NILG Info Center: Laws and Regulations for Federal Contractors and Subcontractors

Federal contractors and subcontractors are required to meet certain obligations and prohibited from discriminating against qualified job applicants or employees on the basis of race, color, religion, sex, sexual orientation, gender identity, national origin, disability, or status as a protected veteran (PDF).

Federal contractors and subcontractors that enter into federal contracts or subcontracts that meet specific dollar thresholds are also required to take affirmative action (e.g., proactive steps) to ensure that all applicants and employees are treated fairly in all areas of employment including recruitment, hiring, promotion, retention, and compensation.

Requirements for federal contractors and subcontractors are outlined in three laws that are enforced by the U.S. Department of Labor’s Office of Federal Contract Compliance Programs (OFCCP):

• Section 503 of the Rehabilitation Act of 1973
• Executive Order (EO) 11246
• Vietnam Era Veterans’ Readjustment Assistance Act (VEVRAA) of 1974

Requirements include:

• Equal Employment Opportunity (EEO) clause: Under federal contracting laws, all covered government contractors and subcontractors must include an EEO clause specifying the non-discrimination and affirmative action obligations they assume as a condition of its contract or subcontract.
• Affirmative Action: Affirmative action goes beyond equal employment opportunity, and requires targeted outreach efforts to facilitate recruitment, hiring, retention, and advancement of employees from diverse backgrounds, including people with disabilities and veterans.

Disability-Related Requirements

• Section 503 prohibits employers with federal contracts or subcontracts worth at least $15,000 from discriminating against applicants and employees with disabilities, and requires them to take affirmative steps to hire, retain, and promote people with disabilities.
  • In 2014, updates to Section 503 strengthened affirmative action requirements and introduced a 7% utilization goal. These updates also set a requirement that covered employers invite applicants and employees to voluntarily self-identify as people with disabilities (applicants at both the pre- and post-offer stage and employees every five years).
• VEVRAA requires federal contractors and subcontractors with contracts in excess of $100,000 to take affirmative action to employ and advance in employment specified categories of veterans—one of which is disabled veterans—and prohibits discrimination against such veterans. In 2014, updates to VEVRAA strengthened these affirmative action obligations, including a requirement that employers establish annual hiring benchmarks for protected veterans. These updates went into effect at the same time as updates to Section 503. VEVRAA rules also require that covered employers invite applicants and employees to voluntarily self-identify as veterans with protected status (PDF).