On January 21, 2025, President Donald Trump, under the auspices of promoting civil rights and merit-based opportunity by ending “illegal” diversity equity and inclusion (DEI) programs, revokes Executive Order (EO) 11246, as amended, which had been in place for 60 years. EO 11246 prohibits federal contractors from discriminating based on race, color, religion, sex, sexual orientation, gender identity, or national origin and mandates affirmative action by covered federal contractors to ensure equal employment opportunities.

What is Included Within EO 11246?

Under EO 11246, covered federal contractors are required to take many actions, including:

• Prominently post a nondiscrimination clause in its workplace.
• State in job advertisements that all qualified candidates will be considered without discrimination.
• Protect employees’ rights to discuss compensation.
• Inform labor unions of their obligations.
• File compliance reports with the Secretary of Labor.
• Implement an affirmative action plan with specific employment goals for marginalized groups and women.
• Appoint an official responsible for the equal opportunity and affirmative action program.

How is EO 11246 Enforced

In 1965, the Office of Federal Contract Compliance Programs (OFCCP) was established to ensure compliance with EO 11246, Section 503 of the Rehabilitation Act of 1973, and the Vietnam Era Veterans' Readjustment Assistance Act of 1974. The OFCCP’s affirmative action obligations require contractors to ensure that applicants and employees are treated equally, irrespective of race, color, religion, sex, sexual orientation, gender identity, national origin, disability, or protected veteran status. These obligations include company audits to ensure compliance on employment matters and employee compensation. Any covered contractor knows how time-consuming and resource intensive it is to prepare affirmative action plans and to respond to OFCCP audits.

Despite a recent successful challenge to OFCCP’s authority to bring administrative enforcement proceedings, ABM Industry Groups, LLC v. U.S. Department of Labor, Case No. H-24-3353, 2024 WL 4642962 (S.D. Tex. Oct. 30, 2024), OFCCP announced in 2024 plans to increase efforts in ensuring compliance with EO 11246. Those plans included, starting in March 2025, a requirement that federal contractors submit monthly reports by the 15th day of each month using Form CC-257. These reports would require details related to the gender, race, ethnicity, and work hours of their employees. The fate of this initiative is now unclear.

What Are the Key Elements of the New EO for Federal Contractors

There are several key provisions in the new EO that provide guidance on what federal contractors can and cannot do:

1. The new EO is premised on the concept that the government, private corporations, and other entities are engaging in “dangerous, demeaning and immoral race- and sex-based preferences under the guise of so-called ‘diversity, equity, and inclusion’ (DEI) or ‘diversity, equity, inclusion and accessibility’ (DEIA).”
2. While EO 11246 is revoked, federal contractors “may continue to comply with the regulatory scheme.” While it is not entirely clear what that means, it appears to give contractors time to eliminate policies, programs, and personnel that are involved in DEI or DEIA (which the Office of Management and Budget and Attorney General are directed to do for the federal government).
3. OFCCP is immediately prohibited from holding federal contractors and subcontractors responsible for taking affirmative action.
4. All government contracts and grants must include a term requiring the contractor or grant recipient to “certify that it does not operate any programs promoting DEI that violate any federal anti-discrimination laws”
5. Perhaps even more far reaching, all contracts and grants must “excise references to DEI and DEIA principles.”

What Covered Contractors Should Do Now

While the full impact of the revocation EO 11246 remains to be seen, the following are some suggestions for contractors to consider taking now:

1. Immediately stop making decisions based on what is stated in an affirmative action plan (AAP), except for plans that related to covered veterans and disabled individuals.

• EO 11246 provided the legal basis for AAPs. Because that authority has been revoked, making decisions based on an existing AAP creates a significant risk of potential liability.

2. Use the next 90 days to review the words “diversity,” equity,” and “inclusion,” or the acronyms DEI or DEIA, in any company titles, programs (including training programs) or policies, and determine whether the titles and the programs should be changed or eliminated.

• While the new EO is focused on “unlawful” conduct, and not all efforts to promote DEI or DEIA are unlawful, given the overall tenor of the EO, it would be prudent for contractors to review how those terms are used in their workplace and consider how they can be rephrased and/or restructured.
• Because federal contractors are going to be required to certify that they are in full compliance with applicable laws, and contracts must excise references to DEI and DEIA “principles,” it creates the potential for a False Claims Act case for any entity that falsely certifies that they are in full compliance. That is because the certification becomes a material inducement to the government’s payment decisions for purposes of section 3729(b)(4) of title 31, United States Code. As such, federal contractors and grant recipients could face significant liability for future non-compliance.

3. Remember that not all efforts to maintain a diverse workforce are illegal.

• Using recruiting sources that provide diverse candidates is lawful, as long as they are not the exclusive sources of candidates.
• Providing a mentoring program open to all employees is lawful, even if it is most utilized by women and marginalized groups.
• In other words, focus on actions that are actually “inclusive,” and that do not exclude groups of employees based on a particular identity.

4. Continue to prepare and comply with AAP’s that cover individuals with disabilities and covered veterans.

• As set forth above, there is a statutory basis for such AAP’s that were not revoked by the new EO.

5. Because the legal underpinning for taking affirmative action has been eliminated, it is unlikely that OFCCP will be able to carry through on its initiative to have contractors submit monthly reports relating to their employees on the 15th of each month, starting March 15. Nonetheless, look for future guidance on this issue to confirm.

Further details on permissible affirmative actions to ensure equal opportunities and maintain a diverse workforce are expected once the new Secretary of Labor is sworn into office.