News Alert: New Administration Bans Affirmative Action for Contractors and Grantees

By Robert Nichols, Phil Beshara, Carla Weiss, and Logan Kemp of Nichols Liu

 

On January 21, 2025, President Trump issued an executive order titled “Ending Illegal Discrimination and Restoring Merit-Based Opportunity,” which rescinded Executive Order 11246. Executive Order 11246 and its implementing regulations (41 C.F.R. § 60-2) had required contractors to develop affirmative action programs and submit reports. The new order prohibits the Department of Labor’s Office of Federal Contract Compliance Programs (OFCCP) from holding contractors to affirmative action plans in the future. OFCCP is further prohibited from allowing or encouraging federal contractors and subcontractors to engage in workforce balancing based on race, color, sex, sexual preference, religion, or national origin. Contractors must comply with the new order by April 21, 2025.

 

In addition to repealing Executive Order 11246, the new order directs the Attorney General and Secretary of Education to issue guidance to state and local agencies and institutions of higher education that receive federal grants or participate in the federal student loan program. The guidance will instruct these recipients to comply with Students for Fair Admissions, Inc. v. President and Fellows of Harvard College, 600 U.S. 181 (2023), which banned race-based affirmative action in college admissions. The Order mandates that the new guidance be issued by May 21, 2025.

 

The Executive Order also requires that future contracts and grant awards contain a term requiring the contractor or grantee (1) to agree that its compliance in all respects with all applicable federal anti-discrimination laws is material to the Government’s payment decisions for purposes of the False Claims Act, and (2) to certify that it does not operate any programs promoting DEI that violate any applicable federal anti-discrimination laws.

 

The Nichols Liu team will be monitoring the implementation of this executive order, as well as other executive orders from the new administration. If you have any questions about how this executive order may impact your business with the federal government, please contact us.

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