Priority Number
Shop OurSolutions  ►
Equal Opportunity Employment and Federal Contractors

General Federal Contractor Requirements for Fair Hiring

If you enter into contracts or subcontracts with the federal government, you are subject to a number of nondiscrimination and affirmative action requirements.

Affirmative action involves a series of positive and proactive steps to promote equal employment opportunity, eliminate illegal discrimination and include individuals previously excluded from the workplace. Government data shows that stereotypes and biases still hinder employment opportunities for many minorities, veterans and disabled individuals.

In practice, affirmative action promotes the outreach, recruitment, mentoring, training, management and development of workers from diverse backgrounds.

As an employer doing business with the federal government, you must comply with the following laws and regulations:

Executive Order 11246. Prohibits discrimination on the basis of race, color, religion, sex or national origin for anyone seeking employment with government contractors.
Section 503 of the Rehabilitation Act of 1973. Along with the ADA, this law prohibits discrimination on the basis of disability, covering individuals with physical or mental impairments that substantially limit or restrict a major life activity, such as caring for oneself, performing manual tasks, walking, seeing, hearing, speaking, breathing, learning or working. It assumes individuals are qualified, or able to perform the essential functions of the job, with or without reasonable accommodation.
Vietnam Era Veterans’ Readjustment Assistance Act of 1974 (VEVRAA). Promotes the employment and advancement of disabled veterans, recently separated veterans (left active duty within past three years) and other protected veterans.

Employment practices affected

The basic equal employment opportunity requirements of a federal contractor are:

Don’t discriminate when hiring, promoting, compensating, training or terminating
Display the Equal Employment Opportunity (EEO) poster in a conspicuous place, such as the lunchroom or break room
Include a detailed EEO tagline in employment advertising (e.g., “All qualified applicants will receive consideration for employment without regard to their protected veteran or disabled status and will not be discriminated against.”)
Proper recordkeeping, including the retention of certain personnel records for at least two years
Permit agency access to your records during a complaint investigation or compliance evaluation
File an annual EEO-1 Report
The Office of Federal Contract Compliance Programs (OFCCP) is the agency that ensures that employers contracting or subcontracting with the federal government comply with nondiscrimination and affirmative action laws and regulations. In carrying out its responsibilities, the OFCCP has authority to declare you ineligible for future government contracts and seek relief (such as back pay for lost wages) for victims of discrimination.

Meet OFCCP requirements for affirmative action hiring

As of March 2014, new regulations by the OFCCP require covered federal contractors and subcontractors to set benchmarks for hiring veterans and individuals with disabilities, as specified under VEVRAA and Section 503 of the Rehabilitation Act.

Using legal self-identification forms allows you to gather the necessary disability and veteran status information to complete an affirmative action plan and other affirmative action filings, including an EEO-1 Report and VETS-4212 Report. They satisfy the latest OFCCP recordkeeping requirements, in addition to supporting your efforts to ensure all individuals have an equal opportunity for employment.

You must use OFCCP-approved forms to collect details on an individual’s protected status, and participation must be voluntary. The proper form will meet the OFCCP’s standards while also providing applicants and employees with important information, such as why they are being asked to self-identify, how the information will be used, and that it will not be used against the applicant or employee.

Impact of Latest Affirmative Action Rules

For four decades, VEVRAA and Section 503 of the Rehabilitation Act have protected veterans and individuals with disabilities from job discrimination.

In September 2013, the DOL’s Office of Federal Contract Compliance Programs (OFCCP) issued two new rules to strengthen these protections, substantially expanding the affirmative action requirements for covered federal contractors and subcontractors.

Effective March 24, 2014, the requirements include measurable hiring targets for veterans and disabled workers, in addition to enhanced recordkeeping and data-tracking obligations. Here are some of the specifics – and what you need to do to comply:

Utilization goal for disabled workers
For the first time, contractors must strive to achieve an “aspirational utilization goal” for hiring qualified individuals with disabilities: 7% of your total workforce if you employ 100 or fewer employees. If you’re a larger employer, the goal is 7% for each job group. The OFCCP has stressed that this is not a rigid quota and failure to meet the goal will not be considered a violation.
Hiring benchmark for veterans
Rather than a specific utilization goal, the OFCCP requires contractors to establish hiring benchmarks each year for protected veterans. You may choose to use the national benchmark for veterans in the civilian labor force (currently 8%, updated annually by the OFCCP) – or establish your own benchmark using a combination of data from the Bureau of Labor Statistics, Veterans’ Employment and Training Service and your own individual hiring circumstances.
Applicants should be invited, via an OFCCP-compliant form, to voluntarily self-identify as protected veterans or disabled individuals at both the pre-offer and post-offer stages. This is a critical change, since the Americans with Disabilities Act (ADA) previously allowed inquiries about disabilities only after the job offer. You should also invite all current employees to self-identify as individuals with disabilities at least every five years. It is important that you keep this information confidential and separate from other personnel records.
Collect and retain mandatory data
In addition to hiring targets, contractors are now required to document the following data to allow for “quantitative measurements and comparisons”:
The number of veteran and disabled applicants
The total number of job openings and jobs filled
The total number of applicants for all jobs
The number of veteran and disabled applicants hired
The total number of hires

This data should be compiled annually and filed for three years to identify trends and measure outreach and recruitment efforts.

Equal Opportunity clause in subcontracts
As a contractor, you must incorporate an Equal Opportunity clause in all subcontracts to alert subcontractors of the federal regulations prohibiting discrimination against protected veterans and disabled individuals. It’s also a best practice to send a written notification of your affirmative action policy to subcontractors and request their cooperation.
Current EEO labor law poster
The federal Equal Employment Opportunity (EEO) poster is shared by the Equal Employment Opportunity Commission (EEOC) and OFCCP, so the agencies could choose to make mutual changes, such as the terminology used to describe veterans protected by VEVRAA.

Remember: This is a mandatory posting that you must display in a conspicuous location with other employee notices.

New language in job ads
As another best practice, all job solicitations and advertisements should go beyond a generic “EEO employer” reference and, instead, state that, “All qualified applicants will receive consideration for employment without regard to their protected veteran or disabled status and will not be discriminated against.”

Which employers are affected

The guidelines under Section 503 apply if you are a federal contractor with 50 or more employees and contracts of at least $50,000, while the VEVRAA requirements are targeted toward contractors with 50 or more employees and contracts of at least $100,000.

Mandatory EEO-1 Reporting

In addition to maintaining affirmative action programs, federal contractors with 50 or more employees and contracts of at least $50,000 must submit an annual EEO-1 Report.

The EEO-1 Report – formally known as the “Employee Information Report” – is a government form requiring a count of your employees by job category and then by ethnicity, race and gender. The EEO-1 Report must be filed each year with the EEOC under the authority of Title VII of the Civil Rights Act of 1964.

The EEOC and the Office of Federal Contract Compliance Programs (OFCCP) adopted the EEO-1 Report to collect annual data from employers and federal contractors about their minority and female workforce. Both agencies use the data for enforcement purposes. While the OFCCP uses EEO-1 data to determine which employer facilities to select for compliance evaluations, the EEOC uses the data to analyze employment patterns – such as representation of female and minority workers within companies, industries and regions.

The filing of the EEO-1 report is required by law, and is not voluntary. Penalties for noncompliance by a federal contractor or subcontractor may include termination of the federal government contract and debarment from future federal contracts.

To fill out the EEO-1 Report, the EEOC strongly endorses employees’ self-identification of race and ethnicity, which includes these seven categories:

Hispanic or Latino
White (Not Hispanic or Latino)
Black or African American (Not Hispanic or Latino)
Native Hawaiian or Other Pacific Islander (Not Hispanic or Latino)
Asian (Not Hispanic or Latino)
American Indian or Alaska Native (Not Hispanic or Latino)
Two or More Races (Not Hispanic or Latino)

You can use a legal self-identification form, or data sheet, for employees to voluntarily provide this information. The information must be kept confidential and, obviously, cannot contribute to any adverse employment decision.


Make completion of a new hire data sheet a mandatory job requirement. Although self-identification (i.e. asking employees to provide the information) is the most reliable and preferred method by the OFCCP and EEOC, visual observation also can be acceptable for identifying the race and ethnicity of employees.
Neglect to post the Equal Employment Opportunity poster. You must display this poster in a conspicuous location where both employees and applicants can see it.
Count employees more than once on the EEO-1 Report. Employees must be accounted for in one and ONLY one of the race/ethnicity and job categories.
Forget to include all full-time and part-time employees when completing your EEO-1 Report.


File a new hire data sheet separately from other personnel records.
Retain a copy of your most recent EEO-1 Report in your file at all times.
Use EEO-1 data to evaluate your own internal programs and help ensure equal employment opportunity practices.
File the EEO-1 Report by September 30th of each year.
Labor Law Compliance Made Easy - Find out which labor law posters are required for your state. Learn More​​​​