Executive Order 13950, On Combating Race and Sex Stereotyping: Its Effect on Government Contractors’ Use of Diversity Training

In 2020, President Donald Trump issued an executive order that barred federal agencies from conducting diversity training focusing on anti-racism in the United States; the order came after the debut of the 1619 Project (a critical retrospective on race history in the United States), and in the aftermath of a surge in the “Black Lives Matter” movement and the protests that resulted from the murder of George Floyd. Although the executive order was subsequently withdrawn by President Biden, the original order’s ban on certain contractor training—even if only temporary—highlighted the radical disruption that changing established compliance training regimes could cause. Beyond the First Amendment issues raised by the government’s demand that contractors change their employees’ training, the executive order—and its potential impact—highlighted contractors’ vast latticework of compliance obligations with the government, and the often-overlooked costs of suddenly reordering those obligations. This article concludes that politically inspired executive orders—even if they seem, on their face, to be minor and peripheral—should be carefully assessed for the costs they can cause to ripple across the $600 billion federal procurement market.

Executive Order 13950 on Combating Race and Sex Stereotyping

Executive orders are issued by the president of the United States and “generally directed to, and govern actions by, Government officials and agencies. These Executive Orders can have the force of law, even if they do not follow the same procedure as bills passed by Congress.” On September 22, 2020, an executive order on Combating Race and Sex Stereotyping was issued by President Trump, with an effective date of November 21, 2020. The White House explained that its purpose was to “promote economy and efficiency in [f]ederal contracting, promote unity in the [f]ederal workforce, and combat offensive and anti-American race and sex stereotyping and scapegoating.” To understand the executive order’s goals, the concepts of race and sex stereotyping and scapegoating must be defined.

Race or sex scapegoating is defined 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 encompasses any claim that, consciously or unconsciously, and by virtue of their 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.” As defined in E.O. 13950, race or sex stereotyping means “ascribing character traits, values, moral and ethical codes, privileges, status, or beliefs to an entire race or sex, or to individuals because of their race or sex.” The Trump administration took the position that stereotyping and scapegoating, when taught to the federal contract workforce, would not unite the workforce but instead would cause backlash.

Opponents of the order believed that E.O. 13950’s purpose was to segregate and erode the gains in civil rights since the 1960s, and to end diversity training in the workplace. Opponents argued that the Trump administration did not want to remedy racial and gender biases, even when “some employees are reporting ongoing discrimination and exclusion within their own agencies that has yet to be addressed.”

The executive order made clear the Trump administration’s position that what it termed racial “scapegoating” would not be allowed. For instance, E.O. 13950 begins by stating that

[m]any people are pushing a different vision of America that is grounded in hierarchies. . . . This ideology is rooted in the pernicious and false belief that America is an irredeemably racist and sexist country; that some people, simply on account of their race or sex, are oppressors; and that racial and sexual identities are more important than our common status as human beings and Americans.”

It was this type of compliance training that the executive order sought to stop. The Trump White House believed that the diversity training provided by contractors was misrepresenting the U.S. history to the world and in the workplace via stereotyping and scapegoating. Thus, the federal uniformed services and institutions receiving federal contracts and/or grants were to be prohibited from the following activities:

The contractor shall not use any workplace training that inculcates in its employees any form of race or sex stereotyping or any form of race or sex scapegoating, including the concepts that

(a) one race or sex is inherently superior to another race or sex;

(b) an individual, by virtue of his or her race or sex, is inherently racist, sexist, or oppressive, whether consciously or unconsciously;

(c) an individual should be discriminated against or receive adverse treatment solely or partly because of his or her race or sex;

(d) members of one race or sex cannot and should not attempt to treat others without respect to race or sex. . . .

The executive order banned any discussions about white privilege and implicit bias training. The Trump administration urged that these diversity training methods are racist and anti-American. To opponents of the executive order, however, that understanding of diversity training seemed illogical because the purposes of the training methods are to make persons aware of differences—not to reinforce hierarchies of privilege or exclusion.

The Trump White House misinterpreted common diversity training methods by adopting the views of conservative think tanks that themselves were shut off from the mainstream. Those think tanks argued that the types of diversity training at issue were inherently divisive. The Department of Labor (DOL) was appointed as the agency to enforce the E.O., through the Office of Federal Contract Compliance Programs (OFCCP). Contractors that violated the order risked having their contracts canceled, terminated, or suspended in whole or in part. The contractors could also have faced debarment.

The executive order led contractors and their allies to file lawsuits for injunctive and declaratory relief. For instance, on October 29, 2020, the NAACP Legal Defense and Educational Fund, Inc. (LDF) filed a lawsuit “challenging the executive order on the grounds that it violates the free speech, due process, and equal protection clauses of the United States Constitution.”

On January 12, 2021, LDF filed an amended complaint adding the American Association for Access, Equity and Diversity (AAAED) as a plaintiff. The AAAED is a national civil rights organization of professionals who manage affirmative action, diversity, and equal opportunity programs. AAAED’s members included federal contractors and subcontractors at risk of losing contracts if they spoke up against the new executive order or resisted its mandate. AAAED collects fees from training contracts ranging up to tens of millions of dollars. The plaintiffs in the lawsuit provide diversity and inclusion training and/or hold trainings on U.S. history of systematic racism. The plaintiffs also depend on fees from universities and corporations, which are also government contractors.

Enforcement of E.O. 13950

Executive Order 13950 became effective immediately when signed on September 22, 2020, but the requirements for federal contractors and subcontractors were to apply to contracts entered into 60 days after the date of the executive order, i.e.,after November 21, 2020—and thus after the November 2020 election. On November 21, 2020, in the wake of President Trump’s defeat at the polls, the OFCCP began “investigat[ing] claims of sex and race stereotyping pursuant to its existing authority under a prior order, Executive Order 11246 [Equal Employment Opportunity], which required contractors and subcontractors to treat employees without regard to their race or sex, among other protected bases, and requires contractors to take affirmative action to ensure such discrimination does not occur.” In fact, E.O. 11246 existed for 55 years and was created for the purpose of combating racism in the federal workforce and encouraging diversity. On January 20, 2021, E.O. 11246 was replaced by E.O. 13985, Advancing Racial Equity and Support for Underserved Communities Through the Federal Government.

Subsequently, on December 20, 2020, the U.S. District Court for the Northern District of California issued a preliminary injunction against OFCCP “prohibiting OFCCP from implementing, enforcing, or effectuating Section 4 of Executive Order 13950.” The action for injunctive relief was filed by Santa Cruz Lesbian and Gay Community Center and other parties; the plaintiffs included nonprofit organizations, a consultant, and an individual. The plaintiffs provide services to lesbian, gay, bisexual, and transgendered clients living with HIV. For instance, plaintiffs’ AIDS Foundation of Chicago (AFC) was a recipient of grant funds in the amount of $25.9 million from federal agencies. Upon the issuance of the executive order, it lost funding from a primary sponsor, allegedly because it could no longer sponsor an event titled “Positive Change II—Dismantling Racism in the HIV Workplace.”

Shortly after taking office on January 20, 2021, President Biden rescinded Executive Order 13950. Today, however, although the executive order is no longer in force, state governments are enacting similar legislation. “So far, [8] states have considered legislation or other steps to limit how race and racism can be taught, according to an analysis from Education Week. Eight states, all Republican-led, have banned or limited the teaching of critical race theory or similar concepts through laws or administrative actions.” The new state laws ban K–12 education, institutions of higher education, and “companies that do business with government entities from conducting diversity, equity, and inclusion programs.” These nascent “grassroots” attacks on diversity training, like the rescinded federal order, run contrary to decades of contractors’ well-established training in diversity and inclusion.

History of Workplace Diversity Training

Historically, diversity training programs have been among the most controversial and least understood of contractors’ compliance obligations. “Diversity refers to the differences, similarities, and related tensions that exist in any mixture.” Diversity is not limited to race or gender; however, diversity has been politicized and equated with affirmative action. Notwithstanding, diversity programs “seek to create an awareness of bias and discrimination, to help employees acknowledge their biases and develop skills to address those biases, and to help capitalize on diversity as an asset for organizational performance.” The methods of delivering diversity programs are by classroom instruction, videos, discussions, role play, simulations, and exercises. Most of the programs are “[r]ooted in social justice philosophy, [and] civil rights legislation,” and are now a part of America’s workplace culture.

During the 1960s and 1970s, diversity training’s main focus was complying with Title VII of the Civil Rights Act of 1964, which made it illegal for employers with greater than 15 employees “to discriminate in hiring, termination, promotion, compensation, job training, or any other term, condition, or privilege of employment based on race, color, religion, sex, or national origin.” The Civil Rights Act of 1964 established the Equal Employment Opportunity Commission, a federal agency, to enforce the Act.

The following year, on September 24, 1965, President Lyndon B. Johnson issued Executive Order 11246 on Equal Employment Opportunity. “Executive Order 11246 requires affirmative action and prohibits federal contractors from discriminating on the basis of race, color, religion, sex, sexual orientation, gender identity, or national origin. Contractors also are prohibited from discriminating against applicants or employees because they inquire about, discuss, or disclose their compensation or that of others, subject to certain limitations.” The Department of Labor’s Office of Federal Contract Compliance enforced E.O. 11246.

In the past, the EEOC’s enforcement tools included the issuance of consent decrees to employers for violating the Act to require diversity training for their managers. During this time, employers voluntarily began to create trainings focused on compliance to limit liability and negative publicity. These trainings caused backlash because the focus or objective was on treating women and minorities fairly. White males felt that minorities and women were receiving preferential treatment in the workplace. Therefore, the trainings were not successful because the trainers could not make a business justification for the training, other than to avoid litigation. However, some companies chose to make diversity training part of their corporate culture by making diversity a moral imperative.

In the 1980s, the focus on diversity training was on “helping women and people of color to assimilate into existing corporate cultures by creating special training programs based on the assumption that these new corporate entrants were less prepared because they had not yet developed the necessary managerial skills to be effective.” This approach, however, created a stigma (which continues today) that women and minorities were less qualified than white males. Companies also began to recruit women and minorities but often failed to retain and promote them.

Most diversity training methods that were developed in the late 1980s to late 1990s (called “Sensitivity Training”) are still in use today. The purpose of the training is to include women, minorities, persons with disabilities, and white males. “The various training approaches ranged from an emphasis on social justice to sensitivity and awareness and appreciation of differences, to Roosevelt Thomas’ connection of diversity to business outcomes.” Roosevelt Thomas is known as the founder of Diversity and Inclusion. Mr. Thomas suggests that companies should move away from diversity training based on affirmative action because it fails to address the root cause of inequality and prejudice. He stated that, “[in] a country seeking competitive advantage in a global economy, the goal of managing diversity is to develop our capacity to accept, incorporate, and empower the diverse human talents of the most diverse nation on earth. It’s our reality. We need to make it our strength.”

Affirmative action and other training techniques also could cause reverse discrimination and divisiveness. For example, “in your face,” “admit your guilt” sessions for white men to “confess and repent” sometimes left them feeling “defensive.” White men sometimes left these trainings feeling like villains and thinking that women and minorities would take their jobs. The trainings also made minorities uncomfortable and feeling pressure to speak for an entire race or identity group.

One of the most popular diversity training methods was the Experimental Learning Technique, which shows the relationship between adverse treatment and performance. The Experimental Learning Technique (also called the “Blue Eyes/Brown Eyes” technique) was developed by Jane Elliot, an Iowa public school teacher. She “separated students by the color of their eyes and told them that one group was superior (Blue Eyes) to the other group (Brown Eyes), and therefore, was entitled to better treatment. The group that thought it was superior performed better and the group that was treated poorly performed worse.”

In the early 2000s the term “inclusion” became popular in diversity training, though the term was historically used in the field of education, and meant the goal of having children with disabilities participate fully in all facets of school. Today “the concept of inclusion has developed as a way to capture and communicate how people and organizations must be and what they must do to benefit from diversity, both individually and collectively.” In the workplace, the goal is to make everyone feel that they can contribute to the organization’s mission and have a sense of belonging without losing their cultural identity or uniqueness.

Inclusion is a competency like leadership, through which employees become culturally competent about differences in the workplace. Inclusion is a continuous learning process, very unlike a lone diversity training session; employees learn how to think globally. “Positioning diversity as a competency has created another major paradigm shift; the assumption is no longer that only certain groups need training (e.g., white men or minorities), but rather that all employees need to be more cross-culturally competent in an increasingly global world. It is just as important for an African American male to learn more about his Chinese coworker or vice versa.” Similarly, R. Roosevelt Thompson Jr. created the concept of Strategic Diversity Management (SDM). SDM “is a craft for enhancing the way people make quality decisions in situations where there are critical differences, similarities, and tensions.” For example, instead of pretending or ignoring that tensions exist about a person’s differences, SDM urges employees to make the decision to learn about the differences instead of making assumptions.

Current Diversity and Inclusion Training

Currently there is another paradigm shift in diversity and inclusion training. Over the past decade there has been an increase in incidents of racial injustice due to police brutality and workplace sexual harassment, developments that helped spur movements such as “Black Lives Matter” and “Me too.” At the same time, white nationalism has increased in the United States. As a result, on August 18, 2011, President Barack Obama issued Executive Order 13583, Establishing a Coordinated Government-wide Initiative to Promote Diversity and Inclusion in the Federal Workforce. E.O. 13583 required that the Office of Management and Budget issue a Governmentwide Inclusive Diversity Strategic Plan in 2016, which was to focus on “a New Inclusion Quotient,” and was to call upon agencies to “provide training and education on cultural competency, implicit bias awareness and inclusion learning for all employees.” As noted, cultural competence is “the ability to understand, appreciate and interact with people from cultures or belief systems different from one’s own.” Further, cultural competence is used by the federal government “to [help] eliminate racial, ethnic and socioeconomic disparities in health and mental health care.”

Similarly, organizations throughout the United States are focusing on implicit bias training. “Implicit bias refers to the attitudes or stereotypes that affect our understanding, actions, and decisions in an unconscious manner. These biases, which encompass both favorable and unfavorable assessments, are activated involuntarily and without an individual’s awareness or intentional control.” In 2018, global coffee company Starbucks shut down all of its retail stores for one day to conduct racial bias training. This was after two Black men were arrested in a Philadelphia, PA, store after being there for 10 minutes without purchasing a beverage and requesting a restroom key. Its response to this racial incident demonstrated that Starbucks was racially sensitive and willing to put people over profits; the company lost $16.7M in profits by closing its stores.

In 2019, the New York Times faced backlash for publishing the 1619 Project commemorating the 400th Anniversary of Slavery in America. The Project “reframe[s] American history by considering what it would mean to regard 1619 as our nation’s birth year instead of 1776.” In August 1619, the arrival of a ship at “Point Comfort in the British colony of Virginia, brought a cargo of 20 to 30 enslaved Africans. Their arrival inaugurated a barbaric system of chattel slavery that would last for the next 250 years. This is sometimes referred to as the country’s original sin, but it is more than that: It is the country’s very origin.” The 1619 Project is a compilation of essays, poems, and photos detailing the perspectives of Black people’s experiences in America. For example, the author Nikole Hannah-Jones wrote a short essay about her father flying an American flag on the porch of their home as a child. She found it unusual because although her father served in the U.S. Army hoping that he would finally be treated equal to a white American, his dream never came to fruition. He was still treated as a second-class citizen, no matter how patriotic he was or hard he worked. Ms. Jones also gave a brief history of Black Americans’ contribution to society and even gave examples of another Black American patriot named Isaac Woodard who was blinded after being beaten by a white mob shortly after being discharged from the Army after World War II. Other essays include discussions about music, the wealth gap between white and Black Americans, the prison system, redlining, health care, and education.

Notably, Ms. Hannah-Jones won the Pulitzer Prize for her work on the 1619 Project. Currently, the Pulitzer Center offers guides and classroom activities for teachers to reeducate students on slavery. Although her success has been celebrated, it has also been politicized. Ms. Hannah-Jones was recently denied tenure at the University of North Carolina at Chapel Hill, reportedly as a result of political opposition to the 1619 Project.

The 1619 Project fueled the establishment of E.O. 13950 because it provides information on how teachers can reeducate Americans about slavery. White nationalists believed the project to be anti-American and attacked the New York Times and the author. Conservative think tanks tried to convince the New York Times to rescind the 1619 Project because they believe it is false. However, it can be argued that some white Americans really do not know the truth about the Black experience in America, or do not care to know. For instance, “[t]he Heritage Foundation has been tireless in its efforts to debunk the radical and anti-American positions taken by The New York Times and the ‘1619 Project’ since it was first published.” The Heritage Foundation also created a curriculum in opposition to the 1619 Project called the 1776 Commission, which has been endorsed by former President Donald Trump. On September 17, 2020, “Constitution Day, President Donald Trump announced the creation of a ‘1776 Commission’ designed explicitly to counter the harmful narratives propagated by anti-American initiatives, including the ‘1619 Project.’” This stood in sharp contrast to observing the 400th anniversary of Blacks in America.

Thereafter, on September 22, 2020, the president introduced E.O. 19350 to curb any dialogue about America’s past that is negative, “[d]uring a time when the United States is engaged in an emotional, and increasingly confrontational, dialogue over the legacy of its racially prejudiced past. Increasingly, educators across the United States are also exploring ways to better teach the narratives of racial privilege and injustice that have led to the pervasiveness of institutional racism in America.”

Another incident that served as a catalyst for more diversity training was the murder of George Floyd by a policeman while under arrest in Minneapolis. His highly publicized death ignited federal agencies and the private sector to hire consultants to discuss racial privilege and injustice. “On May 25, [2020,] a Minneapolis police officer was caught on video with his knee on the neck of George Floyd for almost 10 minutes, torturing and killing Floyd, a 46-year-old Black Man.” “A massive wave of angry protests erupted in more than 2,000 cities and towns on a scale not seen in America since the Civil Rights Movement and the Vietnam War. “Black Lives Matter” extended its reach as a rallying cry against racism and police brutality. While most protests against the police misconduct and racial inequality were peaceful, television news was filled with chaotic scenes of rioting, looting and buildings set afire in major cities.” In response, President Donald Trump made a speech in the White House’s Rose Garden about the protest and rioting and stated, “I will fight to keep them safe [i.e., businesses]. I will fight to protect you. I am your president of law and order, and an ally of all peaceful protestors.”

The “law and order” statement was an abhorrent response to much of the country; it did not unite the country. Instead it was seen as a message implicitly endorsing segregation, similar to the messaging of former presidential candidates and Governor George Wallace of Alabama in the 1960s. Governor Wallace was known for saying, “segregation now, segregation tomorrow, and segregation forever.” President Trump’s statement, therefore, was not a positive public relations event, unlike, for example, Starbucks’ response to a racially charged incident. Similar to Starbucks, for business and reputational reasons, it is important for companies to provide diversity training.

Why Are We Still Using Diversity Training?

Companies continue to use diversity and inclusion training because it has been found to increase profits, save costs, and inspire innovation.

In fiscal year 2020, the federal government spent $682 billion on government contracts; spending increased by $83 billion from 2019–2020. The top five awardees were five defense contractors: Lockheed Martin ($75.8B), Raytheon ($28.1B), General Dynamics ($25.6B), Boeing ($23.0B), and Northrop Grumman ($14.7B). These five companies have robust diversity and inclusion programs. Northrop Grumman, a global company, has been recognized by DiversityInc. as one of the Top 50 Companies for Diversity.

Diversity is a global demographic fact, and we must understand its implications for talent, the workplace, and the marketplace. The federal government encourages diversity among contractors through the work of the Small Business Administration, which assists small businesses, including small disadvantaged businesses and women-owned businesses, in winning 23 percent of government contracts.

The government and contractors still need diversity and inclusion training to change “mind-sets.” Research has shown that some government contractor diversity programs “help save sourcing costs, but could also enhance quality at the source by increasing supplier bases and nurturing innovative partners through the mentor protégé program[s],” which encourage established contractors to team with smaller, emerging firms. Further, because it damages competition in the government’s supply chain, “discrimination against minority business enterprises could lead to higher business failure rates, lower profitability, and reduced sales revenues.”

A Harvard study found “new research provides compelling evidence that diversity unlocks innovation and drives market growth—a finding that should intensify efforts to ensure that executive ranks both embody and embrace the power of differences.” The innovation works when there is “two-dimensional diversity” among employees. This occurs when employees possess acquired and inherent traits (such as traits one is born with, e.g., gender and ethnicity), coupled with experiences from working in another culture or country. An alternative tool for diversity training could be a focus on recruiting more such “two-dimensional” employees, to offset the negative effects of laws such as E.O. 13950 that constrict diversity training.

The case for continuing diversity training is, as noted, a strong one. Organizations that support diversity are more profitable. “According to the McKinsey study “Why Diversity Matters,” companies in the top quartile for gender-diverse executive suites were 15% more likely to generate above-average profitability compared to the bottom quartile of companies whose executive teams were predominantly white and male.” Private firms are likely to prefer the more profitable path, and will continue to support diverse workforces and diversity training.

Negative Effects of E.O. 13950

Private entities’ support for diversity training—an established norm in human resources management, involving many millions of dollars in training every year—could have been up-ended by President Trump’s executive order banning certain training. Many organizations such as the State University of New York (SUNY) believed that the executive order’s proscriptions, which extended to “divisive concepts,” “race or sex stereotyping,” and “race or sex scapegoating,” though written in a neutral manner, would nevertheless “run counter to approaches taken by many institutions to address historical patterns of discrimination, including the prohibition on teaching inherent, unconscious bias; [and] training that touches on a shared responsibility for past or present inequities on the basis of race or sex.” The executive order also could well have narrowed the scope of work allowed researchers and trainers who are hired to present on race and sex discrimination.

These were not hollow risks; before the executive order was rescinded, it had a pronounced impact on established training regimes. Diversity practitioners were suffering financial losses, and contracts were canceled, because of E.O. 13950’s chilling effect on the training industry. During the interregnum before the order was repealed, Rosa Clemente, a public speaker and activist, was scheduled to speak at a Hispanic Heritage Month event at the National Credit Union Administration, a federal agency. “Less than 24 hours before the talk, she got word that her presentation would be canceled after the staff reviewed her PowerPoint presentation, which she said made references to ‘white supremacy’ and ‘racial capitalism.’” Although the talk was about Hispanic History Month, not diversity training, the executive order had a chilling effect. Many contractors thus began to feel the effects of the executive order; sometimes for the first time, government officials were requesting permission to review their materials prior to their presentations to employees, and contractors were confused as to what agencies were looking for, and whether their contracts would be canceled.

The economic effects of the executive order, even if only transient, were significant. Due to E.O. 13950, for example, the University of Iowa (UI), a federal contractor, paused all diversity trainings. The “administrators . . . joined the chorus of critics around the country denouncing the message in the executive order. But administrators have also cited the potential risks of noncompliance—including a loss of federal funding [$346,721,973]—as the reason trainings have been temporarily suspended. The university has put together a committee to ‘vet’ trainings for compliance.”

The executive order, moreover, echoed far beyond the federal government. On June 8, 2021, Governor Kim Reynolds of Iowa signed Iowa’s House File 802 into law, which prohibited diversity and inclusion training focusing on race and sex stereotyping at government agencies, entities, school districts, and public secondary schools. Notably, many states have similar laws prohibiting sex and race stereotyping, such as Idaho, Oklahoma, Tennessee, Texas, New Hampshire, and Arizona. The effects of E.O. 13950 are not going away.

Conclusion

Until President Biden rescinded the Trump administration’s executive order on diversity training, many contractors that supply that training were at risk of losing contracts, and contractors’ well-established compliance programs risked being undone. The E.O. raised an awareness that diversity is serious and companies have to be flexible, and framed diversity training into a moral language to reduce potential divisiveness that will ultimately increase overall training effectiveness. Moreover, contractors should align diversity into their corporate culture and business strategy and equate cultural competence to leadership skills. As research shows, one day of diversity training cannot transform a person, but creating a work environment that fosters diversity will eventually allow employees to understand diversity among peers, and they will become more sensitive to the differences that everyone around them possesses. Also, a focus on hiring two-dimensional employees—employees grounded in diversity and its benefits—will educate, diversify, and innovate the contractor and federal workforces to be more sensitive to and aware of the differences (and the strengths in those differences) between people in the workplace.