New executive order ends contractor race and sex affirmative action obligations and targets employer DEI efforts

Key provisions of the Order

The Order revokes EO 11246, effectively eliminating the federal legal underpinning for contractors’ creation and maintenance of affirmative action programs (AAPs) with respect to race, ethnicity, and gender, and OFCCP’s authority to conduct audits of contractors’ AAPs. EO 11246 had been in place since 1965. The Order states, however, that “[f]or 90 days from the date of this order, Federal contractors may continue to comply with the regulatory scheme in effect on January 20, 2025,” thus permitting contractors to continue to comply with current regulations until April 21, 2025.

Additionally, the Order broadly prohibits OFCCP from “[p]romoting ‘diversity’”; “[h]olding Federal contractors and subcontractors responsible for taking ‘affirmative action’”; or permitting Federal contractors and subcontractors to undertake “workforce balancing based on race, color, sexual preference, religion, or national origin.” 

The Order further requires that every contract or grant award include, among other things, a term requiring the contractor or grantee to certify that it does not operate any programs “promoting DEI that violate any applicable Federal anti-discrimination laws.” 

The Order also targets employers’ DEI programs—including employers that are not Federal contractors. In particular, it directs the Attorney General, within 120 days, to submit a report containing recommendations for enforcing Federal civil rights laws and taking other measures to “encourage the private sector to end illegal discrimination and preferences, including DEI.” As contemplated by the Order, these efforts may also include investigations and potential enforcement actions against employers and contractors regarding their DEI programs and initiatives. The Order does not specifically define which DEI programs will be the focus of enforcement actions, but it references a desire to end programs that contain or encourage “illegal preferences and discrimination.”

The Order also requires the Attorney General and Secretary of Education, within 120 days, to jointly issue guidance to state and local agencies receiving Federal funds, as well as institutions of higher education receiving federal grants or federal student loan assistance, regarding measures required to comply with the Supreme Court’s decision in Students for Fair Admissions, Inc. v. President and Fellows of Harvard College, 600 U.S. 181 (2023).

Programs that are not impacted by the Order

Separate from EO 11246, OFCCP administers and enforces two equal employment opportunity and AAP statutes: the Vietnam Era Veterans’ Readjustment Assistance Act (VEVRAA), regarding protected veterans; and Section 503 of the Rehabilitation Act of 1973 (Section 503) regarding persons with disabilities. The Order does not speak to these statutes and OFCCP’s authority regarding them, so these programs appear to remain in effect. 

Additionally, the Order expressly states that it does not apply to lawful Federal or private-sector employment and contracting preferences for protected veterans and does not prevent State or local governments, Federal contractors, or Federally-funded educational agencies or institutions of higher education from engaging in First Amendment-protected speech. 

Open questions

The Order leaves several questions unanswered. We will continue to monitor closely for further guidance and developments. For example:

• What will be left of OFCCP moving forward? Will OFCCP turn its efforts toward auditing DEI policies that it believes go too far?
• Will a new executive order for Federal contractors be promulgated in place of EO 11246?
• What types of DEI-related efforts will the administration consider “illegal” preferences or discrimination or will otherwise be prioritized for enforcement action?
• Will the Federal Acquisition Regulation (FAR) be updated with the new certification language and will current contracts and/or the System for Award Management (SAM.gov) be modified to remove the FAR clauses implementing EO 11246, e.g., FAR 52.222-25, Affirmative Action Compliance and FAR 52.222-26, Equal Opportunity?
• How should Federal contractors that are subject to affirmative action obligations pursuant to state laws respond?
• How will the Order interplay with state laws that restrict DEI efforts?
• Will Federal contractors or grantees face potential False Claims Act risk based on the requirement to certify in a contract or grant award that they do not operate programs promoting DEI that violate the law?
• What are the Order’s implications for non-employment programs and activities, e.g., students at higher education institution? 

Although much ambiguity exists, further guidance from the Federal government is expected.

Next steps

All employers—particularly Federal contractors and grantees—should promptly inventory any DEI-related programs and policies and conduct internal risk assessments to determine whether they should be continued or modified in light of antidiscrimination laws and the President’s executive actions. Federal contractors in particular should watch carefully for future guidance to determine how to address their current AAP obligations, and should keep in mind the 90-day grace period contemplated in the Order.

For more information about the Order and its potential impact on your organization, contact the authors of this article or the Hogan Lovells lawyer with whom you work.

Authored by George W. Ingham, Joy Sturm, Stephanie Gold, Stacy Hadeka, Allison Pugsley, Bill Ferreira, Patricia Ambrose, Amy Folsom Kett, Saydee Schnider, and Keith Lee.