (“DEI”) initiatives in violation of federal law. Importantly, the order permits federal contractors to phase out their affirmative action programs over the next 90 days.
The new executive order does not specifically mention or impact the application, requirements, or governing regulations of either Section 503 of the Rehabilitation Act or the Vietnam Era Veterans Readjustment Assistance Act (VEVRAA). Both statutes create their own affirmative action obligations for federal contractors and subcontractors concerning protected veterans and individuals with disabilities. While neither statute is explicitly addressed in the new executive order, the language of the order arguably negatively impacts OFCCP’s authority to enforce both the Rehabilitation Act and VEVRAA.
The practical impact of the new executive order on federal contractors’ and subcontractors’ administrative responsibilities is significant because it abolishes EO 11246 and all related requirements, it removes the OFCCP’s authority to enforce affirmative action requirements, and it disallows implementation of DEI initiatives that violate any applicable federal anti-discrimination laws.
It is important to note, however, that the new executive order does not negate or modify the various laws prohibiting employment discrimination on the basis of race, color, national origin, religion, gender, gender identity, sexual orientation, pregnancy, disability, and age. However, employers can expect increased federal government scrutiny on DEI programs (including companies having diversity officers and departments) as President Trump revamps the Equal Employment Opportunity Commission (EEOC) and rolls out additional DEI restrictions. Furthermore, notwithstanding the foregoing, it is possible for a federal contractor or subcontractor who is committed to diverse, equitable, and inclusive workplaces can maintain such programs without violating anti-discrimination laws. Finally, the order does not affect federal, state, or local civil rights laws in any way.
Given the requirements of this new executive order, other related executive orders, and the new administration’s direction in these areas, federal contractors and subcontractors are strongly advised to review their policies, practices, and initiatives with respect to DEI, including consulting experienced and knowledgeable counsel. Butler Snow will continue to closely monitor this topic and provide relevant updates. For more information or immediate guidance please check with a qualified labor and employment attorney.
