On September 22, 2020, the White House issued Executive Order 13950, entitled “Executive Order on Combating Race and Sex Stereotyping,” that imposes serious new obligations on federal contractors and grant holders regarding the content of their diversity and inclusion training. Executive Order 13950 follows an executive memorandum issued by the White House on September 4, 2020, which directed executive branch agencies to end trainings on topics such as “critical race theory” and “white privilege.”

The Order, effective immediately, aims to prevent federal executive departments and agencies (Agencies), the Uniformed Services, federal government contractors, and federal grant recipients from promoting and perpetuating race and sex-based stereotypes and scapegoating and other divisive concepts in their federally funded trainings. Specifically, the Order seeks to prohibit those institutions from using training to promote the following concepts to employees:

• That one race or sex is inherently superior to another;
• That the United States is fundamentally racist or sexist;
• That a person’s race or sex makes the person inherently racist, sexist or oppressive;
• That a person should be discriminated against in part or in whole due to race or sex;
• That one’s treatment of another cannot and should not be based on the individual’s race or sex;
• That an individual’s race or sex dictates his or her moral character;
• That an individual, because of race or sex, is responsible for actions committed in the past by other members of the individual’s race or sex;
• That an individual should feel discomfort, guilt, anguish or some other type of psychological distress because of his or her race or sex;
• That meritocracy and hard work ethic are racist and sexist constructs created by a particular race to oppress another race; and
• That race or sex stereotyping or scapegoating.

Under the Order, “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.

“Race or sex scapegoating,” under the Order, 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 his or her 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 members of the other.

According to the Order, trainings that promote the concepts outlined above, collectively referred to as “divisive concepts,” perpetuate racial stereotypes and division and should not be supported by federal taxpayer dollars.

Thus, the Order imposes the following requirements on Agencies, the Uniformed Services, federal contractors, and federal grant recipients.

Federal Contractors

First, government contractors that are not otherwise exempted from the nondiscrimination and equal employment opportunity requirements of Executive Order 11246 may not use any workplace training that inculcates in any of its employees any form of race or sex stereotyping or any form of race or sex scapegoating, or any of the other “divisive concepts” described above. Examples of contracts exempt from compliance with Executive Order 11246 include contracts involving less than $10,000, contracts where the work is performed outside of the United States, and contracts with state or local governments, as well as contractor facilities that are separate and distinct from contractor activities related to the performance of the contract.

Notably, the Order purports to apply to all of a federal contractor’s employees (unless otherwise exempt under Executive Order 11246), and not just those working on a federal contract. While the Order does not specifically limit its enforcement to contractor employees working in the United States, based on judicial precedent, there may be an argument that the Order extends to US citizens working abroad for a U.S. government contractor, but not as to non-U.S. citizens working abroad. The Order also does not exempt contracts for Commercial Items or Commercial Off-the-Shelf Items, which are frequently exempted from other government contracting regulations.  Furthermore, it raises a question as to how a contractor will know that it has inculcated any employees with any of the divisive concepts.

Existing government contractors must immediately:

• Send to each labor organization or employee representative with which it has a collective bargaining agreement or other contract or understanding, a notice, to be provided by the Agency contracting officer, advising the labor union or workers’ representative of the contractor’s commitments under the Order and post copies of the notice in conspicuous places available to employees and applicants for employment; and
• Submit, within thirty days of the Order, upon a request for information by the Department of Labor Office of Federal Contract Compliance Programs (OFCCP), copies of any training, workshop, or employee programming that relates to diversity and inclusion, along with information on the duration, frequency and expense of such activities (this requirement is also imposed on subcontractors and employees of federal contractors and subcontractors).

Government contractors that enter into new government contracts 60 days after the date of the Order, or as of November 21, 2020, must (1) agree that they will not use any workplace training to instill divisive concepts in the training of any of their employees by memorializing such agreement in the government contract; and (2) include in each of their subcontract(s)/purchase order(s) language regarding their rights and performance commitments under the Order as well as the penalty for noncompliance.

Significantly, the Order does not seek to retroactively amend existing federal government contracts signed before November 21, 2020. However, should a contractor seek a modification or extension of an existing government contract or subcontract as of November 21, 2020, the change might trigger obligations under the Order.

Despite the foregoing, the Order states that nothing within it “shall be construed to prohibit discussing, as part of a larger course of academic instruction, the divisive concepts listed [above] in an objective manner and without endorsement.” As such, contractors may retain discussion of the above-listed concepts in existing training materials so long as they are presented neutrally and without any indication that the contractor endorses them.

Penalties for government contractors who fail to comply with the Order, or any implementing rules or regulations, may include cancellation of government contracts or debarment from future government contracts.

The Order tasks the OFCCP with monitoring compliance with the Order, establishing a hotline for employees and employers with questions and investigating any complaints of noncompliance.

Federal Grant Recipients

Federal grant holders must certify, as a condition of receiving federal funds, that they will not use the funds to promote divisive concepts in training. All Agency heads must identify and submit to the Director of the Office of Management and Budget (OMB) a list of all grant programs that must complete the necessary certification.

Takeaways

Given the rulemaking authority and oversight responsibilities that the Order delegates to the Department of Labor, the OMB and the OPM, additional guidance is likely forthcoming at some point.

In the meantime, government contractors may wish to seek further legal review of all diversity and inclusion training materials used. Doing so will allow counsel to reassess whether those training materials create any new risk of legal exposure, and provide counsel with an opportunity to make any necessary modifications to bring the materials into compliance. Specifically, counsel may wish to include a disclaimer in the training materials that tracks the language of the Order to make clear that the materials are intended to comply with the Order. Additionally, it is recommended that U.S. employees who receive training sign an acknowledgment form confirming that Order-compliant training has been provided. The acknowledgment form may be helpful in defending potential whistleblower claims raised by employees who report alleged training violations to the Department of Labor, another area of potential concern for contractors, although the possibility of frivolous claims remains. The acknowledgment form may be signed by employees electronically so long as the contractor retains the electronic record.

It is unclear whether and when the Agencies tasked with enforcing the Order will initiate a rulemaking process to promulgate regulations implementing the Order. And, in the event that there is a change in administration following the election, it is unclear whether they will be able to complete that process before January 2021 or if a new incoming administration will rescind the Order entirely.