What Federal Contractors Should Know About the New Executive Order Regulating Diversity Training

On September 22, 2020, President Trump issued the controversial Executive Order 13950 (the “Order”), intended “to promote economy and efficiency in Federal contracting, to promote unity in the Federal workforce, and to combat offensive and anti-American race and sex stereotyping and scapegoating….”

The Order is more than just a mere policy position. Rather, it imposes new requirements/limitations on federal contractors related to diversity and inclusion (“D&I”) training.  According to the Order,

[t]he Federal Government has long prohibited Federal contractors from engaging in race or sex discrimination and required contractors to take affirmative action to ensure that such discrimination does not occur. The participation of contractors’ employees in training that promotes race or sex stereotyping or scapegoating similarly undermines efficiency in Federal contracting. Such requirements promote divisiveness in the workplace and distract from the pursuit of excellence and collaborative achievements in public administration.

Therefore, it shall be the policy of the United States not to promote race or sex stereotyping or scapegoating in the Federal workforce or in the Uniformed Services, and not to allow grant funds to be used for these purposes. In addition, Federal contractors will not be permitted to inculcate such views in their employees.

In other words, the Order makes both stereotyping and scapegoating unlawful in a training program.  While the Order will not apply to federal contractors until these provisions are added to new government contracts, the Office of Federal Contract Compliance Programs (“OFCCP”) has taken the position that racial or sexual stereotyping or scapegoating may already violate the existing Executive Order 11246, which generally prohibits discrimination by federal contractors and includes certain affirmative action requirements. As a result, federal contractors should act now to ensure that they are compliance with the new rule.

What is Race or Sex Stereotyping and Scapegoating?

Pursuant to the OFCCP’s recently issued FAQs, “race or sex stereotyping” means ascribing character traits, values, moral and ethical codes, privileges, status, or beliefs to an entire race or sex, or to individuals because of their race or sex.  “Race or sex scapegoating” means assigning fault, blame, or bias to a race or sex, or to members of a race or sex, because of their race or sex.  It encompasses any claim that, consciously or unconsciously, and by virtue of their race or sex, members of any race are inherently racist or are inherently inclined to oppress others, or that members of a sex are inherently sexist or inclined to oppress others.

More specifically, the FAQs explain that race or sex stereotyping or scapegoating include the concepts that:

• One race or sex is inherently superior to another race or sex;
• An individual, by virtue of his or her race or sex, is inherently racist, sexist, or oppressive, whether consciously or unconsciously;
• An individual should be discriminated against or receive adverse treatment solely or partly because of his or her race or sex;
• Members of one race or sex cannot and should not attempt to treat others without respect to race or sex;
• An individual’s moral character is necessarily determined by his or her race or sex;
• An individual, by virtue of his or her race or sex, bears responsibility for actions committed in the past by other members of the same race or sex;
• Any individual should feel discomfort, guilt, anguish, or any other form of psychological distress on account of his or her race or sex; or
• Meritocracy or traits such as a hard work ethic are racist or sexist, or were created by a particular race to oppress another race.

What Does This Mean for Training Programs?

Notably, the Order does not prohibit all D&I training.  Addressing President Trump’s Order, Secretary of Labor Eugene Scalia said: 

“I should be clear about what the President’s new Order does not do. It does not prohibit workplace training about non-discrimination and equal opportunity—that training is important, the Labor Department encourages it, and in some instances we require it. Nor does the Order prohibit the diversity training offered by countless American employers; training that, like my remarks today, emphasizes the importance of recognizing the value and worth of people of all races and creeds. American employers should value diversity and take extra strides to assure opportunity for those who in the past have been denied it—although they must do so in a way that does not discriminate against others based on race, ethnicity, or other protected characteristics. Finally, the President’s Order does not prohibit trainings about pre-conceptions or biases that people may have—regardless of their race or sex—about people who are different, and which could cause slights or even discrimination that’s not intended. What the Order does prohibit, though, is instruction in which federal contractors tell workers that because of their particular race or sex, they are racist, morally culpable, or less worthy of being heard.”

Said differently, unconscious or implicit bias training is prohibited to the extent it teaches or implies that an individual, by virtue of his or her race, sex, and/or national origin, is racist, sexist, oppressive, or biased, whether consciously or unconsciously.  In other words, this might apply to concepts like “white privilege.”  Training is not prohibited if it is designed to inform workers, or foster discussion, about pre-conceptions, opinions, or stereotypes that people—regardless of their race or sex—may have regarding people who are different, which could influence a worker’s conduct or speech and be perceived by others as offensive.

Specific Provisions Now Required in Government Contracts

With the exception of contracts exempt from Section 204 of Executive Order 11246, the Order seeks to ensure its compliance by requiring all Government agencies to include in their contracts with private employers a provision that states:

“The contractor shall not use any workplace training that inculcates in its employees any form of race or sex stereotyping or any form of race or sex scapegoating, including the concepts that (a) one race or sex is inherently superior to another race or sex; (b) an individual, by virtue of his or her race or sex, is inherently racist, sexist, or oppressive, whether consciously or unconsciously; (c) an individual should be discriminated against or receive adverse treatment solely or partly because of his or her race or sex; (d) members of one race or sex cannot and should not attempt to treat others without respect to race or sex; (e) an individual’s moral character is necessarily determined by his or her race or sex; (f) an individual, by virtue of his or her race or sex, bears responsibility for actions committed in the past by other members of the same race or sex; (g) any individual should feel discomfort, guilt, anguish, or any other form of psychological distress on account of his or her race or sex; or (h) meritocracy or traits such as a hard work ethic are racist or sexist, or were created by a particular race to oppress another race. The term “race or sex stereotyping” means ascribing character traits, values, moral and ethical codes, privileges, status, or beliefs to a race or sex, or to an individual because of his or her race or sex, and the term “race or sex scapegoating” means assigning fault, blame, or bias to a race or sex, or to members of a race or sex because of their race or sex.”

The Order also requires employers to (1) impose the same training prohibitions on its potential subcontractors and (2) provide notice to labor unions regarding the employer’s commitments under the Order.  If an employer fails to comply with either of these rules, the Government may cancel, terminate or suspend an ongoing contract and declare the employer ineligible for Government contracts in the future.

What about Federal Grant Recipients?

In the same way that employers are prohibited from implementing workplace training that includes any form of race or sex stereotyping or scapegoating, Government agencies may require federal grant recipients to certify that they will not use any Federal funds: 

“[T]o promote the concepts that (a) one race or sex is inherently superior to another race or sex; (b) an individual, by virtue of his or her race or sex, is inherently racist, sexist, or oppressive, whether consciously or unconsciously; (c) an individual should be discriminated against or receive adverse treatment solely or partly because of his or her race or sex; (d) members of one race or sex cannot and should not attempt to treat others without respect to race or sex; (e) an individual’s moral character is necessarily determined by his or her race or sex;
(f) an individual, by virtue of his or her race or sex, bears responsibility for actions committed in the past by other members of the same race or sex; (g) any individual should feel discomfort, guilt, anguish, or any other form of psychological distress on account of his or her race or sex; or (h) meritocracy or traits such as a hard work ethic are racist or sexist, or were created by a particular race to oppress another race.”

The Order makes clear that this provision is not intended to prevent institutions from discussing these concepts as part of broader academic instruction so long as it is done in an objective manner. For example, if a college is using these materials as part of course curriculum, the Order does not prohibit the necessary discussion of these topics as they relate to the learning process.  The key to compliance is simply that grant recipients do not promote such ideas.

Possible Changes to Title VII Guidance?

In addition to laying out its own framework of rules, the Order instructs the United States Attorney General to assess the extent to which workplace trainings that teach these prohibited concepts contribute to a hostile work environment.  If the Attorney General finds that such trainings do increase hostility in the workplace, employers that do not have Government contracts nor receive federal grants might still face potential harassment liability under Title VII of the Civil Rights Act of 1964.

OFCCP Voluntary Request for Information

On October 21, 2020, the OFCCP issued a request for information (“RFI”) to the public for the stated purpose of obtaining additional information that will enable it to develop tools for compliance assistance.  The RFI can be found here.  In particular, the Order required the OFCCP to seek out information and materials from the public regarding:

• Workplace trainings that promote, or could be reasonably interpreted to promote, race or sex stereotyping;
• Workplace training that promote, or could be reasonably interpreted to promote, race or sex scapegoating; and
• The duration, frequency, and costs of such workplace trainings.

The OFCCP also requests information through more pointed questions.  Clearly, these questions are directed to both employers and their employees, and include:

• Have there been complaints concerning this workplace training? Have you or other employees been disciplined for complaining or otherwise questioning this workplace training?
• Who develops your company’s diversity training? Is it developed by individuals from your company, or an outside company?
• Is diversity training mandatory at your company? If only certain trainings are mandatory, which ones are mandatory and which ones are optional?
• Approximately what portion of your company’s annual mandatory training relates to diversity?
• Approximately what portion of your company’s annual optional training relates to diversity?

Employers should know that the RFI is strictly voluntary and that the mere submission of material will not be grounds for an enforcement action.  The OFCCP warns, however, that to the extent it offers employers compliance assistance (such as finding that the employer has non-compliant materials), and the employer refuses to correct the issue afterwards, this non-compliance could form the basis for future enforcement actions in response to complaints are routine audits.  Nevertheless, employers that have an interest in the issues raised by the order might still be interested in submitting comments for the purpose of helping the OFCCP craft its future enforcement discretion.  Responses to the RFI must be submitted by December 1, 2020.

Employers considering responding to the RFI are advised to consult with labor and employment counsel to analyze the benefits and potential negatives of doing so.

Going Forward

The discussion of race and sex in America is not going away anytime soon.  As employers continue to develop constructive ways to discuss these difficult and important issues in the workplace, they must ensure that do so in a way that is cognizant of their obligations to provide a workplace free from unlawful discrimination or harassment. Employers directly subject to the Order will also want to ensure that their D&I training and initiatives are implemented in a way that will not lead to legal liability or a termination of their contracts with the Government.

The legality of the Order also remains a question.  For example, some critics question whether the Order’s requirements can be implemented under the Administrative Procedure Act and the Paperwork Reduction Act.  Others question if the Order is an attempt to regulate private speech that presents a possible challenge under the First Amendment to the United States Constitution.  Whatever changes might arise, Baird Holm’s labor and employment team will continue to monitor legal guidance surrounding the Order and report on any critical developments.