The U.S. Department of Labor released three final rules on Friday that wipe out most affirmative action requirements for federal contractors, aligning the regulations with President Donald Trump’s 2025 executive order.
What the three rules change
The first rule nullifies the race‑ and sex‑based mandates that stem from a 1965 executive order and makes associated regulatory changes.
The second rule targets the Section 503 obligations of the 1973 Rehabilitation Act. Most notably, it eliminates the 7% utilization goal that set a benchmark for hiring qualified individuals with disabilities.
The rule also adjusts coverage thresholds, tying them to the dollar value of contracts rather than a flat percentage.
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The third rule revises the 1974 Vietnam Era Veterans’ Readjustment Assistance Act, or VEVRAA, and updates the contract‑value thresholds.
Timeline and remaining obligations
Implementation dates differ across the three rules. The 1965 order repeal takes effect on Oct. 26.
Most of the Section 503 provisions become active on Sept. 21, with a single section delayed until Dec. 21. The VEVRAA rule also starts on Sept. 21.
Even with the rollbacks, contractors are not free from all anti‑discrimination duties. The rules leave intact the prohibitions of Title VII of the 1964 Civil Rights Act and other federal, state, and local laws, according to an analysis by Ogletree Deakins attorneys.
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Jackson Lewis lawyers note that the Section 503 rule still requires firms to take affirmative action to employ and advance qualified individuals with disabilities. Companies must also continue to assess the effectiveness of their recruitment outreach to these workers.
The Department of Labor had paused the Office of Federal Contract Compliance Programs’ investigations shortly after the 2025 order, saying it lacked authority under the rescinded 1965 order. That pause was lifted for Section 503 and VEVRAA matters in July 2025, allowing enforcement to resume under the new framework.
Legal challenges are already emerging. At least one lawsuit contests the March executive order that warned contractors could lose contracts for engaging in discriminatory DEI programs. The litigation remains unresolved, and its outcome could shape how aggressively the new rules are enforced.
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