Insights

On February 13, 2025, a coalition of sixteen state attorneys general issued a “Multi-State Guidance Concerning Diversity, Equity, Inclusion, and Accessibility Employment Initiatives” (the Guidance). Led by Attorney General Andrea Campbell of Massachusetts and Attorney General Kwame Raoul of Illinois, and joined by the Attorneys General of Arizona, California, Connecticut, Delaware, Hawaii, Maine, Maryland, Minnesota, Nevada, New Jersey, New York, Oregon, Rhode Island, and Vermont, the Guidance is a direct response to concerns from the private sector in the aftermath of President Trump’s recent Executive Order 14173, which  directed federal agencies “to encourage the private sector to end illegal discrimination and preferences, including DEI.” The Guidance clarifies “the state of the law for businesses, nonprofits, and other organizations operating” in their respective states.

There has been a lot of talk about diversity, equity and inclusion (DEI) lately, largely due to two recent Executive Orders (EO 14151 and EO 14173) (collectively referred to as “the EOs”) signed by President Trump during his first days in office and subsequent implementing memos issued by the Office of Management and Budget (OMB), the Office of Personnel Management (OPM), and the Justice Department. The EOs aim first to dismantle DEI “mandates, policies, programs, preferences, and activities in the Federal Government.” Specifically, the EOs task the Director of the OPM with reviewing and revising all federal employment practices, union contracts, and trainings to ensure elimination of all DEI and related programs. They next direct federal agencies to combat private sector DEI through civil compliance investigations, to terminate equity-related initiatives, programs, grants, or contracts, and to require certifications (with potential False Claims Act liability if the certifications are not valid) that the contractor or grantee “does not operate any programs promoting DEI that violate any applicable federal anti-discrimination laws.”  These EOs are discussed in detail in our prior Alert.

On Inauguration Day, President Trump issued a flurry of executive orders.  Among the first he signed was the Initial Rescissions Of Harmful Executive Orders and Actions Executive Order (the “Rescinding EO”). This directive rescinded 78 executive orders issued by the Biden Administration.  The revocation of one in particular, Executive Order 14055 of November 18, 2021 Non-displacement of Qualified Workers Under Service Contracts (the “EO 14055”), will have an immediate impact on federal contractors performing and bidding on Service Contracts.

On Friday, October 4, 2024, the Supreme Court granted certiorari in an appeal from the Sixth Circuit decision in Ames v. Ohio Department of Youth Services, a Title VII case involving claims of reverse sexual orientation discrimination.  Plaintiff Marlean Ames, a heterosexual woman, alleges that she was demoted and replaced by a gay man and was also denied a promotion in favor of a gay woman because of her sexual orientation.  The Sixth Circuit affirmed summary judgment in favor of the employer-defendant, holding that—to establish a prima-facie case under Title VII as a member of the majority—in addition to the “usual” showing Plaintiff was required to make an additional showing of “background circumstances to support the suspicion that the defendant is that unusual employer who discriminates against the majority.” 87 F.4th 822, 825 (6th Cir. 2023) (citation omitted). The Court observed that such a showing is typically made with evidence that the minority group (here, gay people) made the challenged employment decision or with statistical evidence showing a pattern of discrimination by the employer against members of the majority group—neither of which Plaintiff satisfied.

On June 24, 2024, the U.S. District Court for the Northern District of Texas issued a nationwide preliminary injunction, stopping the U.S. Department of Labor (“DOL”) from enforcing three key elements of regulations related to the Davis-Bacon Act and Related Acts (“DBA” or “Act”).  The court order issued in Associated General Contractors v. U.S. Department of Labor will provide significant comfort and certainty to contractors that perform work on federally funded construction projects.

In a recent development that underscores the ongoing debate over diversity, equity, and inclusion (DEI) initiatives in the United States, a group of 21 Republican State Attorneys General spearheaded by Tennessee Attorney General Jonathan Skrmetti has challenged the American Bar Association's (ABA) Standard 206 on Diversity and Inclusion. In a letter sent to the ABA in early June, the Republican AG group argues that the ABA Standard and its proposed revisions are unlawful due to the Supreme Court's ruling in Students for Fair Admissions, Inc. v. President & Fellows of Harvard College (SFFA).

On August 1, 2024, Nondiscrimination on the Basis of Sex in Education Programs or Activities Receiving Federal Financial Assistance, one of the final Title IX regulations of the U.S. Department of Education released on April 19, 2024, will go into effect. The new regulations address the previous administration’s rollback of Title IX protections, and include, among other things, an expanded definition of sex discrimination that provides new protections for LGBTQ+ individuals against discrimination on the basis of sexual orientation and gender identity. For example, the new rules prohibit schools that receive federal funding from barring transgender students’ use of pronouns that correspond to their gender identities, or denying transgender students access to facilities, like locker rooms and restrooms, that match their gender identities. Other notable changes in the new regulations include the following: (1) protection from all sex-based harassment and discrimination, including that based on sex stereotypes, sexual orientation, gender identity, or pregnancy or related conditions; (2) broadening the definition of “hostile environment” harassment to include conduct that is so severe or pervasive that it limits or denies a person’s ability to participate in the education program or activity; (3) increased accountability by requiring schools to take prompt and effective action to end any sex discrimination in their education programs or activities, prevent reoccurrence, and remedy its effects; and (4) protection against retaliation for students, employees, and others who exercise their Title IX rights.

On June 3rd, 2024, in a 2-1 ruling, the 11thCircuit U.S. Court of Appeals granted a preliminary injunction against Fearless Fund (“Fearless”), enjoining the Fearless Strivers Grant Contest, a privately-funded grant competition open only to businesses owned by black women.  In another victory for the American Alliance for Equal Rights (“Alliance”) and Edward Blum, the legal strategist behind the Supreme Court’s recent rulings against college race-based admissions, the 11thCircuit held that the Alliance had standing to sue on behalf of three pseudonymously named business owners who were “ready and able” to enter the Contest but “were excluded from the opportunity to compete . . . solely on account of the color of their skin.”  The Court determined that plaintiffs were likely to prevail in the lawsuit, finding that privately funded businesses like Fearless can violate 42 U.S.C. § 1981, originally enacted as Section 1 of the Civil Rights Act of 1866, through contract-based programs restricted to persons of color.  

Now more than ever, federal contractors find themselves at the intersection of innovation and regulation, particularly in the realm of Artificial Intelligence (AI).  AI is now incorporated into a broad range of business systems, including those with the potential to inform contractor employment decisions.  For that reason, the Office of Federal Contract Compliance Programs (OFCCP) has issued new guidance entitled “Artificial Intelligence and Equal Employment Opportunity for Federal Contractors” (the “AI Guide”).  OFCCP issued the AI Guide in accordance with President Biden’s Executive Order 14110 (regarding the “Safe, Secure, and Trustworthy Development and Use of Artificial Intelligence”), which we reported on here.  The AI Guide provides answers to commonly asked questions about the use of AI in the Equal Employment Opportunity (EEO) context.  The AI Guide also offers “Promising Practices,” which highlight a number of important considerations for federal contractors.  Focusing on federal contractors’ obligations and attendant risks when utilizing AI to assist in employment-related decisions, the AI Guide also provides recommendations for ensuring compliance with EEO requirements while harnessing the efficiencies of AI.

On June 29, 2023, the Supreme Court held that it is unconstitutional (under the Constitution’s Equal Protection Clause, as to public institutions) and a violation of Title VI of the Civil Rights Act of 1964 (as applicable to private institutions accepting federal financial assistance) for colleges and universities to consider race as a factor in the admissions process. See Students for Fair Admissions, Inc. v. President & Fellows of Harvard Coll., No. 20-1199, 2023 WL 4239254 (U.S. June 29, 2023) (“Harvard”), a summary of which can be found here. This decision upended decades of precedent and has caused employers in the private sector to ask how the decision will impact diversity, equity, and inclusion (“DE&I”) initiatives and employment decisions. This article addresses the impact of Harvard, eight months later.

On December 14, 2023, the Department of Labor (“DoL”) issued a final rule implementing Executive Order 14055, “Nondisplacement of Qualified Workers Under Service Contracts” (the “Rule”). The Rule requires contractors to give service employees from a predecessor contract a bona fide right of first refusal for employment under new Service Contract Act (“SCA”)-covered contracts, contract-like instruments, or subcontracts for the same or similar work. These bona fide offers to service employees—as defined by the SCA—must be made before the contractor makes offers to other workers. The Rule will go into effect on February 12, 2024.

A U.S. federal government shutdown creates a number of direct and indirect consequences that impact U.S. companies, individuals and virtually every aspect of the U.S. economy.  Although the federal government has experienced previous lapses in funding that have led to shutdowns of all or part of the federal government, the current funding impasse and impending shutdown raise a number of unique and unprecedented questions for government workers, government contractors and businesses, and the public at large.

On August 23, 2023, the U.S. Department of Labor (“DOL”) issued a final rule updating regulations governing federally funded construction projects subject to the Davis-Bacon Act and Related Acts (“DBA”). The final rule is the first significant regulatory update to the DBA since 1982.  Among other things, the final rule changes how DOL will calculate the applicable prevailing wage for any given classification of workers on a DBA-covered contract when the default “majority” prevailing wage calculation is not possible; in particular it supplants the current “weighted average” calculation approach with the “30-percent rule.” The revised rule will go into effect on October 23, 2023 – 60 days after it was published in the Federal Register.

On December 30, 2022, New York Governor signed into law Labor Law Section 240-i, establishing a registration system for contractors and subcontractors engaged in public work and covered private projects in New York. This law will require contractors to register with the New York State Department of Labor (the “Department of Labor”) every two years, by submitting various disclosures about their businesses, in order to ensure that contractors do not have previous labor law violations, and will abide by New York labor laws and regulations, including prevailing wage requirements. The Department of Labor will establish and maintain a public on-line system where registrations and disclosures are available.

This week, the Department of Labor (DOL) and Office of Management and Budget (OMB) issued a memo directing all agencies to designate “agency labor advisers” who are responsible for advising agencies on “Federal contract labor matters.”  FAR Part 22 contemplates the appointment of “agency labor advisors,” and requires contractors to contact them about potential labor disputes or questions; however, DOL and OMB found not all agencies have such a role.

Employers in the District of Columbia should be aware that, effective October 1, 2022, the Human Rights Enhancement Amendment Act expanded the D.C. Human Rights Act (“DCHRA”) in several significant ways. Specifically, pursuant to the amendment, the definition of “employees” protected from discrimination under the DCHRA now includes independent contractors and unpaid interns. The amendment also protects individuals experiencing homelessness from discrimination, and codifies protections against workplace harassment.

The Department of Labor (“DOL”) recently announced in a July 29, 2022 Change Order notice that the Wage and Hour Division (“WHD”) had revised the Field Operations Handbook (“FOH”) by deleting the exemption under the Service Contract Act (“SCA”) for federal contracts to operate Job Corps Centers.  Prime contractors and subcontractors operating these centers will now be subject to the SCA and FAR 52.222-41, Service Contract Labor Standards, according to DOL. 

On July 27, 2022, Mayor Muriel Bowser signed the Non-Compete Clarification Amendment Act of 2022, which will become effective following a 30-day congressional review period. The Act will substantially amend D.C.’s ban on non-compete agreements, first passed by the City Council in early 2021 but delayed significantly since it was first enacted. 

On April 27, 2022, the Chicago City Council passed amendments (“Amendments”) to its Human Rights Ordinance (“Ordinance”) adding significant sexual harassment prevention requirements for employers, including new employer policy, notice, and training obligations, expanded recordkeeping requirements, and stricter penalties for violations. The Amendments also expand the definition of “sexual harassment” and “sexual orientation.” The Amendments, which apply to all employers with at least one employee working within the geographical boundaries of the city of Chicago, took effect on June 4, 2022. Chicago employers, however, have until July 1, 2022 to implement the amended sexual harassment prevention requirements.

On May 12, 2022, the Equal Employment Opportunity Commission (“EEOC”) published guidance to help employers using artificial intelligence (“AI”) technology to remain compliant with the Americans With Disabilities Act (“ADA”). On the same day, the Department of Justice posted its own guidance regarding AI-related disability discrimination. Both are consistent with recent emphasis by the EEOC on the potential interaction of the usage of AI in employment decisions with disability rights. This new guidance comes after EEOC Chair Charlotte A. Burrows, in October 2021, launched the agency’s Artificial Intelligence and Algorithmic Fairness Initiative to examine the use of AI, machine learning, and other emerging technologies in the context of federal civil rights laws.