In January 2025, the Trump Administration rescinded Executive Order 11246 and issued Executive Order 14173, ending federal affirmative action requirements based on race, color, national origin, and sex, while maintaining affirmative action requirements for veterans and people with disabilities. The Administration explained that rescinding EO 11246 would end illegal discrimination and restore merit and experience-based employment opportunities.
The U.S. Department of Labor’s proposed 2026 Fiscal Year Budget requested no funds for the Office of Federal Contract Compliance (OFCCP). The FY 2026 Congressional Budget Justification Analysis of Appropriation Language states that the FY 2026 Budget proposes to eliminate the OFCCP.
The OFCCP had been responsible for ensuring that federal contractors comply with equal opportunity employment laws for both job applicants and employees, and audits were previously selected on a neutral basis, generally prioritizing companies with the largest employee counts. With the termination of the OFCCP, the 2026 budget, if approved, would transfer the enforcement of laws protecting veterans and people with disabilities to other agencies within the Department of Labor.
Protections for people with disabilities, under Section 503 of the Rehabilitation Act of 1973, would be transferred to the Equal Employment Opportunity Commission (EEOC). The EEOC is responsible for enforcing federal laws that make it illegal to discriminate against a job applicant or an employee because of a number of protected classes, including having a disability. The agency investigates allegations of discrimination and has the authority to file a lawsuit to protect individuals and the public interest. The OFCCP could require compliance through ongoing reporting but lacked the authority to fine or initiate a lawsuit. It is unclear how the EEOC will conduct Section 503 Audits of federal contractors, and if these audits can enable a broader investigation into the company.
Again, if the DOL’s proposed budget gets passed, enforcement of the Vietnam Era Veterans’ Readjustment Assistance Act of 1974 (VEVRAA) will be assigned to the Veterans Employment and Training Service (VETS). Until now, VETS has been set up to help the military and their spouses transition to civilian employment and to provide information and training, but it has never conducted outside audits and currently lacks the ability to enforce compliance. The added responsibilities of enforcing VEVRAA could impact their main objective of helping veterans find meaningful civilian employment.
Despite these federal changes, contractors must still comply with state and local laws requiring nondiscrimination policies on the basis of gender and race, leaving federal contractors unsure how best to proceed.
Employers Council can guide you through these federal changes and advise on how to remain in compliance during these uncertain times. Contact us at info@employerscouncil.org.
James Arroyo, MA, SPHR, SHRM-SCP, is a Senior Affirmative Action Specialist with Employers Council.