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Federal Contractor Requirements

As a part of contracting with the federal government organizations assume certain affirmative action obligations. Federal contractors are required to take affirmative action in employment and are prohibited from discriminating on the basis of sex, race, color, national origin, religion, disability or status as a protected veteran.

The inclusion of people with disabilities among these targeted groups is intended to promote equal employment opportunity for applicants and employees with disabilities. This is especially important given the large difference in employment rates between people with and without disabilities.

Defining Federal Contractors

Is My Organization a Federal Contractor or Subcontractor?


Federal contractors are individuals or employers who enter into a contract with the United States (any department or agency) to perform a specific job, supply labor and materials, or for the sale of products and services. If your company does business with the federal government, you are most likely a federal contractor based on Executive Order 11246.


If your company does business with another company that holds direct contracts with the federal government, your organization is classified as a federal subcontractor.

If you need assistance in determining whether your organization is a contractor or subcontractor you can use the Office of Federal Contract Compliance Programs' (OFCCP) Federal Contractor Compliance Advisor.

Federal Contractor Requirements


Equal employment opportunity and affirmative action are integral elements of the contractor's agreement with the federal government. There are three sets of regulations that apply to contractors:

These regulations require that every non-exempt government contract and subcontract include Equal Employment Opportunity (EEO) clauses. These clauses specify the non-discrimination and affirmative action obligations each contractor or subcontractor assumes as a condition of its contract or subcontract.

Compliance with Regulations

It is important that contractors and subcontractors take action to comply with the relevant regulations. Key aspects of this compliance related to all protected classes, including people with disabilities, are:

1. Review your organization's current Affirmative Action Plan to ensure that it is effective in eliminating discrimination and in promoting the hiring and retention of women, minorities, veterans and individuals with disabilities.

2. Document and evaluate recruitment and outreach efforts intended to increase hiring and retention of veterans and individuals with disabilities (pursuant to Section 503 of the Rehabilitation Act and VEVRAA.)

3. Examine workplace facilities to ensure they are accessible to individuals with disabilities, including online applications and company websites.

4. Reach out to community-based resources that can assist with the recruiting, hiring, retention and advancement of people with disabilities.

5. Review the Checklist for Compliance to self-assess compliance with the affirmative action program (AAP) requirements of Section 503 of the Rehabilitation Act. While contractors are not required to use the checklist (and using it doesn’t ensure compliance), doing so may prove beneficial in enhancing awareness of AAP obligations and flagging potential problem areas in need of correction.

Monitoring Compliance

Compliance with federal contractor regulations is monitored by the Office of Federal Contract Compliance Programs, an agency within theU.S. Department of Labor.

In recent years the OFCCP has increased its monitoring of federal contractor compliance and is paying closer attention to the implementation of affirmative outreach and engagement with recruitment resources. OFCCP has revised the affirmative action provisions under Section 503 and VEVRAA to ensure that more people with disabilities and veterans are employed and are given the opportunity to advance in the federal contractor workforce. New regulations and record keeping requirements were finalized in August of 2013.

In order to remain competitive among other contractors, organizations will need to be proactive in their outreach and recruitment efforts in order to capitalize on good faith efforts that result in hiring, advancing and retaining individuals and veterans with disabilities.

Affirmative Action

What is Affirmative Action?

Affirmative Action requires that employers take proactive steps to recruit, hire, train, and promote individuals from groups that have traditionally been discriminated against on the basis of race, gender, disability, religion, or status as a Vietnam era or special disabled veteran.

Affirmative action goes beyond equal employment opportunity and requires targeted outreach efforts to facilitate hiring employees from diverse backgrounds.

Affirmative action requirement can apply to employers based on:

  • Federal law
  • Status as a federal government contractor or subcontractor
  • A conciliation agreement with a state or federal agency
  • Court order

Some employers voluntarily adopt Affirmative Action Plans in an effort to create a more balanced workforce.

Affirmative Action for Federal Government Contractors

Organizations that do business with the federal government are required to meet certain affirmative action requirements.

The Office of Federal Contract Compliance Programs (OFCCP) within the U.S. Department of Labor enforces the laws that have affirmative action implications, including:

Affirmative Action and Contract Size

Affirmative Action requirements vary depending on the size of the contract; larger contracts are subject to additional requirements.

Contracts of $10,000 or More

Contractors with...

  • 15 or more employees AND
  • Government contracts or subcontracts totaling $10,000 or more MUST:
    • Take affirmative action to hire, retain, and promote qualified individuals with disabilities.
    • Include an equal opportunity clause in all nonexempt contracts and subcontracts or purchases of $10,000 or more. The clause must promise that the contractor will not discriminate on the basis of race, gender, religion, national origin, disability or status as a Vietnam era or disabled veteran, and will take affirmative action to hire applicants and treat employees during employment without regard to any of those factors.

When a subcontractor has a contract that includes this equal employment clause, the same affirmative action obligations then become binding on the subcontractor.

Contracts of $50,000 or More

Contractors with…

  • 50 or more employees AND
  • Government contracts or subcontracts totaling $50,000 or more MUST: 
  • Follow the same requirements as outline above for contractors with contracts of $10,000 or more
    • Have formal, written Affirmative Action Plans for women and minorities, individuals with disabilities, and veterans.
      • Plans for individuals with disabilities and veterans may be combined, and must set forth the employer’s policies and practices for implementing affirmative action. Hiring Benchmarks for protected veterans must be established, and regularly evaluated and refined based on quantitative data. New regulations pertaining to people with disabilities requires a 7% goal across the entire workforce for businesses with less than 100 employees, or within each job group for larger businesses.
      • Plans for women and minorities must set goals for hiring and promoting in job categories where women and minorities are underutilized.

The Code of Federal Regulations (CFR) provides guidance on the steps an employer must follow to develop a plan.

Other Resources

e-laws Advisor<>
The e-laws Advisors are interactive e-tools that provide easy-to-understand information about a number of Federal employment laws. Each Advisor simulates the interaction that you might have with an employment law expert. It asks questions and provides answers based on responses given.

Affirmative Action and People with Disabilities<>
This resource provides information on Affirmative Action (AA) and how it relates to the employment of people with disabilities including the ten components of a successful AA Plan.

Executive Order 11246 - Affirmative Action<>
This resource provides information from the Department of Labor on the Executive Order 11246 and the role of the Office of Federal Contract Compliance Programs. It also describes Affirmative Action (AA) outreach and requirements for Federal Contractors. Examples of AA programs, successes and additional resources are also provided for employers.

Office of Federal Contract Compliance<>
Office of Federal Contract Compliance Programs (OFCCP) ensures that contractors doing business with the Federal government take affirmative action and do not discriminate. The purpose of this agency is to enforce the contractual promise of affirmative action and equal employment opportunity required of those who do business with the Federal government.

Vietnam Era Veterans' Readjustment Assistance Act (VEVRAA) of 1974<>
This web site provides information on VEVRAA, which requires that employers with federal contracts or subcontracts of $100,000 or more provide equal opportunity and affirmative action for Vietnam era veterans, special disabled veterans, and veterans who served on active duty during a war or in a campaign or expedition for which a campaign badge has been authorized.

Section 503 of the Rehabilitation Act of 1973 <>
This resource provides information on Section 503 of the Rehabilitation Act of 1973 which requires affirmative action and prohibits employment discrimination by federal government contractors and subcontractors with contracts of more than $10,000.

Page last updated on Tuesday, March 25, 2014