Many employers have inquired about their obligations following the issuance of Executive Order 14173, which revokes Executive Order 11246. It is essential to understand that, while the requirement to maintain an affirmative action plan for minorities and females has been eliminated, the analysis of these groups remains critical under Title VII of the Civil Rights Act of 1964. This federal law prohibits employers from engaging in discrimination based on protected characteristics, including race, color, ethnicity, sex, and other categories. The prohibition applies to all employment-related practices, including hiring, promotion, compensation, and termination decisions.
Title VII Compliance and Discriminatory Practices
Employers must recognize that discriminatory actions under Title VII do not have to be intentional. Any act or omission that lacks proper documentation to demonstrate that employment decisions were made based on non-discriminatory, merit-based criteria can be deemed discriminatory.
With the revocation of Executive Order 11246, the concept of “goals” for hiring and promotion no longer applies. However, this does not absolve a company from liability if it fails to select the most qualified candidate from a protected group. Such decisions can still lead to allegations of discrimination under Title VII, potentially resulting in government enforcement actions or individual and class-action lawsuits.
Statistical Analysis and Employment Practices
Historically, both individuals and the Equal Employment Opportunity Commission (EEOC) have used statistical analysis in discrimination cases. Such analysis involves comparing employment figures against availability data to identify statistically significant underutilization of protected groups. If a company cannot justify why individuals from a protected group were not selected for positions, it may be found to have engaged in discriminatory practices, which can result in substantial financial liability, particularly in class-action claims.
While affirmative action obligations previously required federal contractors to conduct statistical reviews, it remains a best practice for all employers to continue similar analyses. Moving forward, these analyses should be job-focused rather than goal-driven, ensuring that employment decisions—including hiring and compensation—are merit-based and defensible. Employers should regularly review workforce data to identify any statistical disparities and ensure that employment decisions are documented and justifiable.
Regulatory Requirements and the UGESP
Under the Uniform Guidelines on Employee Selection Procedures (UGESP), contractors are required to collect and report certain data in ways that have been consistent since 1978. The UGESP is incorporated into Title VII, emphasizing that this data collection remains necessary despite changes in broader executive orders. Employers should continue following these guidelines to avoid potential compliance issues.
Understanding the Timeline and Future Developments
Under the EO issued on January 21, 2025, federal contractors may continue operating their programs in accordance with EO 11246 until April 21, 2025, under a safe harbor provision. Additionally, by May 21, 2025, recommendations are scheduled to be submitted to the administration for consideration. Forthcoming guidance is anticipated to provide contractors with further clarity on adapting to the evolving regulatory environment.
Replacing Placement Goals With Benchmarks
EO 14173 encourages contractors to reconsider the use of placement goals and goal attainment. Instead, organizations are advised to use benchmarks for tracking non-discriminatory practices, marking a shift toward an outcome-based approach to workforce management.
Recommended Best Practices
To mitigate potential legal risks and ensure compliance with Title VII, employers should adopt the following best practices:
- Annual Workforce Analysis – Employers should conduct an annual review of their workforce composition across job categories. This analysis should encompass all protected groups, including traditionally recognized groups such as women and racial minorities, as well as white and male employees. A comprehensive, non-discriminatory approach ensures fairness and prevents inadvertent bias.
- Applicant Pool Assessment – Beyond statistical analysis, companies should compare selection decisions against applicant pools to ensure that hiring practices are based on merit and non-discriminatory criteria.
- Data Collection and Compliance – Employers should continue collecting race, ethnicity, and sex data for job applicants and employees. This information is crucial for assessing fairness in employment practices. Additionally, some state and local jurisdictions still require data collection and reporting, making compliance essential.
- Ongoing Affirmative Action Obligations – While Executive Order 14173 eliminated affirmative action requirements for minorities and females, obligations under other federal laws remain. Federal contractors must still prepare affirmative action plans under the Vietnam Era Veterans’ Readjustment Assistance Act (VEVRAA) and Section 503 of the Rehabilitation Act. These laws require contractors to take proactive steps to ensure non-discriminatory hiring, promotion, and compensation practices for veterans and individuals with disabilities.
- DEI Program Review – Contractors should reassess their Diversity, Equity, and Inclusion (DEI) programs to ensure alignment with federal anti-discrimination laws. This includes updating internal policies and handbooks to reflect compliance with Executive Order 14173, Title VII, VEVRAA, and Section 503.
- Training Programs for HR and Management – Employers should implement robust training programs for HR personnel and managers to ensure that employment decisions—related to hiring, promotion, compensation, and termination—are made in compliance with anti-discrimination laws. Training should focus on statistical and non-statistical analysis of employment decisions to confirm merit-based practices.
- Accurate Documentation of Employment Decisions – Maintaining detailed records of employment decisions is critical. Proper documentation provides evidence that hiring, promotions, compensation, and terminations are based on objective, merit-based criteria, protecting employers from potential legal challenges.
Conclusion: Evolving But Essential Compliance
The regulatory environment surrounding non-discrimination in federal contracting is evolving, but the fundamental principles of fairness remain constant. Employers must be proactive in analyzing their workforce statistically, collecting essential data, and aligning their policies with the legal frameworks that govern non-discriminatory practices. By staying informed and adopting best practices, contractors can successfully navigate this evolving landscape and maintain compliance with all non-discrimination obligations.
If you would like Lighthouse to complete and file your report, please call for a quote or if you have any questions, please contact Greta Gay at ggay@lightbeacon.com or 501-658-8883 (direct).