January 23, 2025

President Trump Ends Affirmative Action Requirements for Government Contractors

Contractors and Grant Recipients Prohibited from Maintaining DEI Programs or Engaging in Discrimination; Duties of the Office of Federal Contract Compliance Programs Heavily Curtailed
Holland & Knight Alert
Jeremy D. Burkhart

Highlights

  • In a wide-sweeping executive order, President Donald Trump has eliminated the requirement for federal contractors to maintain affirmative action programs.
  • His order, "Ending Illegal Discrimination and Restoring Merit-Based Opportunity" (the Order), revokes Executive Order 11246 (Equal Employment Opportunity), which was signed by President Lyndon Johnson in 1965.
  • In addition, the Order prohibits federal contractors, subcontractors and grant recipients from maintaining "diversity, equity, and inclusion" (DEI) or "diversity, equity, inclusion, and accessibility" (DEIA) programs.
  • The Order also heavily curtails the Office of Federal Contract Compliance Programs (OFCCP), which was previously charged with enforcing Affirmative Action requirements and had been used by the Biden Administration to audit contractors in order to achieve pay equity.

President Donald Trump has eliminated the requirement for federal contractors to maintain affirmative action programs. His order, "Ending Illegal Discrimination and Restoring Merit-Based Opportunity" (the Order), revokes Executive Order (EO) 11246 (Equal Employment Opportunity), which was signed by President Lyndon Johnson in 1965.

This Holland & Knight alert details the Order and its impact on government contractors and grant recipients.

Background

In 1941, President Franklin Roosevelt signed EO 8802, outlawing discrimination based on race, color, creed and national origin in the federal government and defense industries. In 1943, President Roosevelt extended the coverage of EO 8802 by making it applicable to all government contractors. In 1953, President Dwight Eisenhower issued EO 10479 to require federal agencies "to include in their contracts a provision obligating the government contractor not to discriminate against any employee or applicant for employment because of race, creed, color, or national origin and obligating the government contractor to include a similar provision in all subcontracts." The policy of nondiscrimination implemented by Presidents Roosevelt and Eisenhower was changed in 1965 by President Lyndon Johnson, who issued EO 11246, requiring contractors to "take affirmative action." On July 21, 2014, President Barack Obama signed EO 13672, amending EO 11246 to include sexual orientation and gender identity as protected classes that had to be addressed in contractors' affirmative action policies and statements.

Under EO 12086 in 1978, President Jimmy Carter directed that enforcement of affirmative action obligations be overseen by the Office of Federal Contract Compliance Programs (OFCCP), a special office within the U.S. Department of Labor. Since then, the OFCCP has conducted compliance evaluations and investigations of federal contractors' and subcontractors' personnel policies and procedures. In addition to responding to specific complaints of alleged discrimination and recommending enforcement actions to the Labor Department, the OFCCP annually audits federal supply and service contractors. On Nov. 20, 2024, it published its annual Corporate Scheduling Announcement List (CSAL), identifying 2,000 federal supply and service contractors and subcontractors for compliance reviews.

Affirmative Action requirements are codified in 41 C.F.R. 60-1 and 60-2. Pursuant to these regulations, federal contractors and subcontractors are required to take "affirmative action" to "recruit and advance" qualified minorities and women. A contractor's affirmative action procedures must be incorporated into the company's written personnel policies and updated annually, and a contractor is charged with implementing these policies through an affirmative action program (AAP). Some of the requirements of an AAP include comparing the utilization of women and minorities to their availability, setting placement goals if women or minorities are underutilized, assessing recruitment and outreach efforts, and developing and executing action-oriented programs to address identified problems. If women and minorities are not employed at a rate "to be expected given their availability in the relevant labor pool," then the contractor must take affirmative steps to remedy this underutilization. A contractor's noncompliance with its affirmative action obligations can result in the OFCCP taking enforcement actions against the company.

The enforcement of Affirmative Action requirements has been the subject of recent scrutiny. In 2023, the U.S. Supreme Court found that college admissions policies using race or diversity as a factor violate the Equal Protection Clause of the 14th Amendment of the U.S. Constitution.1 In fall 2024, the U.S. District Court for the Southern District of Texas held that OFCCP enforcement proceedings before a Labor Department administrative law judge violate the "take care" clause of Article II of the Constitution.2

The Order and Impact on Government Contractors

President Trump's new Order revokes EOs 11246 and 13672 and their implementing regulations, as well as several other initiatives that were designed to promote diversity and inclusion. For government contractors and grant recipients, the following parts of the Order are particularly important:

  • "Federal contractors and subcontractors shall not consider race, color, sex, sexual preference, religion, or national origin in ways that violate the Nation's civil rights laws."
  • Contractors and grant recipients will be required to agree that they will comply "in all respects with all applicable Federal anti-discrimination laws" as a condition of all future contracts and grant awards.
  • Contractors and grant recipients will be required to certify that they "do[] not operate any programs promoting [diversity, equity, and inclusion] DEI that violate any applicable Federal anti-discrimination laws."
  • OFCCP is now prohibited from enforcing affirmative action, promoting diversity or "allow[] or encourage[] Federal contractors and subcontractors to engage in workforce balancing based on race, color, sex, sexual preference, religion, or national origin."
  • The Order directs all executive departments and agencies "to terminate all discriminatory and illegal preferences, mandates, policies, programs, activities, guidance, regulations, enforcement actions, consent orders, and requirements," and "to enforce our longstanding civil-rights laws and to combat illegal private-sector DEI preferences, mandates, policies, programs, and activities."
  • The Order further directs the director of the Office of Management and Budget (OMB) to "[e]xcise references to DEI and [diversity, equity, inclusion, and accessibility] DEIA principles, under whatever name they may appear, from Federal acquisition, contracting, grants, and financial assistance procedures to streamline those procedures, improve speed and efficiency, lower costs, and comply with civil-rights laws" and to terminate all "diversity," "equity," "equitable decision-making," "equitable deployment of financial and technical assistance" and "advancing equity" requirements, programs and activities.
  • Notably, the Order states that it "does not apply to lawful Federal or private-sector employment and contracting preferences for veterans of the U.S. armed forces or [blind] persons protected by the Randolph-Sheppard Act, 20 U.S.C. 107 et seq."

The Order also directs certain officials to coordinate in order to prepare "recommendations for enforcing Federal civil-rights laws and taking other appropriate measures to encourage the private sector to end illegal discrimination and preferences, including DEI."

Next Steps for Federal Contractors

The Order provides contractors and subcontractors 90 days to eliminate their affirmative action programs to the extent they are inconsistent with the Order's requirements. Starting April 21, 2025, contractors "shall not consider race, color, sex, sexual preference, religion, or national origin in ways that violate the Nation's civil rights laws." Furthermore, contractors, subcontractors and grant recipients are prohibited from maintaining any DEI programs.

  • Companies who wish to do business with the federal government should take immediate steps to review their affirmative action and DEI programs to ensure compliance with the new Order. When deciding on policies and hiring practices, companies should follow the Order's directive to "not consider race, color, sex, sexual preference, religion, or national origin."
  • If a contractor was previously identified on the CSAL as being subject to an annual compliance review, that contractor should ask for guidance from OFCCP to verify whether such review will still take place.
  • If contractors or grant recipients have personnel filling roles such as "Diversity Officer," careful attention should be given to the authorities and responsibilities of these positions.
  • Contractors and grant recipients should review their internal policies and procedures to identify potential violations of the new directives.

It is important that contractors ensure compliance with this Order and the pending change in regulations. For questions or further guidance, please contact the author.

Notes

1 Students for Fair Admissions, Inc. v. Harvard University, 600 U.S. 181 (2023).

2 ABM Industry Groups, LLC v. U.S. Department of Labor, Case No. H-24-3353, 2024 WL 4642962 (S.D. Tex. Oct. 30, 2024).


Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem, and it should not be substituted for legal advice, which relies on a specific factual analysis. Moreover, the laws of each jurisdiction are different and are constantly changing. This information is not intended to create, and receipt of it does not constitute, an attorney-client relationship. If you have specific questions regarding a particular fact situation, we urge you to consult the authors of this publication, your Holland & Knight representative or other competent legal counsel.


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