Highlights
A recently issued executive order seeks to end illegal DEI programs
The order bans certain federal contractor affirmative action programs and a subsequent order ends enforcement actions
Further, the order promises formal guidance to educational agencies and higher education institutions relating to affirmative action in admissions and educational programs
Among the executive orders issued this past week is an order titled Ending Illegal Discrimination and Restoring Merit-Based Opportunity. Issued late in the day on Jan. 21, 2025, the order addresses diversity, equity, and inclusion (DEI) programs in the private sector, affirmative action programs by government contractors, and affirmative action in higher education and other educational agencies.
The executive order seeks to end diversity, equity and inclusion programs and affirmative action programs that “violate the text and spirit” of civil rights laws and “undermine the traditional values of hard work, excellence, and individual achievement.”
The executive order revokes four prior executive orders stretching back to 1965, while leaving in place certain earlier orders relating to non-discrimination and equal protection.
Private Sector DEI Programs
One focus of the executive order is to encourage private sector employers to end DEI programs involving “illegal discrimination and preferences” and advance “the policy of individual initiative, excellence and hard work.” To accomplish this, the executive order requires the U.S. Attorney General, in consultation with the heads of all federal agencies, to formulate a strategic enforcement plan to:
- Outline steps to deter DEI programs involving “illegal discrimination or preferences”
- Identify the “most egregious and discriminatory DEI practitioners.” This includes charging each federal agency to identify up to nine businesses/organizations/institutions of higher education to target for investigation
- Evaluate litigation against organizations whose DEI programs are unlawful
- Identify strategies to end illegal DEI programs in the private sector and encourage compliance with federal civil rights laws
- Propose potential regulatory actions or sub-regulatory guidance on the topic of DEI
The Attorney General, after consulting the heads of federal agencies, is to provide the strategic enforcement plan by May 21, 2025.
Federal Contractor Affirmative Action Programs
Perhaps the most significant part of the executive order is that it revokes Executive Order 11246, the long-standing legal authority from 1965 that requires federal contractors and subcontractors to take affirmative action with respect to the employment of women and minorities and prohibits discrimination on the basis of race, color, national origin, sex and religion. Although federal contractors are permitted to continue to comply with Executive Order 11246 through April 21, 2025, there are significant long-term implications for contractors. These include:
- Federal contractors are no longer required or allowed to take “affirmative action” with respect to women and minorities.
- Federal contractors are not allowed or encouraged to “engage in workforce balancing based on race, color, sex, sexual preference, religion, or national origin.” This effectively means that federal contractors will no longer set hiring goals when their workforces do not reflect the availability of women and minorities in the pools from which they recruit. Likewise, federal contractors will no longer take good faith efforts to address goals or measure progress toward goals.
- Federal contractors are held to strict non-discrimination requirements, including not considering race, color, national origin, sex, sexual preference, or religion in violation of federal civil rights laws.
- Federal contracts will require contractors to agree that payment under the contract is contingent upon compliance with all federal non-discrimination laws.
- Federal contractors will be required to certify they do not have DEI programs that violate federal non-discrimination laws.
- The Office of Federal Contract Compliance Programs (OFCCP), the agency within the Department of Labor that enforces employment laws applicable to federal contractors, will immediately cease enforcing non-discrimination and affirmative action obligations with respect to women and minorities under Executive Order 11246. In follow-up, on Jan. 24 the newly appointed Acting Secretary of Labor issued an order halting all investigations and enforcement activity relating to Executive Order 11246. Accordingly, all complaints, investigations and cases pending before OFCCP, administrative law judges and the Administrative Review Board relating to Executive Order 11246 are closed. The Department of Labor is to notify contractors with pending cases of the closure by Jan. 31, 2025.
Not affected by this executive order are federal contractors’ obligations with respect to veterans and individuals with disabilities. Because Vietnam Era Veterans’ Readjustment Assistance Act (VEVRAA) (applicable to veterans) and Section 503 (applicable to individuals with disabilities) are legislative, the executive order does not overturn those laws. Federal contractors will continue to have affirmative action and non-discrimination requirements with respect to veterans and individuals with disabilities. OFCCP may continue to enforce those laws but in accordance with the Jan. 24 order by the Acting Secretary of Labor, pending VEVRAA and Section 503 investigations and reviews are placed on hold pending further guidance.
New audits of government contractors are most certainly delayed until that guidance is issued. To commence new audits related to VEVRAA and Section 503, OFCCP will need to amend its current audit letter (scheduling letter and itemized listing). Changing the audit letter will require OFCCP to go through a notice, comment and approval process.
Affirmative Action in Education
The final prong of this executive order addresses affirmative action in educational programs. The executive order requires the Attorney General and Secretary of Education to issue joint guidance to higher education institutions and state/local agencies receiving federal funding with respect to complying with the holding of Students for Fair Admissions, Inc. v. President and Fellows of Harvard College. It is anticipated this guidance will address the use of race in admissions, scholarships, financial assistance and other aspects of the educational process.
Takeaways
In light of the executive order, employers should consider reviewing DEI programs to ensure they comply with anti-discrimination laws.
Government contractors should continue to comply with affirmative action requirements with respect to veterans and individuals with disabilities. They may continue their affirmative action programs with respect to women and minorities until April 21, 2025, but should watch for additional guidance on eliminating the affirmative action aspects of these plans, while continuing to focus on a commitment to non-discrimination.
Higher education and other educational agencies should continue to comply with the holding of Students for Fair Admissions and wait for further guidance from the Secretary of Education and Attorney General.