A lawyer who represented SpaceX looks to downsize federal contracting watchdog

On Monday, March 24, Catherine Eschbach, the new head of a civil rights agency within the Labor Department, sent an email to her staff introducing herself and announcing her plans to downsize the agency and investigate whether the work it's been engaged in for decades is constitutional.

"I look forward to meeting and working with you as we implement the agenda that the American people elected President Trump to enact," she wrote in the email, shared with NPR by a Department of Labor employee who asked to remain anonymous to avoid retaliation.

"We will restore the agency to full compliance with its constitutional and statutory authority," concluded Eschbach.

Eschbach is now leading the Office of Federal Contract Compliance Programs, a watchdog agency within the Department of Labor that both audits and investigates federal contractors to ensure they are obeying equal opportunity and anti-discrimination laws.

Eschbach comes to the watchdog agency after most recently working at private law firm Morgan, Lewis & Bockius, where she represented SpaceX in an ongoing legal battle between SpaceX and the National Labor Relations Board, an independent agency that investigates and adjudicates unfair labor practice charges. The chief executive of SpaceX, Elon Musk, is also a senior adviser to President Donald Trump.

The NLRB was examining the firings of eight SpaceX employees when the company, represented by lawyers including Eschbach, filed suit last year against the agency arguing that its structure was unconstitutional. The board dropped its opposition to SpaceX's arguments on constitutionality in court after Trump fired one of its members, but it's unclear how or when that case will be resolved.

Now, Eschbach appears to be considering dismantling the Office of Federal Contract Compliance Programs, the agency she leads.

That would largely put an end to the agency's work holding contractors, including companies led by Musk, accountable to federal anti-discrimination laws and leave many American workers less protected. Her appointment raises conflict-of-interest concerns, given her previous work for SpaceX.

The Department of Labor did not respond to a request for comment from NPR.

"It's a free for all," said the Labor Department employee who spoke to NPR on condition of anonymity. "Federal contractors and subcontractors will basically be unregulated because they don't know what to do to stay in compliance."

Limiting the agency's authorities

The scope of the watchdog agency's work is significant, given federal contractors employ an estimated 20% of the U.S. workforce. Federal contracts amounted to over $750 billion in the 2023 fiscal year, according to the Government Accountability Office.

Every year, the Office of Federal Contracting Compliance Programs selects hundreds of contractors and subcontractors for audits. The agency's audit list for 2025 includes tech giants Google, Meta, Amazon and Salesforce; major airlines including American, United and Delta; the automaker General Motors; defense giant Raytheon; the hotel brand Marriott; and many others.

Some of the agency's audits eventually lead to investigations. And some of those investigations lead to settlements, with companies paying millions to workers subjected to alleged discrimination.

Craig Leen, a partner with K&L Gates who served as director of the watchdog agency under the first Trump administration, says the agency was busy during those years, recovering approximately $117 million for workers. In a news release published in October 2020, the Department of Labor praised the agency's efforts to protect employees from discrimination, calling it the "best" year ever for compliance assistance.

"It was a very productive time. I would say it was the high watermark of" the agency, says Leen. "We helped a lot of workers. We helped a lot of businesses comply with the law."

But now, things are changing.

In the email to staff, Eschbach noted that Trump had already rescinded the executive order that the agency was created to enforce. Executive Order 11246, signed by President Lyndon B. Johnson in 1965, required federal contractors to take steps to identify and address barriers to employment and create affirmative action plans, detailing how they would reach a diverse pool of applicants. Notably, the order did not permit employers to use race or gender in hiring decisions.

"We were very clear about that," says Leen. "No preferences, no quotas, no set-asides. Those are illegal."

Still, Eschbach noted that Trump had revoked that policy in January because it "facilitated federal contractors' adoption of discriminatory [Diversity, Equity, and Inclusion] practices out of step with our nation's civil rights laws."

Leen doesn't believe anything the agency did on his watch was problematic, but thinks given the intense focus on diversity, equity and inclusion during the Biden years, it's possible some companies went too far.

"You cannot consider race or gender in decision-making. Frankly, even in determining what particular individual to recruit, you can't consider race or gender," says Leen. "What you could do is, in a broader sense, if you identified underrepresentation of women and minorities in certain positions, you could do broader recruiting to areas where you're more likely to recruit women and minorities to try to ensure equal opportunity."

His advice to companies he's working with now is to do a thorough review of their practices to ensure that their recruiting efforts, their hiring and pay policies, their mentoring programs and other steps they may have taken to comply with Executive Order 11246 don't exclude or close opportunities for anyone, including white men.

"Being white is a protected class just as much as being Black or Hispanic or Asian or Native American or Pacific Islander," says Leen.

In her email, Eschbach ordered Office of Federal Contract Compliance Programs employees to "verify" that federal contractors had "wound down" their use of affirmative action plans after 90 days, as specified by Trump, and said the agency would be examining previously submitted plans to determine whether they are discriminatory.

However, she also questioned the agency's remaining authorities under Section 503 of the Rehabilitation Act and the Vietnam Era Veterans' Readjustment Assistance Act, which protect individuals with disabilities and specific categories of military veterans respectively.

The Office of Federal Contract Compliance Programs currently requires federal contractors to take steps to comply with those statutes, including addressing barriers to employment and creating affirmative action plans detailing outreach to job candidates from those communities.

The acting secretary of labor ordered that the agency pause enforcement actions relating to those authorities "pending further guidance" on January 24, though compliance lawyers tell NPR they believe the agency is not currently ending its work relating to enforcing those laws.

"We will need to examine those statutes closely," Eschbach wrote. "The reality is, most of what OFCCP [the agency] had been doing was out of step, if not flat out contradictory, to our country's laws."

Several Democratic lawmakers have already protested the Trump administration's actions with respect to diminishing the agency's authorities, and insist contractors still have responsibilities to their workers.

"Despite the President's actions to rescind EO 11246, federal contractors are still responsible for complying with the Civil Rights Act of 1964," says Rep. Bobby Scott, D-Va., the ranking member on the House Education Committee, in a statement provided to NPR.

"President Trump claims that we are 'returning' to a 'merit-based' society, but he has a fundamental misunderstanding of the work of the OFCCP," Scott adds. "The OFCCP enforces civil rights law to ensure that workers are hired because of their merit and that an individual's merit is not overlooked because of an employer's discriminatory practices."

Slashing the agency

On Feb. 25, the acting director of the office submitted an internal memo to Acting Secretary of Labor Vincent Morris laying out a plan to "reduce its workforce by 90 percent," a copy of which was also shared with NPR. Employees, including NPR's source at the Labor Department, now worry the plan is to get rid of nearly all the agency's authorities, employees, funds and offices while appearing to technically abide by congressional and legal requirements.

If the federal labor watchdog is dismantled and its remaining work is put under the larger umbrella of the Department of Labor, some employees worry that remaining staff won't have the resources or the investigative authorities they need.

"We as an agency are supposed to be serving the American people and investigating companies that break the law, and that is through regular audits or complaint investigations" said the Labor Department employee. "Now a lot of that work will never get completed."

Trump's new government body, the Department of Government Efficiency, is working to reduce headcount and slash budgets across the federal government, effectively under the direction of Musk. Agencies and federal departments dealing with civil rights and worker protections have been hit hard.

Eschbach wrote that the agency would have a "reduced scope of mission" and that there would soon be reductions in force "consistent with the administration-wide DOGE agenda."

Rep. Scott was particularly concerned about the plan to slash the agency's headcount. "The decision to reduce OFCCP staff by roughly 90 percent will almost certainly set the office up for failure, and American workers will pay the price," he said. "It is troubling that yet another agency investigating Elon Musk's private company, Tesla, is being actively dismantled."

The work has already been disrupted. Before Eschbach arrived at the agency, its ongoing audit of Elon Musk's Tesla Inc. was halted, according to the Labor Department employee who spoke with NPR, which was first reported by the San Francisco Standard.

Leen notes that while the agency may be dramatically reducing its enforcement work, the Trump administration has signaled greater involvement by the Department of Justice in employment law.

In a memo from early February, Attorney General Pam Bondi wrote that "the Department of Justice's Civil Rights Division will investigate, eliminate, and penalize illegal DEI and DEIA preferences, mandates, policies, programs, and activities in the private sector and in educational institutions that receive federal funds."

"That's a big change, because now there's a new sheriff in town," says Leen.

Others are skeptical that the Trump administration's actions will do much to hold contractors accountable for violating equal employment opportunity laws.

"Every president since Lyndon Johnson has taken seriously the responsibility to ensure that American taxpayers' money is used to make our country more fair and to expand opportunity," wrote Sharon Block, the executive director of the Center for Labor and a Just Economy at Harvard Law School, in an email to NPR.

"It doesn't seem like it is too much to ask businesses that profit from government work, to treat their workers fairly. But this administration won't even make that basic ask of corporations contracting with the government."

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