Vendors worried about new rules on racial diversity training

Concerns about legality & implementation; OPM halts current trainings; attorneys advise compliance for now

      Federal contractors are alarmed about several recent orders from the Trump Administration to strictly avoid "race or sex stereotyping" and "race or sex scapegoating" in any diversity trainings or communications that they provide to the government or to their own employees or subcontractors.

      The White House in an Executive Order on Sept. 22 said that trainings involving such "divisive concepts" must be canceled immediately and that contractors soon will be required to submit copies of their diversity training materials for review. The Office of Personnel Management suspended all current diversity training contracts and the Labor Dept. followed up with new rules.

     Contractors are being ordered to comply with the new rules starting on Nov. 22 or face possible contract termination, suspension or debarment.

      Vendors are objecting strongly to the executive order and say it may infringe on their constitutional rights. Critics include 11 business and technology organizations that signed a letter saying the order should be revoked.

      Attorneys say the order probably will be challenged in court. "The Executive Order raises serious First Amendment questions that will likely lead to litigation," Squire Patton Boggs attorneys wrote in a recent blog entry.

      The new rules have been imposed quickly and with strong penalties for non-compliance, resulting in a rapid uptick of concern.

      Attorneys are advising vendors to follow the new guidelines for now, even as they grapple with challenging requirements. Recent actions

      The recent chain of events began in early September following conservative media outlets' reports criticizing federal diversity trainings. The Trump Administration responded with several recent documents and actions.

• On Sept. 4, Office of Management and Budget Director Russell Vought wrote to agency heads to outline new policies on diversity trainings, citing the unnamed media reports as the basis for those policies. He wrote that he was directed by President Trump to terminate "un-American" trainings such as those cited by the media. He ordered the agencies to begin reviewing trainings for cancellation.
• On Sept. 22, the president issued Executive Order 13950 prohibiting "divisive concepts" in federally-funded diversity trainings and communications, including vendors' communications with federal employees, the military and their own employees. The banned concepts include "race and sex stereotyping" and "race and sex scapegoating," with several definitions of those terms provided

        The order also instructed agencies to issue a Request for Information by Oct. 22 to ask vendors to submit their "diversity" and "inclusion" materials for review.

• On Oct. 2, Dennis Dean Kirk, associate director of employee services at the Office of Personnel Management issued a memo stating that to carry out the executive order, all federally-funded diversity and inclusion trainings must be reviewed and approved by OPM before use. The requirement applies to trainings and support materials used in the past and planned for the future.

      Each agency is asked to make one comprehensive submission. They will be reviewed in order of receipt.

      On Oct. 7, the Labor Dept.'s Office of Federal Contract Compliance issued guidelines for complying with the executive order. DOL noted that specific requirements apply to federal contracts entered into after Nov. 21, including provisions related to prohibited training, notice requirements, penalties for noncompliance, and the order's effect on subcontracts and purchase orders. These provisions do not apply to current contracts.

      DOL also supplied a list of eight prohibited "concepts," including:

• That "an individual, by virtue of his or her race or sex, is inherently racist, sexist, or oppressive, whether consciously or unconsciously;"
• That "members of one race or sex cannot and should not attempt to treat others without respect to race or sex;"
• That "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;" and
• That "any individual should feel discomfort, guilt, anguish, or any other form of psychological distress on account of his or her race or sex; along other banned concepts."

      The DOL officials also wrote that a hotline has been set up, with a phone number and email address, for agency staff to handle complaints about vendors accused of not following the new rules.

Industry reaction

      Contractors are responding to the executive order with consternation, and attorneys say it already has created a "chilling effect" on diversity trainings.

      Eleven technology and business groups, including the Software Alliance, the IT Industry Council and the HR Policy Association, are urging that the rule be rescinded.

      "By limiting the type of information companies can provide to their own employees, this EO raises significant First Amendment concerns and hobbles longstanding private sector efforts to promote diversity and inclusion," the letter from the business groups states.

      Attorneys agree that the executive order may be on thin ice under the U.S. Constitution.

      "The legal underpinnings of the EO raise serious questions and may be subject to challenge, but, as implemented in its current form, it imposes broad restrictions with dire consequences on how companies and organizations conduct themselves in relation to these important issues," Venable LLP attorneys wrote in a recent blog.

      There may be challenges in complying with the EO while also complying with federal and state equal employment opportunity laws, as well as with the Administrative Procedure Act and the Paperwork Reduction Act, several attorneys pointed out.

      Nonetheless, most attorneys are advising contractors to comply with the EO for now. They say contractors should review their own diversity communications to identify the so-called "divisive concepts" and remove those concepts, at least temporarily, until the legal issues are addressed, or political leadership changes.

      "Implementation of the Order is in its infancy and should the administration change in January 2021, this Order is likely to be revoked. The Order also may face legal challenges. However, given how quickly the OFCCP is being required to solicit information, now is a good time to examine the training programs and resources available to your workforce to determine whether there is any concerning material," wrote PilieroMazza PLLC attorneys in a recent client alert.

More information:
OMB memo: https://bit.ly/3kowHF9
Executive Order: https://bit.ly/34OvGzW OPM memo: https://bit.ly/3iN1UAp
DOL guidelines: https://bit.ly/3lHBYs1 Tech groups’ letter: https://bit.ly/2SJRmr4
Attorney comments - Venable: https://bit.ly/33MXK7k - Squire Patton Boggs: https://bit.ly/2SNBWT0
- Fox Rothschild: https://bit.ly/2GVP1H0 - :PilieroMazza: https://bit.ly/36TqgGj

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