Seyfarth Synopsis: Today, OFCCP Director Eschbach issued a letter to federal contractors inviting them to voluntarily submit information regarding their efforts to comply with Executive Order 14173, “Ending Illegal Discrimination and Restoring Merit-Based Opportunity.” As we previously discussed, EO 14173—issued by President Trump—rescinded Executive Order 11246, which had required federal contractors to implement affirmative action programs for women and minorities. Federal contractors had until April 21, 2025 to unwind their affirmative action programs.
OFCCP’s Invitation To Federal Contractors Amid Uncertain Future
Today, OFCCP Director Eschbach issued a letter to federal contractors inviting them to voluntarily submit narrative information describing their efforts to comply with EO 14173 and wind down practices previously required under EO 11246.
The letter reiterates that EO 14173 was intended to eliminate “unlawful, unfair, and unsafe discriminatory practices,” including those that may be labeled as Diversity, Equity, and Inclusion (DEI). Notably, OFCCP acknowledges that while EO 11246 and its implementing regulations required federal contractors—under certain circumstances—to establish placement goals based on race or sex, the regulations also expressly prohibited quotas and disparate treatment. However, in the letter, OFCCP now asserts that many contractors, in practice, may have overcorrected by making employment decisions based on race or sex in an effort to meet those goals. The agency suggests that this improper reliance on placement goals may have resulted in unlawful disparate treatment, even though such outcomes were not the intended effect of the regulations.
In her letter, OFCCP Director Eschbach criticizes the prior regulatory framework under EO 11246 for encouraging practices that, in its view, resulted in unlawful disparate treatment based on race or sex. Director Eschbach also reminds contractors that the 90-day grace period to wind down EO 11246 compliance has expired and confirms that OFCCP will no longer permit “workforce balancing” or require contractors to take “affirmative action.”
The letter then offers federal contractors the opportunity to voluntarily provide information about the actions the contractor has taken to discontinue compliance with EO 11246 and comply with EO 14173. If they choose to do so, contractors have until September 25, 2025 to provide the information in narrative format through OFCCP’s Contractor Portal.
OFCCP’s letter makes clear that sharing this information is voluntary and contractors have full discretion over what information to provide, if any. In addition to confirming that placement goals are no longer in place, additional examples of changes in practices that OFCCP suggests contractors may choose to describe are: trainings, sponsorship programs, leadership development programs, race- or sex-based placement goals, including the use of participation in race- or sex-related organizations as a “plus factor” or proxy for race or sex in employment decisions, executive compensation to demographically-based goals, trainings focused on racial stereotypes, and encouraging recruitment efforts towards or referrals of candidates based on race or sex. Although the letter references additional guidance on OFCCP’s Contractor Portal, such guidance does not appear to be available as of this alert’s publication.
Federal Contractor Considerations
OFCCP’s letter comes at a time of significant uncertainty for the Agency. The FY 2026 Department of Labor Budget proposes eliminating all funding for OFCCP, effectively zeroing out its $110.9 million budget and eliminating all remaining full-time positions. While contractors are still required to comply with the Vietnam Era Veterans’ Readjustment Assistance Act (VEVRAA) and Section 503 of the Rehabilitation Act, the Budget proposes transferring enforcement of those requirements to the Veterans’ Employment and Training Service (VETS) and the Equal Employment Opportunity Commission (EEOC), respectively.
Despite OFCCP’s uncertain future, this letter signals the Agency’s continued interest in how contractors have responded to the rescission of EO 11246. Contractors should carefully evaluate whether to submit a voluntary narrative in light of their specific circumstances and in consultation with legal counsel.
Further, while the letter reiterates several times that providing this information is voluntary, it does not appear to offer contractors any benefit for doing so, other than allowing the “contractor community to share information.” It is unclear what OFCCP plans to do with the submissions and whether/how they will share information submitted with the contractor community. Contractors are encouraged to weigh these factors thoughtfully as they determine their course of action.
Actions that contractors may want to consider include:
- Conducting a Privileged and Comprehensive Internal Audit: If they have not yet done so, contractors should conduct a privileged internal audit of all employment, recruitment, training, and compensation programs to identify any elements previously aligned with EO 11246. This includes reviewing the use of race- or sex-based placement goals, targeted outreach or recruitment efforts, DEI-related training or mentorship programs limited to specific demographic groups, and any use of demographic “plus factors” in hiring or promotion decisions.
- Monitoring Developments and Seeking Legal Guidance: Contractors should stay informed on updates from various agencies including OFCCP, the Equal Employment Opportunity Commission (EEOC), and the Department of Justice (DOJ) regarding enforcement of federal non-discrimination laws.
Given these developments, it is important to consider consulting with legal counsel before implementing policy changes or submitting any information to OFCCP. The proposed defunding of OFCCP may also reduce the likelihood of enforcement, but it does not eliminate the importance of compliance with anti-discrimination laws or the potential for scrutiny from other agencies or stakeholders.
Accordingly, careful consideration should be given to protecting any internal reviews under the attorney-client privilege and whether providing information related to such reviews may jeopardize their privileged nature. Further consideration should also be given to whether any information provided may be seen as an admission in future litigation or investigations as well as any False Claims Act implications.
Final Thoughts
While OFCCP frames the request for contractor disclosures as voluntary, its letter concludes that “OFCCP will provide a 90-day window from the date of this letter for federal contractors to voluntarily provide information in response to this letter.” No additional context or explanation is provided regarding the implications of this 90-day window leaving open questions about how OFCCP may use the information.
Notably, this 90-day period ends on September 25, 2025, which coincides with the close of the federal fiscal year. Given the FY 2026 Department of Labor Budget Proposal to eliminate OFCCP’s funding and enforcement authority, some contractors may determine that a wait-and-see approach is appropriate while others may choose to document their compliance efforts internally without submitting a narrative at this time.
In either case, contractors should remain vigilant, ensure their employment practices are aligned with current legal requirements, and be prepared to respond to future developments.
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