President Donald Trump has rescinded the 60-year-old Executive Order 11246 (EO 11246), which required federal contractors to practice affirmative action based on race and gender. The president also issued a separate executive order this week to end diversity, equity, and inclusion (DE&I) programs and preferencing in the federal government.
In 1965, President Lyndon Johnson issued EO 11246, which also required nondiscrimination by federal contractors.
While the affirmative action obligation for EO 11246 will end due to its rescission by the EO Trump issued Jan. 21, contractors’ affirmative action obligations will continue for people with disabilities and veterans, due to the Vietnam Era Veterans’ Readjustment Assistance Act (VEVRAA) and Section 503 of the Rehabilitation Act of 1973, explained Zev Grumet-Morris, an attorney with Duane Morris in Chicago. Nondiscrimination obligations based on race, gender, and other protected categories will continue as well.
“In September, we advised a comprehensive review of your DE&I programs for legal compliance and a shift toward inclusive practices that benefit all employees,” said SHRM President and Chief Executive Officer Johnny C. Taylor, Jr., SHRM-SCP. “If you haven’t done so already, now is the time to act.”
OFCCP’s Role Now Up in the Air
The U.S. Department of Labor’s Office of Federal Contract Compliance Programs (OFCCP) “has lost the majority of its portfolio,” said Guy Brenner, an attorney with Proskauer in Washington, D.C. “While it still exists—for now—its sex- and race-based regulations should no longer be operative.”
In addition, Trump’s EO says the OFCCP is prohibited from:
- “Promoting ‘diversity.’ ”
- “Holding [f]ederal contractors and subcontractors responsible for taking ‘affirmative action.’ ”
- “Allowing or encouraging [f]ederal contractors and subcontractors to engage in workforce balancing based on race, color, sex, sexual preference, religion, or national origin.”
“On the one hand, government contractors will be relieved of the majority of OFCCP compliance burdens, which will be welcome news to most contractors,” Brenner said. On the other hand, the executive order is targeting corporate DE&I efforts, “which could present challenges for companies that wish to continue those initiatives.”
For federal contractors, the nondiscrimination obligations continue through this most recent executive order, as well as EO 13279, which Trump retained, said Craig Leen, an attorney with K&L Gates in Washington, D.C., and director of the OFCCP in Trump’s first term. In addition, various other laws, such as Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act, and the Age Discrimination in Employment Act, prohibit discrimination.
“OFCCP has not been focusing enough on disability and veterans, with very low enforcement recovery numbers in these areas,” Leen said. He added that Trump’s executive order “is an opportunity for the OFCCP to finally do much more to support people with disabilities and veterans, while also continuing to strictly enforce nondiscrimination on all protected grounds.”
The new order says nothing about contractors’ affirmative action obligations under Section 503 and VEVRAA, Leen noted.
“Historically, OFCCP has been predominantly concerned with race- and gender-based discrimination under EO 11246—particularly for hiring and compensation practices—so it is possible they pivot to focus more on discrimination practices against individuals with disabilities and protected veterans and VEVRAA,” Grumet-Morris said. “At the same time, however, the executive order prohibits OFCCP from promoting diversity, or holding federal contractors and subcontractors responsible for taking affirmative action, arguably covering OFCCP’s authority to enforce Section 503 or VEVRAA in any meaningful way.”
Rescission’s Impact
EO 11246 required federal contractors and subcontractors with at least 50 employees and a federal contract or subcontract of at least $50,000 to annually develop affirmative action programs, perform annual audits of the organization’s placement and pay practices, and assess their outreach and recruitment programs for underrepresented members of their workforce, Grumet-Morris explained. The OFCCP has long been tasked with enforcing EO 11246 through regular compliance audits that can result in financial penalties for noncompliant contractors, and even debarment from contracting with the federal government. “President Trump’s new executive order would strip OFCCP of that authority,” Grumet-Morris said.
“The executive order provides for the complete rescission of EO 11246, including all affirmative action obligations encompassed within it,” he said. “This means that a contractor’s or a subcontractor’s obligation to annually develop and maintain affirmative action plans with respect to race and gender, along with the other requirements mandated by EO 11246—such as self-audits of an organization’s placement and pay practices, and certain outreach recruitment obligations—are eliminated, as is the OFCCP’s authority to audit contractors’ and subcontractors’ compliance with EO 11246.”
Trump’s reference to “affirmative action” may be interpreted to refer to “preferences,” according to David Goldstein, an attorney with Littler in Minneapolis, who said affirmative action “is one of those terms that means different things to different people.”
Employers that remain concerned about inclusion and diversity “will need to think very carefully about what these concepts really mean—and should mean—and how to achieve them in a way that is constructive, effective, and safe from attack,” he said.
Trump’s executive order provides a grace period, allowing federal contractors to comply with the existing OFCCP regulations for the next 90 days, noted Joshua Roffman, an attorney with Roffman Horvitz in McLean, Va. Most affirmative action plans are effectively nondiscrimination and equal employment opportunity plans, he said.
“I have been advising clients for my entire career that the law prohibits making employment decisions based on gender or race/ethnicity,” he said.
During the next 120 days, the administration will study these issues and make recommendations for more changes, said Lynn Clements, senior director, people insights at Berkshire Associates in Columbia, Md., a division of Resolution Economics.
“Federal contractors must still comply with the affirmative action regulations for individuals with disabilities and protected veterans, file EEO-1 and VETS-4212 reports, and comply with all existing state affirmative action and EEO reporting requirements,” she explained. Local requirements in the affirmative action and EEO space must be followed as well.
“Now is the time to be on top of nondiscrimination efforts to ensure compliance with federal mandates, laws, and actions that are ever-changing,” said Joanna Colosimo, SHRM-SCP, vice president, workforce analytics and compliance strategy, and principal consultant with DCI Consulting Group in Washington, D.C.
For more on companies rethinking their approach to I&D, see this video below from Alex Alonso, Ph.D., SHRM’s chief data & analytics officer.
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