US Department of Labor rescinds previous administration’s final rule addressing displacement of federal contractors

The 2023 “nondisplacement” rule (29 CFR part 9, implementing Executive Order 14055) required that when one federal service contract ended and a new contractor took over essentially the same work:

• The new (successor) contractor and its subcontractors had to in good faith offer a “right of first refusal” of employment to the service employees who had been working on the outgoing (predecessor) contract, if those employees’ jobs would end because of the change in contractors.
• Offers had to be for positions for which the workers were qualified, and workers had to be given at least 10 business days to accept.
• The successor contractor could not fill any open positions with new people until it had first made these offers to the predecessor’s covered employees.
• The contractor could choose to staff the contract with more or fewer workers than the predecessor, but any positions it did fill had to be offered first to qualified predecessor employees.
• There were limited exceptions (for example, no obligation to offer jobs to managers excluded from the Service Contract Act definition of “service employee,” or to workers for whom there was reliable evidence of “just cause” for discharge). These requirements were written into a mandatory contract clause and into detailed regulations on how offers must be made, recordkeeping, and enforcement.

Executive Order (EO) 14148, titled “Initial Rescissions of Harmful Executive Orders and Actions,” was signed by President Trump on January 20, 2025. It:

• States a policy of rolling back prior Biden‑era executive actions, especially those related to diversity, equity and inclusion (DEI), climate policy, COVID‑19, immigration, and certain contracting rules.
• Explicitly revokes dozens of earlier executive orders and memoranda, including EO 14055 (Nondisplacement of Qualified Workers Under Service Contracts) in section 2(qq).
• Directs agency heads (section 3) to stop implementing policies based on the revoked orders, to end DEI implementation, and to review related actions for possible rescission or replacement. The Labor Department’s December 22, 2025 rescission of the 2023 nondisplacement regulations was issued “pursuant to section 3(a) of EO 14148” to carry out the revocation of EO 14055.

Executive Order 14055, “Nondisplacement of Qualified Workers Under Service Contracts,” issued by President Biden on November 18, 2021, established the policy that when a federal service contract ends and a follow‑on contract for the same or similar services is awarded, the new contractor should generally hire the predecessor contractor’s qualified service employees to avoid displacement. Key points and its link to the 2023 regulations:

• Section 3 of EO 14055 required agencies to insert a contract clause stating that successor contractors and subcontractors must, in good faith, offer a right of first refusal of employment to service employees working on the predecessor contract, with at least 10 business days to accept and no new hiring until these offers were made.
• It defined covered “service contracts” (those subject to the Service Contract Act) and carved out exclusions (e.g., contracts under the simplified acquisition threshold, certain mixed federal/non‑federal jobs).
• Section 7 directed the Secretary of Labor to issue regulations and the FAR Council to update procurement rules to implement these requirements.
• The Labor Department’s 2023 final rule at 29 CFR part 9 (“Nondisplacement of Qualified Workers Under Service Contracts”) was issued specifically to implement EO 14055 and operationalize its nondisplacement and right‑of‑first‑refusal requirements. EO 14055 itself was later revoked by EO 14148, and the implementing 2023 regulations were then rescinded by DOL in 2025.

Based on the available information, the December 22, 2025 action rescinds the regulations themselves (29 CFR part 9) going forward; it does not clearly state that it retroactively voids contract clauses already in place on existing contracts.

• EO 14148 revoked EO 14055 as a matter of presidential policy, and DOL then rescinded part 9 “to fully implement and effectuate the revocation of EO 14055.”
• Typically, when a rule like part 9 is rescinded, it applies prospectively to solicitations and contracts going forward; existing contracts that already contain the EO 14055 nondisplacement clause remain governed by their contractual terms unless modified. However, DOL has not, as of the available public notices, issued detailed guidance on how existing contracts containing the old clause should be handled, so the precise treatment of already‑awarded contracts is not fully spelled out.

Employers and workers can access both the compliance toolkits and the semiannual regulatory agenda online:

• Compliance assistance toolkits (Wage and Hour Division): Available on WHD’s “Compliance Assistance Toolkits” or “Resources” pages, which compile industry‑specific guidance on wage, hour, and government‑contract rules, including the Service Contract Act and other laws WHD enforces.
  • These can be reached from the Wage and Hour Division website under Resources → Compliance Assistance Toolkits.
• Semiannual regulatory agenda (Department of Labor): Published twice a year in the Unified Agenda of Federal Regulatory and Deregulatory Actions and accessible via DOL’s Regulations page or directly through Reginfo.gov.
  • The article directs users to view the Department of Labor’s semiannual regulatory agenda to see current and planned regulatory or deregulatory actions.

After rescission of the nondisplacement rule, the Wage and Hour Division (WHD) no longer enforces the specific right‑of‑first‑refusal / nondisplacement protections that were created by EO 14055 and 29 CFR part 9, because EO 14055 has been revoked and part 9 has been rescinded. However:

• WHD continues to enforce other protections for workers on federal contracts, such as the Service Contract Act’s wage and fringe‑benefit requirements and applicable minimum‑wage and overtime laws.
• Workers who believe they have been denied legally required pay or otherwise affected by violations of laws WHD still enforces can file complaints or ask questions by calling WHD’s toll‑free helpline 1‑866‑4US‑WAGE (1‑866‑487‑9243), or by contacting a local WHD office through the website. The Department’s own nondisplacement page now notes the revocation of EO 14055 and rescission of part 9, confirming that these specific displacement protections are no longer in effect.

Publicly available information indicates that, aside from rescinding 29 CFR part 9, the Department of Labor has not issued detailed transitional provisions specific to contractors for unwinding the nondisplacement requirements. What is clear from DOL’s notices:

• EO 14055 was revoked by EO 14148, and 29 CFR part 9 (the nondisplacement rule) was rescinded on December 22, 2025 to “fully implement and effectuate” that revocation.
• Contractors and subcontractors are directed generally to WHD’s compliance assistance helpline (1‑866‑4US‑WAGE) and online resources for guidance on their remaining obligations under other laws, but no separate, formal transition rule has been published that lays out step‑by‑step instructions for existing nondisplacement clauses. Therefore, apart from the rescission itself and generic compliance‑assistance channels, no specific transitional regime has been publicly detailed.