On June 27, 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.” Subsequently, on July 1, OFCCP published for notice and comment the rescission of the Executive Order 11246 regulations and proposed amendments to the Section 503 and VEVRRA regulations. On July 2, OFCCP announced that it will resume enforcement of Section 503 and VEVRAA.
Compliance with Executive Order 14173
Executive Order 14173, Ending Illegal Discrimination and Restoring Merit-Based Opportunity (Order), issued on January 22, 2025, rescinded Executive Order 11246. The Order provided a 90-day window, until April 21, 2025, for contractors to close out their Executive Order 11246 compliance programs.
Director Eschbach’s June 27 letter offers contractors an opportunity to voluntarily provide through the OFCCP contractor portal “information about their efforts to wind down compliance with EO 11246 regulatory scheme and ensure full compliance with the Nation’s non-discrimination laws.” The Director suggested that contractors address the following points in their submission:
- the use of placement goals based on race or sex;
- whether the organization relies on recruitment sources based on race or sex;
- whether employment opportunities are made available based on race or sex;
- the results of a review of their EO 11246 affirmative action efforts and modifications made in response to any findings;
- whether trainings, sponsorship programs, leadership development programs, educational funding opportunities, and other privileges of employment are available to all employees regardless of race or sex; and
- any ratings by diversity organizations based on the contractor’s efforts to “promote the rise of non-white, non-male employees.”
As noted above, contractors are not required to submit a response to Director Eschbach’s questions. Participation is voluntary. OFCCP has not stated how it intends to use the information provided. Before responding, contractors should consult with counsel regarding whether to respond, and if so, what information to include in the response.
Proposed Regulatory Changes
The proposed rescission of the Executive Order 11246 regulations was expected. However, OFCCP also published for notice and comment proposed amendments to the VEVRAA and Section 503 regulations. The amendments to the VEVRAA regulations are limited to removing references to the Executive Order and do not significantly alter contractors’ compliance obligations. However, the amendments to the Section 503 regulations are significant.
OFCCP is proposing to rescind the following provisions in the Section 503 regulations: (1) the requirement that contractors invite applicants and employees to self-identify their disability status and (2) the utilization goal requirement. The agency found that these requirements conflict with the Americans with Disabilities Act’s (ADA) prohibition against inquiring about an individual’s disabilities prior to extending an offer of employment. Additionally, disability-related inquiries are only permitted under the ADA if they are job-related and are consist with business necessity. The OFCCP also expressed concern that the goal may have a “coercive effect” on employers.
Interested individuals, employers and other entities may submit comments on the proposed and Section 503 regulations remain in effect until rescinded.
Section 503 and VEVRAA Compliance Reviews
On July 2, Secretary of Labor Chavez-DeRemer issued Order 08-2025 directing OFCCP to:
- resume investigating pending Section 503 and VEVRAA complaints;
- administratively close the Section 503 and VEVRAA components of pending compliance reviews; and
- “take no further action related to the scheduling list released in November 2024.”
The Secretary confirmed that the annual Section 503 and VEVRAA certification requirement is on hold for now. But she stressed that “Section 503 and VEVRAA, along with their implementing regulations, remain in effect and contractors should continue to otherwise comply with their obligations under the Section 503 and VEVRAA regulatory schemes.”
Contractors with pending Section 503 or VEVRAA complaints should review the status of those matters with counsel in preparation for OFCCP’s reengagement on these matters.
KEY TAKEAWAYS
- Director Eschbach’s open letter to contractors is an invitation to voluntarily provide details related to DEI initiatives in place prior to the issuance of Executive Order 14173 and subsequent actions taken to dismantle those initiatives. Contractors should consult counsel regarding whether to respond, and if so, what information to include in their response.
- Interested individuals, employers, and other entities may submit comments on the proposed regulatory changes. The deadline for submitting comments is September 2, 2025.
- Contractors with pending VEVRAA and Section 503 complaints should review the status of the investigations and be on the lookout for communications from the OFCCP.
Should you have any questions regarding this Legal Update, please contact Consuela Pinto.
