Federal Contractor Requirements

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. A federal subcontractor is a company that does business with another company that holds direct contracts with the Federal Government.

As a part of doing business with the Federal Government, both federal contractors and subcontractors, assume certain obligations. Specifically, they are prohibited from discriminating on the basis of sex, race, color, national origin, religion, disability or status as a protected veteran. They are also required to take affirmative action (e.g., proactive steps) to hire individuals from certain groups that have traditionally been discriminated against.

Three laws, all enforced by the U.S. Department of Labor’s Office of Federal Contract Compliance Programs (OFCCP), set forth these requirements:

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

Under these laws, every non-exempt government contract and subcontract must 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.

It is important to note that affirmative action goes beyond equal employment opportunity and requires targeted outreach efforts to facilitate the recruiting, hiring, retaining and advancing of employees from diverse backgrounds. While federal contractors and subcontractors (and federal agencies) are required to take affirmative action, some employers voluntarily adopt affirmative action plans in an effort to create a more balanced workforce.

Disability-Related Requirements

While Executive Order 11246 addresses race, color, religion, sex, sexual orientation, gender identity or national origin, the other two laws enforced by OFCCP—Section 503 and VEVRAA—pertain to people with disabilities, either directly or indirectly.

Section 503 directly focuses specifically on people with disabilities, prohibiting employers with federal contracts (or subcontracts) from discriminating against applicants and employees with disabilities and requiring them to take affirmative steps to hire, retain and promote qualified individuals with disabilities. In 2014, updates to Section 503 strengthened its affirmative action requirements, creating, for the first time ever, a 7 percent representation goal. They also set a requirement that covered employers invite applicants and employees to self-identify as people with disabilities (applicants at both the pre- and post-offer stage and employees every five years).

VEVRAA has an indirect disability component in that it requires federal contractors and subcontractors 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.

Given the updates to Section 503 and VEVRAA, it behooves employers covered by the law to ensure their workplace culture is conducive to self-identification. Fortunately, there are several strategies they can use to encourage self-identification.