Unpacking the new administration's cancellation of affirmative action programs for federal contractors.

Applies to: All employers with federal affirmative action plans
Effective: January 21, 2025

Overview: What's Happening to Affirmative Action?

On January 21, 2025, President Trump signed an Executive Order (EO) titled “Ending Illegal Discrimination and Restoring Merit-Based Opportunity,” which, among other things, revoked several Executive Orders from prior Administrations that prohibited employment discrimination by federal contractors and subcontractors and required implementation of contractor affirmative action plans (AAPs).

History of Contractor AAP Obligations

In 1941, EO 8802 prohibited discrimination based on race, color, creed and national origin in the federal government and defense industries. In 1943, the coverage of EO 8802 was extended by making it applicable to all government contractors. These non-discrimination requirements were changed in 1965 by President Johnson, who issued EO 11246, requiring contractors to take “affirmative actions” to prevent discrimination, by creating AAPs for women and racial minorities. In 2014, President Obama signed EO 13672, amending EO 11246 to include sexual orientation and gender identity as protected classes that had to be addressed in contractor AAPs.

Separately, under Section 503 of the Rehabilitation Act of 1973 (Section 503) and the Vietnam-Era Veterans Readjustment Assistance Act (VEVRAA) federal contractors must ensure equal employment opportunities for qualified individuals with a disability and qualified veterans. As a result, federal contractors have a statutory obligation to take affirmative action to employ and satisfy their AAP requirements, as it relates to individuals with disabilities and veterans.

What is the Current Law?

The 1965 Executive Order 11246, and amendments, addressing federal contractor equal employment requirements for women and minorities were terminated. In further targeting AAPs, President Trump’s EO directs the Office of Federal Contract Compliance Programs (OFCCP) to immediately cease (1) promoting diversity, (2) holding federal contractors and subcontractors responsible for taking affirmative action, and (3) allowing or encouraging contractors to engage in workforce balancing based on race, color, sex, sexual preference, religion, or national origin. The EO further states that the OFCCP may no longer conduct or enforce compliance reviews of contractor AAPs.

The EO provides a 90-day grace period, meaning that federal contractors may voluntarily continue to follow the now-prohibited AAP requirements until April 21, 2025, at which time they must cease doing so.

Because the AAP requirements under Section 503 and the VEVRAA are established by federal statute, President Trump’s EO cannot override AAP requirements with respect to individuals with disabilities and veterans. Additionally, the EO does not impact any employer anti-discrimination obligations under statutes like Title VII and state equivalents.

What Does This Mean for Employers?

For federal contractors, historical equal employment opportunity requirements are no longer in place, such as tracking data around women and minority applicants and hires. Federal contractors must continue to comply with AAP obligations with respect to disabled individuals and veterans, and must still follow federal and state anti-discrimination laws. It is unclear what impact this will have on EEO reporting obligations for veteran and disabled classifications. Employers should continue to prepare for required reporting until further developments arise.

Although affirmative action plans may no longer be required, employers are still permitted to engage in hiring strategies that seek to diversify the applicant pool for the best opportunity to attract talent. Rescission of the 1965 Executive Order does not necessarily mean a complete dismantling of employer affirmative action plans. Employers should review their plans with legal counsel to determine whether any plan components may or must be maintained.

Action Items for Employers

1. Review and revise affirmative action plans with legal counsel.
2. Update hiring processes as applicable.
3. Have appropriate personnel trained on requirements.

As federal policies continue to evolve, rely on our team of compliance leaders to help you stay on top of key actions, pending legislation, and regulatory changes that may impact your organization. Visit OneDigital's resource page for real-time updates: Federal Policy Updates for Employers: What to Watch in 2025.