Federal enforcement priorities are shifting—and construction companies, especially those working on public or institutional projects, are feeling the pressure. Whether you’re reviewing your hiring practices or responding to an owner’s request for diverse subcontractors, the rules around Diversity, Equity, and Inclusion (DEI) are changing quickly.
 
This guidance offers practical takeaways for contractors navigating today’s evolving legal and political environment.
 
1. Don’t Abandon DEI—but Do Proceed with Caution
 
While some high-profile DEI initiatives have been challenged or curtailed, you are still permitted—and encouraged—to create inclusive workplaces and seek diverse project teams. The key is how you do it.
 

• Anti-discrimination laws still apply: Title VII prohibits making employment decisions based on race, sex, or similar traits—regardless of the intent behind the decision. “Reverse discrimination” is now a rising focus of enforcement.
• Training matters: DEI trainings that assign traits based on identity, separate employees by demographic group, or create pressure based on race or sex can lead to hostile work environment claims.
• Be proactive, not reactive: Audit your DEI programs, Employee Resource Groups, and trainings under legal counsel. The goal is to preserve inclusive efforts while reducing legal exposure.

 
2. For Contractors Working on Federally Funded Projects, the Rules Have Changed
 
Contractors working on federally funded projects must be especially careful:
 

• Executive Order 14173 mandates “color-blind” enforcement of civil rights laws and may condition funding on DEI compliance certifications.
• Past affirmative action plans may be audited under new OFCCP leadership.
• New restrictions may soon apply regarding how gender identity is addressed using federal funds.

 
If you’re a federal contractor or receiving federal funds, review your certifications and historical affirmative action filings to ensure you’re not exposed.
 
3. Rethink Procurement: Outreach Over Outcomes
 
DEI in subcontractor procurement is under scrutiny, particularly when tied to numerical goals or guarantees. Owners may still request diverse participation—but how you approach that request matters.  Avoid common pitfalls such as:
 

• Set-asides that guarantee trades to DBE/MBE firms
• Scoring systems that automatically disqualify low bidders
• Promises to award work only to specific demographics
• Over-promising results to meet owner expectations

 
Instead, Focus on:
 

• Outreach and opportunity: Expand who hears about your projects—especially small, emerging, or historically underutilized firms.
• Capacity building: Help diverse subs build safety credentials, bonding capacity, and experience.
• Transparent procurement: Use standardized bid criteria and clear scopes of work.
• Aspirational, not guaranteed, goals: Language in proposals and contracts should reflect a commitment to inclusivity—not rigid targets that create risk.

 
4. Watch the Funding Source
 
If your project receives federal, state, or municipal funding, make sure you understand what DEI-related requirements apply. Different agencies may apply different standards, and noncompliance—even if unintentional—can result in serious consequences.
 
THE BOTTOM LINE:
 
You don’t have to choose between compliance and inclusion—but you do need to be thoughtful. Build inclusive teams through outreach, transparency, and opportunity—not through preferences, quotas, or set-asides. Document your efforts. Get legal guidance where needed. And stay alert to the rapidly evolving enforcement landscape.
 
Ken Rubinstein is Chair of the Preti Flaherty Construction Law Practice Group, and Harper Weissburg is a member of the firm’s Employment Law Practice Group. Both regularly counsel members of the construction industry on how to navigate the evolving legal and compliance landscape surrounding DEI in both employment and procurement contexts.