U.S. Department of Labor's Three Final Rules Abolish Affirmative Action Requirements for Federal Contractors
The U.S. Department of Labor issued three final rules on Friday, formally abolishing affirmative action requirements and related diversity, equity, and inclusion (DEI) provisions for federal contractors, in response to Trump's 2025 executive order. The rules target Executive Order 1965, Section 503 of the Rehabilitation Act of 1973, and the Vietnam Era Veterans' Readjustment Assistance Act of 1974, with the Section 503 rule eliminating the 7% disability employment utilization goal. The effective dates of the rules differ, but none relieve contractors of their anti-discrimination obligations under laws such as the Civil Rights Act.
At a Glance
- The U.S. Department of Labor issued three final rules on Friday that explicitly revoke affirmative action requirements and related diversity, equity, and inclusion (DEI) mandates for federal contractors, responding to President Donald Trump's 2025 executive orders.
- The first rulerevokes affirmative action requirements based on race and sex from the 1965 executive order, with corresponding regulatory adjustments. The second and third final rules target the regulations under Section 503 of the Rehabilitation Act of 1973 and the Vietnam Era Veterans' Readjustment Assistance Act of 1974, respectively.
- Notably, the second of the three rules eliminates the7% utilization goal, which had set a benchmark for hiring qualified individuals with disabilities across contractor job groups (7% of positions in each job group). The rule also adjusts legal coverage thresholds based on specific contract amounts.
Deep Dive
Federal contractors had been anticipating these final rules, following Trump's 2025 executive order directing the federal government to eliminate contractor affirmative action programs and other DEI initiatives enforced by the Office of Federal Contract Compliance Programs (OFCCP).
Shortly after that executive order, the Labor Department hadpaused OFCCP investigations and enforcement activities related to discriminatory hiring practices, stating it no longer held any authority under the rescinded 1965 executive order by former President Lyndon Johnson. In July 2025, the department lifted the pause related to Section 503 and VEVRAA.
Although the Section 503 final rule removes several requirements, contractors are still required to take affirmative action to hire and advance qualified individuals with disabilities,attorneys at Jackson Lewis said in an analysis released Friday. Additionally, contractors must continue to evaluate the effectiveness of their recruitment efforts and outreach activities for such individuals.
The three rules have different effective dates: the first rule, addressing the 1965 executive order, takes effect on October 26; most provisions of the Section 503 rule take effect on September 21, but one section will take effect on December 21; and the VEVRAA rule takes effect on September 21.
Employers should note that these rulesdo not eliminate anti-discrimination prohibitions under Title VII of the Civil Rights Act of 1964 or federal, state, and local laws, attorneys at Ogletree Deakins said in an analysis released Thursday.
The 2025 executive order referenced in the three rules is distinct from another order Trump issued in March, which requires contractors toavoid participating in discriminatory DEI programs, or risk contract cancellation. At least one lawsuitchallenging that orderis ongoing.