On March 26, 2026, the White House ordered federal agencies to add a new contract clause barring federal contractors and subcontractors from engaging in “racially discriminatory DEI activities.” The order defines those activities as disparate treatment based on race or ethnicity in recruitment, employment decisions such as hiring and promotion, vendor contracting, and even access to training, mentoring, and leadership-development programs. It also requires contractors to provide records and reports on request, report suspected violations by subcontractors, and accept that noncompliance can lead to cancellation, suspension, debarment, or other payment-related consequences. (whitehouse.gov)

So how could hiring and promotion change? In practice, many federal contractors are likely to move away from race-specific internships, leadership tracks, mentorship circles, promotion targets, or supplier programs if access to those opportunities depends on race or ethnicity. Companies may rewrite internal rules so that selection for jobs, advancement, and development programs is based more explicitly on qualifications, performance, and role-related criteria that are open to all employees. At the same time, the text of the order does not ban every discussion of diversity; its target is unequal treatment based on race or ethnicity. That distinction matters, because employers will now be asking not “Do we have a DEI program?” but “Does any part of it treat people differently by race?” (whitehouse.gov)

This March 2026 order did not come out of nowhere. It builds on a January 21, 2025 executive order that revoked Executive Order 11246, the long-standing framework behind affirmative-action obligations for many federal contractors. The Department of Labor says contractors were told to wind down compliance with that old system by April 21, 2025, and OFCCP stopped enforcing the EO 11246 program. Still, not all obligations vanished: OFCCP says Section 503 disability requirements and VEVRAA veteran requirements remain in force, so contractors must still comply in those areas. In other words, federal contractors now face a sharper, more complex landscape: less room for race-conscious employment programs, but continued responsibility under other nondiscrimination and affirmative-action laws. More sector-specific guidance from OMB is still expected. (whitehouse.gov)