Trump’s DEI Order Ends Affirmative Action Obligations of Federal Contractors

On his second day in office, January 21, 2025, President Trump issued an executive order titled:  “Ending Illegal Discrimination and Restoring Merit-Based Opportunity,” and in the process revoked Executive Order 11246 that was signed by President Lyndon Johnson in 1965, and which contains the affirmative action requirements of federal contractors.  The 1965 executive order is the legal authority possessed by the Office of Federal Contract Compliance Programs (OFCCP) to promote diversity and affirmative action programs.  The new executive order does establish a 90-day period during which federal contractors may continue to comply with the regulatory scheme in effect.  Starting April 21, 2025, contractors “shall not consider race, color, sex, sexual preference, religion, or national origin in ways that violate the “Nation’s civil rights laws.”

In effect, the OFCCP is ordered by the recent executive order to immediately stop “promoting diversity,” holding federal contractors to affirmative action obligations and “allowing or encouraging” them to “engage in workforce balancing” based on protected characteristics.  According to a fact sheet accompanying the order, it “protects the civil rights of all Americans and expands individual opportunity by terminating radical DEI preferencing in federal contracting and directing federal agencies to relentlessly combat private sector discrimination” and it “enforces long-standing federal statutes and faithfully advances the Constitution’s promise of colorblind equality before the law.”  The January 21, 2025, executive order directs that federal contractors will be required to certify as part of the contracting process that they do not maintain any DEI programs that violate federal anti-discrimination law, and agency contracts must eliminate any references to DEI.  Although the current executive order does not apply to private employers that are not federal contractors, it includes a section titled “Encouraging the Private Sector to End Illegal DEI Discrimination Preferences.”   It recommends deterring DEI programs in the private sector, including identifying potential targets for compliance investigations.  The Acting Labor Secretary directed the OFCCP to end all pending cases, conciliation agreements, investigations, and complaints.  Some commentators have even suggested that the executive order would empower employees to use the False Claims Act (FCA) with contractors covered by the FCA and seek triple damages if there is evidence that contractors defrauded the government by misrepresenting their compliance with anti-discrimination laws or Trump’s executive order.  Further, the order lacks specifics regarding what constitutes “promoting DEI.”

Editor’s Note – Contractors will now have to examine their affirmative action programs to determine whether they continue.  As to the executive order, employers have no federal level obligation to create or continue affirmative action plans but may continue them with voluntary plans.  The problem will be whether the process of looking at under-utilization of certain groups and taking action to address that under-utilization will cross the line of what the law will consider discrimination.  

It should be noted that the OFCCP can still enforce anti-bias and affirmative action mandates based in statute, like the Vietnam Era Veterans’ Readjustment Assistance Act, which protects military veterans, and Section 503 of the Rehabilitation Act of 1973, which covers disabled workers.  Also, federal contractors still must comply with Title VII of the Civil Rights Act.

Some argue that the executive order does not really change the status of DEI programs, even though such programs will be subject to greater legal scrutiny now.  Further, employers terminating or reducing DEI programs can still face lawsuits alleging they are discriminating against the people covered by the programs as well as by non-minorities and males.  In any event, employers would be wise to review programs that could theoretically come under the DEI concept.  Also, communications about DEI should also be reviewed, as third parties may be looking at such pronouncements to determine who to investigate or who to sue.  The concept is to broaden the eligibility requirements of DEI initiatives to focus on all persons rather than just those of a certain race or gender.  For example, an employer recognizing certain focus groups should require such groups to widen the scope of their participants.  The approach will be to “rebrand” DEI programs, as the executive order refers to DEI programs “whether they are specifically denominated DEI or otherwise.”  One thing for sure, is that the term “DEI” has fallen out of favor.

Many companies will examine the fairness of their hiring and other standards as to applying the same standards to all candidates, without any group getting different or preferential treatment.  The concept is to give everyone a “fair shake.”  This will require further attention to competencies that are considered important as to the persons being evaluated.  The hope is that grading people on how well they will achieve company goals will help the company better achieve those goals.  Also, guidance and judicial case law at this time suggests that recruitment efforts may create opportunities for candidates in under-represented communities, and that employers may maintain employee affinity groups as long as they admit persons to participate regardless of race, national origin or sex.  Employers must remember that the executive order does not purport to pre-empt workplace nondiscrimination obligations under state and local law. 

Of particular danger to employers’ DEI programs may be goal setting affirmative action plans, so-called “aspirational” plans.  Such “aspirational” plans may or may not be legal, but in any case are legally questionable.  To the extent employers eliminate or reduce the DEI concept, many employers may want to “double-down” on their internal procedures for handling discrimination or harassment complaints.  Most would conclude that DEI policies will only be “illegal” if they target protected groups for special treatment, as opposed to removing the bias that precludes such groups from competing on a level playing field.  The executive order does emphasize “merit-based” decision making.  The hope is that initiatives can satisfy the principles of meritocracy and equal opportunity.

Even prior to the current executive orders, organizations have been changing their diversity, equity and inclusion standards, such as the American Bar Association (ABA).  The ABA now suggests broader language to encourage access for “all persons.”

This article is part of our March 2025 Newsletter. 

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