On July 1, 2025, the U.S. Department of Labor (DOL) proposed new rules that would significantly scale back, if not eliminate, affirmative action requirements for federal contractors. This follows the January 21, 2025, executive order rescinding President Lydon B. Johnson’s Executive Order 11246, the decades-old directive that has served as the foundation for affirmative action in federal contracting.
Key Shifts in Compliance Obligations
The proposed rules would remove the requirement for contractors to maintain written affirmative action plans related to race, ethnicity, or gender. Employers would also no longer be required to request demographic data from applicants or employees, conduct pay equity or adverse impact analyses, or comply with internet applicant tracking rules. The obligation to identify as federal contractor on EEO-1 reports would be eliminated, and contractors with 50 to 99 employees would no longer be required to file these reports under federal rules.
Impact on Internal Policies
Employers would also no longer need to include EEO posters in the workplace or on job postings. These proposed changes signal a significant shift in how employers approach workplace diversity and compliance, moving away from federally mandated affirmative action toward internal policy discretion.
Agency Realignment
The DOL’s fiscal year 2026 budget proposes the elimination of the Office of Federal Contract Compliance Programs (OFCCP). Oversight of remaining compliance obligations would be shifted to the Veterans’ Employment and Training Service (VETS) and the Equal Employment Opportunity Commission (EEOC), respectively.
Legal Rationale Behind the Shift
According to the DOL, the move is partially a response to recent Supreme Court decisions restricting the use of race- and gender-based criteria in higher education. The agency argues that existing affirmative action regulations risk encouraging employers to consider protected characteristics in way that may no longer be constitutionally sound, even if the original intent was nondiscriminatory. It also cites administrative burden and lack of evidence of actual discrimination in many cases.
Disability Requirements Remain, for Now
Some affirmative action obligations related to individuals with disabilities under Section 503 of the Rehabilitation Act will remain, though these too are slated for revision. Self-identification invitations, annual audits, and several reporting obligations may be removed, with only minimal written plans still required.
What Employers Should Know
If finalized, these rules would represent the most significant rollback of federal contractor affirmative action obligations in over 50 years. Employers may gain administrative relief and greater flexibility in setting its own workforce policies. However, organizations should also carefully evaluate how the removal of federal mandates might impact internal DEI efforts and legal exposure under other state or federal nondiscrimination laws.
Next Steps
The DOL is accepting public comments on the proposed rules through September 2, 2025. Employers should monitor developments closely and consider reviewing their internal compliance frameworks and DEI strategies in preparation for potential changes.