Federal investigators were working in early 2025 to wrap up a two-year inquiry into claims of pervasive sexual harassment and discrimination at a company that makes weapons, vehicles and cybersecurity tools for the Pentagon.
The investigators had found, among other things, that some male managers at a Norfolk, Va., Navy shipyard had demanded oral sex and other sexual contact from female employees in exchange for promotions and overtime pay, and that Black women had been paid less and promoted less frequently than men, according to three people with knowledge of the findings.
The government was zeroing in on a resolution to propose to the company, BAE Systems: to make seven-figure payouts to workers and to adopt reforms — or risk losing its roughly $8 billion in annual federal contracts.
Then, the inquiry was suddenly halted.
On Jan. 21, the day after President Trump was inaugurated, he directed the Labor Department office conducting the investigation to stop most of its work, effectively shutting down the inquiry. It was part of a sweeping executive order purging the federal government of diversity, equity and inclusion initiatives that Mr. Trump said had undermined individual achievement in favor of a “pernicious identity-based spoils system.”
The investigators were stunned.
“I wasn’t even allowed to contact the workers,” said Sam Maiden, who led the investigation of BAE and retired from the government last year. “We were so angry that they wouldn’t get the remedy that should have come to them.”
BAE never received the investigation’s findings or the proposed settlement, according to a company spokesman, Tim Paynter, who said an internal investigation did not substantiate employee claims of harassment and discrimination. He said that the company was committed to creating a respectful and equitable workplace, adding: “We do not tolerate harassment or retaliation.”
The abrupt and previously unreported demise of the investigation illustrates the far-reaching impact of Mr. Trump’s moves to unravel anti-discrimination policies enacted more than a half-century ago in response to the civil rights movement.
The BAE inquiry was one of thousands of investigations being conducted at the time by the Office of Federal Contract Compliance Programs, an obscure Labor Department agency created in 1965 under President Lyndon B. Johnson to prohibit discrimination by government contractors on the basis of race, religion, gender and national origin.
When Mr. Trump took office last year, the agency had jurisdiction over approximately 35,000 contractors that employed 20 percent of the U.S. work force — about 34 million people.
The office had also become a target for conservative and pro-business groups, which complained that its audits were onerous and unfair. Records show that the agency was scheduled to launch about 2,000 inquiries in 2025, all of which were derailed by Mr. Trump’s order.
Among the companies spared additional scrutiny was Tesla, whose chief executive, Elon Musk, oversaw Mr. Trump’s initiative to shrink the federal government. Records show that the Labor Department office had opened an audit of the company’s Fremont, Calif., plant in October 2024, as Mr. Musk was pouring millions of dollars into the Trump campaign.
Mr. Musk, whose company SpaceX is also a major federal contractor, had long harbored intense antipathy for the agency and its procedures, and was furious about the Tesla investigation, according to two people who worked with him on the matters and spoke on condition of anonymity to describe private conversations.
Two months after Mr. Trump’s executive order, the administration appointed a corporate lawyer to oversee the agency, after she had represented SpaceX in other dealings with the Labor Department and had sued the civil rights office on behalf of another client. She immediately began to dismantle it.
The agency has been gutted, down from about 480 employees on Mr. Trump’s first day in office last year to about 75 as of May. Mr. Trump’s current budget proposal calls for eliminating it entirely, a move the White House argues would ensure fairness for all Americans.
“For far too long, the Office of Federal Contract Compliance Programs has been used to promote and enforce unconstitutional, racially discriminatory employment practices,” said Taylor Rogers, a White House spokeswoman. “By ending the weaponization of the O.F.C.C.P., the president is protecting the basic civil rights of every American to be treated based on their individual merit and hard work, not the color of their skin.”
A spokesman for Mr. Musk did not respond to requests for comment.
To understand the impact of the collapse of a key civil rights agency in the heart of the federal government, The New York Times interviewed current and former agency investigators, as well as workers and executives at several contractors that had faced audits. The Times also reviewed written complaints from workers, in addition to legal filings and other documents obtained via Freedom of Information Act requests. Those included a heavily redacted 100-page report on the BAE inquiry.
Of the investigations thwarted by Mr. Trump’s order, the BAE case stood out to investigators because of the seriousness of the allegations and the fact that the inquiry was so close to a potential settlement.
Government investigators had visited the shipyard and interviewed hundreds of employees, including nearly 100 women who had described their firsthand experiences in detail, investigators said.
Several women interviewed by investigators told The Times that they had hoped a settlement would end their troubles.
Instead, the problems are “all still going on,” said Vernita Thurman, who worked as a painter in the BAE shipyard for 20 years before leaving last year, and who remains in contact with her former colleagues.
Other women who still work at the shipyard offered the same assessment, speaking on condition of anonymity out of fear of retribution.
One said she called the investigators for months after the executive order, with no response. She said she learned that the investigation was over only when a Times reporter contacted her and some of her colleagues.
A Civil Rights-Era Agency Hated by Elon Musk
Since its founding nearly 61 years ago, the Labor Department’s contractor compliance office has conducted tens of thousands of top-down audits of companies, searching for patterns of discrimination in pay, hiring and promotion.
The more well-known Equal Employment Opportunity Commission, another civil rights-era agency upended by the Trump administration, was designed as a forum for workers at any company to file individual discrimination complaints. The Labor Department office, in contrast, initiated audits of government contractors, often randomly and sometimes in response to complaints.
The idea was that any company doing business supported by taxpayers should be held to exemplary standards, and could face scrutiny at any time.
Companies were required to turn over statistics on employee demographics, salaries and hiring, and to make employees available for interviews with investigators. The office typically opened about 2,000 workplace audits every year, with some of the investigations lasting years.
Over time, the office’s mandate grew. The Obama administration added sexual orientation and gender identity to the forms of discrimination it would investigate. It documented many cases of discrimination against women and minorities and, at times, against white men.
Between 2014 and 2024, the office won $260.8 million in compensation for 250,900 workers, according to agency data. More than 22,600 workers received new job opportunities or salary adjustments. There is no public data showing these numbers for the entire life of the agency.
Some of the nation’s biggest companies have been required to respond.
In 2020, for example, the office found that Wells Fargo had discriminated against 34,193 Black job applicants, compelling the financial services company to pay them a combined $7.8 million, reform hiring procedures and report on those changes for five years, records show.
A spokeswoman for Wells Fargo declined to comment.
That year, the nation’s largest business lobby, the U.S. Chamber of Commerce, argued in a legal brief that the office should be eliminated, saying its audits “routinely involve excessive and arbitrary demands” leading to “regulatory overreach and coerced settlements,” including “massive monetary awards.”
The group filed its brief as part of dueling lawsuits between Oracle, a technology giant, and the Labor office, which claimed that the company owed $400 million in compensation to underpaid female, Black and Asian employees. Both lawsuits were ultimately dismissed. Oracle did not respond to a request for comment.
Mr. Musk’s views of the office stemmed from a broader opposition to any government entity that sought access to his companies’ data and practices, according to the two people who worked with him on these issues and spoke with The Times. One said Mr. Musk considered the audit process “emotionally draining.”
The agency had audited two SpaceX launch sites in recent years — in Florida in 2019 and in Texas in 2021 — and found no patterns of discrimination, according to agency records. The Tesla factory under review had been the subject of complaints from some employees, who said they had been subjected to racial slurs and racist images.
Representatives for Tesla and SpaceX did not respond to requests for comment.
The lawyer appointed to lead the office shortly after Mr. Trump’s executive order was Catherine Eschbach, who in addition to her work for SpaceX had represented a separate company that had tangled with the agency.
That firm, a large janitorial contractor called ABM, had undergone audits at 10 sites in 2024, and had engaged in dueling lawsuits with the compliance office.
The agency’s process “violates the Constitution in multiple ways — to say nothing of basic notions of fairness,” Ms. Eschbach wrote in a September 2024 legal complaint.
In December 2024, ABM signed two settlements with the office, which claimed that the company had discriminated against Black and white job applicants in favor of Hispanic applicants. In the settlements, which The Times obtained through a Freedom of Information Act request, the company agreed to pay $1.1 million to the applicants, and the company agreed to drop its lawsuit against the agency.
A spokesman for ABM, Michael Valentino, told The Times in an email that the company “consistently denied any violation or discrimination.” He said ABM had “acted appropriately and in compliance with applicable law and federal directives at all times.”
After the Trump order in January 2025, the government directed the company “not to implement or pay those agreements,” Mr. Valentino wrote.
The sudden change was striking even to some lawyers who had worked with companies targeted by audits.
“It’s like somebody pulled the plug out of the wall,” said John Fox, a lawyer who has represented ABM and other companies in dealings with the Labor Department office.
A spokeswoman for Ms. Eschbach, who left the office last September and is now an official at the E.E.O.C., referred questions to the Labor Department. In an email, a department spokesman said Ms. Eschbach “had no involvement” in the ABM matter in her role at the agency because the settlements had been closed by Mr. Trump’s executive order, and Ms. Eschbach had not joined the office until March 2025, two months later.
Once she arrived, Ms. Eschbach moved quickly to establish a new direction for the office.
She sent an email to employees during her first week calling for an “autopsy” of “actions and regulations.” In the email, which was viewed by The Times, she directed them to stop much of their work enforcing discrimination rules and investigating companies, and added that many would lose their jobs. “With the administration-wide DOGE agenda, we will be ‘right-sizing’ the agency,” she wrote, using the acronym for the Department of Government Efficiency, the initiative headed by Mr. Musk at the start of the Trump administration.
Hundreds of investigators and lawyers were soon put on leave or transferred.
Those who remained were tasked with drafting language to rescind regulations banning most forms of discrimination that the office had spent decades rooting out. They also began reversing rules that required contractors to maintain a workplace free of harassment, and that prohibited them from retaliating against applicants and employees for discussing their pay.
Ms. Eschbach wrote that the office would continue to enforce two regulations barring discrimination against veterans and people with disabilities, since those groups were still covered by separate laws.
While thousands of companies avoided additional scrutiny after Mr. Trump’s order, some of the largest of those firms had forged close ties with the president and his administration.
Among them were Amazon, Google, Meta and the construction equipment company Caterpillar, all of which donated to Mr. Trump’s inauguration and would later contribute to the construction of a new White House ballroom.
Audits of Amazon, Meta and Caterpillar that had begun in 2024 were killed. Google had been scheduled for a 2025 review. None of the companies responded to requests for comment.
Legal experts said that without the compliance audits, many workers may never know about discrimination in wages, hiring and promotion, which can be invisible without access to the kinds of records that companies were required to provide.
“It proactively audited federal contractors before workers even knew they were being discriminated against,” said Jessica Stender, the policy director at Equal Rights Advocates, a nonprofit legal organization that represents workers. “Now that oversight is gone.”
Claims of Sex Acts for Overtime
The BAE shipyard in Norfolk had been a target of worker complaints for years.
In 2013, 166 female shipyard workers sued the company for harassment and discrimination, winning a $3 million settlement that was distributed among the plaintiffs, although the company denied liability. The settlement, reached in 2016, also required shipyard managers to follow a detailed list of procedures aimed at ensuring that women would be protected from harassment, and that they would be more equitably paid and promoted.
But when the settlement expired after two years, the troubles re-emerged, said Joshua Friedman, a lawyer for the employees.
Mr. Friedman advised his clients to file complaints with the Labor Department’s compliance office.
“We thought the federal investigation might be able to make it stop,” Mr. Friedman said.
The Labor Department investigators began their audit in April 2022.
They walked through the shipyard, where they found sexist and racist graffiti, the investigators said in interviews.
Women told investigators that some male managers had used sexually explicit nicknames to address female workers, according to interviews with the investigators and employees, and documents viewed by The Times. Workers told investigators that the troubling behavior occurred repeatedly over years, often from the same small group of managers.
One worker said that a manager told her that he would “put a baby in her,” documents show. Another said she was routinely asked what color underwear she was wearing.
When women refused demands by some managers for sex acts in exchange for overtime pay, managers would retaliate, the investigators said. Their report cited actions such as “lowering performance evaluations, inequitable distribution of overtime hours, job assignments, and retaliatory write-ups.”
“Everyone saw what was going on, the patterns,” said Ms. Thurman, the former painter at the shipyard. “All the shenanigans. All the years of not getting the same pay. And you know you won’t get a fair chance when you go to HR.”
BAE did not provide specific answers to a detailed list of questions about the investigation.
Mr. Maiden, the lead investigator, said the evidence was so sound that he was confident a settlement would compensate the workers and compel the company to halt similar practices in all of its work sites.
“We were all ready to go with it, writing it up,” said Mr. Maiden.
After Mr. Trump signed the order, the acting labor secretary directed the office to “cease and desist all investigative and enforcement activity.”
The employee interviews and the data the investigators had gathered would be for nothing. The payments and workplace reforms they had hoped to propose would never come to pass.
Andrea Fuller contributed reporting. Research was contributed by Susan C. Beachy, Kitty Bennett, Alain Delaquérière and Kirsten Noyes.
