On July 1, 2025, the DOL published two separate proposed rules that would affect federal contractors’ obligations to have affirmative action plans for individuals with disabilities, as well as minorities and women.
Rescission of Executive Order 11246 (Equal Employment Opportunity Act) Implementing Regulations
On July 1, 2027, the Department of Labor (“DOL”) published a proposed rule that would rescind the regulations for Executive Order 11246 (Equal Employment Opportunity Act). E.O. 11246 was revoked by Executive Order 14173 on January 21, 2025.
The Executive Order 11246 (Equal Employment Opportunity Act) regulations prohibited covered Federal contractors and subcontractors from discriminating in employment based on race, color, religion, sex, sexual orientation, gender identity, and national origin and required them to take affirmative action on those bases. They also prohibited these employers from taking adverse employment actions against applicants or employees because they inquired about, discussed, or disclosed information about their pay or their co-workers’ pay, subject to certain limitations.
The Executive Order 11246 (Equal Employment Opportunity Act) regulations, contained at 41 CFR parts 60-1, 60-2, 60-3, 60-4, 60-20, 60-40, and 60-50, generally required covered federal contractors to have written affirmative action plans that promote the hiring and promotion of women and minorities, and imposed certain notification and data collecting requirements.
The DOL has determined that these regulations need to be rescinded because they are based on Executive Order 11246 (Equal Employment Opportunity Act) and that Executive Order was rescinded Executive Order 14173. The DOL also justifies its recission of these regulations on the ground that
though the regulations state that contractors must make employment decisions in a nondiscriminatory manner, the regulations may have induced and incentivized these entities to consider characteristics like race and sex when making such decisions to try to avoid, if scheduled for a compliance evaluation, becoming entangled in a costly audit process or to try to avoid DOL enforcement actions or conciliation procedures—scenarios which could potentially result in the contractor’s debarment or the contractor incurring other penalties or sanctions, including back pay liability.
Affirmative action requirements like these that place a finger on the scale for an applicant based on their race or sex—without any showing of actual discrimination potentially meriting remedial action—are more legally vulnerable after the Supreme Court found certain universities’ affirmative action systems violated the Equal Protection Clause of the Fourteenth Amendment in SFFA. 600 U.S. at 215–16; 231 (invalidating college affirmative action programs that “concluded, wrongly, that the touchstone of an individual’s identity is not challenges bested, skills built, or lessons learned but the color of their skin.”). Regulations that incentivize and induce adopting practices that can induce or incentivize disparate treatment in employment decisions based on race or sex, “cannot be reconciled with the guarantees of the Equal Protection Clause.” Id. at 230. As such, they must be rescinded. See id. at 232 (Thomas, J. concurring) (“[A]ll forms of discrimination based on race—including so-called affirmative action—are prohibited under the Constitution[.]”).
The effect of the proposed rule will be to entirely remove 41 C.F.R. Parts 60-1, 60-2, 60-3, 60-4, and 60-20. The practical effect of this change will be to eliminate the obligation of federal contractors to:
- have and implement written affirmative action plans for women and minorities;
- include equal employment opportunity posters and notices in the workplace and job postings; and
- conduct annual statistical analysis of the makeup of their workforce.
Comments on the proposed rule are due September 2, 2025.
Revisions to Section 503 (Disability) Affirmative Action Regulations Applicable to Contractors
On July 1, 2025, the Department of Labor also published a proposed rule that will significantly revise the regulations that govern the affirmative action plans that federal contractors are currently required to have for individuals with disabilities. Under the revised regulations, federal contractors will still be required to have written affirmative action plans for applicants and employees with disabilities, but they will no longer have to (i) invite applicants and employees to self-identify their disability status, or (ii) conduct annual audits of their workforce to determine the percentage of individuals with disabilities. Accordingly, these revisions will reduce the regulatory and administrative burden on federal contractors, but not change their legal obligation to have an affirmative action plan for individuals with disabilities.
Section 503 of the Rehabilitation Act of 1973 (Section 503), and its implementing regulations at 41 CFR part 60-741, requires:
- federal contractors with a government contract in excess of $15,000 to not discriminate against applicants and employees with disabilities; and
- federal contractors with 50 or more employees and a single federal contract or subcontract of $50,000 or more to develop and maintain an affirmative action to employ and advance in employment qualified individuals with disabilities.
In response to E.O. 14173, “Ending Illegal Discrimination and Restoring Merit-Based Opportunity,” 90 FR 8633 (Jan. 31, 2025), which revoked Executive Order 11246 (Equal Employment Opportunity), the DOL is proposed to amend 41 C.F.R. Part 60 to:
- remove the provisions that require federal contractors to invite applicants and employees to self-identify their disability status,
- remove the requirement that contractors apply a seven percent utilization goal for employment of qualified individuals with disabilities to each of their job groups, or to their entire workforce if the contractor has 100 or fewer employees;
- remove the requirement that contractors conduct a utilization analysis where they evaluate the representation of individuals with disabilities in each job group within their workforce (or across the entire workforce if they have 100 or fewer employees) with the seven percent utilization goal and document steps taking to meet the utilization goal when it is not met; and
- remove references to Executive Order 11246.
The DOL’s rationale for the changes is that:
- the American with Disabilities Act prohibits employers from asking employees about their disability, and the requirement to invite applicants and employees to self-identify their employment status is contrary to that statute;
- Section 503’s implementing regulations states that the use of quotas is prohibited, but the requirement to track utilization goals can have the practical effect of being an impermissible quota; and
- the revisions will reduce the administrative burden on federal contractors.
The deadline for comments on this proposed rule is September 2, 2025
