Federal Contractor Requirements
Learn about obligations federal contractors have under Section 503 of the Rehabilitation Act, and strategies to meet them.
Federal contractors must meet specific equal employment and affirmative action requirements to ensure that their workforces are inclusive of people with disabilities. This page explains what a federal contractor is, what these requirements are and how to ensure your organization is meeting these requirements.
Who is a Federal Contractor?
Federal contractors are businesses or organizations that enter into a contractual agreement with any department or agency of the United States Government to perform a specific job, supply labor and/or materials, or for the sale of products and services. A federal subcontractor is a company that enters into a contractual relationship with a federal contractor to fulfill the work of a federal contract.
As a part of doing business with the Federal Government, both federal contractors and subcontractors must meet certain obligations and are 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. Covered federal contractors and subcontractors 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.
These requirements are outlined in three laws that are enforced by the U.S. Department of Labor’s Office of Federal Contract Compliance Programs (OFCCP). They are:
- Executive Order 11246
- Section 503 of the Rehabilitation Act of 1973
- Vietnam Era Veterans’ Readjustment Assistance Act (VEVRAA) of 1974
Under these laws, all covered government contract and subcontract must include an Equal Employment Opportunity (EEO) clause. EEO clauses specify the non-discrimination and affirmative action obligations each contractor or subcontractor assumes as a condition of its contract or subcontract. Learn about strategies to help federal contractors meet their obligations under Section 503 of the Rehabilitation Act and recruit, hire, advance and retain workers with disabilities.
Affirmative action goes beyond equal employment opportunity, and requires targeted outreach efforts to facilitate recruiting, hiring, retaining and advancing employees from diverse backgrounds. While covered federal contractors and subcontractors (and federal agencies, under different regulations) are required to take affirmative action and develop written affirmative action plans, some employers voluntarily adopt affirmative action plans to create a more inclusive workforce.
Section 503 directly focuses on people with disabilities. The law prohibits employers with federal contracts (or subcontracts) who have contracts with the federal government of 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 its affirmative action requirements and introduced a 7% utilization goal. These updates 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).
Learn about strategies to help federal contractors meet their obligations under Section 503 and recruit, hire, advance and retain workers with disabilities.
VEVRAA has an indirect disability component, in that it 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 self-identify.
Self-Identification of Employees with Disabilities
Given Section 503 and VEVRAA reporting requirements, employers covered by those laws should ensure that their workplace culture encourages self-identification. EARN’s publication, Engaging Employees to Measure Success: Innovative Approaches to Encouraging Self-Identification, provides strategies to assist, along with examples of internal efforts implemented by various companies.
Additionally, EARN’s Communicating the Benefits of Self-Identification: Five Steps to Success resource provides process strategies employers can utilize to invite applicants and employees to self-identify not only for reporting requirements, but also as a way of conveying a company’s commitment to a disability-inclusive workplace.
Finding Job Candidates with Disabilities
Recruitment Tip: Work-based learning opportunities like internships and apprenticeships help employers build a diverse pipeline of talent, including people with disabilities. For more information on developing inclusive apprenticeship programs, visit the Partnership on Inclusive Apprenticeship’s (PIA) website. To learn more about inclusive internship programs, read the Department of Labor’s Inclusive Internship Programs: A How-To Guide for Employers (PDF).
Of course, getting an accurate count of current employees with disabilities is only one part of the equation. It is also important for federal contractors and subcontractors to ensure their recruiting and hiring processes are disability-inclusive.
Building relationships with state and local disability and workforce development service providers, such as state vocational rehabilitation agencies, American Job Centers, Centers for Independent Living (CILs) and other community-based organizations, can be beneficial for federal contractors seeking to proactively recruit people with disabilities and veterans in order to meet their goals under Section 503 and VEVRAA. These service providers can connect federal contractors with job seekers with disabilities directly or provide access to candidate databases. Since they have a strong local focus, they also can also assist in identifying and training individuals for specific workforce needs.
Relationships with service providers can be formed through formal partnerships (i.e., signed agreements outlining expectations from both parties) and/or informal interactions (i.e., ongoing contact regarding job openings and candidates). These organizations can help provide job candidates as well as supports that help bring people with disabilities on board—and ensure their success for years to come. For more information on state and local resources that can help federal contractors recruit and hire people with disabilities, visit Finding Candidates with Disabilities.