A Look at Changes to Department of Labor Office of Federal Contract Compliance Programs
Modifications Made in Wake of Executive Order 14173
Highlights
- Shortly after assuming office, President Donald Trump signed Executive Order (EO) 14173, which revoked EO 11246. The latter EO prohibited employment discrimination and required that federal contractors develop written affirmative action programs for women and minorities.
- The acting director of the U.S. Department of Labor's Office of Federal Contract Compliance Programs (OFCCP) said that the office will reduce its operations from 55 offices nationally to four. OFCCP will also reduce its number of employees by 90 percent.
- Federal contractors will no longer be subject to OFCCP review and enforcement with respect to nondiscrimination and affirmative action concerning women and minorities, but statutory obligations under Section 503 of the Rehabilitation Act and the Vietnam Era Veterans' Readjustment Assistance Act of 1974 remain.
Recently issued Executive Order (EO) 14173 revoked EO 11246, which prohibited employment discrimination and required that federal contractors develop written affirmative action programs for women and minorities. The U.S. Department of Labor's Office of Federal Contract Compliance Programs (OFCCP) enforced EO 11246, along with Section 503 of the Rehabilitation Act (Section 503) and the Vietnam Era Veterans' Readjustment Assistance Act of 1974 (VEVRAA). Details on EO 14173 were provided in a previous Holland & Knight alert.
Where Does This Leave OFCCP, and What Does It Mean for Federal Contractors?
OFCCP is experiencing a whirlwind of change in both its structure and its on-the-ground organization. On Feb. 25, 2025, the acting director of OFCCP stated that the agency will reduce its operations from 55 offices nationally to four and decrease the number of employees from 479 to 50 – a 90 percent reduction.
The decreases in OFCCP offices and employees come four weeks after the Labor Department issued a cease and desist order halting all investigations and enforcement activity under EO 11246 as part of Secretary's Order 03-2025 issued on Jan. 24, 2025. The order also explained that Section 503 and VEVRAA investigations are "held in abeyance until further notice."
Pursuant to Secretary's Order 03-2025, OFCCP sent letters to contractors under OFCCP review for EO 11246 compliance. The letter stated: "On January 21, 2025, President Donald J. Trump issued an Executive Order entitled 'Ending Illegal Discrimination and Restoring Merit-Based Opportunity' that revoked Executive Order 11246. Due to this revocation, the Executive Order 11246 component of the review has been closed by OFCCP. The Section 503 and VEVRAA components of the review are being held in abeyance until further notice."
EO 14173 did not address Section 503 and VEVRAA. OFCCP continues to have enforcement responsibilities with respect to the congressionally mandated affirmative action and nondiscrimination requirements of Section 503 and VEVRAA. Section 503 and VEVRAA require, among other things, that federal contractors develop written affirmative action programs for veterans and individuals with disabilities on an annual basis. It is not clear whether and how the Labor Department or OFCCP will reassess administration of Section 503 and VEVRAA.
OFCCP's website reflects the uncertainty of the agency and its role. OFCCP's website states, "OFCCP is updating the website to bring the information into compliance with the new executive order. Please check back for updates and further guidance." The website also explains that Section 503 and VEVRAA are "both enforced by OFCCP, [and] are statutory and remain in effect."
EO 14173 provides that "for 90 days from the date of this order [i.e., April 21, 2025], Federal contractors may continue to comply with the regulatory scheme in effect on January 20, 2025." Federal contractors should expect further updates from OFCCP as that deadline approaches.
In the Feb. 21, 2025, decision in Nat'l Ass'n of Diversity Officers in Higher Education v. Trump, a federal court in Maryland issued an injunction as to certain aspects of the EO 14173. That decision was addressed in a previous Holland & Knight alert.
The plaintiffs did not challenge the provision of EO 14173 that revoked EO 11246, so the court's decision does not affect the elimination of all federal contractor affirmative action requirements for women and minorities.
Conclusion
Federal contractors, relieved of their obligations under EO 11246 and its regulations, will no longer be subject to OFCCP review and enforcement with respect to nondiscrimination and affirmative action concerning women and minorities. But statutory obligations under Section 503 and VEVRAA remain, though their enforcement and administrative mechanisms may be subject to change as well. OFCCP continues to assess its policies, operations and staffing. With the state of OFCCP in flux, federal contractors should continue to monitor the activities of OFCCP and assess the future of federal contractor affirmative action. Contractors should also consider whether any of their activities geared toward OFCCP affirmative action compliance remain appropriate under current legal standards, which themselves are also in a state of flux.
For more information or questions, please contact the authors.
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