Trump’s Blow to Tiny But Powerful Contractor Watchdog: Explained

President Donald Trump last week gutted the core enforcement power of the US Department of Labor watchdog that polices federal contractors for anti-discrimination and affirmative violations, leaving companies that work for the government without clear guidelines.

Following Trump’s Jan. 21 rescission of decades-old Executive Order 11246, the DOL halted audits and investigations at its Office of Federal Contractor Compliance Programs, upending enforcement of mandates prohibiting workplace bias based on race, sex, and other protected categories, as well as requiring affirmative action plans for recruiting underrepresented workers.

That gives a reprieve, for now, to the roughly 2,000 companies the Biden administration had slated for OFCCP evaluations this fiscal year, including Meta Platforms Inc., Google LLC , and Pfizer Inc. Government contracts are lucrative business for many huge corporations and were worth a total of $769.5 billion in fiscal year 2024.

The OFCCP overhaul is part of a broader set of post-inauguration Trump executive orders aimed at limiting diversity, equity, and inclusion programs across the federal and private workforce. By cutting off the OFCCP’s power to audit employment data at contractors and address bias findings and complaints, the new administration has raised big questions about the sub-agency’s future.

1. What is the OFCCP?

The roots of the OFCCP can be traced back to the 1940s, but President Lyndon Johnson in 1965 established the majority of its power through EO 11246. The agency currently has less than 500 workers, according to budget documents.

While all federal contractors are already subject to non-discrimination laws, like Title VII of the 1964 Civil Rights Act, the OFCCP required additional obligations, particularly hiring and pay data reporting, for the tens of thousands of companies that have contracts with the federal government.

The office currently run by Acting Director Michelle Hodge previously brought high-profile discrimination cases against companies like Oracle America Inc., which defeated the OFCCP’s claims in administrative court, and JPMorgan Chase & Co., which reached a settlement.

In the last decade, the OFCCP obtained over $260.8 million in monetary relief on behalf of over 250,900 employees, according to DOL data.

Trump in his first-term budget proposals floated merging the OFCCP with the Equal Employment Opportunity Commission, or housing it under combined Departments of Labor and Education.

2. What did EO 11246 do?

One of the core requirements under EO 11246 was for contractors to create affirmative action plans that compare the “utilization of women and minorities to their availability.” They also required contractors to set hiring placement goals and assess recruitment and outreach efforts to underrepresented workforce populations.

The OFCCP also analyzed contractors’ employment data to spot potential discrimination, as part of audits that could reach thousands of job sites annually. The audits often highlighted areas of bias in pay or hiring for companies to remediate.

Further, it required pay transparency from contractors, and prohibited them from firing or otherwise discriminating against employees or job applicants for disclosing, discussing, or inquiring about compensation.

In addition to its audit work, the agency accepted bias complaints from contractor employees, inked monetary settlements with violators, and occasionally brought litigation.

Subsequent orders have also been put in place by administrations since Johnson’s adding to the OFCCP’s purview. The Obama-era EO 13672, which shielded federal contractor workers from discrimination on the basis of sexual orientation and gender identity, was also rescinded by Trump.

3. What power does the OFCCP have left?

Outside of the executive order, the OFCCP still has the power to enforce Section 503 of the Rehabilitation Act, which forbids employment bias by contractors against disabled workers and requires affirmative action steps for their employment and advancement. Trump also left in place the office’s duties under the Vietnam Era Veterans’ Readjustment Assistance Act, which adds similar protections for those who have served in the military.

The president can’t eliminate statutory authority with the stroke of a pen. However, the enforcement of contractor obligations to veterans and workers with disabilities make up only a slim portion of the OFCCP’s work.

It’s not clear if enforcement of Section 503 and VEVRAA will eventually be placed under another part of the DOL as Trump revamps agencies’ work.

A memo from Acting Labor Secretary Vincent Mincone sent to DOL staff Jan. 24 said Section 503 and VEVRAA components of open compliance reviews or investigations will be held in abeyance pending further guidance.

4. What does this mean for federal contractors?

There’s no clear guidance yet from the DOL on what comes next, creating confusion at many big US companies.

Micone’s memo told the agency to “immediately cease and desist” activity under EO 11246, including pending cases, conciliation agreements, investigations, and complaints.

Trump’s executive order states that contractors may continue to comply with the OFCCP’s previous requirements for 90 days. Voluntary compliance could assist companies in avoiding violations of Title VII or other discrimination laws by continuing with the heightened levels of internal anti-bias review.

There are no laws prohibiting companies from keeping affirmative action plans in place, even after the 90-day window. But they may risk scrutiny from a Trump administration antagonistic to diversity programs.

The Jan. 21 Trump executive order also included a section encouraging private companies to end DEI programs altogether, whether or not they have contracts with the government.

The order directs agency heads to submit a report with “specific steps or measures to deter DEI programs” that the administration deems discriminatory, and identify up to nine potential civil compliance investigations of private companies or organizations.

To Learn more:

• Trump Confounds Contractors in Weakening DOL Anti-Bias Office
• Trump Guts Contractor Watchdog’s Anti-Discrimination Power (1)
• Trump Taps Republican Commissioner Andrea Lucas to Lead EEOC (1)
• Trump ‘Orwellian Trolling’ on DEI Orders Invites Lawsuit Rematch
• DOL Halts Action on Federal Contractor Discrimination Cases (1)