President Donald Trump on Jan. 21 issued the executive order Ending Illegal Discrimination and Restoring Merit-Based Opportunity, which is likely one of many actions he will take to eliminate diversity, equity and inclusion practices.

The EO, which took effect immediately, orders all federal executive departments and agencies to terminate all discriminatory and illegal preferences, mandates, policies, programs, activities, guidance, regulations, enforcement actions, consent orders and requirements. It also ordered all agencies to enforce longstanding civil rights laws and to combat illegal private sector DE&I preferences, mandates, policies programs and activities.

Staffing firms that provide staffing to federal contractors and subcontractors will be most impacted by this EO. However, Trump’s order encourages the private sector to end illegal DE&I discrimination and preferences, which will also affect the users of contingent workers as well as their providers.

The EO revokes multiple preceding executive actions, including Executive Order 11246. Issued by President Lyndon B. Johnson in 1965, Executive Order 11246, Equal Employment Opportunity, established requirements for non-discriminatory practices in hiring and employment for federal government contractors. The order also required federal contractors to “take affirmative action to ensure that applicants are employed, and that employees are treated during employment without regard to their race, creed, color, or national origin.” Per President Trump’s order, federal contractors may continue to comply with the regulatory scheme in effect for 90 days after Jan. 21.

The EO’s accompanying fact sheet touts Trump’s Jan. 21 executive order as “the most important federal civil rights measure in decades.” The fact sheet also outlines the key components of the order, highlighting his goal to restore the values of “individual dignity, hard work, and excellence.” Trump indicates that federal hiring, promotions and performance reviews will reward “individual initiative, skills, performance, and hard work and not, under any circumstances, DEI-related factors, goals, policies, mandates, or requirements.”

Conflicting State and/or Local Requirements

The executive order prohibits affirmative action programs for federal contractors and subcontractors. However, there are many state and local jurisdictions that still require affirmative action programs for state and municipal contracts. Prior to the issuance of the EO, many contractors submitted their federal plan in lieu of preparing a separate affirmative action plan for states and municipalities. The federal government is suggesting affirmative action plans are illegal, but if state or municipalities still require a plan, it is unclear what contractors should do to remain compliant with conflicting requirements. Specifically, there has always been dispute over whether Johnson’s Executive Order 11246 was lawful. The Trump administration has clearly staked out the position that it is not. Still, contractors are still required to comply with state and local affirmative action laws, many of which are each subject to the same legality arguments as was Executive Order 11246. A key decision for contractors will be whether they may, must or must not comply with state and local laws similar to Executive Order 11246. Buyers and sellers of staffing should take stock of any conflicting requirements to coordinate their response.

One obvious example is the gathering of demographic data on applicants. As a general matter, employers are not permitted to inquire about protected status (age, race, sex, etc.) during the hiring process; because employers may not lawfully use such information, they are not permitted to obtain it. Executive Order 11246 provided perhaps the greatest exception to this otherwise universal rule: It required employers to obtain demographic data on applicants and compare it to the demographics of the available labor market. Does there remain any lawful reason for employers to gather demographic data on the race, sex, etc., of applicants? And, if a state or local law requires or permits the gathering of such data (or the comparison of such data to targets for hiring persons of each demographic group), is the state or local requirement lawful? Employers may face liability for complying with state and local laws — and also face liability for not complying with the same laws. This is one of the many key questions that will be resolved in the coming months and years.

Unanswered Questions

The EO seeks to prohibit “illegal” DE&I programs. This leaves lingering questions around what specifically is prohibited and what contractors to the federal government can do or continue to do. For example, even if a contractor does not discriminate, can it still publish statistics about its workforce? Additionally, can contractors still offer affinity-based employee resource groups? Can contractors still analyze their applicant pools to identify barriers to employment for people and seek to address those barriers? Can contractors conduct training that makes generalizations about individuals or groups based on their race, sex or other characteristics?

Staffing firms that provide staffing for federal contractors and subcontractors must stay up to date with what information is required when filling these roles. More guidance is expected from the Trump administration in the coming weeks and months.