President Trump Rescinds Affirmative Action for Federal Contractors and Requires Enforcement Plan to End Unlawful DEI at Private Companies

On January 21, 2025, President Trump signed a sweeping executive order titled “Ending Illegal Discrimination and Restoring Merit-Based Opportunity” (the “Order”), rescinding affirmative action and other anti-discrimination laws applying to federal contractors, requiring contractors to certify that they do not have unlawful “DEI programs,” and requiring federal agencies to create strategic enforcement plans targeting illegal DEI programs in the private sector. 

Not only is the Order a drastic change from the prior administration, but it ushers in a “sea change” at the federal level on decades-old affirmative action and anti-discrimination requirements for federal contractors, agencies, and programs. Without clear guidelines in the Order on what constitutes unlawful “DEI programs,” companies are left to speculate on what this administration views as discriminatory or what types of programs they might seek to target. It remains to be seen how this Order will be implemented and whether the Order (or parts thereof) will be legally challenged or survive such challenges. In the meantime, companies should review their affirmative action and DEI practices, policies, and programs in light of this Order. 

Requirements Impacting Federal Contractors and Grantees

Since the 1960s, Executive Order 11246 (“EO 11246”) has granted the Office of Federal Contract Compliance Programs (“OFCCP”) authority to require federal contractors to maintain affirmative action plans and comply with certain anti‑discrimination protections, prohibiting discrimination based on race, color, religion, sex, sexual orientation, gender identity, or national origin. The Order revokes EO 11246 in its entirety and requires OFCCP to “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.”

The Order allows (but does not require) federal contractors to continue to comply with the “regulatory scheme in effect on January 20, 2025,” for 90 days from the date of the Order, or until April 21, 2025. 

The Order further requires the head of each agency to include in every contract or grant award terms requiring contractors and grantees to:

• Certify they are not “operat[ing] any programs promoting DEI that violate any applicable Federal anti-discrimination laws”; and
• Agree that their “compliance in all respects with all applicable Federal anti‑discrimination laws is material to the government’s payment decisions” for purposes of the False Claims Act (“FCA”).

The Order also prohibits federal contractors and subcontractors from considering race, color, sex, sexual preference, religion, or national origin in violation of civil rights law in their “employment, procurement, and contracting practices.” In addition, the Order revokes EO 13672, which prohibited contractors from discriminating against employees on the basis of sexual orientation and gender identity. Notably, EO 13672 was issued several years before the U.S. Supreme Court’s landmark decision in Bostock v. Clayton, which recognized protections against such discrimination under Title VII of the Civil Rights Act of 1964.

The Order does not, however, apply to lawful federal or private-sector employment and contracting preferences for veterans of the U.S. Armed Forces or persons protected by the Randolph-Sheppard Act, 20 U.S.C. § 107.

Private Sector Enforcement

The Order instructs the heads of all federal agencies to, among other things, “enforce our longstanding civil-rights laws and to combat illegal private-sector DEI preferences, mandates, policies, programs, and activities.” Within 120 days of the Order, the Attorney General is required to submit a report with recommendations for “enforcing Federal civil-rights laws and taking other appropriate measures to encourage the private sector to end illegal discrimination and preferences, including DEI.” That report must contain a “proposed strategic enforcement plan” identifying:

• Key sectors of concern within each agency’s jurisdiction;
• The “most egregious and discriminatory DEI practitioners in each sector of concern”;
• A plan with “specific steps or measures to deter DEI programs or principles” that are unlawful, whether named “DEI” or not;
• “[U]p to nine potential civil compliance investigations of publicly traded corporations, large non-profit corporations or associations, foundations with assets of 500 million dollars or more, State and local bar and medical associations, and institutions of higher education with endowments over 1 billion dollars”;
• Strategies to “encourage the private sector to end illegal DEI discrimination and preferences and comply with all Federal civil-rights laws”; and
• Potential litigation, regulatory action, and sub-regulatory guidance.

What Companies Should Do Now

While additional guidance is needed to understand that full impact of the Order, companies should review and assess their affirmative action, anti‑discrimination, and DEI practices, policies, and programs against the backdrop of the Order. Below are some notable areas to consider.

• Affirmative Action Plans: Contractors will no longer be required to create affirmative action plans for females and minorities under EO 11246. Whether they can voluntarily continue those plans beyond 90 days remains to be seen. Despite the Order seeming to imply federal contractor affirmative action plans require unlawful workforce balancing or preferences, the affirmative action regulations already comply with federal antidiscrimination laws, including expressly prohibiting the use of race, gender, and other protected characteristics to make employment decisions and expressly prohibit unlawful preferences and set asides. Although affirmative action plans under EO 11246 are no longer required, contractors must continue to comply with their affirmative action, antidiscrimination, and accommodation obligations for protected veterans under the Vietnam Era Veterans Readjustment Assistance Act (“VEVRAA”) and individuals with disabilities under Section 503 of the Rehabilitation Act (“Section 503”).
• OFCCP Enforcement: The Order does not address how it will impact OFCCP audits currently in process. Although the Order should require OFCCP to immediately cease all compliance evaluations, conciliation negotiations, or enforcement actions related to EO 11246, contractors should consult their legal counsel or seek further guidance from OFCCP on their particular situation. The fate of OFCCP going forward is unclear. OFCCP still has statutory mandate to enforce the disability and veteran affirmative action requirements under Sections 503 and VEVRAA. Unless Congress rescinds those laws, OFCCP will still have the mandate to require employers to create affirmative action plans for individuals with disabilities and veterans and annually submit VETS 4212 reports. It is also possible that OFCCP may be merged with Equal Employment Opportunity Commission (“EEOC”). Indeed, during President Trump’s first term, there was a budget proposal to merge the two agencies. Regardless, contractors will continue to be subject to antidiscrimination laws and enforcement actions by EEOC and other state fair employment agencies, as well as private discrimination lawsuits.
• Certifying Compliance with Anti-discrimination Laws: Contractors and grantees will also want to review their anti‑discrimination and DEI policies and programs given the forthcoming contractual requirement to certify their compliance with anti-discrimination laws. Of course, the devil is in the details. It will likely take months before any regulations or contract clause is established to implement this requirement. The clear import of the Order, however, is that inaccurate or false certifications could subject contractors to potential liabilities under the FCA.
• Review DEI Programs: With federal agencies being directed to develop strategic enforcement plans, the new administration has sent a strong signal that it intends to investigate and pursue companies for their “illegal” DEI programs. What DEI programs this administration believes are “illegal” or how it will seek to enforce the Order remain open questions. At a minimum, companies should review their DEI programs to ensure that they comply with anti-discrimination laws. This includes ensuring that those programs do not create any unlawful set-asides, quotas, or preferences unless they meet very narrow exceptions for lawful remedial programs, such as government consent decrees. Although many companies have already done those reviews given the growing trend of cases against corporate DEI programs following the U.S. Supreme Court’s decision in the Harvard and UNC cases, they should consider revisiting those efforts. Companies, however, should avoid rolling back DEI programs too far to avoid potential legal and business risks. Removing certain DEI programs, such as those targeted at eliminating bias, could increase risk of traditional discrimination claims or hinder recruitment and retention efforts. 

What’s Next?

The Order comes on the heels of flurry of executive actions since President Trump took office, which have rescinded various DEI efforts throughout the federal government, including by:

• Declaring that the U.S. Government’s official policy is that there are only two genders: male and female;
• Terminating DEI programs and offices within the federal government; and
• Rescinding the executive order requiring pay transparency and banning the use of salary history information for federal contractors.

More federal actions on DEI are likely on the horizon. Although the Order focuses on the federal government, companies should continue to monitor what happens at the state level. Lawmakers and regulators in “red states” may become emboldened by these actions and seek to implement similar measures or take similar enforcement actions in their own jurisdictions. On the other hand, “blue state” lawmakers and regulators may seek to fill the gap, seeking to push pro-DEI and anti-bias measures for companies operating within their borders.