Dive Brief:
- The U.S. Department of Labor issued three final rules on Friday outlining the elimination of affirmative action requirements for federal contractors and related diversity, equity and inclusion requirements in line with President Donald Trump’s 2025 executive order.
- The first of the rules rescinds the race- and sex-based affirmative action requirements outlined in a 1965 executive order and makes associated regulatory changes. The second and third final rules target regulations of Section 503 of the 1973 Rehabilitation Act and the 1974 Vietnam Era Veterans’ Readjustment Assistance Act, respectively.
- Notably, the second of the three rules eliminates the 7% utilization goal that created a benchmark for hiring of qualified individuals with disabilities, set at 7% of roles in each job group of a contractor’s workforce. The rules also make changes to the laws’ coverage thresholds, which are based on the dollar amounts of specific contracts.
Dive Insight:
Federal contractors have been anticipating the final rules in the aftermath of Trump’s 2025 executive order, which directed the federal government to eliminate contractors’ affirmative action programs and other DEI initiatives as enforced by the Office of Federal Contract Compliance Programs.
DOL initially paused OFCCP’s investigation and enforcement activities relating to discriminatory hiring practices shortly after the order’s publication, adding that it no longer had any authority under the rescinded former President Lyndon Johnson’s 1965 executive order. The department lifted the pause as it pertained to Section 503 and VEVRAA in July 2025.
Though the Section 503 final rule removes several requirements, contractors will still need to take affirmative action to employ and advance qualified individuals with disabilities, attorneys at Jackson Lewis said in an analysis published Friday. Separately, contractors also must continue to assess the effectiveness of their recruitment efforts and outreach to such individuals.
The three rules take effect on different timelines: the first rule, which targets the 1965 order, is effective Oct. 26; most of the Section 503 rule is effective Sept. 21, with the exception of one section which takes effect Dec. 21; and the VEVRAA rule is effective Sept. 21.
Employers should note that the rules don’t eliminate the discrimination prohibitions of Title VII of the 1964 Civil Rights Act or elsewhere under federal, state and local laws, Ogletree Deakins attorneys said in an analysis published Thursday.
The 2025 executive order mentioned in the three rules is separate from Trump’s March order requiring contractors to avoid engaging in discriminatory DEI programs at the risk of seeing their contracts cancelled. At least one lawsuit has been filed challenging this order; litigation remains ongoing.
