White House Issues Executive Order Affecting Federal Contractors, Recipients of Federal Funding and Businesses With DEI Initiatives

Last week, the White House issued a number of executive orders with wide-ranging impact. Among them was an executive order reflecting, among other matters, the Trump Administration’s opposition to affirmative action and diversity, equity, and inclusion initiatives in the workplace, entitled “Ending Illegal Discrimination and Restoring Merit-Based Opportunity.”

The executive order revokes a series of long-standing executive orders, including EO 11246, that had established affirmative action and other obligations for federal contractors and certain recipients of federal funding. The changes significantly reduce these entities’ obligations with respect to women and minority groups, though their obligations with respect to veterans and individuals with disabilities are unchanged.

Entities are permitted to comply with the previous regulatory scheme for 90 days, but implementation on the government side has been more immediate. The Office of Federal Contract Compliance Programs — an agency of the U.S. Department of Labor responsible for enforcing affirmative action and other obligations of government contractors — was directed on January 24, 2025, to cease all investigative and enforcement activity under revoked EO 11246 and its regulations. The agency no longer has authority to investigate and enforce those matters. Though the agency still has authority over matters related to Section 503 of the Rehabilitation Act (with respect to individuals with disabilities) and the Vietnam Era Veterans’ Readjustment Assistance Act (with respect to veterans), investigations related to those laws have been placed on hold pending further guidance.

The recent executive order also impacts businesses that have diversity, equity, and inclusion programs and initiatives, regardless of whether they have affirmative action obligations. The White House indicated that it considers certain diversity, equity, and inclusion programs and initiatives to be counter to federal anti-discrimination laws and signaled that it intends to ramp up investigative and enforcement efforts against private sector businesses with such programs and initiatives.

Fredrikson encourages businesses to reach out to a member of our compliance team or their regular counsel to discuss how the recent executive orders affect their obligations, contracts and business practices. The Fredrikson team is actively advising on the practical impact of the executive orders. Please feel free to reach out to any member of the firm with questions.