KHVPF Insight
FAREWELL, OFFICE OF FEDERAL CONTRACT COMPLIANCE PROGRAMS
Federal contractors could not have imagined that 60 years of tension and conflict with the Office of Federal Contract Compliance Programs (OFCCP) would unceremoniously end with the stroke of a Presidential pen. But that is precisely what happened on January 20, 2025.
In back-to-back Executive Orders signed within 48 hours of his Inauguration on January 20, President Donald J. Trump rescinded President Lyndon Johnson’s longstanding Executive Order 11246, which established race and gender affirmative action and non-discrimination requirements for most Federal contractors and covered subcontractors, leading to formation of the OFCCP, a sub-agency of the U.S. Department of Labor. Since its inception, OFCCP’s relationship with the federal contracting community has been guarded and often controversial. Some – maybe most – contractors feared from the start that affirmative action (the stated goal of which is to attract, recruit, and retain qualified women and minorities in employment) would inevitably cross the line to effectively require illegal hiring quotas. Too often, unfortunately, many were proven right. Other frequently voiced complaints over the years have centered on OFCCP’s cookie cutter approach to creating affirmative action plans. This approach has often proved statistically suspect and incapable of meaningfully adapting to complex individualized organizational formats. Add to this the redundancy of OFCCP’s non-discrimination rules with the EEOC’s, and the double jeopardy-like concerns of these contractors are obvious. Most recently, OFCCP has been heralding its status as the early precursor to the Diversity, Equity, and Inclusion movement. And while many are lauding DEI and OFCCP’s role in it, it is likely that it was this now controversial element that put the bullseye on OFCCP for immediate action.
As a result, beginning January 20, OFCCP has evaporated with the signing of Executive Order14151, which “end[ed] radical and wasteful Government DEI Programs and Preferences.” The next day, Executive Order14173, “Ending Illegal Discrimination and Restoring Merit-Based Opportunity” followed. Four days later, on January 25, the Acting Secretary of Labor signed Order 03-2025, thereby instructing OFCCP to “cease and desist all investigative and enforcement activity under rescinded Executive Order 11246.” And with that Order, all audits and investigations abruptly ended forever. On January 31, OFCCP formalized this outcome in emails to all Federal contractors dismissing all pending E.O. 11246 audits and pending conciliation agreements. Department of Labor administrative law judges also dismissed all pending OFCCP Complaints relying on E.O. 11246 jurisdiction, including all pending cases, investigations, complaints and other enforcement-related or investigative activity based on race, color, religion, national origin, sex, sexual orientation, and gender identity. By February 4, OFCCP had sanitized and taken down almost all of its heretofore extensive website. Only investigations involving Section 503 (disabilities) and VEVRAA (Veterans) are still being held in abeyance, while contractors await further guidance. It is highly likely that these investigation – which pertain only to affirmative action and not to non-discrimination – will be moved to other sub-agencies within the Department of Labor that already deal with Section 503 and VEVRAA.
What remains in question is the cottage industry OFCCP spawned over its six decades, initially to assist Federal contractors in the creation of affirmative action plans – an annual requirement that OFCCP regulations required most contractors to create for the each and every contractor “establishment.” The contractor had to statistically analyze each establishment’s “job groups” based on race and gender demographic data. Job groups were themselves largely undefined and amorphous concepts that may or may not meet the stated objective of being similar in content, opportunity for advancement, and compensation. The analysis basically involved comparing the establishment’s actual “utilization” of minorities and women in a particular job group against the theoretical availability of qualified women and minorities in the relevant labor market or recruiting area. This is a vast oversimplification, but it explains the cottage industry it created. That industry understandably now sees itself in danger of overnight extinction.
The same can be said for DEI practitioners, many of whom found their initial footings in affirmative action planning. Many of these practitioners now are wondering what will remain of their responsibilities, given E.O. 14151’s mandate to end “radical and wasteful Government DEI programs and preferences.” Certainly, the demise of OFCCP ends (1) E.O. 11246 Affirmative Action Plans and systemic discrimination investigations for women and minorities; (2) Form EEO-1 filings long required of Federal contractors; and (3) applicant flow logs that contractors used to record the race and gender of their employment applicants or applicants for promotion, among other recordkeeping and analyses. Agencies now have 60 days to root out all DEI programs, performance requirements, and employees, leading many attorneys specializing in affirmative action and OFCCP to predict that an agency DEI program is now impermissible until and unless proven otherwise. The only possible exception to this generalization is for Veterans’ preferences.
What remains to be fleshed out is how these federal governmental directives will impact DEI in non-governmental workplaces. Some private employers, especially those that had some exposure under now rescinded E.O. 11246, extended DEI programs beyond Federal requirements by hiring employees of a gender or race perceived as being favored by a customer group or investor base. This type of preferential hiring because of race or gender is impermissible under Title VII and related civil rights law, a principle most recently reinforced in the Supreme Court’s 2023 decision, Students for Fair Admissions v. Harvard While the limit of private sector DEI is beyond the scope of the recent Executive Orders, perhaps a private employer has a legitimate reason for still asking applicants to self-identify by race and gender. There can be a legitimate reason for asking for such demographic data other than for the construction of affirmative action plans. For example, more and more state laws are explicitly or implicitly mandating pay equity analyses, and a private employer legitimately may need to know its employees’ gender and race for this purpose. At least until private employers receive more certainty from their legislatures, one broad approach an employer could take would be to define each element of its DEI program and analyze whether any element could qualify as a legally impermissible adverse job action. A prudent employer may wish to strike any such elements, at least for the time being, leaving intact only those elements aimed at inclusion that do not – as a matter of course – exclude others because of their race or gender.