Impact Summary: Ending Illegal Discrimination and Restoring Merit-Based Opportunity

What is Changing?

• The new Executive Order states that employers have until April 21, 2025, to discontinue following the EO 11246 framework. As of late June, OFCCP is asking contractors to voluntarily submit narrative information about what steps they have taken to unwind their EO 11246 practices. HR Works recommends caution for any employer considering a response.
• Shortly after EO 14173 was issued, the Acting Secretary of Labor ordered all DOL employees, including OFCCP, OALJ, and ARB, to cease and desist all investigative and enforcement activity under EO 11246. On July 2, 2025, the Secretary of Labor lifted the abeyance and instructed OFCCP to resume investigating complaints and administratively close compliance evaluations due to the intermingling of information with EO 11246.
• The new Executive Order also instructs the Attorney General, Director of OMB, and heads of relevant agencies to propose a process for contractors to certify that they are not operating any DEI (diversity, equity, and inclusion) programs that violate nondiscrimination laws. They have also been instructed to identify potential violators – practitioners or employers operating “illegal DEI” programs – and recommend ways to encourage private sector employers to end “illegal discrimination and preferences, including DEI.” As of late June, certification language is with OMB for review, but no information has been released publicly.

What is Not Changing?

• AAPs for protected veterans and individuals with disabilities are not impacted by the new Executive Order. Employers are required to continue creating and following those AAPs in the same manner they did prior to January 21, 2025. In early July, OFCCP proposed new rules which include the removal of the self-identification process for individuals with disabilities. The rules have not yet been finalized.
• Federal reporting of EEO-1, EEO-3, EEO-4, EEO-5, and VETS-4212 Reports also continues, as do State-mandated AAPs or equal opportunity related reports, including California Pay Day Reporting, Illinois Equal Pay Certification, and Massachusetts Workforce Data Reporting.

What Should Contractors Do Now?

Contractors should consider various aspects of their affirmative action and nondiscrimination programs:

Data collection – It could take the government six months or more to issue further clarification and guidance. In the meantime, HR Works urges all contractors to continue the same data collection procedures that were in place prior to January 21, 2025. It is easier to peel back these processes later than it would be to re-establish them. It could also be burdensome to contractors if reconstruction of missing or lost data became necessary in order to remain compliant. As one caveat to this, review the language on the applicant self-identification form: if it indicates the information is being solicited due to Federal contractor requirements, this language should be removed or softened by April 21^st.

AAPs – Do not delay in creating AAPs for protected veterans and individuals with disabilities. Those requirements remain in place, and enforcement has resumed.

Nondiscrimination testing – Certain AAP analyses, including disparity analyses (commonly referred to as impact ratio analyses or adverse impact analyses) and compensation analyses are neutral in analyzing differences by any race or gender. These are not predicated on EO 11246 principles and offer valuable insight and data for ensuring organizational practices are not inadvertently impacting any race or gender group in a negative way. HR Works is strongly encouraging contractors to continue these analyses so they remain aware of the impact of their personnel practices and will be able to certify confidently that no discriminatory employment programs are in place.

Implementation requirements – This includes broad and ongoing actions such as AA/EEO training, diversity-focused recruitment and outreach, employee development programs, posters, subcontractor and union notifications, accommodation tracking, and much more. Many steps contractors take to implement their AAPs are either dictated by or intertwined with the requirements for veterans and individuals with disabilities, which remain in place. HR Works has updated our Affirmative Action Implementation Guide and created a Transitional Implementation Guide to assist long-term affirmative action employers with understanding the changes. New materials are available in the Resources Library within our client portal sites. Construction contractors may now follow the same implementation procedures as supply and service contractors.

DEI programs – The Trump Administration has taken a firm and swift stance against DEI programs, characterizing them as “illegal” and “rooting out” violators. HR Works is encouraging employers with active DEI programs to review the details of the program to ensure they are solidly anchored in and adhering to principles of nondiscrimination. It is critical that employers avoid DEI programs that include preferences, quotas, or mandates that may violate law despite being designed with good intentions in mind. HR Works can assist employers with conducting an DEI risk assessment if desired.

EEO-1 reporting – With a separate Executive Order Defending Women from Gender Ideology Extremism and Restoring Biological Truth to the Federal Government, employers should assume that EEOC will remove the option to submit information on non-binary gender employees in the Comments section of EEO-1 reports.

Potential Implications/Considerations for All Employers

In addition to impacts on federal contractors and subcontractors, this executive order directs federal agencies to combat “illegal DEI” practices in the private sector.

Review DEI Initiatives and Policies

• Since the EO does not define “illegal DEI,” employers should carefully review their DEI programs and policies to ensure alignment with civil rights laws (e.g., Title VII). Focus on non-discrimination, non-harassment, and ensuring that employment opportunities are open for all employees. Specifically, avoid implementing quotas or initiatives that could be interpreted as discriminatory or exclusionary for any race or gender group.
• Align DEI initiatives with federal anti-discrimination laws and merit-based requirements, while adhering to any broader protections under state or local laws.
• While continuing to support workforce equity and inclusion, employers may need to adjust DEI strategies to focus on inclusivity and opportunity without crossing into areas that could be perceived as discriminatory or in violation of the EO.

Evaluating the Effectiveness of EEO and DEI Programs

• Metrics-Based Assessment: Regularly measure the success of employment practices and programs by noting the outcomes using objective, data-driven metrics (e.g., retention rates, representative improvements, engagement surveys, adverse impact analyses, and compensation analyses). This ensures that programs are aligned with equal opportunity for all, avoiding preference or disparate impact on any particular demographic group.
• Risk-Benefit Analysis: Carefully weigh the potential legal risks of continuing certain DEI initiatives, especially if they could be interpreted as “illegal” under the EO’s undefined parameters. Programs that explicitly or implicitly prioritize certain groups over others could pose a liability risk.
• Documentation of Purpose: Clearly document the business rationale and objectives behind DEI efforts, emphasizing alignment with legal requirements and business needs. Ensure employees and managers responsible for implementing equal employment opportunities and DEI initiatives are trained to do so in a nondiscriminatory manner.

Prioritize Civil Rights Compliance

• Ensure that policies and practices remain compliant with Title VII, focusing on equitable treatment of employees and job applicants without regard to protected characteristics such as race, sex, religion, or national origin. Keep in mind additional protections may be afforded under state and local anti-discrimination laws, as well.
• Audit recruitment, hiring, training, and promotion practices to ensure they do not inadvertently disadvantage any group. The Uniform Guidelines on Employee Selection Procedures can be a useful auditing tool.
• Reaffirm non-discrimination and anti-harassment practices that reflect fairness and inclusion.

Employee Training and Communication

• Review and update anti-discrimination and harassment training programs to align with the EO’s emphasis on civil rights laws.
• Training can include practical tools and scenarios to help employees understand how to engage in inclusive behaviors without creating legal risk.
• Communicate any changes to EEO and DEI programs transparently to employees, ensuring they understand the reasoning behind adjustments and the company’s ongoing commitment to a respectful and equitable workplace.

Prepare for Agency Oversight

• Since the EO directs federal agencies to combat “illegal DEI” in the private sector, employers should anticipate potential audits or investigations and ensure thorough documentation of compliance efforts.
• Proactively engage legal or compliance experts to address any uncertainties regarding what constitutes “illegal DEI” under the EO.

Prepare for Increased Scrutiny

• Publicly traded corporations, higher education institutions with large endowments, and non-profits with substantial assets may be prioritized for civil compliance investigations. These entities should conduct internal audits to ensure compliance and maintain thorough documentation of non-discrimination efforts, hiring and promotion decisions, and workplace investigations to demonstrate compliance if targeted for an audit.

What’s Next?

Information from the government continues to evolve. The Attorney General is working with other agencies to develop recommendations for ensuring nondiscrimination. A new certification requirement is pending. The DOL’s budget for 2026 allocates no budget to OFCCP. We may see lawsuits from civil rights agencies or other parties attempting to lessen the impact of the new Executive Order. HR Works is watching all of this and will continue updating clients and providing guidance as these changes occur.

If you are a current Affirmative Action client and have not received notifications on this topic from HR Works, please contact your Consultant to ensure you are on our mailing list.

While affirmative action is and always has been lawful and nondiscriminatory, the phrase “affirmative action” has become associated with a potentially insurmountable amount of misconception. In the upcoming weeks and months, HR Works and the industry in general will be considering a shift away from this phrase to one that is more closely associated with the equal employment opportunity that affirmative action was designed to ensure.

HR Works continues to update the sizable library of AA/EEO resources and tools that we have made available to clients and will continue to provide training on using the new resources. We have also adjusted our service offerings in light of EO 14173 and will be reaching out to each client prior to their next AAP to determine their desired AAP contents.

HR Works AA/EEO Consultants are available to support clients through this change, not only with publications and tools, but also individualized consulting. Any client wishing to discuss these changes with their Consultant should simply reach out to schedule a meeting and our Consultants will be happy to answer any questions that arise.