On January 21, 2025, President Trump issued an Executive Order titled “Ending Illegal Discrimination and Restoring Merit-Based Opportunity” (“Order”).[1] That Order, among other things, revoked Executive Order 11246, giving federal contractors 90 days to adjust to the new regulatory scheme.[2]

What is Executive Order 11246?

Issued by President Johnson in 1965, Section 2 of EO 11246 “Equal Employment Opportunity” (along with its amendments), created the affirmative action programs obligations with which most Federal contractors had to comply.[3] EO 11246 also mandated certain language that had to appear in most government contracts. And the Department of Labor promulgated several regulations meant to implement EO 11246’s requirements. Among these requirements were

• filing an annual report with the Office of Federal Contract Compliance Programs (OFCCP) providing a demographic breakdown of the contractor’s workforce by race and sex;[4]
• provision of non-segregated facilities;[5]
• nondiscrimination on the basis of race, color, religion, sex, sexual orientation, gender identity, or national origin when hiring in the U.S. for positions either inside or outside the U.S.;[6]
• nonpayment or nonreimbursement of any membership fees for an employee’s participation in a private club;[7] and
• creation of an affirmative action program that analyzes the company’s hiring practices as they relate to hiring, promotion, and retention of minorities, compares its practices and current demographics with its geographic labor pool, and identifies strategies for bringing its demographics in line with its geographic labor pool if necessary.[8]

What Does the Order Do?

The Order has two main effects on government contractors. The first is the elimination of most affirmative action programs. The second is a requirement related to contractors’ employment of diversity, equity, and inclusion (“DEI”) programs.

Most affirmative action requirements – but not all – go away.

Under the Order’s text, OFCCP can no longer hold federal contractors and subcontractors responsible for affirmative action requirements. Nor can OFCCP allow or encourage those contractors to “balance” their workforces as to race, color, sex, sexual preference, religion, or national origin. So, at a minimum, contractors will no longer have to file the reports described above or keep any records relating to its hiring, promotion, or retention of the groups those reports track.

But there’s always a catch.

EO 11246 and its amendments weren’t the only source of affirmative action requirements. Two Congressional acts—the Rehabilitation Act of 1973 (as amended)[9] and Vietnam Era Veterans’ Readjustment Assistance Act of 1973 (as amended) (VEVRAA)[10]—have affirmative action requirements aimed at hiring, promotion, and retention of people with disabilities and veterans of the armed services. The requirements under those acts won’t change as a result of the Order (though may change with later Executive Orders or rulemakings reflecting the administration’s priorities). Those regulations require most contractors to, among other things, create an affirmative action policy and plan to employ and advance qualified protected veterans as well as individuals with disabilities. So federal contractors shouldn’t scrap their affirmative action programs in their entirety just yet. Instead, they should have qualified counsel review their current affirmative action programs to ensure that they maintain compliance with the Order as well as the remaining affirmative action requirements.

Contractors should also be aware that just because EO 11246 went away doesn’t mean that all acts EO 11246 prohibited are now legal. For example, discrimination on the basis of race, color, religion, sex, sexual orientation, gender identity, or national origin is illegal under Title VII of the Civil Rights Act of 1964.[11] So, too, does Title VII prohibit segregated workplaces.[12]

UPDATE: There is some widespread misinformation that the Order eliminates Small Business Administration setaside programs, such as the 8(a) program. It does not. Setaside programs for disadvantaged minority derive from legislation[13] and are thus far unaffected by the Trump Administration’s Executive Orders. The SBA may, however, promulgate new regulations or offer new guidance reflecting the Administration’s priorities. New regulations will likely require public notice and comment.[14]

Contractors must certify that they are and will not operate any programs promoting DEI which violate Federal anti-discrimination laws.

The Order requires contracting officers to insert a clause into each government contract under which the contractor certifies that it doesn’t operate any DEI program that violates Federal anti-discrimination laws. But what DEI programs violate those anti-discrimination laws isn’t very clear. And of course employers already had an independent duty to not violate federal employment laws. But with this new certification, a federal contractor that knows it sponsors a noncompliant DEI program who nonetheless certifies that it doesn’t can face both civil and criminal liability under the False Claims Act.[15] Areas where all employers—not just federal contractors—should be cautious are

• programs in which employees discuss negative feelings toward protected classes;
• programs that may cause or promote a hostile work environment by assigning fault or blame to protected classes;
• programs that use quantitative goals relating to improving diversity or setting aside positions based on a protected status; and
• programs that direct investments exclusively to underrepresented protected classes.

As noted above, the Order gives contractors 90 days to adjust to the new requirements. Therefore, contractors seeking increased diversity, equity, and inclusion will need to tailor their efforts to comply with the Order. Some ways to avoid potential violations of federal anti-discrimination law while doing so include

• removing potentially exclusionary language from job advertisements or applications;
• offering optional unconscious bias training;
• conducting outreach to diverse colleges and student groups;
• establishing mentorship programs and employee resource groups which are open to all employees of any identity; and
• Implementing family-friendly policies like nursing rooms and flexible work options.

We will keep you updated with any further developments.

[1] As of this writing, the Order did not yet appear in the Federal Register.

[2] The White House, Ending Illegal Discrimination and Restoring Merit-Based Opportunity (Jan. 21, 2025), https://www.whitehouse.gov/presidential-actions/2025/01/ending-illegal-discrimination-and-restoring-merit-based-opportunity/.

[3] Exec. Order No. 11246 (1965), Equal Employment Opportunity, reprinted as amended at https://www.dol.gov/agencies/ofccp/executive-order-11246/as-amended.

[4] 29 C.F.R. § 60–1.7

[5] 29 C.F.R. § 60–1.8

[6] 29 C.F.R. § 60–1.10

[7] 29 C.F.R. § 60–1.11

[8] 29 C.F.R. § 60–2.10

[9] See 29 U.S.C.A. § 793 and 41 C.F.R. § 60–741.43.

[10] See 38 U.S.C.A. § 4212 and 41 C.F.R. § 60–300.40.

[11] 42 U.S.C.A. §§ 2000e to 2000e-17; Bostock v. Clayton Cnty., Ga., 590 U.S. 644 (2020).

[12] 42 U.S.C.A. § 2000e-2(a)(2).

[13] See, e.g., 15 U.S.C.A. § 636(j) (authorizing creation of programs to place contracts with businesses located in areas of high unemployment or low income); 15 U.S.C.A. § 637(a) (authorizing creation of programs to place contracts with disadvantaged small business concerns).

[14] 13 C.F.R. § 101.108.

[15] 31 U.S.C.A. §§ 3729 to 3731.