Under 41 CFR 60-300.5, a federal contractor or subcontractor holding a contract worth $200,000 or more must not discriminate against protected veterans and must take affirmative action to employ and advance them. The clause is enforced by the Office of Federal Contract Compliance Programs and reaches far beyond a simple no-discrimination promise: it triggers job-listing obligations, applicant self-identification invitations, annual hiring benchmarks, federal reporting, recordkeeping, and a flow-down duty to subcontractors.
Which Contractors Are Covered
Coverage turns on contract value. Federal contracts and subcontracts of $200,000 or more for the purchase, sale, or use of personal property or nonpersonal services fall under the clause. The FAR Council recently raised the threshold from $150,000.1eCFR. 41 CFR 60-300.5 – Equal Opportunity Clause
Once a contractor is covered, the obligation reaches the whole company, not just the site doing the federal work. Every establishment the contractor operates has to comply.
Who Counts as a Protected Veteran
The regulation recognizes four categories, and a single person can fall into more than one. All four require active duty service and a discharge under conditions other than dishonorable.2eCFR. 41 CFR 60-300.2 – Definitions
- Disabled veterans entitled to VA disability compensation, or discharged because of a service-connected disability.
- Recently separated veterans, meaning anyone within three years of discharge or release from active duty.
- Active duty wartime or campaign badge veterans, who served during a war or in a campaign or expedition that earned a campaign badge.
- Armed Forces service medal veterans, who took part in a military operation for which an Armed Forces service medal was awarded under Executive Order 12985.
The Two Core Duties
The clause imposes two separate obligations. The first is nondiscrimination. You cannot treat someone worse because of their protected veteran status in any term or condition of employment. The regulation names hiring, promotion, pay, termination, job assignments, leave, fringe benefits, training, and employer-sponsored social or recreational programs.3eCFR. 41 CFR 60-300.5 – Equal Opportunity Clause
The second is affirmative action. Passive nondiscrimination is not enough. Covered contractors have to take deliberate steps to recruit, hire, and advance veterans, and to review their own hiring processes and employment policies for barriers that disadvantage protected veterans.
Listing Job Openings With the State Workforce Agency
Covered contractors must list their job openings with the appropriate state workforce agency job bank, which the regulation calls the Employment Service Delivery System. This applies to openings that exist when the contract is signed and to openings that come up during the contract, even at facilities unrelated to the federal work.3eCFR. 41 CFR 60-300.5 – Equal Opportunity Clause
Some openings are exempt: executive and senior management positions, jobs that will be filled internally, and positions lasting three days or fewer. Openings at independently operated corporate affiliates are also excluded. A listing has to stay active on the state job bank for as long as the position remains posted on the contractor’s own career page.
Inviting Applicants to Self-Identify
Contractors have to invite applicants to voluntarily identify themselves as protected veterans at two separate points.
The pre-offer invitation goes out as part of the application process or at any time before a job offer, and asks whether the applicant believes they are a protected veteran without asking which category.4eCFR. 41 CFR 60-300.42 – Invitation to Self-Identify
The post-offer invitation comes after a job offer but before the person starts work, and asks which of the four categories apply. Both invitations must state that responding is voluntary, that the information will be kept confidential, and that it will not be used against the applicant.
Setting an Annual Hiring Benchmark
Each year, covered contractors set a hiring benchmark for protected veterans. The benchmark is a measuring tool. It is not a quota, a ceiling, or a floor.5eCFR. 41 CFR 60-300.45 – Benchmarks for Hiring
You choose one of two methods. The simpler option is to adopt the national percentage of veterans in the civilian labor force that OFCCP publishes annually. That figure is 5.1%, effective July 30, 2025.6U.S. Department of Labor. VEVRAA Hiring Benchmark
The alternative is a customized benchmark built from the percentage of veterans in the state labor force, the number of veterans using the state employment service in the past year, your own applicant and hiring ratios, your assessment of outreach effectiveness, and the nature of your job openings. Contractors using this method have to document each factor and how much weight it carried, and keep those records for three years.
VETS-4212 and Recordkeeping
Covered contractors file an annual report on veteran hiring using Form VETS-4212. The filing window runs August 1 through September 30 each year.7U.S. Department of Labor. VETS-4212 Federal Contractor Reporting
Recordkeeping is a separate obligation. Contractors with 150 or more employees or a government contract of at least $150,000 must retain personnel and employment records for at least two years from the date the record was made or the personnel action was taken, whichever is later. Smaller contractors, with fewer than 150 employees and no contract reaching $150,000, can use a one-year retention period.8eCFR. 41 CFR 60-300.80 – Recordkeeping
Flowing the Clause Down to Subcontractors
Covered prime contractors must include the Equal Opportunity Clause in every non-exempt subcontract or purchase order of $100,000 or more. The obligations then run through the supply chain to companies that may never deal with the government directly.1eCFR. 41 CFR 60-300.5 – Equal Opportunity Clause
You do not have to print the clause in full. Incorporation by reference to 41 CFR 60-300.5 works, provided the contract includes bold-face language stating the regulation’s prohibition against veteran discrimination and its affirmative action requirement. If the clause is left out by mistake, it is treated as part of the contract by operation of law anyway.
What Falls Outside the Clause
Work performed entirely outside the United States is exempt, so long as no workers are recruited inside the U.S. for that contract. When a state or local government holds a federal contract, the obligations attach only to the agency or subdivision doing the work, not to the entire government. The OFCCP Director can also waive the requirements for a specific contract or category of contracts when the national interest justifies it.1eCFR. 41 CFR 60-300.5 – Equal Opportunity Clause
What Happens if You Don’t Comply
The Department of Labor can withhold progress payments on existing contracts, terminate or suspend the contract, and debar the contractor from future federal work.9Office of Federal Acquisition Policy. FAR Subpart 22.13 – Equal Opportunity for Veterans
Debarment is the heaviest of these. A debarred contractor is locked out of federal contracting until it comes back into compliance and is reinstated. For companies whose revenue depends on government work, that can be existential. OFCCP does not have to wait for a complaint; it runs compliance evaluations on its own initiative.