Construction Contractors Face Uncertainty After New EO on DEI and Affirmative Action

On Jan. 21, President Trump signed the “Ending Illegal Discrimination and Restoring Merit-Based Opportunity” Executive Order (EO), which significantly impacts federal contractors by:

• Requiring certification that contractors do not operate Diversity, Equity and Inclusion (DEI) programs that violate federal anti-discrimination laws.
• Rescinding Executive Order 11246, which mandated affirmative action programs for federal contractors.
• Directing the Office of Federal Contract Compliance Programs (OFCCP) to stop enforcing diversity promotion and affirmative action requirements.
• Federal contractors may continue compliance with prior regulations until April 21, 2025, but must reassess their policies considering this change.

Key Considerations for Contractors

For Contractors That Perform Federal Work:

• Immediately review and modify DEI and affirmative action policies to align with the new EO.
• Certification of compliance will be required to continue federal work.
• The EO does not change requirements under the Vietnam Era Veterans’ Readjustment Assistance Act (VEVRAA) or the Rehabilitation Act, meaning obligations to veterans and individuals with disabilities remain.
• The Attorney General and Secretary of Education are expected to issue compliance guidance within 120 days.

For Contractors That Do Not Perform Federal Work:

• The EO does not directly impact private or state-funded projects.
• However, contractors engaged in jointly trusteed apprenticeship programs (JATCs) should be aware that 29 CFR Part 30, which enforces equal employment in apprenticeships, has not been addressed in the EO. Obligations under the Employment and Training Administration (ETA) remain intact.

Potential Challenges and Open Questions:

• State Contracts: Some states (e.g., California, Minnesota) have affirmative action and DEI requirements that may conflict with this EO. Federal contractors working in such states should assess potential compliance risks.
• Private Sector Clients: If private companies (e.g., Apple) require affirmative action plans, a contractor may need to separate its federal and private work through distinct entities to maintain compliance.
• Vendor Compliance: It is unclear whether using materials from vendors with their own DEI initiatives could impact federal project eligibility. Further guidance is needed.
• Impact on Apprenticeships: The EO does not explicitly address JATCs, leaving questions about the enforcement of affirmative action obligations under the ETA.

--Information provided by FCA International