New Executive Order Rescinds Affirmative Action Mandates for Federal Contractors

On January 21, 2025, President Trump issued an Executive Order (“EO”) titled, “Ending Illegal Discrimination and Restoring Merit-Based Opportunity,” which revokes EO 11246 and eliminates long-standing affirmative action requirements for federal contractors. The new directive provides a 90-day transition period, allowing federal contractors until April 21, 2025 to adjust to the new regulatory framework.

What was Executive Order 11246?

Executive Order 11246 required certain federal contractors and subcontractors with at least 50 employees and $50,000 in contracts to implement affirmative action plans to prevent employment discrimination and promote equal employment opportunity. With the Executive Order's revocation, these requirements are no longer in effect.

Key Provisions of President Trump’s Executive Order

President Trump’s new directive claims to eliminate "illegal preferences and discrimination," which bars federal contractors from considering race, color, sex, sexual preference, religion, or national origin in their employment procurement or contracting practices. Several key changes include:

1. Restricting the OFCCP’s Authority

The Office of Federal Contract Compliance Programs (“OFCCP”), previously responsible for enforcing affirmative action mandates and other requirements, has been directed 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 a workforce balancing based on race, color, sex, sexual preference, religion, or national origin. As a result, the OFCCP will halt investigations, pending cases, conciliation agreements, complaints, and any other enforcement or investigative activities related to these provisions. Additionally, the OFCCP must notify all regulated parties with open reviews or investigations that their cases have been closed.

The OFCCP will continue enforcing other federal anti-discrimination laws, including, but not limited to, Title VII of the Civil Rights Act of 1964, Age Discrimination in Employment Act, the Americans with Disabilities Act, etc., which remain in effect.

2. Cease the Operation of DEI Programs

Under the President’s new order, all federal contractors and grant recipients must certify that they do not operate diversity, equity, and inclusion (“DEI”) programs that violate applicable federal anti-discrimination laws. This requirement will apply to new, renewed, or modified contracts. While the specific criteria for determining whether a DEI program violates these laws remain unclear, the administration's broader interpretation of unlawful DEI initiatives suggests that companies should carefully review their programs. Federal contractors and subcontractors may need to assess compliance risks and evaluate whether certain initiatives could be considered noncompliant under the evolving regulatory framework. To reduce risks, federal contractors and subcontractors should be cautious about DEI initiatives that use race- or gender-based hiring or promotion quotas, restrict opportunities based on identity, prioritize certain groups, or mandate race-or gender-based training participation.

3. Discouraging DEI Programs in the Private Sector

Although President Trump’s order does not directly prohibit DEI programs in private businesses that do not contract with the federal government, it seeks to discourage such initiatives, and we expect additional guidance in this area from the Department of Justice. Federal agencies are instructed to propose strategies for reducing DEI initiatives and to identify up to nine public or nonprofit organizations for potential compliance investigations. While this measure does not have immediate legal consequences for private companies, it signals a shift in federal priorities that could impact corporate DEI policies.

What Obligations Remain for Federal Contractors?

Despite these rollbacks, federal contractors and subcontractors must still comply with the Rehabilitation Act, which prohibits discrimination and mandates affirmative action for employees with disabilities, and the Vietnam Era Veterans’ Readjustment Assistance Act (“VEVRAA”), which requires affirmative action for specific categories of veterans, including disabled veterans, recently separated veterans, and Armed Forces service medal recipients. As a result, certain federal contractors must maintain affirmative action programs for disabled employees and veterans if they meet the applicable workforce size and contract value thresholds. The OFCCP will continue enforcing these requirements, including job posting, self-identification, and reporting obligations.

Looking Ahead

The revocation of Executive Order 11246 represents a major policy shift in federal contractor obligations, and significantly reduces compliance requirements related to affirmative action and DEI initiatives.  Federal contractors must remain vigilant about ongoing obligations under other laws and regulations, however. If you have any questions about President Trump’s EO, please contact one of Honigman’s Employment Attorneys here.