President Donald Trump has issued an executive order (EO) targeting affirmative action and diversity, equity, and inclusion (DEI) programs at companies that do business with the federal government. The provisions of the January 21, 2025, EO, entitled “Ending Illegal Discrimination and Restoring Merit-Based Opportunity,” take the following steps.
- Revoke EO 11246. This 1965 order prohibited discrimination by federal contractors and required affirmative action to ensure equal employment opportunity. Among other requirements, it required federal contractors with at least 50 employees and a single contract of $50,000 or more to develop an Affirmative Action Program (AAP).
- Place Further Restrictions on the Office of Federal Contract Compliance Programs (OFCCP). The Trump EO similarly prohibits OFCCP from “[p]romoting ‘diversity’ ” or “[a]llowing or encouraging Federal contractors and subcontractors to engage in workforce balancing based on race, color, sex, sexual preference, religion, or national origin.”
- Prohibit OFCCP From Enforcing Affirmative Action Requirements. The Vietnam Era Veterans’ Readjustment Assistance Act and Section 503 of the Rehabilitation Act, require affirmative action by most federal contractors to promote job opportunities for veterans and persons with disabilities. These statutes remain in effect following the Trump EO; however, the EO instructs OFCCP to “immediately cease ... [h]olding Federal contractors and subcontractors responsible for taking ‘affirmative action,’” which means that these obligations will presumably not be enforced during the Trump administration, but they could be enforced by a future administration.
- Require Contractor Acknowledgement of Materiality. The Trump EO also requires federal agencies to include in every contract or grant award a clause requiring the contractor or grant recipient to (1) agree that its compliance with federal anti-discrimination laws is material to the government’s payment decisions for purposes of the civil False Claims Act, and (2) certify that it does not operate any programs promoting DEI that violate any applicable federal anti-discrimination laws.
- Delete All References to DEI Principles and Terminate All DEI Programs. The EO instructs the Director of the Office of Management and Budget, with the assistance of the Attorney General, as requested, to (1) review and revise, as appropriate, all governmentwide processes, directives, and guidance; (2) remove references to DEI and DEIA (including “accessibility”) principles, under whatever name they may appear, from federal acquisition, contracting, grants, and financial assistance procedures to streamline those procedures, improve speed and efficiency, lower costs, and comply with civil-rights laws; and (3) terminate all “diversity,” “equity,” “equitable decision-making,” “equitable deployment of financial and technical assistance,” “advancing equity,” and like mandates, requirements, programs, or activities, as appropriate.
- Require Development of Strategic Enforcement Plan. The final section of the Trump EO addresses DEI in the private sector, stating that within 120 days of the order, the administration shall formulate a strategic plan that includes identifying “the most egregious and discriminatory DEI practitioners in each sector of concern” along with a plan of specific steps “to deter DEI programs or principles that constitute illegal discrimination or preferences.” The EO calls out publicly traded corporations, large nonprofits, foundations with more than $500 million in assets, state and local bar and medical associations, and higher education institutions with endowments of more than $1 billion.
The requirement to acknowledge materiality does not appear to subject federal contractors to any antidiscrimination requirements that do not already exist under federal law; however, this provision will increase compliance risk for contractors by raising the specter of civil False Claims Act liability for contractors who engage in diversity practices that are later deemed to be unlawful. This could encourage relators (i.e., whistleblowers), to file False Claims Act complaints against government contractors for violating federal antidiscrimination laws in their efforts to promote diversity. A finding of liability under the civil False Claims Act can result in treble damages, penalties that exceed $28,000 per false invoice, and potentially suspension or debarment from government contracting.
The EO provides 90 days for federal contractors to comply with the order’s provisions.
