The following information was first shared on a live webinar with JobTarget and Jackson Lewis P.C. 

Download the full webinar recording here.

On January 21, 2024, President Trump revoked Executive Order 11246 with the signing of Executive Order 14173. 

In this article, we'll cover:

• Background on Executive Order 11246
• Newly Signed Executive Order: Ending Illegal Discrimination and Restoring Merit-Based Opportunity
• The Impact on Federal Contractors
• Takeaways and Next Steps for Federal Contractors and Employers
• Implications for Private Sector DEI Programs 

Disclaimer: This should not be used as a substitute for legal advice on a particular matter. Any information provided herein are necessarily general in nature.

Background on Executive Order 11246: what was it?

Executive Order (EO) 11246 was originally issued by President Lyndon Johnson in 1965. 2025 was set to mark the 50th anniversary of the issuance of this Executive Order. 

This landmark Executive Order, which has undergone a number of revisions since it was originally issued, prohibited government contractors from discriminating on the basis of race and gender. Sexual identity and orientation were later added during the Obama administration. 

At its core, this was a Civil Rights law and it was issued in the midst of the Civil Rights Movement.

In addition to just generally prohibiting discrimination, the Executive Order went further in that it required federal contractors to proactively review its employment practices and procedures to ensure Equal Employment Opportunity (EEO) and nondiscrimination.

It wasn't just a prohibition against discrimination, it was a directive to undertake Affirmative Action to identify any barriers or obstacles to EEO.

The tools or vehicles for undertaking that type of review were the Affirmative Actions Plans themselves.

In addition to the Executive Order, there were a very long set of implementing regulations and those contained numerous additional requirements, such as language that you needed to include in job postings, to mandatory outreach you might have to take when underutilized for women or minorities, to required workplace posters, etc. 

All of those additional technical requirements were designed to help ensure EEO and nondiscrimination. 

Executive Order 11246 when coupled with the Vietnam Era Veterans' Readjustment Assistance Act (VEVRAA) and Section 503 of the Rehabilitation Act, made up three legs to the stool that was government contractor compliance obligations as it relates to EEO and nondiscrimination. 

With the rescission of Executive Order 11246, one of those legs is gone. 

Executive Order 11246 along with VEVRAA and Section 503 of the Rehabilitation Act have been monitored and enforced by the Office of Federal Contract Compliance Programs (OFCCP). That was the agency, that through proactive audits of government contractors, ensured that those businesses complied with those three laws and their implementing regulations. 

It's important to understand that Executive Order 11246 never required contractors to set quotas, or implement targets or mandates. The regulations actually expressly prohibited contractors from basing employment decisions on protected characteristics. 

Executive Order: Ending Illegal Discrimination and Restoring Merit-Based Opportunity 

This order signed by the Trump administration has expressly revoked Executive Order 11246.

In doing so, the Executive Order instructs the OFCCP to "immediately cease" doing 3 things.

• Promoting "diversity"
• Holding contractors and sub-contractors responsible for taking "affirmative action"
• Allowing or encouraging workforce balancing based on race, color, sex, sexual preference, religion, or national origin

In addition to rescinding Executive Order 11246, the new Executive Order also directed The Office of Management and Budget (OMB) to remove all references to Diversity, Equity, and Inclusion (DEI) or Diversity, Equity, Inclusion, and Accessibility (DEIA) principles from federal acquisition, contracting, grants, and financial assistance procedures. And prohibited any federal government mandates to consider any of that in making contracting or grant award decisions, which was a direct repudiation of the Biden administration's consideration of diversity in virtually all federal government activity. 

What Hasn't Changed

While this new Executive Order represents a shift in the government's attitude toward DEI programs, it doesn't change the nondiscrimination laws in place at the federal level in this country. 

Employment decisions based on protected characteristics remain unlawful. They were before the Executive Order and they are after the Executive Order. Moreover, employers and government contractors in some circumstances also have additional requirements that are unchanged at this time. 

For the moment, employers have a responsibility to:

• File EEO-1 reports (for employers with 100+ employees)
• File VETS-4212 reports in the end of September 
• Continue to comply with any state or local government contractor EEO or affirmative action obligations 
• Continue to comply with state or local pay/data reporting requirements 

The Impact on Federal Contractors 

For federal contractors, the Executive Order’s main takeaways are as follows:

• The EO does not eliminate the OFCCP as an agency or take away any contractor non-discrimination obligations. 
• The EO eliminates federal contractor affirmative action plan obligations regarding race and gender (as had been required by EO 11246) and enforcement activity by the OFCCP regarding race or gender affirmative action plans. 
• The EO does not impact obligations under VEVRAA or Section 503 (which are both statutes, not executive orders). For now, OFCCP retains jurisdiction over ensuring contractors comply with these laws.
• Contractors should review any currently pending OFCCP audit requests to determine whether the information requested stems from Executive Order 11246.
• Contractors should continue to prepare VEVRAA and Section 503 Affirmative Action plans.
• Additionally, the EO calls for the development of a new contract term (presumably, a replacement for the current Equal Employment Opportunity clause) for inclusion in federal contracts, which will require contractors to agree that “compliance in all respects with all applicable Federal anti-discrimination laws is material to the government’s payment decisions for purposes of section 3729(b)(4) of title 31, United States Code.”
• The EO requires contractors to certify that it does not operate any programs promoting DEI that violate any applicable federal anti-discrimination laws. The White House Fact Sheet accompanying the EO notes this certification will be an “unmistakable affirmation that contractors will not engage in illegal discrimination, including illegal DEI.”
• Review any new government contracts for new/relevant EEO/DEI terms.

So, what is illegal DEI? 

It's not defined.

The use of this term is not accidental. The Administration is trying to conflate the two terms together. It's intended to create confusion. It's intended to create the impression that any DEI programs are illegal.

Note: This Executive Order is already under litigation for being too vague and insufficiently detailed.

Takeaways 

• Executive Order eliminates federal contractor AAP obligations regarding race and gender (as required by EO 11246) and OFCCP enforcement activity regarding 11246 AAPs
• Executive Order bars federal contractors from considering race, color, sex, sexual preference, religion, or national origin in their employment, procurement or contracting practices "in ways that violate the Nation's civil rights laws"
• Executive Order does not take away any contractor EEO or non-discrimination obligations
• Executive Order does not impact obligations under VEVRAA or Section 503 (which are both statutes not executive orders) 
• Executive Order does not eliminate OFCCP as an agency
• Executive Order does not require OFCCP to discontinue enforcement of federal anti-discrimination laws 

Next Steps

What do you do now if you're a government contractor?

• Discontinue development and implementation of Executive Order 11246 AAPs — 90 day grace period 
• Inventory and unwind technical compliance activities associated with Executive Order 11246
• Consider privileged EEO analyses to avoid discrimination claims
• Continue development and implementation of VEVRAA and Section 503 AAPs (and yes, keep listing jobs with the state employment service) 
• Communicate with OFCCP on any active audits that the company deems the review of Executive Order 11246 compliance closed and reviews of VEVRAA and Section 503 compliance held in abeyance 
• If engaged in active litigation with OFCCP related to Executive Order 11246 compliance — including discrimination claims — file motion for dismissal 

Unwinding Executive Order 11246 Technical Compliance

• Pay Transparency Nondiscrimination Provision: Contractors no longer required to post or include the provision in handbooks
• Race/Ethnicity and Gender Self-Identification: Federal contractors no longer required to solicit race/ethnicity and gender from applicants
• Affirmative Action/Equal Employment Opportunity Policy Statement: Contractors should remove references to Executive Order 11246, its implementing regulations, and affirmative action for females and minorities 
• EEO Tagline: Contractors should remove references to affirmative action for race, color, religion, sex, sexual orientation, gender identity, and national origin in taglines for job postings in applications 
• Purchasing Agreements: Remove references to Executive Order 11246, its implementing regulations, and affirmative action for females and minorities 

DEI Initiatives Likely To Be Targeted

• Diverse slate programs
• Aspirational goals 
• Aspirational goals tied to compensation
• Identity-restricted mentorship, sponsorship, and development programs
• Even employee resource groups and affinity groups

What The EO Means For All — Contractor and Non-Contractor Employers

For all employers, whether they are federal contractors, the EO does not change the law relating to employment discrimination. It does, however, signal increased investigation and enforcement activities relating to DEI programs that utilize discriminatory preferences.

Employers should consider taking the following actions:

• Review employment practices and DEI initiatives for compliance with nondiscrimination statutes, such as Title VII of the Civil Rights Act or 1964
• Eliminate or revise policies or practices that likely are inconsistent with existing law
• Review EEO policies and communications to assess the risk of enforcement agency investigations
• Reassure employees of the employer’s commitment to equal employment opportunity and nondiscrimination
• Focus on employee psychological safety and wellness; and
• Stay tuned for challenges to the EO and more information about sectors, industries, and organizations the federal agencies identify for investigation and further scrutiny and guidance from the attorney general, secretary of education, and other federal agencies
  
  
  

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