President Trump Issues Executive Order Targeting Policies and Practices Designed to Ensure Equal Opportunity

Bottom Line Up Front

On January 21, 2025, President Trump signed an executive order entitled Ending Illegal Discrimination and Restoring Merit-Based Opportunity (the “Executive Order”), which eradicates the federal government’s diversity, equity and inclusion (“DEI”) policies and programs relating to race, sex, and other identity categories. The Executive Order overhauls the government’s approach to combating discrimination and ensuring equal opportunities in its capacities as both an employer and an entity awarding contracts. The primary intent of the Executive Order is to eliminate what it describes as “illegal preferences” based on race, sex, and other identity categories. The Executive Order affects federal contractors, subcontractors, grant recipients, state and local educational agencies that receive federal grants, and institutions of higher education that receive federal grants or participate in the federal student loan assistance program. The Executive Order mandates that all executive departments and federal agencies cease enforcing affirmative action program requirements; moreover, it reinforces the legal obligation to hire and promote employees based on qualifications and skills only and without considering demographic characteristics. The Executive Order also extends its reach beyond contractors and other recipients of federal funds by directing the heads of all federal government agencies and the Attorney General to take specific steps to “encourage the private sector to end illegal discrimination and preferences, including DEI.”

Notably the Executive Order does not apply to contracting preferences and other provisions for veterans of the U.S. Armed Forces or visually impaired persons protected by the Randolph-Sheppard Act.¹ The Executive Order also does not appear to apply to contracting preferences and other provisions for qualified individuals with disabilities pursuant to Section 503 of the Rehabilitation Act.

What The Executive Order Revoked

The Executive Order revoked four executive orders and a presidential memorandum, all of which have been in effect for years:

1. Executive Order 11246: (September 24, 1965) Executive Order 11246 prohibited federal contractors from discriminating against employees because of race, color, religion, sex, or national origin and required federal contractors to take affirmative action, including undertaking recruiting initiatives and monitoring demographics of their workforces as part of their efforts to ensure that applicants and employees were treated without regard to these characteristics. Executive Order 11246 also required federal contractors with at least 50 employees and who met certain contract thresholds to develop and maintain written Affirmative Action Programs and to evaluate their compensation practices for pay disparities by gender and race, known as pay equity audits. Employers have 90 days from January 21, 2025, to cease complying with Executive Order 11246.
   
   In response to the Executive Order, the Acting Labor Secretary ordered the Department of Labor to “immediately cease and desist” enforcement actions related to government contractors’ compliance with Executive Order 11246. The Secretary’s Order applies to all open cases, which includes conciliation agreements, investigations, and complaints.
   
   
2. Executive Order 12898: (February 11, 1994) Executive Order 12898 required federal agencies to prioritize environmental justice by identifying and addressing, as appropriate, disproportionately high and adverse human health or environmental effects of their programs, policies, and activities on minority populations and low-income populations in the United States and its territories and possessions, the District of Columbia, the Commonwealth of Puerto Rico, and the Commonwealth of the Mariana Islands.
   
   
3. Executive Order 13583: (August 18, 2011) Executive Order 13583 imposed equal opportunity, diversity, and inclusions requirements on the federal government as an employer and required the Director of the Office of Personnel Management (OPM) and Deputy Director for Management of the Office of Management and Budget (OMB) to establish a government-wide initiative to promote diversity and inclusion in the federal workforce and to improve federal agency efforts to recruit, hire, promote, retain, develop, and train a diverse and inclusive workforce consistent with merit system principles.
   
   
4. Executive Order 13672: (July 21, 2014) Executive Order 13672 amended Executive Order 11246 to prohibit discrimination against employees because of their sexual orientation or gender identity.
   
   
5. The Presidential Memorandum of October 5, 2016: This Presidential Memorandum provided guidance to the national security workforce² for promoting talent and diversity. It mandated that the covered agencies collect and disseminate demographic data of the national security workforce, implement personnel policies to ensure that all national security employees had access to professional development opportunities, expand training on unconscious bias, inclusion, and flexible work policies, and reward diversity and inclusion efforts.

Impact on the Office of Federal Contract Compliance Programs

As part of its mandate, the Executive Order also effectively reverses the objectives of the Office of Federal Contract Compliance Programs (“OFCCP”) within the Department of Labor. OFCCP’s new mission is to actively prevent federal contractors from implementing affirmative action or DEI policies. The Executive Order requires OFCCP to “immediately cease” promoting diversity, enforcing affirmative action requirements, and allowing or encouraging federal contractors and subcontractors to “engage in workforce balancing” on the basis of employee race, color, sex, sexual orientation, religion, or national origin.

Contractual Enforcement and Certification

The Executive Order builds upon the 2002 Executive Order 13279 (Equal Protection of the Laws for Faith-Based and Community Organizations) to emphasize that federal contractors’ employment, procurement, and contracting practices are not to consider race, color, sex, sexual preference, religion, or national origin. The Executive Order will enforce this by requiring the head of each agency to include in every contract or grant award: 1) A term requiring the contractor/grantee 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 2) A term requiring the contractor/grantee to “certify that it does not operate any programs promoting DEI that violate any applicable Federal anti-discrimination laws.”

Impact on Affirmative Action for Higher Education

As it pertains to federal contractors and grantees, all state and local educational agencies that receive federal funds, as well as all institutions of higher education that receive federal grants or participate in the federal student loan assistance program under Title IV of the Higher Education Act will receive further guidance from the Attorney General and the Secretary of Education within 120 days of the Executive Order.

Impact on Private Employers

The Executive Order directs the Attorney General and the heads of all federal government agencies to “take all appropriate action with respect to the operations of their agencies to advance” the directives in the Executive Order. In addition, the Executive Order requires the Attorney General to consult with the heads of relevant agencies to submit a report recommending ways to end private sector DEI policies and practices within 120 days of the Executive Order. The report must specifically identify:

1. Key sectors of concern within each agency’s jurisdiction;
2. The most “egregious and discriminatory DEI practitioners” in each sector of concern;
3. A plan to “deter DEI programs or principles . . . that constitute illegal discrimination or preferences,” which must specifically identify “up to nine potential civil compliance investigations of publicly traded corporations, large non-profit corporations, 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;”
4. Other strategies to encourage private employers to end “illegal DEI discrimination and preferences”; and
5. Potential regulatory action and sub-regulatory guidance.

Takeaways

1. Enforcement action. Federal contractors will need to dismantle their affirmative action programs and any “workforce balancing” activities within the next 90 days (other than for veterans, blind people, and qualified individuals with disabilities). Whistleblowers and False Claims Act violations are sure to be a concern for contractors in this area.
   
   
2. Messaging. It will be important for federal contractors to create clear and consistent messaging to their workforces regarding the changes, why they are being made, and how the company is complying with the new mandates. Federal contractors should also consider how to respond to employee questions about the reasons for the changes.
   
   
3. Revise or draft policies. To get ahead of any potential enforcement actions and make the company’s position clear, federal contractors should revise hiring, promotion, and other HR policies to remove any references to prohibited DEI practices.
   
   Private sector employers, especially publicly traded corporations, large non-profit corporations, institutions of higher education with endowments over 1 billion dollars, and state law and medical associations, should carefully review their DEI initiatives and related communications. In addition to potential enforcement actions by governmental agencies, private employers may also face private lawsuits related to their DEI programs, as plaintiffs’ lawyers and advocacy groups may be encouraged to bring lawsuits as a result of the Executive Order.
   
   
4. Prepare for contract modifications. Every contract or grant will likely be modified in the near future to comply with the Executive Order’s mandate to include terms agreeing that compliance with applicable federal anti-discrimination law is material to the government’s decision to pay under the contract and certifying that the contractor or grantee does not promote unlawful DEI initiatives.

Goodwin’s Government Contracts and Grants Team, Employment Team, and Government Investigations & Enforcement Team have significant experience counseling clients on matters involving compliance with employment laws, statutory and regulatory obligations, applicable agency policies and procedures, and federal employment, procurement, and contracting practices. Please contact the authors of this alert if you have questions.

^[1] 20 U.S.C. 107 et seq.
^[2] The national security workforce encompasses: Department of State: Civil Service and Foreign Service; the United States Agency for International Development (USAID): Civil Service and Foreign Service; the Department of Defense (DOD): commissioned officers, enlisted personnel, and civilian personnel; the 17 members of the Intelligence Community; Department of the Treasury: Office of International Affairs and Office of Critical Infrastructure Protection; Department of Justice: National Security Division and Federal Bureau of Investigation; and the Department of Homeland Security.

This informational piece, which may be considered advertising under the ethical rules of certain jurisdictions, is provided on the understanding that it does not constitute the rendering of legal advice or other professional advice by Goodwin or its lawyers. Prior results do not guarantee similar outcomes.