OFCCP Compliance Requirements: Affirmative Action and Penalties

Federal contractors still have real OFCCP compliance requirements in 2026, even after Executive Order 11246 was revoked. Two statutes carry the enforcement weight now: Section 503 of the Rehabilitation Act, which protects qualified individuals with disabilities, and the Vietnam Era Veterans’ Readjustment Assistance Act (VEVRAA), which protects covered veterans. Both remain fully in effect, with their own jurisdictional thresholds, written affirmative action program requirements, recordkeeping rules, and penalty structures.¹ Contractors who assumed everything OFCCP-related ended with EO 11246 are exposed.

What Ended With Executive Order 11246

Executive Order 14173, signed January 21, 2025, revoked EO 11246 and eliminated the race- and sex-based affirmative action framework that had governed federal contractors since 1965.² The Department of Labor followed with a proposed rule rescinding the implementing regulations at 41 CFR Parts 60-1, 60-2, 60-3, 60-4, and related parts.³

Gone: the organizational profiles, job group analyses, and utilization analyses that compared minority and female representation to labor market availability. Gone too: the equal opportunity clause EO 11246 required in every federal contract, along with the subcontractor flow-down provisions that carried those obligations through the supply chain. Contractors no longer prepare race- and sex-based affirmative action programs.

Everything below survived.

Who Is Still Covered

OFCCP’s remaining jurisdiction runs through Section 503 and VEVRAA. Both thresholds were adjusted for inflation effective October 1, 2025.⁴

Section 503 covers contractors and subcontractors with federal contracts worth more than $20,000. It prohibits discrimination against qualified individuals with disabilities and requires affirmative steps to recruit, hire, and advance them. A contractor with 50 or more employees that holds a single contract of at least $50,000 must also develop and maintain a written affirmative action program for each establishment.⁵

VEVRAA applies to contractors and subcontractors with federal contracts of $200,000 or more. It prohibits discrimination against protected veterans (a category that includes disabled veterans, recently separated veterans, active-duty wartime or campaign badge veterans, and Armed Forces service medal veterans) and requires affirmative action to employ and advance them. The written AAP requirement applies to contractors with 50 or more employees and a single contract of $200,000 or more.⁴

Affirmative Action Programs You Still Have to Write

The surviving programs focus on two specific populations rather than the whole workforce.

Section 503: The 7% Utilization Goal

A covered contractor must prepare a written program at each establishment within 120 days of starting a covered contract, then review and update it annually.⁶

OFCCP has set a 7% utilization goal for qualified individuals with disabilities. Contractors with more than 100 employees apply the goal to each job group; those with 100 or fewer may apply it to their entire workforce.⁶ The 7% figure is not a quota. Missing it does not itself trigger a violation, but failing to take good-faith steps toward it can. Falling short is a signal to examine outreach and hiring practices for barriers.

The program must include an annual data collection analysis tracking applicants who self-identified as having a disability, total job openings and jobs filled, total applicants, applicants with disabilities who were hired, and total hires. These records must be kept for three years.⁶

VEVRAA: The Hiring Benchmark

The VEVRAA program follows a similar structure but centers on protected veterans. Each contractor establishes a hiring benchmark and measures its veteran hiring against it.

OFCCP publishes a national benchmark based on the percentage of veterans in the civilian labor force. As of July 30, 2025, that benchmark is 5.1%.⁷ A contractor may use the national figure or build its own benchmark from factors like the three-year average of veterans in the civilian labor force, the number of veterans in the area who participated in DOL employment services, and similar data. Either approach works, but the contractor must document which one it chose and why.

The Contractor Portal

OFCCP’s online Contractor Portal requires covered contractors to certify annually whether they developed and maintained AAPs for each establishment. As of 2026, OFCCP has indicated the Section 503 and VEVRAA AAP certification period will remain closed.¹ Watch the portal for reopening announcements. Once the system is active, failing to certify can increase the likelihood of being selected for a compliance evaluation.

Recordkeeping and Reporting

Record Retention

Under VEVRAA, contractors must keep personnel and employment records for at least two years from the date the record was created or the personnel action occurred, whichever is later. Contractors with fewer than 150 employees or without a contract of at least $150,000 may keep records for one year. Records related to involuntary terminations follow the same two-year or one-year split.⁸

The specific data collection analyses required under both Section 503 and VEVRAA carry a longer three-year retention requirement.⁸⁶ When a contractor receives notice that a complaint has been filed or a compliance evaluation has started, all relevant personnel records must be preserved until the matter is fully resolved, regardless of the normal retention timeline.

EEO-1 Reporting

The EEO-1 Component 1 report requires employers to submit workforce data broken down by job category, sex, race, and ethnicity. Private employers with 100 or more employees file under Title VII. Federal contractors with 50 or more employees previously filed under the additional authority of EO 11246.⁹ With EO 11246 gone, the filing obligation for contractors with 50 to 99 employees is in a transitional state. Contractors in that size range should check the EEOC’s data collection portal for updated guidance.

VETS-4212 Reporting

Contractors and subcontractors with federal contracts meeting the threshold must file an annual VETS-4212 report documenting efforts to employ veterans. The Department of Labor lists the current reporting threshold at $150,000.¹⁰ Data from this form feeds directly into OFCCP’s compliance evaluation targeting, so the accuracy of the filing matters beyond the legal obligation to submit it.

Workplace Notices

Federal contractors must display the “Know Your Rights: Workplace Discrimination is Illegal” poster where employees and applicants can see it. It replaced the older “EEO is the Law” poster and covers protections under Title VII, the ADA, GINA, the Equal Pay Act, and other federal anti-discrimination statutes.¹¹ Contractors must also post the Pay Transparency Nondiscrimination Provision. Both notices need to reach remote workers and online applicants through electronic posting.¹²

Section 503 also requires contractors to notify labor unions or worker representatives in writing about the company’s nondiscrimination and affirmative action commitments regarding individuals with disabilities. The broader race- and sex-based union notification once required under EO 11246 ended with the revocation; the disability-specific notification stayed.

How a Compliance Evaluation Works

OFCCP still conducts compliance evaluations, now scoped to Section 503 and VEVRAA. The agency publishes Corporate Scheduling Announcement Lists identifying establishments selected for review. A selected contractor receives a scheduling letter listing documents that must be submitted within 30 days.¹³

The evaluation typically starts with a desk audit, where a compliance officer reviews the submitted AAPs and supporting data remotely. If the desk audit surfaces potential problems, OFCCP may conduct an on-site review. The agency can also run focused reviews aimed at a single protected group rather than examining all obligations at once.

If OFCCP finds a violation, it issues a Pre-Determination Notice giving the contractor 15 days to respond in writing, extendable for good cause. If informal resolution fails, OFCCP may issue a formal Notice of Violation and attempt conciliation. A contractor found in full compliance receives a closure letter.

Penalties for Noncompliance

OFCCP’s enforcement tools for Section 503 and VEVRAA violations include:

Conciliation agreements, the most common resolution, in which the contractor agrees to remedial steps that can include back pay and interest for affected individuals, job offers to members of an affected class, updated policies, and ongoing monitoring of hiring and promotion rates.
Cancellation, termination, or suspension of federal contracts in whole or in part for violations of the equal opportunity clauses or implementing regulations.³
Debarment, which declares a contractor ineligible for future government contracts after a failure to comply with an administrative order.³

For contractors whose federal revenue is a significant share of the business, debarment is an existential risk. The most expensive failures tend to involve years of neglected recordkeeping, where the contractor simply cannot produce what OFCCP requests. At that point, the agency draws its own conclusions from the gaps.

1
Office of Federal Contract Compliance Programs. Office of Federal Contract Compliance Programs
2
The White House. Ending Illegal Discrimination and Restoring Merit-Based Opportunity
3
Federal Register. Rescission of Executive Order 11246 Implementing Regulations
4
U.S. DOL Office of Federal Contract Compliance Programs. Updated Jurisdictional Thresholds for Section 503 of the Rehabilitation Act and the Vietnam Era Veterans’ Readjustment Assistance Act
5
U.S. Department of Labor. Jurisdiction Thresholds and Inflationary Adjustments
6
eCFR. 41 CFR Part 60-741 – Affirmative Action and Nondiscrimination Obligations of Federal Contractors and Subcontractors Regarding Individuals With Disabilities
7
U.S. Department of Labor. VEVRAA Hiring Benchmark
8
eCFR. 41 CFR 60-300.80 – Recordkeeping
9
U.S. Equal Employment Opportunity Commission. EEO Data Collections
10
U.S. Department of Labor. VETS-4212 Federal Contractor Reporting
11
U.S. Equal Employment Opportunity Commission. Know Your Rights: Workplace Discrimination is Illegal Poster
12
Office of Federal Contract Compliance Programs. OFCCP Updates Required EEO Posters
13
eCFR. 41 CFR Part 60-1 – Obligations of Contractors and Subcontractors