Business and Legal Insights

On January 21, 2025, President Trump issued an Executive Order (“EO”) entitled “Ending Illegal Discrimination and Restoring Merit-Based Opportunity.” This EO revokes longstanding Executive Order 11246 (Equal Employment Opportunity), originally signed by President Lyndon Johnson, which mandated non-discrimination in employment by government contractors and subcontractors. EO 11246, among other things, required most contractors to adopt affirmative action plans that included workforce analyses, with a goal of increasing employment opportunities for underrepresented women and minorities.    

Aside from rescinding EO 11246, the current EO directs the head of each federal agency to include in every contract a term requiring the contractor or to certify that they do not operate any programs promoting Diversity, Equity, and Inclusion (“DEI”) that would violate any applicable anti-discrimination laws and to acknowledge that the certification is material for purposes of the government’s payment decision and therefore subject to the False Claims Act. The EO also revokes other executive orders that address DEI and affirmative action, and directs federal contractors and subcontractors not to consider race, color, sex, sexual preference, religion, or national origin in ways that violate civil rights law in their employment, procurement, and contracting practices. 

The EO also addresses the role of the Office of Federal Contract Compliance Programs (OFCCP) which, since 1965, has enforced affirmative action requirements in government contracts under the now rescinded EO 11246. The OFCCP is now instructed to cease promoting diversity and is prohibited from holding federal contractors and subcontractors responsible for taking affirmative action. The EO also states that the OFCCP may not “allow” or “encourage” federal contractors and subcontractors to engage in workforce balancing based on race, color, sex, sexual preference, religion, or national origin. It also eliminates the affirmative action plan obligations under EO 11246 for contractors regarding race and gender, as well as enforcement activity by the OFCCP regarding race or gender affirmative action plans. 

The EO provides a grace period that permits federal contractors to continue existing practices under EO 11246 for 90 days from January 21, 2025.  The EO does not, however, apply to lawful federal or private-sector employment and contracting preferences for veterans of the U.S. armed forces under the Vietnam Era Veterans’ Readjustment Assistance Act, 38 U.S.C. 4212, for the blind under the Randolph-Sheppard Act, 20 U.S.C. 107 et seq., or to statutory obligations under Section 503 of the Rehabilitation Act of 1973 involving individuals with disabilities.

The EO does not affect the obligations of federal contractors and subcontractors to continue to comply with other federal equal employment opportunity laws such as Title VII, the Age Discrimination in Employment Act, the Equal Pay Act, and the Americans with Disabilities Act.

The EO will have a significant impact on the construction industry, among other industries, across the nation. Affected employers should reach out to their construction or labor and employment counsel in order to prepare for compliance. If you have any questions, please contact blog authors Mary Ruth Houston or C. Ryan Maloney.