Trump Executive Order Ends Affirmative Action for Federal Contractors

On Tuesday, January 21, 2025, President Donald Trump signed an Executive Order (EO) entitled Ending Illegal Discrimination and Restoring Merit-Based Opportunity. The new EO rescinds President Lyndon Johnson’s 1965 EO 11246, which authorized the affirmative action obligations federal contractors have complied with for almost 60 years.

Under President Trump’s EO “[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.”

The EO bars the U.S. Department of Labor’s Office of Federal Contract Compliance Programs (OFCCP) from holding federal contractors and subcontractors responsible for taking “affirmative action” based on race, color, sex, sexual preference, religion, or national origin.

Going forward, federal contractors will be required to certify that they “do not operate any programs promoting Diversity, Equity, and Inclusion (DEI) that violate any applicable federal anti-discrimination laws” and “to agree that [their] compliance in all respects with all applicable federal anti-discrimination laws is material to” whether they are in compliance with the Federal False Claims Act.

President Trump’s EO further directs “all executive departments and agencies to terminate all discriminatory and illegal preferences, mandates, policies, programs, activities, guidance, regulations, enforcement actions, consent orders, and requirements…and to combat illegal private-sector DEI preferences, mandates, policies, programs, and activities.” To this end, the U.S. Attorney General must within 120 days of the order “submit a report to the Assistant to the President for Domestic Policy containing 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.”

The report is to detail “sectors of concern” as far as improper DEI practices within each federal agency’s jurisdiction, examples of the most “egregious and discriminatory DEI practitioners” in each such sector, and provide “a plan of specific steps or measures to deter DEI programs or principles (whether specifically denominated ‘DEI’ or otherwise)” that constitute illegal discrimination or preferences in the private sector. 

Each federal agency shall identify up 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,” and well as litigation and subregulatory guidance that would promote the EO’s purpose of ending affirmative action and DEI. The EO “does not apply to lawful federal or private-sector employment and contracting preferences for veterans of the U.S. armed forces.”

MCAA members are encouraged to discuss these changes with their own legal counsel to ensure they are in compliance.

Those interested in learning more about expected federal policy changes during the second Trump administration are encouraged to join us for Trump Administration II Webinar: A Virtual Discussion on Coming Tax, Regulatory & Trade/Tariff Policies on February 6, 2025, at 2:00 p.m. EST. The webinar will provide valuable insights from Daniel Bunn, President & CEO of the Tax Foundation, and will be moderated by Jim Gaffney and Chuck Daniel.

In related news, the DOL Employment and Training Administration (ETA) issued a Training and Employment Notice (TEN) directing state workforce agencies, state apprenticeship agencies, and other stakeholders on changes the ETA is making to federal financial assistance awards to prohibit diversity, equity, and inclusion (DEI) activities prohibited by President Trump’s Executive Orders (EOs) titled, “Ending Radical and Wasteful Government DEI Programs and Preferencing,” issued on January 20, 2025, and “Ending Illegal Discrimination and Restoring Merit-Based Opportunity,” issued on January 21, 2025—which rescinded Lyndon Johnson’s Executive Order 11246 establishing affirmative action for federal contractors. Per the TEN, “all recipients of federal financial assistance awards are directed to cease all activities related to “diversity, equity, and inclusion” (DEI) or ‘diversity, equity, inclusion, and accessibility’ (DEIA) under their federal awards, consistent with the requirements of the EOs.” The TEN goes on to state that ETA “like all federal agencies, will provide further guidance on specific programs and activities within those programs.”