The Office of Federal Contract Compliance Programs (OFCCP), which is within the U.S. Department of Labor (DOL), enforces Executive Order 11246 and two laws that prohibit employment discrimination and require affirmative action by companies doing business with the federal government. The DOL estimates that roughly 24,000 businesses, employing about 28 million workers, are covered under that Executive Order and/or the laws enforced by OFCCP.
Affirmative action refers to proactive steps an employer takes to employ, retain, and provide work opportunities for individuals from certain protected classes that may be underrepresented in the employer’s workforce. Affirmative action is not about quotas, giving preferential treatment to one protected class over others, or reducing employment standards. It is aimed at ensuring equal employment opportunities for all.
Affirmative action can be mandated by law or it may be undertaken voluntarily. This chapter focuses on certain mandatory obligations of employers that contract with the federal government, either as contractors or subcontractors.
In most instances, only state contractors in Minnesota are subject to state affirmative action requirements. Nevertheless, when entering into contracts with state or local agencies, ask the contracting officer about any applicable affirmative action/nondiscrimination obligations. For instance, private employers contracting with the State may have additional nondiscrimination obligations, beyond what is generally required of private employers, and in certain situations, contractors may be required to prepare a written affirmative action program. Furthermore, if a private employer is sponsoring a state apprenticeship program, the employer may be required to prepare a written affirmative action program.
Similar to the protections provided by the Minnesota Human Rights Act, Executive Order 11246 prohibits employment discrimination based on race, color, religion, sex, sexual orientation, gender identity, or national origin. This Executive Order also requires covered federal contractors and subcontractors to take actions to employ and advance the employment of qualified minorities and women, but it does not require such action with respect to lesbian, gay, bisexual or transgender individuals.
Section 503 of the Rehabilitation Act (Section 503) prohibits employment discrimination against individuals with disabilities and requires covered federal contractors and subcontractors to take actions to employ and advance the employment of qualified individuals with disabilities.
The Vietnam Era Veterans’ Readjustment Assistance Act (VEVRAA) prohibits employment discrimination against certain protected veterans and requires covered federal contractors and subcontractors to take actions to employ and advance the employment of qualified protected veterans.
These laws and their related regulations impose substantial obligations on covered federal contractors and subcontractors. Non-compliance can result in harsh consequences. For instance, covered federal contractors or subcontractors who fail to comply with their affirmative action obligations may be subject to monetary damages, increased monitoring by OFCCP and/or even possible debarment.
Not all federal contractors and subcontractors are covered by Executive Order 11246, Section 503 and/or VEVRAA. Coverage is based on types of contracts, as well as the dollar amounts of those contracts. Moreover, there are higher dollar thresholds before a covered federal contractor or subcontractor is required to prepare and implement written affirmative action programs for minorities, women, individuals with disabilities and protected veterans.
For purposes of Executive Order 11246 and the laws enforced by OFCCP, a federal contract is an agreement between a federal governmental agency and any person for the purchase, sale or use of personal property or nonpersonal services (such as utilities, transportation, research, construction and insurance) that can reasonably be expected to have a total value in excess of $10,000 in one year.
A federal subcontract is an agreement between a federal contractor and any person for the purchase, sale or use of personal property or nonpersonal services, which is necessary to perform a federal contract or under which any portion of the federal contractor's contractual obligation is performed, undertaken, or assumed that can reasonably be expected to have a total value in excess of $10,000 in one year. For ease of reference, the terms “contractor” and “contract” shall encompass covered federal subcontractors and subcontractors, respectively, throughout the remainder of this chapter, unless otherwise noted.
A federally assisted construction contract is a construction contract paid for, in whole or in part, with funds from the federal government or funds borrowed under a federal grant, contract, loan, insurance, or guarantee.
Federal contracts that are exempt from Executive Order 11246, VEVRAA, and Section 503 include all of the following:
The following types of contracts are exempt only from Executive Order 11246:
Executive Order 11246 covers employers that meet at least one of the following criteria:
A federal contractor’s obligation to prepare and maintain a written affirmative action program pursuant to Executive Order 11246 only arises if the federal contractor has a single covered contract $50,000 or more and has 50 or more employees. If coverage is based on serving as a depository of federal funds or acting as an issuing and paying agency for U.S. savings bonds, the federal contractor is required to prepare and maintain a written affirmative action program pursuant to Executive Order 11246 if the contractor has 50 or more employees, without regard to any dollar threshold.
Section 503 covers employers that meet at least one of the following criteria:
A federal contractor’s obligation to prepare and maintain a written affirmative action program pursuant to Section 503 only arises if the federal contractor has a single covered contract $50,000 or more and has 50 or more employees. If the federal contractor serves as a depository for federal funds of $50,000 or more, or has an agreement valued at $50,000 or more to be an issuing and paying agent for savings bonds and notes, the federal contractor would be required to prepare a written affirmative action program pursuant to Section 503.
The Vietnam Era Veterans’ Readjustment Assistance Act (VEVRAA) covers employers that meet at least one of the following criteria:
| Executive Order 11246 | Section 503 | VEVRAA | |
| Basic Threshold | Federal contract(s) greater than $10,000. There is no dollar threshold for government bills of lading; entities that serve as a depository of federal funds; or entities that are an issuing and paying agency for U.S. savings bonds. | A federal contract greater than $15,000. The $15,000 threshold also applies to government bills of lading; entities that serve as a depository of federal funds; and entities that are an issuing and paying agency for U.S. savings bonds. |
A federal contract greater than $150,000. The $150,000 threshold also applies to government bills of lading; entities that serve as a depository of federal funds; and entities that are an issuing and paying agency for U.S. savings bonds. |
| AAP Threshold |
50 or more employees in company and (i) a federal contract of $50,000 or more or (ii) government bills of lading which in any 12-month period total or can reasonably be expected to total $50,000 or more. Note that there is no dollar threshold for entities that serve as a depository of federal funds or entities that are an issuing and paying agency for U.S. savings bonds. |
50 or more employees in company and a federal contract $50,000 or more. The $50,000 threshold also applies to government bills of lading; entities that serve as a depository of federal funds; and entities that are an issuing and paying agency for U.S. savings bonds. |
50 or more employees in company and a federal contract $150,000 or more. The $150,000 threshold also applies to government bills of lading; entities that serve as a depository of federal funds; and entities that are an issuing and paying agency for U.S. savings bonds. |
A federal contractor’s obligation to prepare and maintain a written affirmative action program pursuant to VEVRAA only arises if the federal contractor has a single covered contract of $150,000 or more and has 50 or more employees. If the federal contractor serves as a depository for federal funds of $150,000 or more or has an agreement valued at $150,000 or more to be an issuing and paying agent for savings bonds and notes, the federal contractor would be required to prepare a written affirmative action program pursuant to VEVRAA.
Federal contractors covered by Executive Order 11246 and/or the laws enforced by OFCCP have a multitude of regulatory obligations. One of the principal obligations, if the contractor meets the applicable thresholds, is preparing and maintaining a written affirmative action program.
Affirmative action programs are management tools aimed at ensuring equal employment opportunity. They contain diagnostic and action-oriented components that evaluate the composition of the contractor’s workforce, compare it to the composition of the relevant labor pool and set forth action items to address areas where women and minorities are not employed at the rate to be expected given their availability in the relevant labor pool.
As discussed in this chapter, a cornerstone of an employer’s affirmative action obligations is the preparation of a written affirmative action program. Once developed, the program is not meant to sit on the shelf and collect dust. Covered contractors are required to implement the processes and initiatives in the plan, audit each process and initiative, and document and retain all compliance efforts and supporting data. Accordingly, the affirmative action program should be treated as a living, breathing document that helps guide the contractor’s employment processes and actions.
Affirmative action program requirements vary based on whether the federal contractor is a supply and service contractor or a construction contractor. Covered supply and service contractors must develop and maintain a written affirmative action plan for women and minorities for each establishment that has 50 or more employees at that location. For establishments with fewer than 50 employees, contractors may include employees in an affirmative action plan that covers the establishment, in an affirmative action plan where the personnel function that supports the establishment is located or in an affirmative action plan where the official to whom they report is located. If a contractor desires to establish a written affirmative plan based on functional or business units, rather than by establishment, the contractor must obtain prior approval from OFCCP. Affirmative action programs are not required for individuals based on their sexual orientation or gender identity.
An affirmative action plan for supply and service contractors must be prepared within 120 days of the start of the covered contract for each of the contractor’s separate establishments and the program must be updated annually. The affirmative action plan is kept on file with the federal contractor and is implemented by the contractor. The affirmative action plan is submitted to OFCCP only if and when OFCCP requests a copy for the purpose of conducting a compliance review.
The components of an affirmative action plan under Executive Order 11246 include all of the following:
Construction contractors and federally-assisted construction contractors, with their typically temporary and fluid workforce, are not required to develop written affirmative action programs. Instead, OFCCP sets goals for workforce participation by women and minorities, expressed in percentage terms for the contractor’s aggregate workforce in each trade on all construction work in the covered area. The goals are applicable to all of the contractor’s construction work (whether or not it is federal or federally assisted) performed in the covered area. If the contractor performs construction work in a geographical area located outside of the covered area, it must apply the goals established for such geographical area where the work is actually performed. With regard to this second area, the contractor also is subject to the goals for both its federally involved and non-federally involved construction.
Construction contractors and federally-assisted construction contractors must use good faith efforts to increase the utilization of women and minorities and the applicable regulations outline what efforts must be taken.
The numerical goals in affirmative action plans are not quotas or set-asides. Contractors are required to use good faith efforts to meet their stated numerical goals, but OFCCP cannot penalize a contractor if the goals are not met. Affirmative action does not permit contractors to discriminate in favor of any group when making employment selections and decisions.
Generally, contractors that are required to prepare and implement an affirmative action program pursuant to Executive Order 11246 also will be required to prepare and implement an affirmative action program under Section 503. If a contractor meets the threshold for developing and maintaining affirmative action programs for individuals with disabilities pursuant to Section 503, the contractor must prepare the affirmative action program within 120 days of the start of the covered contract for each of the contractor’s separate establishments and the program must be updated annually. Construction contractors and federally-assisted construction contractors that meet the threshold requirements also are required to prepare the Section 503 affirmative action program.
Covered contractors must make the Section 503 affirmative action program available to any employee or applicant for inspection upon request. The supporting data metrics in the affirmative action program (i.e., the specific numbers and percentages applicable to the contractor’s workforce, as well as the numerical analyses) may be removed from the program that is made available for inspection. The location and hours during which the program may be inspected must be posted at each establishment.
The affirmative action plan is kept on file with the federal contractor and is implemented by the contractor. The affirmative action plan is submitted to OFCCP only if and when OFCCP requests a copy for the purpose of conducting a compliance review.
The components of an affirmative action plan under Section 503 include all of the following:
Contractors are required to use good faith efforts to meet the utilization goal, but OFCCP cannot penalize a contractor based solely on failure to meet the utilization goal.
Contractors subject to Section 503 also must document and retain all requests that they receive from individuals with disabilities for reasonable accommodations and the resolution of those requests.
If a contractor meets the threshold for developing and maintaining affirmative action programs for protected veterans pursuant to the Vietnam Era Veterans' Readjustment Assistance Act (VEVRAA), the contractor must prepare the affirmative action program within 120 days of the start of the covered contract for each of the contractor’s separate establishments and the program must be updated annually. Construction contractors and federally-assisted construction contractors that meet the threshold requirements also are required to prepare the VEVRAA affirmative action program.
Covered contractors must make the VEVRAA affirmative action program available to any employee or applicant for inspection upon request. Data metrics in the affirmative action program may be removed from the program that is made available for inspection. The location and hours during which the program may be inspected must be posted at each establishment.
The affirmative action plan is kept on file with the federal contractor and is implemented by the contractor. The affirmative action plan is submitted to OFCCP only if and when OFCCP requests a copy for the purpose of conducting a compliance review.
The components of an affirmative action plan under VEVRAA include all of the following:
Contractors are required to use good faith efforts to meet their established hiring benchmark, but OFCCP cannot penalize a contractor solely because the hiring benchmark is not met.
Federal contractors have many additional obligations. While a discussion of every potential contractor obligation is beyond the scope and intent of this chapter, following are key obligations that, if applicable to the contractor, must be implemented.
Federal contractors should be aware that they have further recordkeeping and documentation obligations, including with respect to the recruiting process, that are not fully addressed in this chapter. For instance, covered contractors must comply with the internet applicant recordkeeping rule. Information on the Internet applicant rule may be found at:
Contractors also must document, assess and retain all outreach efforts to women, minorities, veterans and individuals with disabilities and make them available for inspection during an OFCCP audit. Contractors subject to Section 503 must document and retain all requests that they receive from individuals with disabilities for reasonable accommodations and the resolution of those requests. Furthermore, electronic recordkeeping information may be found at:
Federal contractors must post the “Equal Employment Opportunity is the Law” poster where applicants and employees have access to it. Any hard copy that is posted must be viewable from a wheelchair.
The poster, which is in two parts (main and supplement) may be downloaded at:
The federal contractor’s affirmative action policy must be placed in any employee handbook or made available to employees in another manner. Federal contractors also must include a notice to applicants and employees that the affirmative action programs for veterans and individuals with disabilities are available for inspection. If the federal contractor is a party to a collective bargaining agreement, the contractor must notify union officials of the affirmative action policy and request their cooperation. Federal contractors also must send written notification of their affirmative action policy to all subcontractors and request their cooperation. Finally, affirmative action plans, if submitted to the government during an audit or a proceeding, may be disclosed pursuant to a Freedom of Information Act (FOIA) request. Because affirmative action plans are subject to disclosure in a variety of ways, contractors should be mindful of putting information in their plans that may be valuable to competitors.
Covered contractors also must include a clause in covered subcontracts and purchase orders setting out the text of the required notice or incorporating the text by reference and outlining the posting obligation.
Contractors subject to the National Labor Relations Act (NLRA) must provide notice of employee rights under the NLRA, the law that governs relations between unions and employers in the private sector. A copy of the poster may be found at:
Covered contractors also must include a clause in covered subcontracts and purchase orders setting out the text of the required notice or incorporating the text by reference and outlining the posting obligation.
When issuing solicitations and advertisements for applicants, federal contractors must indicate that they are equal employment opportunity employers and must specifically mention veterans and individuals with disabilities. Accordingly, an equal employment opportunity statement might be phrased as follows:
“EOE/AAE: Applicants will receive consideration for employment without regard to race, color, religion, sex, national origin, veteran or disability status or any other protected class.”
Federal contractors subject to VEVRAA must list all jobs with state or local employment service delivery systems, other than executive and senior management positions meeting the Fair Labor Standards Act (FLSA) executive exemption test, see Executive employee exemption (Wages and hours), positions that will be filled from within the contractor's organization, and positions lasting three days or less. The listings must specifically include the following information:
Moreover, the job listings must be submitted in a format accepted by the employment service. For instance, if the applicable employment service only accepts web-based listings, then the contractor generally must submit all required job listings in that format.
Federal contractors must ask applicants to voluntarily self-identify race/ethnicity and gender and track this information for affirmative action compliance purposes. Applicants must be asked if they are Hispanic or Latino, White (not Hispanic or Latino), Black or African American (not Hispanic or Latino), Native Hawaiian (not Hispanic or Latino) or Other Pacific Islander (not Hispanic or Latino), Asian (not Hispanic or Latino), American Indian or Alaska Native (not Hispanic or Latino) or two or more races (not Hispanic or Latino), and whether they are male or female. Applicants must be given the option of not self-identifying their race/ethnicity and gender.
Covered federal contractors must invite protected veterans and individuals with disabilities to voluntarily self-identify at two distinct points in the hiring process: pre-offer and post-offer. OFCCP has issued a form that contractors must use for the self-identification of a disability, both pre-offer and post-offer. The form is accessible on OFCCP’s website at:
OFCCP has provided sample pre-offer and post-offer invitations to self-identify for veterans, which are located in the affirmative action regulations for protected veterans, Appendix B, Part 60-300 - Sample Invitation to Self-Identify and may be accessed at:
Contractors may, but are not required to, use OFCCP sample forms for the self-identification of protected veterans.
Covered federal contractors also are required to survey their current workforce to allow individuals with disabilities to voluntarily self-identify. The survey must be conducted during the first year the contractor becomes subject the OFCCP’s revised regulations, which went into effect on March 24, 2014, and then every five years thereafter. Additionally, contractors must remind their employees at least once during the years in between invitations that they may voluntarily update their disability status at any time. Furthermore, contractors may identify individuals as having disabilities even if the individuals do not self-identify if the disability is obvious (someone is missing a limb or is blind) or the disability is known to the contractor (perhaps as a result of a request for a reasonable accommodation for a disability or a statement by the employee).
All self-identification forms must be kept separate from personnel files and be treated as confidential. These forms are subject to inspection by OFCCP during an audit or other proceeding.
Federal contractors covered by Executive Order 13658, which relates to the federal contracting minimum wage for work performed on covered federal contracts, must pay the established federal contracting minimum wage to all employees performing work on or in connection with a federal contract. This federal contracting minimum wage is higher than the federal minimum wage that applies to all employers covered by the FLSA (see Wages and hours) and is aimed at ensuring that workers have a living wage.
Effective for contracts entered into on or after January 1, 2015, the federal government requires many federal contractors to pay a specified minimum wage for the life of the contract, which is indexed annually. The minimum wage for 2021 is $10.95 per hour. On January 1, 2022, the rate is $11.25 per hour for employees of existing government contractors. For new or extended contracts the hourly rate is $15.00 per hour.
Additionally, beginning January 1, 2021, tipped employees performing work on or in connection with covered contracts generally must be paid a minimum cash wage of $7.65 per hour. This rate is $7.90 per hour effective January 1, 2022.
Covered federal contractors also must include a federal contracting minimum wage clause in covered subcontracts to notify contracting parties of their obligation to pay the federal contracting minimum wage and post a notice to workers of the wage requirement. Furthermore, covered contractors must notify all workers performing on or in connection with a covered contract of the applicable federal contracting minimum wage rate, which can be accomplished by posting a notice with the then current federal contracting minimum wage rate. The notice is available on the OFCCP website at:
Former President Obama issued Executive Order 13665 in April 2014, promoting pay transparency and openness by expressly permitting the employees and job applicants of federal contractors to inquire about, discuss, or disclose their compensation or the compensation of other employees or applicants without fear of discrimination. This non-discrimination provision does not apply to employees or applicants who make the disclosure based upon information obtained in the course of performing essential job functions.
The Final Rule implementing Executive Order 13665 applies to new federal contracts or alterations to federal contracts occurring on or after January 11, 2016. Federal contracts and employee handbooks must be updated to reflect the new provision, and federal contractors must disseminate the provision by posting it electronically or where it will be available to applicants or employees. The OFCCP generally requires the following language in the handbook and postings:
The contractor will not discharge or in any other manner discriminate against employees or applicants because they have inquired about, discussed, or disclosed their own pay or the pay of another employee or applicant. However, employees who have access to the compensation information of other employees or applicants as a part of their essential job functions cannot disclose the pay of other employees or applicants to individuals who do not otherwise have access to compensation information, unless the disclosure is either:
Federal contractors also must post the Pay Transparency Notice, accessed at:
Executive Order 13706, signed by former President Obama in September 2015, requires certain federal contractors to provide employees with up to seven days of paid sick leave every year. Executive Order 13706 applies only to certain categories of federal contracts, including those for services, construction, concessions, or contracts in connection with federal property or lands, and excludes contracts for the manufacturing or furnishing of goods. Executive Order 13706 applies to covered new contracts and replacements for expiring contracts with the federal government that result from solicitations issued on or after January 1, 2017 (or that are awarded outside the solicitation process on or after January 1, 2017).
Under Executive Order 13706, a contractor must permit an employee to accrue not less than one hour of paid sick leave for every 30 hours worked on or in connection with a covered contract, and accrual may be limited to 56 hours per year. Leave may be used for the employee’s own care as well as for family care, with familial relationships being defined fairly broadly (e.g., an elderly neighbor whom the employee considers to be like a grandfather). Employees may also use the paid sick leave for absences resulting from domestic violence, sexual assault, or stalking.
The DOL issued regulations specify that the Executive Order applies to contracts and subcontracts in the following categories:
Any subcontract of a covered contract that falls intone of these four categories is also subject to paid leave requirements.
The law does not apply to:
The law also provides that if a collective bargaining agreement currently provides more than 56 hours of leave to employees performing work under covered contracts, the agreement will apply until the earlier of January 1, 2020 or until the agreement expires.
The law requires that an employee submit a request for leave at least seven days before the leave is to begin or as soon as is practicable, and the employer can request certifications or documentation for absences of longer than three days.
Paid sick leave under the law may run concurrently with leave under the Family and Medical Leave Act. Furthermore, employers have flexibility to adopt paid time off policies that are equivalent to or more generous than those described in the Executive Order. Therefore, employers that have more generous leave policies that allow employees to draw down time for a consolidated leave bank do not need to extend additional paid time off specifically denominated as sick leave.
President Trump, in Executive Order 13782, revoked Executive Order 13673, promoting Fair Pay and Safe Workplaces. Signed by former President Obama on July 31, 2014, Executive Order 13673 would have required prospective federal contractors on contracts exceeding $500,000 to publicly disclose violations of certain labor laws within the prior three years, including, among others, violations of the FLSA, OSHA, NLRA, Rehabilitation Act, ADA, ADEA, FMLA, Title VII or their state law equivalents. Executive Order 13673 also contained provisions restricting the use of mandatory arbitration agreements in certain circumstances and required contractors to provide detailed wage statements to their employees. On October 24, 2016, the U.S. District Court for the Eastern District of Texas had entered a nationwide preliminary injunction enjoining implementation of the reporting of labor law violations and the restrictions on use of mandatory arbitration agreements. Now the entire executive order is rescinded, per President Trump’s executive order.
Federal prime contractors and first-tier subcontractors subject to Executive Order 11246 that have 50 or more employees and a prime contract or first-tier subcontract for $50,000 or more must file an EEO-1 Report each year with the EEO-1 Joint Reporting Committee. Federal contractors that serve as a depository of government funds in any amount or are a financial institution that is an issuing and paying agent for U.S. savings bonds and notes also are required to file an EEO-1 Report annually. The EEO-1 Report reports the race/ethnicity and gender of the contractor’s workforce, by job category. The preferred method for gathering the race/ethnicity and gender data is self-identification. Contractors may register for and access the EEO-1 Report and accompanying instructions at:
The EEOC revised its EEO-1 survey to require all employers with 100 or more employees to submit additional summary data on wages paid to their employees, including categorization by gender, race and ethnicity. Employers are required to identify and report the number of employees in each of 12 “pay bands” based upon employees’ W-2 earnings and apply the pay bands to each of the 10 EEO-1 job categories. The OFCCP intends to use the same form to collect the same data from federal contractors.
The filing deadline for EEO-1 Report data for fiscal years (FYs) 2019 and 2020 is October 25, 2021. For more information, visit:
Federal contractors subject to the Vietnam Era Veterans' Readjustment Assistance Act (VEVRAA) that have a federal contract entered into or modified on or after December 1, 2003, in the amount of $100,000 or more must file a VETS-4212 Form each year, by September 30, with the Veterans’ Employment and Training Service. The VETS-4212 report records the types of protected veterans in the contractor’s workforce, by job category. The method for gathering the protected veteran data is self-identification. The prior reporting forms were known as the VETS-100 and VETS-100A Forms. The VETS-4212 Form may be accessed at:
Federal contractors entering into contracts with others for the performance of work related to a federal contract must notify the contracting party(ies) of their affirmative action obligations. This may be accomplished by incorporating an appropriate EEO clause in applicable contracts.
OFCCP audits federal contractors principally through the use of compliance evaluations and complaint investigations. If violations are found, OFCCP generally will seek conciliation agreements with the violating contractor that require the violating contractor to undertake specified remedial action and typically involve periodic monitoring by OFCCP. If conciliation efforts are not successful, then OFCCP may recommend an enforcement action to the U.S. Solicitor of Labor.
Federal contractors that violate the Executive Order or laws enforced by OFCCP may be subject to damages and/or sanctions including, but not limited to, back pay with interest, limitations on the right to bid for new federal contracts, monitoring by OFCCP, and/or even debarment.
The U.S. Department of Labor (DOL) maintains a website to assist employers in complying with their obligations under Executive Order 11246, Section 503 of the Rehabilitation Act, and VEVRAA at: