DOL Rescinds Long-Standing Federal Contractor Affirmative Action Rules

The U.S. Department of Labor on Friday, Aug. 21, officially dismantled more than 60 years of affirmative action requirements and precedents for federal contractors, marking a significant shift in federal employment policy.

In three coordinated final rules published in the Federal Register, the DOL’s Office of Federal Contract Compliance Programs (OFCCP) eliminated regulatory affirmative action mandates for women and minorities while significantly narrowing requirements for individuals with disabilities.

The DOL and proponents of the new rules believe the changes will reduce compliance costs and administrative burdens for businesses. Detractors, including civil rights advocates, warn the rollbacks could stall workplace diversity efforts and reduce transparency in corporate hiring practices.

A Closer Look

The DOL’s newly issued rules transform compliance obligations for companies doing business with the U.S. government.

Here is a breakdown of the three rules.

Rule 1: Rescission of Executive Order (EO) 11246 Regulations

• What is it and why is this significant? The rule formally removes the implementing regulations for EO 11246 (instituted in 1965 by President Lyndon Johnson) following its revocation by President Donald Trump in EO 14173 in January 2025. EO 11246 had required contractors to “not discriminate against any employee or applicant for employment because of race, creed, color or national origin” and apply such affirmative actions to “employment, upgrading, demotion or transfer; recruitment or recruitment advertising; layoff or termination; rates of pay or other forms of compensation; and selection for training, including apprenticeship.” The new final rule eliminates race- and sex-based affirmative action programs, pay transparency provisions, and OFCCP-specific uniform employee selection guidelines for federal supply, service and construction contractors.
• When is it effective? Oct. 26

Rule 2: Section 503 Disability Regulation Changes

• What is it and why is this significant? The rule narrows affirmative action obligations for individuals with disabilities spelled out in Section 503 of the Rehabilitation Act of 1973. It does so by eliminating the “7% utilization goal” (which required federal contractors to aim to have individuals with disabilities make up at least 7% of each job group in their workforce), associated utilization analyses and disability data collection. Contractors must discontinue using Form CC-305 and inviting applicants/employees to self-identify as disabled. Core nondiscrimination and reasonable accommodation rules remain in place. Toward that, the final rule states that “[the agency] is not prohibiting contractors from exercising their own legal and business judgment about making disability inquiries consistent with the [Americans with Disabilities Act],” which permits inquiries that are “job related or made for reasons of business necessity.”
• When is it effective? Sept. 21

Rule 3: VEVRAA Technical Amendments

• What is it and why is this significant? The rule updates the Vietnam Era Veterans’ Readjustment Assistance Act (VEVRAA) regulations by removing references to EO 11246 that are now considered obsolete and adjusting the basic coverage contract threshold to $200,000 (from the previous $150,000). Unlike the affirmative action changes spelled out in the disability regulations, covered contractors must still maintain written VEVRAA plans (if they have 50 or more employees and a contract of $200,000 or more), solicit protected veteran status/self-identification from applicants and new hires, track applicant data and assess veteran outreach effectiveness, and set annual veteran hiring benchmarks and file annual VETS-4212 reports.
• When is it effective? Sept. 21 (with shared administrative enforcement adjustments delayed until Dec. 21)

Next Steps

Given the final rules, and the upcoming effective dates, it would be prudent for contractors who do business with the federal government to start evaluating their hiring and workforce-data frameworks.

A post by law firm Duane Morris LLP summed up the changes and task at hand, stating, “The DOL rules continue a significant push by the Trump administration to eliminate, or greatly reduce the scope of, federal contractors’ affirmative action obligations. And, they further create risk for contractors who may wish to continue practices in place for years that they view as beneficial (e.g., providing applicants with an opportunity to self-identify as an individual with a disability). Contractors should consult with employment counsel regarding their current affirmative action programs and practices to ensure that they are meeting their continuing affirmative action obligations, while not continuing previously required practices that now could give rise to risk and exposure.”

The law firm also advised contractors to look beyond the federal requirements, stating such companies shouldn’t lose sight of state and local affirmative action requirements to which they may be subject.

Editor’s Note: Additional Content

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