Executive Order Targets Contractor Diversity Training

President Trump issued a controversial Executive Order on September 22, 2020 purporting to "promote unity in the Federal workforce" by addressing what the White House termed "offensive and anti-American" rhetoric in certain workforce trainings.¹

Summary

The Executive Order begins with an essay laying out the President's view of the role of diversity and equality in American history, before declaring it to be the "policy of the United States not to promote race or sex stereotyping" and forbidding federal contractors or the use of grant funds to "inculcate" contrary views. The Executive Order contains specific definitions of the "divisive concepts," "race or sex stereotyping," and "race or sex scapegoating" targeted through the Order.

Of relevance to government contractors, the Executive Order announces that, with certain limited exceptions, every future government contract entered into on or after November 21, 2020 will contain a clause forbidding the contractor from providing any workplace training that "inculcates in its employees" any of the concepts proscribed by the contract clause, including:

• 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;²
• 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 or 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 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.

Second, contractors must post and must send a notice (to be provided by the agency contracting officer) to all labor unions with which they have a collective bargaining agreement that advises of employee rights under the Order.

Third, contractors are required to flow down the substance of the clause to all subcontractors and vendors. The clause also requires the prime contractor to take any actions the Secretary of Labor directs it to take in order to enforce its provisions or sanction noncompliance (but may request government intervention in any resulting litigation).

The penalties for noncompliance with the provisions of the new mandatory contract clause are severe—the contract may be cancelled, terminated, or suspended in whole and in part. The clause provides that an offending contractor "may be declared ineligible for further government contracts" in accordance with the provisions of the Equal Opportunity Executive Order (number 11246), first promulgated in 1965. The Department of Labor Office of Federal Contract Compliance Programs (OFCCP) must also establish a hotline and investigate complaints received under the Order.

Besides the obligations affecting future contracts through this mandatory contract clause, the Executive Order also requires the Director of OFCCP to publish a request for information (RFI) in the Federal Register "seeking information from Federal contractors, Federal subcontractors, and employees of Federal contractors and subcontractors regarding the training, workshops, or similar programming provided to employees." The RFI will include a request for copies of trainings "having to do with diversity and inclusion" along with "information about the duration, frequency, and expense of such activities."

Implications

The Executive Order will likely require extensive changes to many workplace bias and discrimination trainings. News reports indicate that OFCCP has sent letters to regarding diversity initiatives to several federal contractors that have specific goals to increase diversity.³ Several states also require certain types of diversity trainings that could be impacted by the Order. Given these concerns, as well as the fact that contractors' communications are subject to First Amendment protections⁴, a legal challenge to the Order seems likely.

In the meantime, contractors and subcontractors should expect this new contract clause to appear in all new contracts entered after November 21, 2020, but there is no provision requiring the mass modification of existing contracts to incorporate the clause. The clause's text states that contracts exempted from coverage by Executive Order 11246 (Equal Opportunity) will not be subject to its requirements, suggesting that the clause may not be required in commercial item contracts, or for contracts to be performed outside the United States.

Notably, participation in the RFI relating to trainings is not denoted as mandatory. Presuming participation in the RFI process remains voluntary, contractors may wish to consider whether to respond to the RFI, especially given the effort of computing the cost of internally developed and managed training programs. The risk of reputational damage or harassment could favor responding—if a company's trainings are relatively neutral in tone—or choosing not to respond, as the administration and/or OFCCP could choose to "make an example" of companies providing potentially offending materials.

In sum, this Order places contractors in a difficult position. Some level of antidiscrimination and diversity/inclusion trainings are required under applicable law, and many companies desire to go above-and-beyond minimum requirements as part of their workplace culture. However, contractors should also take care that their trainings do not violate the letter or spirit of the Order, given the severe consequences for noncompliance (that despite best efforts could arise from internal disgruntled complaints).

© Arnold & Porter Kaye Scholer LLP 2020 All Rights Reserved. This Advisory is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.