On January 21, 2025, an Executive Order was signed entitled “Ending Illegal Discrimination and Restoring Merit-Based Opportunity.” Section three of the executive order rescinded Executive Order 11246 which releases federal contractor’s and subcontractor’s affirmative action obligations with respect to race and gender. Federal contractors and grant recipients have until April 21, 2025 (90 days from the issuance of the EO) to comply with the EO’s provisions. During this grace period of 90 days—until April 21, 2025—contractors may continue complying with the prior “regulatory scheme” that was in effect before EO was signed.
According to the White House Fact Sheet accompanying the Executive Order, the specific requirements of the new Executive Order are:
- “All executive departments and agencies are to terminate all discriminatory and illegal preferences, mandates, policies, programs, activities, guidance, regulations, enforcement actions, consent orders, and requirements.”
- The Office of Federal Contract Compliance Programs (OFCCP) is ordered to “cease promoting “diversity,” holding federal contractors and subcontractors responsible for taking “affirmative action,” and allowing or encouraging federal contractors and subcontractors to engage in workforce balancing based on race, color, sex, sexual preference, religion, or national origin.
- An allowance “for 90 days from the date of this order, Federal contractors may continue to comply with the regulatory scheme in effect on January 20, 2025.”
- A requirement that federal contractors shall not consider race, color, sex, sexual preference, religion, or national origin in ways that violate the Nation’s civil rights laws.”
- The development of a new contract provision for federal contracts requiring the recipient to “certify that it does not operate any programs promoting DEI that violate any applicable Federal anti-discrimination laws,” and requiring federal contractors to execute a, “Simple and unmistakable affirmation that contractors will not engage in illegal discrimination, including illegal DEI, facilitated by all federal contracts” that will become effective within 90 days of the EO (April 21) and will be “considered material to the government’s payment decisions and is subject to the False Claims Act (FCA).”
- Office of Federal Contract Compliance Programs (OFCCP) enforcement activity relating to EO 11246 have been paused and Section 503 and VEVRAA compliance reviews are on hold.
The FCA combats “fraud in government programs imposing damages and civil penalties on individuals and companies that knowingly submit false claims for payment to the government, because the party billed the government for goods or services that it did not provide, or the party allegedly misrepresented its compliance with rules imposed by statute, regulation, or contract.” (Wilmer Hale). Making the certification subject to the FCA is significant because the FCA is basically a whistle blower reward program. If a whistle blower’s complaint turns out to be valid and the government pursues the contractor for the violation, the whistle blower receives a significant portion of the ultimate penalty paid by the contractor and, since it is a criminal statute, a significant violation can also include jail time for corporate officers.
Affirmative action requirements regarding disabled individuals and protected veterans – under VEVRAA or Section 503 of the Rehabilitation Act – are both required by statute and are unaffected by the EO. The Office of Federal Contract Compliance (OFCCP), charged with enforcing contractor Affirmative Action requirements, released its own statement acknowledging the issuance of the new EO and limiting its ongoing actions to Section 503 and the VEVRRA.
Executive Order 11246 was signed by President Lyndon B. Johnson in 1965 to prohibit contractors from discriminating based on protected characteristics (race, color, religion, sex, national origin, sexual orientation, and gender identity). It required conducting a comparison of the actual utilization of women and minorities to their availability in the workforce and taking affirmative action steps including setting placement goals for women and minorities, developing action-oriented programs to address identified problems, and making good faith efforts to address underutilization. Placement goals were required if women and minorities were not employed at a rate to be expected given their availability in the relevant labor pool.
Though the affirmative action and non-discrimination requirements described in EO 11246 are no longer operative, contractors still have requirements under existing anti-discrimination laws such as the Age Discrimination in Employment Act, Title VII of the Civil Rights Act, and the Americans with Disabilities Act not to make employment decisions based on any protected characteristic. EEO-1 reporting (for employers with 100+ employees), VETS-4212 reporting and state or local pay/data reporting requirements (CA Pay, IL, MA) are also still in effect.
As recommended in an article by Jackson Lewis, contractors should discontinue the development and implementation of EO 11246 affirmative action plans (AAPs) designed to balance the workforces as to race or sex. Executive Order 11246 had required contractors to demonstrate good faith efforts to reach out to and recruit minorities and women so each contractor should evaluate and tailor recruitment strategies such as ceasing to use targeted female and minority-serving recruitment sources, institutions, organizations, and job boards.
Contractors seeking increased diversity, equity, and inclusion will need to tailor their efforts to comply with the Order. As recommended by Burr & Forman, 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.
Contractors should continue development and implementation of VEVRAA and Section 503 AAPs and follow all contractor equal employment opportunity (EEO) and non-discrimination obligations and should continue targeted good faith efforts and keep documentation of those efforts. The following information should be captured in a good faith efforts log with respect to VEVRAA and Section 503 recruiting efforts:
- the date you reached out to the organization.
- the name of the organization.
- the name of the person you contacted at that organization.
- the phone number / email of the contact person.
- the type of outreach – was it an in-person meeting, a phone call, an email, or an event.
- notes describing what transpired during the outreach.
- links to any pertinent documents such as a job description or flyer sent to the organization.
- any candidate referrals received because of the outreach.
- any hires that occurred because of the outreach.
Based on the outcomes of the outreach, the contractor should determine if the outreach effort is effective or not effective.
All employment decisions must continue to be made without consideration of race, color, religion, sex, or national origin, as well as other factors protected by federal, state, and local law. Title VII of the Civil Rights Act of 1964 is a federal law and protects job applicants and employees from discrimination in recruitment, selection, termination, and other employment terms and conditions based on the protected characteristics.