Affirmative Action: Now What Do Federal Contractors Do?

Since 1965, businesses that wanted to contract with the federal government were required by Executive Order 11246 not to discriminate against employees and applicants on the basis of race, creed, color, or national origin. Sex was also added to the list of protected classes. Based on the size of the employer and size of their contract, some contractors were required to adopt written affirmative action plans to make their workplaces more look like the communities from which they recruited. While no business was obligated to hire unqualified workers or maintain hiring quotas, the use of affirmative action to promote diverse workplaces has generated much political and legal opposition.

On January 21, 2025, the Trump Administration issued Executive Order No. 14173, which revoked Executive Order 11246. For ninety (90) days from the date of this Order, federal contractors may continue to comply with the regulatory scheme in effect on January 20, 2025. There will, however, be no enforcement actions to enforce the provisions of Executive Order 11246.

What Executive Order No. 14173 Does

Executive Order No. 14173 (“EO”) eliminated the US Department of Labor (“DOL”) federal contracting watchdog’s ability to monitor federal contractors for bias based on race, sex, and other characteristics, and to ensure they have adequate affirmative action plans. The new EO also bars federal contractors from considering race, color, sex, sexual preference, religion, or national origin in their employment, procurement or contracting practices “in ways that violate the Nation’s civil rights laws.”

The EO requires the DOL’s Office of Federal Contract Compliance Programs (“OFFCP”) to immediately 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.

Federal contractors, whose sole source of the affirmative action obligations is EO 11246, can stop complying and updating affirmative action plans (“AAP”) based on sex or race.

What Executive Order No. 14173 Does Not Do

While EO 11246 has been abolished, the requirements of Section 503 of the Rehabilitation Act, 29 U.S.C. 793 and the Vietnam-era Veterans Readjustment Assistance Act (“VEVRAA”) 38 U.S.C. 4202 are statutory. They are both enforced by OFCCP and remain in effect.

Federal contractors should continue doing what it was doing before for both Section 503 and VEVRAA. No changes in requirements have been announced for either law. Covered contractors should continue to:

• Maintain plans for individuals with disabilities and protected veterans.
• Set hiring benchmarks for protected veterans.
• Provide reasonable accommodations to individuals with disabilities.
• Avoid discrimination based on disability status or protected veteran status.
• List job openings with appropriate Employment Service Delivery System (ESDS), which is often the state job board.

While affirmative action, as we knew it under Executive Order 11246 may no longer exist, Title VII remains the law of the land and all employment decisions should continue to be made without consideration of race, color, religion, sex, or national origin as well as other factors protected by federal or local law. The Age Discrimination in Employment Act (“ADEA”) and the Americans With Disabilities Act (“ADA”) were similarly unaffected by the new EO.

If you are a Federal Contractor, you should:

• Promptly review any DEI/DEIA plans, programs, or policies as well as your AAPs, to determine whether they contain any aspects that could be deemed unlawful under Title VII or any other federal, state, or local civil rights law and consider whether to take any action to modify such plan, programs, or policies, including modifying the names of such plans, programs, and policies.
• Cease using affirmative action and/or DEI goals as a factor in making employment decisions for applicants or employees, including hiring or promotion decisions, performance evaluations, or salary reviews.
• Take steps to ensure that you are able to wind down your EO 11246-required AAPs.
• Seek direction and clarification from OFCCP authority about how Rehabilitation Act and VEVRA AAPs, will be monitored and enforced, the status of any pending compliance reviews, and how reporting obligations will be addressed.
• Continue to file EEO-1 reports if you have at least 100 employees.
• Continue to file annual VETS-4212 reports with the DOL if your business has federal contracts or subcontracts worth at least $150,000.
• Continue to comply with the federal Equal Pay Act or similar state or local laws regarding pay equity.
• Wait for the development of new contract term(s) (presumably, a replacement for the current Equal Employment Opportunity clause) for inclusion in federal contracts, which will require contractors to agree that “compliance in all respects with all applicable Federal anti-discrimination laws is material to the government’s payment decisions for purposes of Section 3729(b)(4) of Title 31, United States Code.”
• Review any new government contracts for new/relevant EEO/DEI terms.
• Reassure employees of your commitment to equal employment opportunity and nondiscrimination.

If you have any questions about the impact of Executive Order 14173, please do not hesitate to contact any of the lawyers in Fraser Stryker’s Labor and Employment Department.