Labor rescinds the Executive Order 11246 regulations and finds it lacks authority for them

The Office of Federal Contract Compliance Programs published a final rule on 21 August 2026, effective 26 October, rescinding the implementing regulations for Executive Order 11246 — 41 CFR parts 60-1, 60-2, 60-3, 60-4, 60-20, 60-40, 60-50 and 60-999 — and stripping the EO 11246 components from the administrative enforcement procedures at part 60-30.¹ It carries into the Code of Federal Regulations the revocation of the 1965 order by Executive Order 14173 on 21 January 2025 (see Affirmative-action contracting order rescinded).¹ The order “and its implementing regulations at 41 CFR part 60-1 et seq.” had “prohibited covered Federal contractors and subcontractors from discriminating against employees and applicants because of race, color, religion, sex, sexual orientation, gender identity, national origin, or because they inquired about, discussed, or disclosed their compensation or that of others, subject to certain limitations,” and required affirmative action under parts 60-2 and 60-4.¹ The rescission “eliminates compliance obligations that previously applied to 107,165 supply and service entities and 9,982 construction contractors, employing approximately 32 million workers,” and drew 917 public comments.¹ Two companion rules of the same date modify the disability and veterans regimes (see OFCCP drops the disability utilization goal and leaves the veterans’ benchmark standing).²

1. The Department concludes that its own regulations are unconstitutional and unauthorised. On the first, after setting out the equal-protection standards, it “concludes that the race- and sex-based affirmative action regulations in 41 CFR parts 60-2 and 60-4 are unconstitutional under these standards and therefore should be rescinded,” noting that “[n]o commenter disputed that these regulations either classify individuals on the basis of race for purposes of equal-protection jurisprudence or are subject to strict scrutiny.”¹ On the second, having “reconsidered its authority to maintain the regulations implementing E.O. 11246 under the Procurement Act,” it “has determined that it lacks statutory authority for significant portions of the E.O. 11246 regulatory framework, including its regulations requiring race- and sex-based affirmative action … and authorizing OFCCP to seek monetary relief in E.O. 11246 administrative proceedings against contractors.”¹ The disclaimer is partial: the Department “believes that the Procurement Act could authorize it to require contractors to follow Federal nondiscrimination law—but not to seek monetary relief for violations.”¹

2. The record the Department relies on and the record against it are both in the rule. The state attorneys general, the Pacific Legal Foundation and America First Legal “argued that OFCCP’s race-based affirmative action regulations constitute racial classifications that fail strict scrutiny and therefore must be rescinded.”¹ Against that, the AFL-CIO “stated that generally applicable equal employment opportunity laws enacted by Congress require compliance with the regulations,” and National Nurses United “argued that Congress ratified the E.O. 11246 regulatory framework through enactment of section 718 of Title VII of the Civil Rights Act of 1964, as amended in 1972,” citing 42 U.S.C. 2000e-17.¹³ Commenters also asserted that rescission “will result in increased employment discrimination against minorities and women,” on the ground that the rescinded regulations reached further than the statute: “Title VII does not apply to small businesses with fewer than 15 employees, whereas the E.O. 11246 nondiscrimination regulations apply to such small businesses, as long as they have more than $10,000 in Federal contracts.”¹

3. Labor’s copy of one set of guidelines goes; the guidelines do not. Part 60-3 is the Uniform Guidelines on Employee Selection Procedures, which apply to “tests and other selection procedures which are used as a basis for any employment decision” and require a contractor whose selection procedure is found to have an adverse impact “on minorities or women” to validate it and retain the documentation.¹ The Department rescinds part 60-3 “solely to the extent that they were codified in the E.O. 11246 regulations,” and states that this “does not impact other agencies’ interpretation and application of UGESP, or the existence of UGESP more broadly”; the same guidelines remain codified at 29 CFR part 1607, which the Department does not administer.¹ That codification is not untouched elsewhere: Executive Order 14281 of 23 April 2025 directs the repeal or amendment of the Title VII disparate-impact regulations at 29 CFR part 1607 (see EO 14281 directs rollback of disparate-impact regulations), and the EEOC’s separate rescission of 6 July 2026 removed its affirmative action guidelines at 29 CFR part 1608 — a different instrument from the selection-procedure guidelines at part 1607.⁴⁵

4. The quantified effect is a burden estimate carried over from the proposal. The Department “estimates that the final rule eliminates approximately 9,875,221 hours of annual burden,” with “10-year quantifiable cost savings amount[ing] to $8,499,270,061 at a 3% discount rate or $6,998,112,173 at a 7% discount rate,” and annualised savings of “$996,373,776 in 2024 dollars, using a 7 percent discount rate.”¹ That figure is the NPRM’s, retained: the Department says it “retains this estimate in the final rule as a measure of direct, quantifiable compliance costs,” while judging that the true savings “are in all likelihood substantially greater” and that it “lacks sufficient data to quantify these additional effects with a reasonable degree of confidence.”¹ OIRA “has designated this rule as a ‘major rule,’ as defined by 5 U.S.C. 804(2)” under the Congressional Review Act.¹⁶ The Department separately describes a contractor obligation now in place: Executive Order 14398 of 26 March 2026 requires contractors to include a clause affirming they will not engage in “disparate treatment based on race or ethnicity” in work under the contract, with noncompliance exposing the contract to cancellation or suspension and the contractor to debarment.¹⁷