In the wake of recent executive orders from President Donald Trump, federal contractors are facing significant inclusion and diversity (I&D) compliance challenges. These orders call for the elimination of “illegal” and “discriminatory” programs within organizations that contract with the federal government. Private companies also need to consider their compliance challenges after over a dozen memos from Attorney General Pam Bondi were shared with staff at the Department of Justice. One memo requires the department’s Civil Rights Division and Office of Legal Policy to provide a report with recommendations to encourage the private sector to end illegal discrimination and preferences, including policies relating to DEI (diversity, equity, and inclusion) and DEIA (diversity, equity, inclusion, and accessibility). While there may be additional guidance through legislation or court decisions, HR leaders can act now to ensure their organizational culture upholds I&D while adhering to current compliance actions.
1. Perform a Compliance Review
To align with the latest executive orders, federal contractors need to perform a comprehensive compliance review, focusing on current recruiting and hiring practices as well as education and skill development programs available to employees. One of the largest impacts comes from Executive Order 14173, which rescinds EO 11246, signed in 1965 by President Lyndon B. Johnson, which required federal contractors to practice affirmative action based on race and gender. According to experts, the new EO’s impact directly affects programs and practices that previously complied with EO 11246’s affirmative action requirement. Furthermore, Executive Order 14151 dissolves DEI programs, including specific training and performance requirements.
Federal contractors must now provide proof of compliance to remain certified. Specifically, the text of EO 14173 instructs each agency head to require certification that contractors are compliant with all applicable federal anti-discrimination laws. This EO also calls for stronger enforcement mechanisms, requesting a report from the attorney general, in concert with agency heads and the director of the Office of Management and Budget (OMB), outlining recommendations for enforcing federal civil-rights laws. Private companies should pay close attention to these developments to ensure their compliance approach remains robust and up-to-date. Keeping an eye on updates from federal authorities and considering how DEI training materials are reported is essential to navigating these shifts effectively.
2. Sustain Workforce Inclusion Initiatives
Despite the legal changes prompted by the executive orders, it remains essential for organizations to sustain workforce inclusion initiatives. While some aspects of inclusion practices face scrutiny, certain areas are still permissible and important for fostering a supportive work culture. For instance, employee resource groups (ERGs) can continue to operate as long as they remain open and accessible to all employees, thus promoting inclusivity without engaging in discriminatory practices.
Panelists from a recent SHRM webcast emphasized the importance of evaluating the activities, mission, and goals of ERGs to ensure they align with current legal requirements. Upskilling and workforce training initiatives that are available to all employees can uplift the workforce while avoiding exclusionary practices. Additionally, events and activities promoting cultural awareness should involve all employees and emphasize the importance of diversity.
Disability and veterans’ programs also remain a crucial part of inclusion efforts, as legal hiring protections for veterans and individuals with disabilities are still in place. These programs are not only compliant but also strengthen an organization’s commitment to a diverse workforce. Continuously assessing and refining these initiatives helps maintain a balanced approach to diversity while ensuring compliance with executive orders.
3. Involve Legal and HR Stakeholders
Engaging legal and HR stakeholders is a critical step for federal contractors to ensure continued compliance with evolving DEI regulations. Reviewing current relationships and contracts with legal and compliance professionals will assist in determining whether new partnerships are necessary. Proactively assessing these relationships can help organizations align their diversity initiatives with the latest regulatory framework and potentially pre-empt any legal challenges.
Legal experts, like those from the panel discussed in the SHRM webcast, can provide valuable insights into how the executive orders affect collective bargaining agreements and other contracts. For example, changes in leadership at the National Labor Relations Board (NLRB) could impact agreements that federal contractors hold with third parties. By engaging with legal professionals, contractors can better understand the implications of these changes and take necessary actions to ensure compliance.
Additionally, panelists highlighted the need to monitor federal programs, like the U.S. Small Business Administration’s 8(a) and set-aside programs, which aim to uplift specific groups to help them compete for federal contracts. Understanding the legal challenges and ensuring that requirements are met is crucial for organizations to avoid potential legal disputes and continue benefiting from these programs.
4. Clearly Communicate Changes
To comply with recent executive orders, federal contractors need to conduct a thorough compliance review. This review should evaluate current recruitment, hiring practices, and employee development programs. The most significant change stems from Executive Order 14173, which overturns the 1965 EO 11246. Initially signed by President Lyndon B. Johnson, EO 11246 required federal contractors to follow affirmative action guidelines based on race and gender. The new EO’s implications directly impact programs that conformed to these previous affirmative action mandates. Additionally, Executive Order 14151 discontinues DEI (Diversity, Equity, and Inclusion) programs, including associated training and performance criteria.
To maintain certification, federal contractors must now demonstrate proof of compliance. EO 14173 specifies that agency heads must certify that contractors adhere to all relevant federal anti-discrimination laws. It also calls for stricter enforcement measures, with the attorney general, agency heads, and the Office of Management and Budget (OMB) director collaborating to propose strategies for implementing federal civil-rights laws. Private businesses should stay informed about these changes to ensure their compliance strategies are robust and current. Monitoring updates from federal authorities and understanding how DEI training materials are reported will be crucial in adapting to these changes effectively.
