On January 21, 2025, as part of his initial blitz of 45 Executive Orders, President Trump issued Executive Order (EO) 14173 entitled Ending Illegal Discrimination and Restoring Merit-Based Opportunity. The EO stated that it is aimed at addressing and eliminating, “dangerous, demeaning, and immoral race- and sex-based preferences under the guise of so-called ‘diversity, equity, and inclusion’ (DEI) or ‘diversity, equity, inclusion, and accessibility’ (DEIA) that can violate the civil-rights laws of this Nation,” which have given rise to “an unlawful, corrosive, and pernicious identity-based spoils system.”
The End of Affirmative Action
The new EO revokes four executive orders and a 2016 memorandum issued by previous Presidents, which imposed nondiscrimination and affirmative action obligations on government contractors. Chief among those is Executive Order 11246 – the grand-daddy of them all – issued in 1965 by President Lyndon Johnson, which required federal contractors not to discriminate in employment on the basis of race, creed, color, or national origin, and which further required contractors to meet certain affirmative action obligations, including developing written affirmative action plans. In 2014, President Barack Obama, in Executive Order 13672, extended EO 11246 to add sexual orientation and gender identity as
protected classes to be addressed in contractors’ affirmative action programs.
In the decades since its issuance in 1965, an infrastructure of federal regulations, a federal agency (the Office of Federal Contract Compliance Programs, or OFCCP), bureaucrats, lawyers, and consultants sprang up around EO 11246 and its progeny. Indeed, the regulations regarding affirmative action requirements, codified at 41 C.F.R. Parts 60-1 to 60-50, were hundreds of pages long. As employers required to comply with EO 11246 can attest, compiling a written affirmative action plan was no simple exercise and could cost employers tens of thousands of dollars.
President Trump’s EO 14173 eliminates all of that. Federal contractors have 90 days from January 21, 2025 in which to wind down their affirmative action programs. The new EO directs OFCCP to cease the following: (i) promoting diversity; (ii) holding Federal contractors and subcontractors responsible for taking “affirmative action;” and (iii) allowing or encouraging federal contractors and subcontractors to engage in workforce balancing based on race, color, sex, sexual preference, religion, or national origin. The new EO mandates that the head of each federal agency shall include in every contract or grant award:
- A term requiring the contractual counterparty or grant recipient to agree that its 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; and
- A term requiring such counterparty or recipient to certify that it does not operate any programs promoting DEI that violate any applicable federal anti-discrimination laws.
The new EO does not address two other federal laws enforced by OFCCP, Section 503 of the Rehabilitation Act, 29 U.S.C. 793, and the Vietnam Era Veterans' Readjustment Assistance Act (VEVRAA), 38 U.S.C. 4212. Those laws, which were statutes passed by Congress and signed by the then-President, cannot be revoked with the stroke of a pen, as is the case with executive orders. Those two laws, therefore, remain in effect.
Scaling Back DEI Initiatives
Beyond revoking certain previous executive orders, the new EO orders “all [governmental] executive departments and agencies (agencies) to terminate all discriminatory and illegal preferences, mandates, policies, programs, activities, guidance, regulations, enforcement actions, consent orders, and requirements.” In contrast to enforcement efforts that occurred between the enactment of the Civil Rights Act of 1964 and January 20, 2025, this EO now directs agencies to enforce civil-rights laws “to combat illegal private-sector DEI preferences, mandates, policies, programs, and activities.”
With respect to the private sector, the EO orders governmental agencies and the U.S. Attorney General to formulate a report containing recommendations for “taking [] appropriate measures to encourage the private sector to end illegal discrimination and preferences, including DEI.” As ordered, the report by the Attorney General will contain a strategic enforcement plan identifying:
- Key sectors of concern,
- The “most egregious” DEI practitioners in each sector,
- Specific steps or measures to deter DEI programs or principles,
- Strategies to encourage the private sector to end “illegal DEI,”
- Litigation appropriate for federal lawsuits, intervention, or statements of interest, and
- Potential regulatory action and sub-regulatory guidance.
The EO specifies that it does not apply to preferences for veterans of the U.S. armed forces.
While the EO characterizes DEI and DEIA as per se unlawful, the impact on private sector employers is currently unclear. Until the recommendations of the Attorney General’s report are available, private employers will have to anticipate which DEI policies or programs may be “illegal” while continuing to operate within the contours of current federal protections against discriminating against or harassing individuals in protected groups as codified in federal statutes, including for example Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act as amended, and the Age Discrimination in Employment Act.
What Should Employers Do Next?
For all employers, and especially for federal contractors, EO 14173 is a sea change. Employers may seriously consider what this shift in federal civil enforcement priorities will mean for their workplace, particularly in light of state laws or reporting requirements present in the states where they operate.
Calfee recommends that all employers work with their legal counsel to conduct a privileged review of policies, procedures, programs, and materials to identify DEI-related content and assess whether updates or revisions are appropriate pending further guidance from agencies or the Attorney General.
Federal contractors should take steps to wind down their Executive Order 11246-required affirmative action programs and review their form contracts and subcontracts to revise or remove language mandated by the defunct executive orders.
Finally, all employers should keep in mind some fundamentals: federal law, through statutes including Title VII, the Age Discrimination in Employment Act, and the Americans with Disabilities Act – all of which remain very much in force – continues to prohibit discrimination in employment based on race, color, religion, sex (including pregnancy, sexual orientation, or gender identity), national origin, age (40 or older), disability, and genetic information (including family medical history). Moreover, state and local laws may bring additional protected classes under the umbrella of nondiscrimination law.
If you have any questions about this new landscape, please contact any of Calfee's Labor and Employment lawyers or contact your regular Calfee contact.
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