Employment Law Report
The Revocation of Executive Order 11246 Affects Federal Contractors and Private Employers
By: Mitzi Wyrick
On January 21, 2025, President Trump signed an Executive Order titled “Ending Illegal Discrimination and Restoring Merit-Based Opportunity” (the “Order”). The Order has ramifications for both federal contractors and private employers.
The Order revoked Executive Order 11246, which had been in effect since 1965, dramatically altering the landscape for federal contractors. Executive Order 11246 required certain companies doing business with the federal government to develop and enforce affirmative action plans, set goals for hiring minority and female employees, and make reasonable efforts to hire from underrepresented groups.
Under the Order, the Office of Federal Contract Compliance Programs (OFCCP), which enforced Executive Order 11246, must 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.
Immediately upon issuance of the Order, the Acting Secretary of Labor directed the OFCCP to cease and desist all investigative and enforcement activity under Executive Order 11246, including pending cases, conciliation agreements, investigations, and complaints. The OFCCP must notify all parties with open reviews or investigations by January 31, 2025 that their review or investigation under Executive Order 11246 has been closed. Although the OFCCP must immediately end all investigative and enforcement activities, federal contractors may continue to comply with Executive Order 11246 for 90 days.
Importantly, the Order does not affect the OFCCP’s enforcement of other statutory affirmative action obligations relating to veterans and individuals with disabilities. These obligations, under the Rehabilitation Act of 1973 and Vietnam Era Veterans’ Readjustment Assistance Act of 1974 (VEVRAA), are enforced by the OFCCP, are statutory and “remain in effect.” The OFCCP will continue to enforce all of the requirements of the Rehabilitation Act and VEVRAA, including affirmative action plans, self-identification processes, job-posting requirements, and reporting requirements. However, the OFCCP is holding existing reviews and investigations under the Rehabilitation Act and VEVRAA in abeyance pending further guidance.
The Order also requires federal agencies to change their contractual equal employment opportunity clauses. Federal contractors will now be required to agree that compliance with federal anti-discrimination laws is material to the government’s payment decisions and, therefore, subjects them to Section 3729(b)(4) of Title 31, United States Code (the False Claims Act). In addition, federal contractors must certify that they do not operate any programs promoting DEI that violate any federal anti-discrimination laws. Consequently, if a contractor is found to submit a request for payment while maintaining an “illegal DEI program” the company could be subject to the False Claims Act, which authorizes lawsuits by private parties for treble damages.
The Order also has implications for private employers that do not have federal contracts. Federal agencies have been directed to “combat illegal private-sector DEI preferences, mandates, policies, programs, and activities.” The Order requires the Attorney General to prepare a report in consultation with the Director of the Office of Management and Budget and agency heads identifying “the most egregious and discriminatory DEI practitioners” in key sectors of concern. The report must outline a plan of specific measures to deter DEI programs and identify up to nine potential civil compliance investigations of publicly traded corporations, large non-profit corporations, foundations with assets of 500 million dollars or more, state and local bar and medical associations, and higher education institutions with endowments over 1 billion dollars. In addition, the report should identify litigation that would be potentially appropriate for federal lawsuits, intervention or statements of interest and propose potential regulatory action.
Accordingly, federal contractors should review their affirmative action programs to determine what remains in effect and if there are conflicting state law obligations. Employers should continue to make required filings, such as EEO-1 and VETS-4212 filings. All employers should review their employment practices and policies, particularly any DEI policies, statements, or initiatives, for compliance with non-discrimination laws to avoid becoming a target of enforcement action. Pay particular attention to any policy or program that treats characteristics or affiliations as a “plus factor”, because the Order increases the risk of private lawsuits claiming reverse discrimination. Finally, keep up with any new guidance issued or legal challenges to the Order to understand your compliance obligations.
