Executive Order 11246, the 1965 order that required federal contractors to keep affirmative action plans, was revoked by Executive Order 14173 on January 21, 2025. The Department of Labor’s final rule removing its regulations took effect October 26, 2026. Federal contractors in California aren’t free of obligations, though. A new contract certification carries False Claims Act risk, and Title VII and FEHA still apply in full.
What did Executive Order 14173 do?
It revoked EO 11246 and changed the contractor relationship. Section 3(b)(i) says “Executive Order 11246 of September 24, 1965 (Equal Employment Opportunity), is hereby revoked.” Contractors could keep following the old rules for 90 days.
The same section told the Office of Federal Contract Compliance Programs to “immediately cease” holding contractors “responsible for taking ‘affirmative action’” and allowing or encouraging “workforce balancing based on race, color, sex, sexual preference, religion, or national origin.”
What did the 2026 final rule change?
It removed the regulations themselves. The Department of Labor’s rule, published August 21, 2026, explains that because “E.O. 14173 revoked E.O. 11246,” the Department “publishes this final rule to rescind the implementing regulations for Executive Order 11246.” It says the rule “is effective on October 26, 2026.”
Those regulations, according to the rule, required covered contractors “to take certain affirmative actions to promote equal employment opportunity in their workplaces.” Written affirmative action plans under the EO 11246 rules, and the construction participation goals, no longer apply.
What risk replaced the affirmative action rules?
A certification that can support a fraud claim. Section 3(b)(iv) requires agencies to put two terms in every contract or grant. The first makes the contractor agree that compliance “with all applicable Federal anti-discrimination laws is material to the government’s payment decisions for purposes of section 3729(b)(4) of title 31,” the False Claims Act’s materiality definition. The second requires the contractor to “certify that it does not operate any programs promoting DEI that violate any applicable Federal anti-discrimination laws.”
That’s the real change for contractors. A discrimination claim that once meant an EEOC charge or a private lawsuit can now be framed as a false certification, with a whistleblower and the government as possible plaintiffs. Contractors should know what programs they run, how they’re structured, and who signed the certification.
Do any federal contractor rules remain?
Yes. The revocation reached EO 11246, not federal statutes. Section 503 of the Rehabilitation Act and the Vietnam Era Veterans’ Readjustment Assistance Act are laws passed by Congress, and the rescission rule notes that OFCCP’s procedural rules continue to govern proceedings under them. OFCCP also revised its Section 503 and VEVRAA regulations in rules effective September 21, 2026, so contractors should check the current versions instead of assuming either set of obligations ended.
Title VII applies to contractors as it does to every covered employer. So does California’s Fair Employment and Housing Act, which reaches employers of five or more and has no cap on damages. A California contractor that dismantled its compliance program because EO 11246 ended still faces every state-law discrimination and harassment claim it faced before.
Where contractor obligations stand
| Obligation | Status | Source |
|---|---|---|
| EO 11246 nondiscrimination and affirmative action | Revoked | EO 14173 sec. 3(b)(i) |
| EO 11246 regulations, including AAPs | Rescinded, effective Oct. 26, 2026 | 91 FR 54444 |
| Anti-discrimination materiality term | In new contracts and grants | EO 14173 sec. 3(b)(iv)(A) |
| DEI certification | In new contracts and grants | EO 14173 sec. 3(b)(iv)(B) |
| Section 503 and VEVRAA | Statutes remain; rules revised | 91 FR 54482; 91 FR 54234 |
| Title VII and FEHA | Unchanged | Federal and state law |
Reviewing a contractor’s position now
- Preserve prior affirmative action plans and the documents behind any diversity program, since they may be requested in a later dispute.
- Calendar contract renewals and modifications that will carry the new terms, and check whether any EPLI or D&O policy covers False Claims Act matters.
- Identify who signs certifications for the company and who can describe each employment program accurately.
- Pull the descriptions, eligibility rules, and selection criteria for every program that touches hiring, promotion, pay, or training.
- Have counsel review the programs against current federal and California law before the next certification is signed.
The firm’s page on employment defense for federal contractors in California explains how it handles discrimination claims for employers.
Federal contractor questions
Do we have to delete our affirmative action plan?
The rule removes the requirement, not prior records. Old plans and data may still be relevant to a pending audit, a lawsuit, or a document hold. Talk to counsel before destroying anything, and follow any litigation hold that covers those records.
Can California require what the federal government dropped?
California has its own anti-discrimination law, and FEHA applies regardless of federal contracting status. The state can’t revive EO 11246, but FEHA claims, CRD investigations, and California’s other workplace rules continue to apply to a contractor’s California workforce.
Does every diversity program create False Claims Act risk?
No. The certification is limited to programs “that violate any applicable Federal anti-discrimination laws.” Programs open to everyone, such as mentoring or recruiting outreach without preferences, are treated differently from programs that limit eligibility by a protected trait. The details of each program matter.
What about subcontractors?
The order’s certification terms are written for “the contractual counterparty or grant recipient.” Prime contractors often pass similar terms down through subcontracts. Subcontractors should read their own agreements for flow-down clauses.
If a contractor is facing a discrimination or certification claim
If your company has received a discrimination charge, a government inquiry, or a whistleblower claim tied to its federal contracts, the structure of the challenged programs and the certifications signed usually shape the defense. Rosenberger + Kawabata represents employers defending employment lawsuits and claims through its business litigation practice, including claims involving discrimination allegations against federal contractors. Contact Rosenberger + Kawabata online for a confidential consultation, or call (310) 894-6921.
Sources
The executive order is Executive Order 14173, 90 FR 8633 (Jan. 31, 2025). The rule is the Department of Labor’s Rescission of Executive Order 11246 Implementing Regulations, 91 FR 54444 (Aug. 21, 2026).
This post is general information about California and federal employment law as of November 7, 2026. It is not legal advice, and reading it does not create an attorney-client relationship. Employment statutes, regulations, and court decisions change often, and the outcome of any claim depends on its facts. Past results do not guarantee future outcomes.