Have a Federal Contract? The Labor Department Just Erased One Set of Hiring Rules and Trimmed Two Others

In 1968, the Labor Department decided that a federal contractor needed a written affirmative action plan once it had 50 employees and a $50,000 contract. That dollar line was never adjusted for inflation; the department now says it would be about $450,000 in 2024 dollars ^[1]. On Aug. 21 the department published a final rule that removes the plan, and the rest of the rules built on Executive Order 11246, along with two companion rules that change what contractors owe on disability and veterans’ hiring ^{[1, 2, 3]}. If you clean federal buildings, pave a federally funded road or sell supplies to an agency, this is about your HR binder.

What the Labor Department finalized on Aug. 21

Three documents, three effective dates. Here’s the short version:

• Executive Order 11246 rules are rescinded, effective Oct. 26, 2026. That covers the written affirmative action programs, the construction contractor rules, the sex discrimination guidelines and the pay transparency provisions, which barred contractors from penalizing workers who discuss pay ^[1].
• Section 503 rules are trimmed, effective Sept. 21, 2026. Contractors no longer have to invite applicants and employees to self-identify a disability (the CC-305 form), keep the related data or measure themselves against the 7% utilization goal for workers with disabilities ^[2]. One technical piece, a change to the administrative hearing rules in 41 CFR part 60-30, waits until Dec. 21 ^[2].
• VEVRAA rules are updated, effective Sept. 21, 2026. VEVRAA is the veterans’ hiring law for contractors. The rule mostly moves enforcement procedures into the veterans’ regulations and writes in the higher dollar thresholds ^[3].

The Office of Federal Contract Compliance Programs, the Labor Department office that enforces these rules, first proposed all three on July 1, 2025 and received 917 comments on the Executive Order 11246 rescission ^[1].

How we got here

Executive Order 11246 dates to 1965 ^[1]. On Jan. 21, 2025, Executive Order 14173 revoked it and let contractors keep following the old regulations for 90 days ^[4]. The same order told agencies to put two terms in every contract: one making compliance with federal anti-discrimination law “material” to payment decisions, and one requiring the contractor to certify it does not run DEI programs that violate those laws ^[4].

The regulations themselves stayed on the books until a rulemaking removed them. The department says the order’s revocation is “a standalone and sufficient basis” for the rescission, and adds legal objections to the affirmative action requirements ^[1].

The two disability and veterans’ laws are different. They’re statutes passed by Congress, so the plans they require don’t go away ^{[2, 3]}. What changes is the paperwork built around them.

Does this apply to you? Two hypotheticals

First, the dollar lines, because they moved last fall. A Federal Acquisition Regulation update effective Oct. 1, 2025 raised a batch of contract thresholds for inflation ^[5]. As a result:

• Section 503 basic coverage starts with a contract over $20,000 (was $15,000). Firms with 50 or more workers and a $50,000 contract also keep a written plan ^[2].
• VEVRAA coverage starts at a single contract of $200,000 (was $150,000), and the written-plan trigger is that same dollar figure plus at least 50 employees ^[3].

Hypothetical one: a janitorial services company with 60 employees and one $80,000 federal contract. Today this firm is over both Executive Order 11246 lines, so it keeps a written plan for each establishment ^[1]. That obligation ends Oct. 26 ^[1]. Its Section 503 plan stays, because it clears 50 employees and $50,000 ^[2]. Starting Sept. 21, though, it can drop the self-ID invitations and the utilization analysis, which the old rules ran on the same job groups as the Executive Order 11246 plan ^[2]. It still needs an audit and reporting system to measure whether its disability efforts work; the department suggests reviewing accommodation requests or workplace accessibility instead ^[2]. At $80,000, it is under VEVRAA’s $200,000 line ^[3].

The department’s estimate of the savings for a firm like this: existing contractors spent about 47 hours a year updating an Executive Order 11246 plan, valued at $99.11 an hour ^[1]. That’s roughly $4,660 a year in staff time, by my arithmetic on the department’s figures.

Hypothetical two: a paving contractor with 12 employees and a $25,000 federally assisted construction job. Executive Order 11246 reached construction contracts over $10,000 regardless of headcount ^[1]. After Oct. 26, that coverage is gone ^[1]. The contractor is still over the $20,000 Section 503 line, so the basic nondiscrimination clause applies, but with 12 employees it was never required to write a plan ^[2]. Here’s a wrinkle commenters raised: Title VII, the main federal job-discrimination law, does not reach employers with fewer than 15 employees, while Executive Order 11246 did ^[1]. The department’s answer is that the contracting agencies themselves will police discrimination through contract terms ^[1].

Who’s still on the hook, and for what

Not much changes in the nondiscrimination rules themselves. Contractors still may not discriminate on the basis of disability, the reasonable accommodation rules are untouched, and workers can still volunteer disability information to request an accommodation ^[2]. The department says a contractor may collect disability data on its own if it believes the law allows it, but the agency won’t supply a form ^[2].

A newer obligation is coming. Executive Order 14398, signed March 26, 2026, requires a contract clause in which contractors agree not to engage in race-based disparate treatment and to furnish records on request; the Federal Acquisition Regulatory Council has been told to write the regulation ^[1]. No clause text has been published.

And nothing here touches the EEO-1. The department says plainly that its rescission does not affect the EEOC’s actions on that report ^[1]. If you read my column on the EEOC’s proposal to drop the EEO-1, that’s still a separate proceeding.

My view on process: three rules with three different effective dates is a lot to ask of a 60-person company without an HR department. The department did write the inflation-adjusted thresholds into the veterans’ and disability rules, which saves owners from cross-checking the FAR ^{[2, 3]}.

What to do between now and Oct. 26

Sort your contracts by value and check each against the $20,000 and $200,000 lines ^{[2, 3]}. On Sept. 21, update your onboarding packet to remove the CC-305 form, and strip the utilization analysis from your Section 503 plan ^[2]. Hold onto your Executive Order 11246 materials until Oct. 26, when the rescission takes effect ^[1].

By the department’s count, the rescission removes obligations from 107,165 supply and service contractors and 9,982 construction contractors, and saves about $996 million a year ^[1]. It estimates the Section 503 changes save another $80 million a year ^[2].

What I’m keeping an eye on

Sept. 21 and Oct. 26. The disability and veterans’ changes start first; the Executive Order 11246 regulations come off the books five weeks later ^{[1, 2, 3]}.

The Executive Order 14398 clause. Once the FAR Council proposes it, small contractors will need to see what records it asks for ^[1].

— Sally