Key Takeaways
- President Trump has eliminated mandates for federal contractors to maintain affirmative action programs in compliance with Office of Federal Contract Compliance Programs requirements.
- The order does not eliminate contractor requirements to comply with other federal and state antidiscrimination employment laws, and it does not apply to affirmative action compliance obligations with respect to individuals with disabilities or to protected veterans.
- The order also indicates future steps to curtail diversity, equity and inclusion efforts in the private sector as well as college and university affirmative action programs.
On Jan. 21, President Donald Trump took aim at a long-standing executive order regarding diversity, equity and inclusion (DEI) in the American workplace. Among a slew of other executive actions taken by Trump shortly after he took office, the president also signed an executive order titled Ending Illegal Discrimination and Restoring Merit-Based Opportunity (the Order). The Order describes DEI programs as “dangerous, demeaning and immoral race- and sex-based preferences … that can violate the civil[]rights laws of this Nation” and states that its purpose is to “end[] illegal preferences and discrimination.” Although having wide-ranging effects on the application of DEI programs in all executive departments and agencies, this client alert focuses on the effects the Order has on federal contractors and on the private sector.
For Federal Contractors: Many Affirmative Action Compliance Requirements Revoked (for Now)
The Order revokes a Lyndon B. Johnson-era executive order, Executive Order 11246 of September 24, 1965 (the 1965 Order), prohibiting discrimination in employment by government contractors and subcontractors. The 1965 Order contained a number of mandatory provisions to be included in government contracts, including requiring contractors and subcontractors to agree not to discriminate against any employee or applicant based on race, color, religion, sex, sexual orientation, gender identity or national origin and to include equal employment opportunity language in solicitations or advancements for employees (Exec. Order 11246, Sec. 202, Sept. 24, 1965). The 1965 Order also required contractors to file compliance reports with the contracting agency or the secretary of labor, as may be directed, which in the present day includes affirmative action plans that contractors prepare annually and may submit to the Office of Federal Contract Compliance Programs (OFCCP) in the event of an audit (Id. at Sec. 203).
The Order revokes the entire 1965 Order, allowing only a 90-day grace period for contractors to continue compliance under the 1965 Order. The Order also requires that OFCCP cease allowing contractors to “engage in workforce balancing based on race, color, sex, sexual preference, religion or national origin.” Finally, every federal contract will now include a term requiring contractors to verify that they do not operate any programs promoting DEI that violate federal antidiscrimination laws. Untrue contractor certifications would likely implicate the False Claims Act.
The Order does not relieve employers of complying with other relevant federal employment discrimination laws such as Title VII of the 1964 Civil Rights Act, the Equal Pay Act, the Age Discrimination in Employment Act or the Americans with Disabilities Act as well as relevant state laws. Further, the Order does not apply to affirmative action compliance obligations based in statute, such as for individuals with disabilities (under Section 503 of the Rehabilitation Act of 1973) or protected veterans (under the Vietnam Era Veterans’ Readjustment Assistance Act). Therefore, contractors should continue to satisfy those compliance obligations.
- Contractor Takeaway: As it currently stands, federal contractors and subcontractors are not required to institute OFCCP-compliant affirmative action programs or create affirmative action plans regarding women and minorities in the workforce. Contractors have 90 days from the date of the Order to continue compliance with those old requirements. However, there is the potential for private litigants to challenge the Order in court, which could result in a potential nationwide injunction stopping the Order from going into effect. Given this uncertainty, contractors could consider continuing with their existing compliance programs until the conclusion of the 90-day period while preparing for compliance with the Order should it survive any legal challenges during that time. Contractors would be prudent to review all currently instituted DEI and affirmative action programming to evaluate whether they are defensible under existing law and to prepare for increased scrutiny by the new administration of all DEI-related programs.
For the Private Sector: ‘Encouraged’ To End DEI Programming
The Order also addressed the private sector. It directs all agencies to take “all appropriate action” to advance the policy to end DEI programming. To that end, the Order asks the attorney general to produce a report within 120 days of the Order that provides recommendations for ending illegal discrimination, including DEI programming, in the private sector. The report will include the identification of potential civil compliance investigations of public companies, opportunities for federal lawsuits and proposals for regulatory action and guidance. The Order specifically calls out publicly traded corporations, large nonprofit corporations or associations, foundations with assets of $500 million or more, state and local bar and medical associations, and institutions of higher education with endowments over $1 billion for identification for civil compliance investigations.
- Private-Sector Takeaway: There will be increased scrutiny by the Trump administration of all DEI and affirmative action programming in the private sector. Companies should review all DEI and affirmative action programming to ensure they are defensible under existing law.
For Colleges and Universities: More Guidance to Come
The Order provides that within 120 days the attorney general and the secretary of education must issue guidance to education agencies and institutions of higher education regarding how to comply with the Supreme Court decision in Students for Fair Admissions Inc. v. President and Fellows of Harvard College, 600 U.S. 181 (2023).
Conclusion
The Trump administration is expected to provide more guidance regarding the Order within the next 90 days. While it is unknown whether the Order will go into effect or be delayed by potential litigation, the administration has indicated its hostility toward DEI programming, with the language of the Order suggesting that such DEI programming is regarded by the administration as itself constituting unlawful discrimination. Contractors and private-sector companies alike should examine their existing practices to reduce risk and make contingency plans should the Order go into effect.
[View source.]
