Equal Employment Opportunity Act Under Trump: DEI, EEOC, and EEO-1

Equal employment opportunity under the Trump administration has changed most visibly through Executive Order 14173, which on January 21, 2025 revoked the 1965 order that required federal contractors to maintain affirmative action programs, added a diversity, equity, and inclusion certification clause tied to False Claims Act liability, and set in motion a reorientation of the Equal Employment Opportunity Commission toward anti-DEI enforcement, religious accommodation, single-sex workplace spaces, and discrimination claims by American workers. The changes affect federal contractors most directly, but the EEOC’s new posture reaches any employer covered by Title VII.

The End of Contractor Affirmative Action

Executive Order 14173, titled “Ending Illegal Discrimination and Restoring Merit-Based Opportunity,” revoked Executive Order 11246, which had required federal contractors to take affirmative action in hiring for nearly 60 years. Contractors had a 90-day window to move off the old regulatory framework.¹

The Office of Federal Contract Compliance Programs has been directed to stop promoting diversity, stop holding contractors responsible for affirmative action, and stop encouraging workforce balancing based on race, sex, religion, or national origin. The Department of Labor has halted enforcement of the EO 11246 regulations and proposed formally rescinding the rules at 41 CFR parts 60-1, 60-2, 60-3, 60-4, 60-20, 60-40, and 60-50, which previously required written affirmative action plans.²

What Contractors Still Have to Do

The revocation does not wipe out every affirmative action obligation. Section 503 of the Rehabilitation Act and the Vietnam Era Veterans’ Readjustment Assistance Act remain in effect, so contractors must still comply with nondiscrimination and affirmative action rules for individuals with disabilities and protected veterans.³ The OFCCP’s Section 503 and VEVRAA certification system is closed while the agency reconfigures its processes, but the underlying statutory obligations continue.

EO 14173 also carves out lawful preferences for military veterans and persons protected by the Randolph-Sheppard Act. It does not restrict First Amendment-protected speech by state or local governments or federal contractors, and professors at federally funded universities may still advocate for or endorse the practices the order targets when doing so as part of academic instruction.¹

The DEI Certification and False Claims Act Exposure

Every new federal contract and grant must now include a clause where the contractor certifies that it does not operate any DEI programs that violate federal anti-discrimination laws. The order treats this certification as material to the government’s payment decisions, which links a false certification directly to the False Claims Act. A contractor found to have maintained illegal DEI programs after certifying otherwise faces contract termination and potential False Claims Act liability, which can include treble damages.¹

A follow-up order signed in March 2026, “Addressing DEI Discrimination by Federal Contractors,” sharpened the enforcement side. Contractors that violate the anti-DEI clause face contract cancellation, suspension, or debarment from future government work. They must also report subcontractor conduct that may violate the clause and grant the government access to books, records, and accounts for compliance checks. The Attorney General may bring False Claims Act actions against violators.⁴

The line between lawful diversity efforts and prohibited “racially discriminatory DEI activities” is not defined by a specific list of concepts. That gives enforcement officials wide discretion and leaves contractors with real uncertainty about training curricula, supplier diversity programs, and hiring initiatives that reference race or sex. Contractors with existing programs of this kind should review them against the language of EO 14173 and the March 2026 order before certifying compliance.

How EEOC Enforcement Has Shifted

The Equal Employment Opportunity Commission has pivoted under Chair Andrea Lucas, and its enforcement priorities track the executive orders closely. The changes affect any employer covered by Title VII, not just federal contractors.

Anti-DEI as a Title VII Issue

The EEOC now treats certain corporate diversity programs as potential Title VII violations. In February 2026, Chair Lucas sent a letter to Fortune 500 CEOs, general counsels, and board chairs reminding them of Title VII compliance obligations tied to DEI initiatives, and the agency has published guidance materials to help workers identify and report what it calls DEI-related race and sex discrimination.⁵

The agency reads the Supreme Court’s 2025 decision in Ames v. Ohio Department of Youth Services as confirming that Title VII protects majority and minority group members equally, so race- or sex-conscious hiring preferences can violate federal law regardless of which group they are designed to benefit.

Religious Accommodation

Religious discrimination has become a top enforcement priority. Since January 2025, the EEOC has filed 16 religious discrimination lawsuits and recovered over $63 million through pre-litigation resolutions and settlements on behalf of religious workers.⁵

The legal standard is also tougher on employers than it used to be. Title VII requires accommodation of religious practices unless doing so imposes undue hardship on the business.⁶ For decades, courts read “undue hardship” to mean anything more than a trivial cost. The Supreme Court raised that bar in Groff v. DeJoy (2023), holding that an employer must show a burden “substantial in the overall context of an employer’s business.”⁷ The EEOC is actively enforcing that higher standard.

Sex Defined as Biological Sex

Executive Order 14168, signed the same day as EO 14173, defines “sex” for federal purposes as immutable biological classification as male or female, excluding gender identity. It directs the Attorney General, the Secretary of Labor, and the EEOC Chair to prioritize investigations and litigation to enforce “the right to single-sex spaces in workplaces.” In January 2026, the EEOC voted to rescind its 2024 enforcement guidance on workplace harassment. In February 2026, it issued a federal-sector decision holding that Title VII permits employers to maintain single-sex bathrooms and exclude employees from opposite-sex facilities regardless of gender identity.⁵

Discrimination Against American Workers

The EEOC and Department of Labor launched “Project Firewall,” a joint initiative targeting employers who allegedly discriminate against American workers in favor of foreign workers. Rather than focusing on discrimination against foreign-born workers, the agency is investigating whether hiring preferences for visa holders or foreign nationals amount to national origin discrimination against U.S. citizens and residents.⁵

Who Counts as an Employee: Two Rules to Watch

Who qualifies as an employee, and who counts as their employer, affects which workers can bring federal discrimination and wage claims at all.

Independent Contractor Classification

In February 2026, the Department of Labor proposed a rule restoring the “economic reality” test from the first Trump administration. The question is whether a worker is economically dependent on a company (an employee) or genuinely in business for themselves (an independent contractor). The proposal elevates two core factors: how much control the worker has over when and how the work gets done, and whether the worker has a real opportunity for profit or loss based on their own initiative and investment.⁸

Three additional factors come in when the core factors point in different directions: the skill required, the permanence of the working relationship, and whether the work is part of an integrated production unit. The rule also clarifies that contractual requirements like safety standards, insurance, or deadlines do not by themselves indicate employer control. The rule is still at the proposed stage and has to go through public comment before it can be finalized.

Joint Employer Standard

The National Labor Relations Board formally reinstated the 2020 joint employer rule on February 25, 2026. Under this standard, a company is a joint employer of another company’s workers only if it possesses and actually exercises “substantial direct and immediate control” over essential employment terms like wages, hours, hiring, or discipline. Sporadic or minimal control does not create joint employer status.⁹

The practical impact falls mainly on franchisors, staffing agencies, and companies that contract with third-party labor providers. A franchisor that sets brand guidelines and quality standards but does not directly control workers’ schedules, pay, or discipline is unlikely to be treated as a joint employer under this standard. The Service Employees International Union has challenged the 2020 rule in the D.C. Circuit.

EEO-1 Reporting

Employers with 100 or more employees, and federal contractors with 50 or more employees meeting certain criteria, still have to file the EEO-1 Component 1 report each year. It tracks workforce demographics by job category, sex, and race or ethnicity.¹⁰

Component 2, the more detailed pay and hours data broken down by demographic group, is not required in 2026. The first Trump administration stayed that requirement, and the OFCCP formally announced it would not request, accept, or use Component 2 data.¹¹ The EEOC’s current data collections page references only Component 1. Several states have enacted their own pay data reporting requirements that go beyond the federal form, and employers operating in multiple states need to check each jurisdiction independently.

What Is Still in Flux

The regulatory framework is not settled. The DOL’s proposed rescission of the EO 11246 regulations is not yet final. The independent contractor rule is at the proposed stage. Courts are reviewing challenges to several executive orders, including EO 14173 itself, which has faced preliminary injunction motions in multiple jurisdictions. The NLRB’s joint employer rule faces a pending circuit court challenge. Any of these could shift the ground employers and workers are standing on now.

For federal contractors, the most immediate concern is the DEI certification clause now appearing in new contracts. Because a false certification opens the door to the False Claims Act, the financial exposure runs well past losing a single contract. Any diversity-focused hiring program, training curriculum, or supplier diversity initiative should be reviewed carefully against the current order language before signing a certification that covers it.

1
Federal Register. Ending Illegal Discrimination and Restoring Merit-Based Opportunity
2
Federal Register. Rescission of Executive Order 11246 Implementing Regulations
3
U.S. Department of Labor. Office of Federal Contract Compliance Programs
4
White House. Addressing DEI Discrimination by Federal Contractors
5
U.S. Equal Employment Opportunity Commission. EEOC Delivers on Administration Priorities and President Trump’s Executive Orders
6
Office of the Law Revision Counsel. 42 USC 2000e
7
U.S. Equal Employment Opportunity Commission. Religious Discrimination
8
U.S. Department of Labor. Notice of Proposed Rule: Employee or Independent Contractor Classification Under the Fair Labor Standards Act
9
Holland & Knight. NLRB Withdraws 2023 Joint Employer Rule, Reinstates 2020 Standard
10
U.S. Equal Employment Opportunity Commission. EEO Data Collections
11
Federal Register. Intention Not To Request, Accept, or Use Employer Information Report (EEO-1) Component 2 Data