June marked five months since the revocation of Executive Order 11246, the 1965 EO that mandated affirmative action planning for federal contractors who met certain thresholds. Presently, federal contractors do still have requirements for maintaining affirmative action plans – albeit different ones than they did prior to January of this year.
Despite a general understanding of those different requirements, however, questions about specific compliance requirements and logistics remain, particularly in the areas of data collection and analysis, and DEI efforts. Barring future additional federal guidance to the contrary, federal contractors have some discretion on these practices while still maintaining compliance.
Federal contractors meeting certain thresholds are still required to create and maintain affirmative action plans for veterans and individuals with disabilities but are no longer required to maintain plans based on race, gender, or related classifications. Since the revocation of EO 11246, numerous articles and webinars on this topic have speculated on where the compliance arrow is headed, but with little to no official clarification. While we expect the federal government to release additional guidance eventually, the timeline is not clear.
New Requirements from Executive Order 14173
Several important questions remain in terms of new obligations created by Executive Order 14173 (revoking Executive Order 11246). EO 14173 prohibited the Office of Federal Contract Compliance Programs (OFCCP) from holding federal contractors responsible for taking affirmative action for the protected classes described above, and from requiring or even encouraging “workforce balancing on the basis of race, color, sex, sexual preference, religion, or national origin.”
EO 14173 further directs the head of every federal agency to include in its contracts a certification by the contractor that the organization does not engage in “illegal DEI” programs that violate federal anti-discrimination laws. These new requirements took effect immediately, though some prohibitions (like “workforce balancing”) were given a 90-day grace period to be phased out of covered federal contractor workplaces.
EO 14173 lacks definitions of the key terms used in the order. Phrases like “workforce balancing” – are not explained. Does it include data analysis? What if employers want to continue to analyze their workforce statistics and compensation, even if they’re not required to? Does the OFCCP portal still exist, and should contractors be using it? Can organizations still be audited? Should contractors get rid of DEI programs? Or just rename them?
Despite the lack of explicit federal guidance, it’s possible to draw some reasonable conclusions about what federal contractors should be doing in this new regulatory scheme. For one, data analysis is not specifically forbidden in EO 14173, although contractors are no longer required to engage in such analysis based on race and gender. However, many federal contractors may also have state or local contracts (or even private obligations) that require affirmative action planning as we previously understood it, and they may have obligations to continue collecting and analyzing data in the same manner as they have prior to EO 14173.
Some employers may choose to monitor their applicant, workforce, and compensation data to serve as a potential defense against future discrimination suits. The simple collection and analysis of data is not prohibited in the wording of the executive order, and there is no reason to interpret the order to mean that statistical analysis is the sole element of “workforce balancing.” Analyzing data to demonstrate that an organization does not discriminate against applicants and employees based on protected class status does not inherently involve taking employment actions. It would be difficult to show that the collection and analysis of data alone constitutes adverse employment action or discrimination.
This practice is quite different from analyzing data to ensure that an organization’s employee population matches the census data in the surrounding area and then taking affirmative steps to establish quotas or make employment decisions to “balance” the workforce to match that census data. While it is possible that the practice of continuing to analyze data based on race, gender, and related categories could result in federal scrutiny, to date, there is no guidance to indicate that this practice is prohibited going forward.
Federal Contractors and DEI Programs
Executive Order 14173 also requires agency heads to mandate certification from contractors that they do not engage in illegal DEI programs. While the term is not explicitly defined, the language is clear that prohibited programs are those that violate federal anti-discrimination laws. In other words, “illegal DEI” programs were already illegal under federal law, under the plain language of the order. Importantly, the order does not require the elimination of DEI programs per se but does make it clear that giving employment advantages to individuals based on a protected class status will not be allowed. This applies to preferential hiring decisions, mentoring programs, and certain training or employee resource groups that were previously directed at employees based on protected class status.
Federal contractors should concentrate their efforts on programs that are inclusion-based and open to all employees, or those meeting certain merit criteria, rather than those based on equity of outcomes. Employers who do not review their DEI programs and adjust where necessary may face increased scrutiny under this EO. To adapt, organizations should not overcorrect past practice – this could also result in discrimination claims. Rather, employers should be prepared to listen to whistleblowers and investigate internal allegations of “illegal DEI” promptly. New OFCCP Director Catherine Eschbach, appointed on March 25, 2025, indicated a strong commitment to enforcing EO 14173.
Enforcement and Audits
Finally, the lack of additional guidance on EO 14173 has created confusion regarding how the order and its requirements will be enforced. Until five months ago, federal contractors relied on the OFCCP certification portal and annual audit list as compliance mechanisms in the field of affirmative action planning. But now, contractors find a void. Currently, the OFCCP portal is not open for certification of any affirmative action plan, even for plans involving only veterans and individuals with disabilities.
In a letter to federal contractors on June 27, 2025, the OFCCP announced that it is opening the portal for contractors to voluntarily disclose how they are disengaging from affirmative action programs that violate federal anti-discrimination laws. Such disclosure is voluntary and is separate from any other certification requirements. Learn more about the June 27 letter in this Employers Council article.
As of the date of this article, the OFCCP has not provided a certification apparatus for the affirmative action plans still required. However, there may be additional enforcement mechanisms implemented in the near future.
In a recent memo, the Department of Justice (DOJ) announced plans to use the False Claims Act against federal contractors who certify that they do not engage in illegal DEI programs when, in fact, they do. According to the DOJ, the Act can be used to prosecute federal contractors or those who receive federal funds, including educational institutions, nonprofits, and state and local governments.
Audit authority under the new administration is also a bit unclear. The OFCCP previously had a robust audit program and clear audit authority with regard to race/gender affirmative action plans, which has since been removed and those audits canceled. Audits of plans for veterans and individuals with disabilities are being held in abeyance pending further notice, and at the time of this publication, that notice has not been issued. While there is no enforcement vehicle, the audit risk remains low, and the nature of any potential audit is unclear.
Federal contractors who meet the remaining affirmative action plan requirements (50 employees, $50,000 in contracts for individuals with disabilities, and 50 employees, $150,000 in contracts for veterans) should continue to complete those plans to maintain federal contracts if audit authority is restored to the OFCCP or transferred to another agency.
Julia Paris is an attorney and the director of Specialized Consulting Services for Employers Council.