Employers are operating in an increasingly complex legal environment when it comes to transgender employees. Federal law continues to prohibit discrimination based on transgender status, but recent executive orders and shifting federal enforcement priorities have introduced new compliance considerations, particularly for federal contractors. This article provides practical guidance for employers seeking to understand their obligations and manage legal risk.
Employers committed to diversity, equity, and inclusion (DEI) programs have spent recent years navigating a hostile enforcement environment. Executive orders threatening broad enforcement action, expansive EEOC investigations, DOJ guidance introducing novel liability theories, and state legislation targeting DEI training have collectively created a climate of significant legal uncertainty.
Even against this backdrop, three recent legal developments offer meaningful encouragement for employers wishing to continue DEI initiatives. Courts and the federal government have begun to draw constitutional and legal limits around aggressive anti-DEI enforcement positions. While the compliance guidance we have previously provided remains relevant, the judicial record has shifted in ways that private employers should understand.
With the 2026 Colorado legislative session now complete, we have a full picture of which labor and employment bills advanced, which were vetoed, and what employers need to know now.
The table below summarizes the final disposition of all bills covered in our earlier update.
The 2026 DEI Executive Order recently issued by the White House imposes new obligations on federal contractors and subcontractors, to prevent “artificial” and “unnecessary” DEI program costs from being passed on to the government in federal courts. It limits the definition of racially discriminatory DEI activities to employment decisions, contracting activities such as vendor agreements
This is not the macabre tale of Macbeth. It is the new legal reality. The EEOC’s sweeping subpoena to Nike signals a dramatic change in EEOC enforcement posture toward Diversity, Equity & Inclusion programs previously regarded as permissible, a shift that demands careful navigation by employers.
Eva Perón’s farewell song from “Evita” comes to mind as the Office of Federal Contract Compliance Programs (OFCCP or Agency) loses its authority and prepares to take its final bow. Aligning with the Administration’s efforts to dissolve the agency, OFCCP has continued to send notices to federal contractors.
The Equal Employment Opportunity Commission (EEOC) and the Department of Labor released their 2026 Congressional Budget Justifications (CBJ) on May 30, 2025, providing valuable information related to the EEOC’s enforcement intentions and the future of the Office of Federal Contract Compliance Programs (OFCCP). A CBJ is the annual budget justification materials of a federal agency or a component of a federal agency that are submitted in conjunction with the President’s annual budget submission. The CBJ provides a detailed description of each program and information about how the agency will use funds, including increases and decreases in spending. The EEOC CBJ identifies four enforcement priorities and anticipated investigations into systemic intentional discrimination using the pattern or practice method of proof. Additionally, the EEOC CBJ and the Department of Labor’s Budget in Brief confirm that the OFCCP will be extinguished with its remaining two programs distributed to the EEOC and the Veterans Employment Training Service.
In previous legal updates, our team analyzed the recent executive order entitled Ending Illegal Discrimination and Restoring Merit-Based Opportunity, which encourages, but does not mandate, that private employers end certain Diversity, Equity, and Inclusion (DEI) practices that the order considers “illegal.” Despite the executive branch’s shift in its approach to DEI, the underlying legal framework for private employers has not changed. The same is true for the recent executive order on gender identity entitled “Defending Women from Gender Ideology Extremism and Restoring Biological Truth to the Federal Government.” While this order introduces significant changes for federal agencies and federal contractors, private employers remain largely unaffected at this time.
The Office of Federal Contract Compliance Programs (OFCCP) has made several announcements, including Directives, Notices, and Proposals in their quest to embark on initiatives that significantly impact federal contractors’ affirmative action obligations. These changes contemplate substantive changes to regulations and existing interpretations of the regulations but are cloaked in terminology such as “guidance” and a proposal to OMB to renew data collection. Many of these initiatives obligate regulated parties to undertake additional significant compliance burdens under the threat of enforcement actions. This blog post, part 1, will discuss two of the changes and the resulting challenges faced by federal contractors: 1) OFCCP’s new interpretation of federal contractors’ obligation to evaluate compensation systems as described in Directive 2022-01 and 2022-01 Revision 1, and 2) the contractor portal. Other changes will be addressed in Part 2 of this series.