Labor & Employment Law Daily Wrap Up, GOVERNMENT CONTRACTS—9th Cir.: DOL must disclose its contractors’ workforce demographics to investigative news organization, (Jul 31, 2025)

By Jason Albright, J.D.

“Until recently, the Department required most federal contractors with fifty or more employees to submit annual reports detailing the composition of their workforces.”

The U.S. Department of Labor must disclose reports that describe the demographic composition of its contractors’ workforces—including information about racial, sexual, and ethnic diversity, or lack thereof—to an investigative news organization that sought the reports through the FOIA process, the Ninth Circuit affirmed. DOL argued that the workforce-composition information is exempt from disclosure under 5 U.S.C. § 552(b)(4) as “commercial or financial information obtained from a person and privileged or confidential,” but information is “commercial” under that exemption if it is an object of or has the subject of commerce, and the data at issue do not describe “the exchange of goods or services or the making of a profit” (Center for Investigative Reporting v. United States Department of Labor, No. 24-880 (9th Cir. July 30, 2025)).

FOIA and exemptions. The Freedom of Information Act (FOIA), 5 U.S.C. § 552, which requires federal agencies to disclose their records to the public upon request, allows agencies to withhold government records if they fall within one of nine statutory exemptions. The exemptions protect information about various matters—e.g. classified national defense materials, law-enforcement records, personnel and medical files, and documents relating to the regulation of financial institutions—that “may legitimately be kept from public view,” according to the court.

Exemption 4. The appeal here concerns FOIA Exemption 4, which allows agencies to withhold “trade secrets” and “commercial or financial information obtained from a person” that is “privileged or confidential.” 5 U.S.C. § 552(b)(4). Exemption 4 protects entities that are required to submit information to the federal government against the competitive disadvantages that could result from disclosure of their private business information

Annual reports sought. The Center for Investigative Reporting, a nonprofit investigative news organization, sought several years’ worth of reports filed by federal contractors with the Department of Labor (DOL). The reports describe the composition of the contractors’ workforces, including the job categories and demographics of their employees, and the organization hoped to use the information to report on contractors’ racial, sexual, and ethnic diversity, or lack of it.

Longstanding DOL practice. Until recently, DOL had required most federal contractors with 50 or more employees to submit annual reports detailing the composition of their workforces. See 41 C.F.R. § 60—1.7(a); Exec. Order No. 11246, 30 Fed. Reg. 12319 (Sept. 24, 1965). Contractors with more than one place of business submitted consolidated reports of aggregated workforce-composition data across all their locations. The reports included contractors’ number of employees in each of 10 job categories: Executive/Senior Level Officials and Managers, First/Mid-Level Officials and Managers, Professionals, Technicians, Sales Workers, Administrative Support Workers, Craft Workers, Operatives, Laborers and Helpers, and Service Workers. The reports also broke down the number of employees in each job category by sex and by race or ethnicity. DOL used the reports to monitor contractors’ compliance with federal antidiscrimination and equal employment opportunity requirements. On January 21, 2025, subsequent to the decision in this case below, President Trump issued Executive Order 14173, which rescinded EO 11246.

Center’s FOIA requests. The Center submitted several FOIA requests for consolidated reports from contractors with multiple locations filed between 2016 and 2020 (EEO reports). The Department determined that the EEO reports “may be protected from disclosure under FOIA Exemption 4,” which allows withholding of certain confidential “commercial or financial information.” 5 U.S.C. § 552(b)(4).

Withheld reports. As required by federal regulations, DOL provided the contractors who filed the reports with notice and an opportunity to object to the Center’s FOIA requests. See 87 Fed. Reg. 51145 (Aug. 19, 2022). After the objection process, DOL disclosed the EEO reports of all non-objecting contractors, but it withheld 16,755 EEO reports from 4,141 objecting contractors based on its assessment that the reports fell under FOIA Exemption 4.

FOIA suit. The Center sued to compel disclosure of all the requested EEO reports under FOIA, and after the pleading stage, the district court instructed DOL “to select six representative objecting contractors to be the subject of bellwether cross-motions for summary judgment.”

Bellwethers. Neither party objected to the use of bellwethers to test DOL’s Exemption 4 argument, and the agency thus selected its six preferred contractors to show that the EEO reports contain confidential “commercial” information.

Disclosure ordered below. On cross-motions for summary judgment based on the bellwethers, the district court ordered the disclosure of the EEO reports on December 22, 2023. The district court construed Exemption 4’s protections for “commercial” information to cover only “commercially valuable information” that “itself yield[s]... commercial insight that is specific to the operations of the federal contractor.” It concluded that the agency had not raised a genuine issue as to whether the information in the EEO reports would reveal commercially significant insights about the bellwethers. Finding that Exemption 4 does not exclude the EEO reports from FOIA’s general disclosure mandate, the district court thus ordered DOL to produce the withheld reports

DOL’s appeal. The agency appealed to the Ninth Circuit, which had jurisdiction under 28 U.S.C. § 1292(a)(1).

Object or subject of commerce. The appeals court first observed that it has contemplated two ways for information to be “commercial” under Exemption 4: it is the object of commerce, or it has the subject of commerce. First, information is the object of commerce—i.e. serves a commercial function—if it is designed to be profitable, if it was made to be bought and sold. Second, information has the subject of commerce—i.e. is of a commercial nature—if it pertains to business or trade. This includes “records that ‘actually reveal basic commercial operations, such as sales statistics, profits and losses, and inventories[.]’”

DOL argued that the information in the EEO reports is “commercial” because it reflects a contractor’s headcount and organizational structure, its resulting capacity to engage in commerce, its performance on diversifying its workforce, and its trends on these measures over time. Accordingly, noted the Ninth Circuit, for the reports to qualify for Exemption 4, DOL must show that these types of information “describe an ‘exchange of goods or services or the making of a profit.’”

Not commercial information. The appeals court concluded that the information in the bellwethers’ EEO reports does not have such a “commercial” subject within the meaning of Exemption 4. The workforce-composition data in the reports at issue did not describe “the exchange of goods or services or the making of a profit.” Instead, they described only two types of information about federal contractors’ workforces: (1) data on the number of employees in each of 10 general job categories; and (2) demographic data on the employees’ race, sex, and ethnicity. The reports did not disclose any details about the services provided by federal contractors, the prices charged for their services, the resulting profits, the terms of the contractors’ agreements with the government, or any similar information, and so they did not, without more, “reveal anything about the exchange of goods or services.”

Diversity and competitive advantage? DOL advanced the argument that “[d]iverse firms are better able to attract and retain talented employees and compete for customers in certain markets,” but in the record, the Ninth Circuit noted, “it drew only indirect connections between a diverse workforce and a contractor’s exchange of goods or services.” Although the agency’s expert highlighted studies showing that “diversity is an organizational resource that translates into a competitive advantage for firms through a greater capacity for resource acquisition, market access, innovation and strategic flexibility,” DOL again “fail[ed] to explain how this data describes contractors’ exchange of goods or services or their making of a profit.”

Finding that the information in the bellwethers’ EEO reports was thus not “commercial,” the appeals court affirmed the district court’s order concluding that DOL must disclose the reports on that basis alone.

The case is No. 24-880.

Judge: Johnstone, A.

Attorneys: Mr. Aaron Robert Field (First Amendment Coalition) and Ms. Therese Cannata (Cannata O'Toole & Olson) for Center for Investigative Reporting and Will Evans. Pamela Johann, U.S. Department of Justice, for U.S. Department of Labor.

Companies: Center for Investigative Reporting

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