Among the flurry of executive actions taken by the new presidential administration, President Trump signed an executive order entitled “Ending Illegal Discrimination and Restoring Merit-Based Opportunity.” This Order revokes Executive Order 11246, the bedrock executive ordered signed by President Lyndon Johnson that established federal contractor affirmative action requirements, and mandates that the Office of Federal Contract Compliance Programs (OFCCP) “immediately cease” the following activities:
- Holding federal contractors and subcontractors responsible for taking “affirmative action” with respect to race/ethnicity and sex;
- Allowing or encouraging federal contractors and subcontractors to engage in “workforce balancing” based on race, color, sex, sexual preference, religion, or national origin; and,
- Promoting “diversity.”
In addition, the President’s executive order requires that future federal contracts include as a material term a certification that the contractor complies “in all respects” with federal anti-discrimination laws and that the contractor does not operate “any programs promoting DEI (diversity, equity, and inclusion)” that violate federal anti-discrimination laws.
What does this mean for current federal contractors?
First, this executive order does not impact affirmative action requirements related to veterans and individuals with disabilities. The OFCCP’s authority in this regard stems from federal statutes – Section 503 of the Rehabilitation Act and the Vietnam Era Veterans’ Readjustment Assistance Act (VEVRAA) – and cannot be upended by executive order.
Second, the executive order provides that current federal contractors “may” continue to comply with current affirmative action regulations for ninety (90) days – until April 21, 2025. However, compliance with federal race and sex-related affirmative action requirements may not be necessary during this period. While the regulatory scheme will remain in place and technically enforceable until the Department of Labor can finalize a rule revoking these regulations, the executive order directs the OFCCP to cease its enforcement activities. So, contractors may wish to consult legal counsel regarding whether to continue compliance activities during this interim period.
Third, federal contractors with pending or scheduled OFCCP audits should work with legal counsel to assess the impact of the executive order upon the OFCCP’s ongoing authority to proceed with these enforcement activities and formulate their response to any lingering OFCCP enforcement actions.
Fourth, federal contractors should evaluate their internal DEI initiatives to ensure that they comply with federal anti-discrimination laws and should be aware as they execute new or modified federal contracts of the impact of this executive order on their DEI efforts.
Fifth, by making its DEI-related changes “material” for False Claims Act purposes, this executive order opens the door to both government enforcement and private whistleblower suits with treble damages. For federal contractors, this opens up a new avenue for employment discrimination-related liabilities – an avenue by which employment discrimination claimants may also be able to act as relators in qui tam suits, alleging that the contractor is not in full compliance with federal anti-discrimination laws.
Note: Litigation challenging this executive order, in whole or in part, is possible. Stay tuned for further updates as the full impact of this executive order becomes clearer. If you have questions related to the executive order and how it may impact your business, please contact Michael Bowling or another member of the firm’s Labor & Employment Practice Group.