On Sept. 22, 2020, President Trump issued Executive Order 13950, Combatting Race and Sex Stereotyping (E.O.) purporting “to promote unity in the Federal workforce, and to combat offensive and anti-American race and sex stereotyping and scapegoating.” In relevant part,¹ the E.O. prohibits federal contractors and subcontractors, as well as a yet-to-be defined group of federal grant recipients, from providing training to their workforce that includes specific prohibited, “divisive” concepts. Because the E.O. identifies potentially significant consequences for violations of the prohibitions contained therein, federal contractors and subcontractors, as well as federal grant recipients, should carefully assess and monitor their compliance with the E.O. requirements.

Background

The E.O. is part of a series of recent directives from the Trump administration regarding diversity and inclusion training. On Sept. 4, 2020, the director of the Office of Management and Budget (OMB) issued M-20-34, Training in the Federal Government, that requires executive departments and agencies to “identify all contracts or other agency spending related to any training on ‘critical race theory,’ ‘white privilege,’ or any other training or propaganda effort that teaches or suggests either (1) that the United States is an inherently racist or evil country or (2) that any race or ethnicity is inherently racist or evil” and to identify “all available avenues within the law to cancel any such contracts and/or to divert Federal dollars away from these un-American propaganda training sessions.”

The E.O. builds on this memorandum by establishing and explaining that “the policy of the United States [shall be] not to promote race or sex stereotyping or scapegoating in the Federal workforce or in the Uniformed Services, and not to allow grant funds to be used for these purposes.” It also prohibits Federal contractors from conducting workplace training that would inculcate “any form of race or sex stereotyping or any form of race or sex scapegoating.”

On Sept. 28, 2020, the director of OMB issued M-20-37, Ending Employee Trainings that Use Divisive Propaganda to Undermine the Principle of Fair and Equal Treatment for All, which reiterates key aspects of and provides additional guidance to agencies implementing the E.O.

Prohibition/Requirements for Federal Contractors and Subcontractors

The E.O. establishes new contractual provisions that must be included in all contracts, except those exempted by section 204 of Executive Order 11246, Equal Employment Opportunity, that are entered into on or after Nov. 21, 2020.² The contract provisions prohibit contractors, during the performance of the contract, from using “any workplace training that inculcates in its employees any form of race or sex stereotyping³ or any form of race or sex scapegoating.”⁴ This “include[es] concepts⁵ that:

• 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;
   
• 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 and 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 other 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.”

Contractors subject to these provisions will also be required to “send to each labor union or representative of workers with which he 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 E.O. and to post copies of this notice in conspicuous places available to employees and applicants for employment.

Contractors subject to this clause are further required to include the provisions of the clause in all subcontracts and purchase orders unless exempted under the rules, regulations, or orders of the Secretary of Labor. The Secretary of Labor is to “direct” how prime contractors are to take action to enforce the provisions including sanctions for non-compliance. If a contractor “becomes involved in, or is threatened with, litigation with a subcontractor or vendor as a result of such direction,” the contractor may “request the United States to enter into such litigation to protect the interests of the United States.”

Applicability of E.O. 13950 to Federal Contractors and Subcontractors

Section 4, Requirements for Government Contractors, applies to all “contracts entered into 60 days after the date of this order” (i.e., Saturday, Nov. 21, 2020) except those exempted by section 204 of Executive Order 11246, Equal Employment Opportunity. The provisions in Section 4 will also apply to all subcontracts and purchase orders under covered prime contracts and higher-tier subcontracts unless exempted under the rules, regulations, or orders of the Secretary of Labor. The E.O. does not define the term “contractor”; therefore, agencies could take the position that the prohibitions and obligations apply to an entire company and not just the division of a company that transacts business with the federal government. Notably, the E.O. does not mandate that current contracts be modified to include the provisions.

Enforcement and Penalties

The E.O. requires the Department of Labor (DOL), through the Office of Federal Contract Compliance (OFCCP), to “establish a hotline and investigate complaints received under both this order as well as Executive Order 11246 alleging that a Federal contractor is utilizing such training programs in violation of the contractor’s obligations under those orders.” DOL already has established the OFCCP Complaint Hotline to Combat Race and Sex Stereotyping, which can be reached at 202-343-2008 or via email at OFCCPComplaintHotline@dol.gov. DOL is directed to “take appropriate enforcement action and provide remedial relief, as appropriate.”

The E.O. also notes that the Attorney General is required to “continue to assess the extent to which workplace training that teaches the divisive concepts set forth in” the E.O. contributes to a hostile work environment and gives rise to potential liability under Title VII of the Civil Rights Act of 1964.

Penalties for non-compliance with the provisions can be significant and include cancelation, termination, or suspension (in whole or in part) of the contract and debarment.

Contractors Providing Training to Agencies

Contractors providing training to agencies should be mindful that the E.O. prohibits training to agency employees of any of the “divisive concepts” identified in the E.O. and that the E.O. directs agencies to request that agency inspectors general review agency compliance with the requirements of the E.O. OMB also is required to review agency diversity and inclusion training programs. On Oct. 2, 2020, OMB established a mechanism through which agencies can upload their training materials for OMB’s review. If a contractor providing training to agencies is delayed in providing that training because of this review process or if it is required to revise training to be compliant with the E.O., the contractor should consider its contractual remedies to address any delays or costs for performing extra work. Additionally, the E.O. requires agencies to make compliance with the E.O. a provision in all agency contracts for diversity training. Finally, if a contractor provides “a training for agency employees relating to diversity or inclusion that teaches, advocates, or promotes the divisive concepts” identified in the E.O. in violation of the contract, the agency may consider whether to pursue debarment of the contractor.

Other Relevant Provision to Federal Contractors and Subcontractors

OFCCP also is required to publish in the Federal Register on or before Oct. 22, 2020, “a request for information seeking information from Federal contractors, Federal subcontractors, and employees of Federal contractors and subcontractors regarding the training, workshops, or similar programming provided to employees.”

Impact on Federal Contractors and Subcontractors

Contractors and subcontractors can continue to provide workplace training that promotes “racial, cultural, or ethnic diversity or inclusiveness.” However, the E.O. requires that these efforts be “consistent with the requirements of this order.” Contractors and subcontractors should review their training materials to understand what changes may need to be made to the materials in order to be compliant (when/if needed) with the E.O. The E.O. provides various examples of “objectionable” training materials, which may serve as a guide for identifying materials that might be within the scope of prohibited training. Contractors and subcontractors should maintain detailed records of any training provided, including but not limited to the training materials, to ensure that they can provide detailed information about the scope and content of its workforce training if it is later subject to OFCCP enforcement, an audit or investigation by an agency office of inspector general, or a claim from an employee.

Applicability of and Impact of E.O. 13950 on Federal Grant Recipients

The scope of federal grant recipients that will be impacted by the E.O.’s certification requirements and the implementation timing of this requirement currently is unknown. Federal agencies have until Nov. 21, 2020, to “review their respective grant programs and identify programs for which the agency may, as a condition of receiving such a grant require the recipient to certify that it will not use Federal funds to promote” the “concepts” identified in Section 5 of the E.O. and listed above. Agencies are required to submit a list of all grant programs so identified to the Office of Management and Budget by Nov. 21, 2020.

OMB M-20-37 also directs federal awarding agencies to implement this certification requirement by updating “their guidance, practices, and procedures to ensure that future notice of funding opportunities and the terms and conditions of Federal awards restrict the use of Federal funds, including funds to meet cost share requirements, from being used to promote the divisive concepts set forth in the E.O. (including by conducting research premised upon these concepts), to the extent consistent with the statute(s) governing the grant program and all other applicable law.” Additionally, M-20-37 clarifies that “although training and education for employee development may otherwise be an allowable cost under 2 CFR 200.472, training or education on the divisive concepts specified in the Executive Order is not an allowable cost unless otherwise provided by law.”

Conclusion

While federal contractors and federal grant recipients should prepare to meet the requirements of the E.O., the E.O. may be impacted by: (1) legal challenges (that seek to enjoin its implementation and/or invalidate the E.O.) and (2) the results of the upcoming election. Accordingly, federal contractors, subcontractors, and grant recipients should monitor legal developments, information from the DOL, agency guidance, and contract or grant-specific language regarding the E.O. to ensure that they are aware of and comply with the requirements of the E.O. that are implemented.

_{1 While the E.O. applies to Executive departments and agencies, the Uniformed Services, Federal contractors (and subcontractors), and certain Federal grant recipients, this GT Alert focuses on the requirements of the E.O. pertaining to and its impact on Federal contractors and grant recipients.}

_{2 The E.O. states that its other provisions are effective immediately.}

_{3 “Race or sex stereotyping” is defined in the E.O. as “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.”}

_{4 “Race or sex scapegoating” is defined in the E.O. as “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 similarly 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 others.”}

_{5 Elsewhere in the E.O., the term “divisive concepts” is used to refer to these concepts.}