July 2025’s Affirmative Action Compliance Update for Federal Contractors

If your organization holds federal contracts, 2025 has brought major regulatory shifts you cannot afford to overlook. From executive orders to proposed rule changes, the landscape around affirmative action has continued to evolve since January 2025. This update summarizes changes to date, rules remaining in effect, and future changes proposed by the Department of Labor (DOL) and Office of Federal Contract Compliance Programs (OFCCP).  

Background and Initial Policy Changes—January to April 2025 

In early 2025, the federal government made a significant policy shift in handling employment rules for federal contractors and subcontractors. Previously, the OFCCP had enforced Executive Order (EO) 11246, which established antidiscrimination requirements for these workers, along with the Vietnam Era Veterans’ Readjustment Assistance Act (VEVRAA) and Section 503 of the Rehabilitation Act. Following President Trump’s EO 14173—Ending Illegal Discrimination and Restoring Merit-Based Opportunity, the OFCCP’s scope substantially narrowed. The federal government paused the enforcement of VEVRAA and Section 503 by the OFCCP.  

The new EO revoked EO 11246, which had prohibited employment discrimination by federal contractors on the basis of race, color, religion, sex, sexual orientation, gender identity, and national origin. It had also required these contractors to implement affirmative action programs. However, EO 14173 did not change the legal obligations under VEVRAA and Section 503. The DOL instructed the OFCCP to stop enforcement activities related to VEVRAA and Section 503, despite these laws remaining intact. 

What's Still Required—VEVRAA and Section 503 Requirements 

While EO 11246 is no longer enforceable, two key regulations remain firmly in place:  

• VEVRAA: The Vietnam Era Veteran's Readjustment Assistance Act protects veterans from discrimination in the workplace. It requires federal contractors with 50 or more employees and a federal contract or subcontract worth $150,000 or more to take proactive measures to recruit, hire, and promote veterans. Additionally, these contractors must maintain an affirmative action program (AAP). 

• The VETS-4212 filing period for federal contractors opened last week on August 1, 2025, and closes on September 30, 2025. The VETS-4212 Report is an annual filing required under VEVRAA, which provides a breakdown of a covered contractor's workforce based on protected veteran status. This report allows the Department of Labor's Veterans' Employment and Training Service (VETS) to collect data on veteran employment among federal contractors. Contractors meeting the VEVRAA requirements must file an annual VETS-4212 report providing data on their veteran workforce.  This is a reporting requirement that demonstrates compliance with VEVRAA and relates to the effectiveness of the AAP.   Federal contractors may submit this form electronically or by regular mail.  

• Section 503: Section 503 of the Rehabilitation Act protects individuals with disabilities, mandating nondiscrimination and requiring affirmative action to hire and promote qualified individuals with disabilities. It applies to federal contractors with 50 or more employees and contracts or subcontracts of $50,000 or more.  

Both regulations require written AAPs, annual planning, and the ability to demonstrate good faith efforts.  

The Transition Period—January to April 2025 

A 90-day transition period began when EO 14173 took effect on January 21, 2025. By April 21, 2025, federal contractors were required to wind down compliance obligations related to the now-revoked EO 11246, which involved AAPs based on race and gender. During this grace period, contractors were encouraged to revise their AAPs and compliance strategies accordingly. 

Resumption of Enforcement—July 2025 

As of July 2, 2025, the Secretary of Labor lifted the pause on the enforcement of VEVRAA and Section 503 by the OFCCP. This means the agency has resumed its investigations and compliance reviews and is now accepting individual complaints regarding discrimination against veterans and individuals with disabilities. Contractors must also have up-to-date and compliant AAPs in place. This reactivation highlights the ongoing importance of these regulations, despite eliminating EO 11246 requirements. 

Employers may have questions about the OFCCP's Contractor Portal, the primary method for contractors to certify their compliance with affirmative action regulations. Recently, it was announced that the portal will not require Section 503 and VEVRAA AAP certifications for now.  

Contractors may continue using the portal for administrative tasks, such as updating company profiles and accessing historical compliance data. 

Proposed Regulatory Changes—What Could Be Next?  

On July 1, 2025, the OFCCP proposed several additional rule changes to DOL's implementation of regulations for the VEVRAA and Section 503 affirmative action plans. These proposed changes are intended to align with the new administration's policies, including the EOs issued in January. The government is currently seeking public input, with a deadline for comments set for September 2, 2025.  

Here's what's on the table:  

• Removing EO 11246 Regulations—The OFCCP proposes rescinding regulations previously enforced under EO 11246 due to the absence of “valid legal authority.” This could result in the elimination of the Internet Applicant Rule, the Pay Transparency Rule, and other affirmative action requirements related to women and minorities. 

• EEO-1 Reporting Changes—Proposals include eliminating the EEO-1 filing requirement for federal contractors and first-tier subcontractors and ending employer obligations to request applicant self-identification of sex and race. 

• VEVRAA Streamlining—While the VEVRAA requirements remain mostly the same, proposed updates are intended to clarify annual AAP requirements and emphasize VETS-4212 reporting and state job posting obligations. The OFCCP will continue to have authority to investigate complaints and conduct compliance reviews. Self-identification, recruitment efforts, and hiring benchmarks for protected veterans will remain unchanged. 

• Section 503 Updates—Potential revisions may eliminate the requirement to collect voluntary self-identification data and strengthen the OFCCP's authority to enforce Section 503 independently. Proposals would also end the 7% utilization goal for hiring individuals with disabilities, eliminating the need for utilization analysis and remedial actions, citing concerns that such goals may lead to perceived quotas or ADA conflicts. 

What Employer Should Do Now  

A reminder that certain states have their own statutes that ban or encourage affirmative action by public employers and state contractors.  For example, in Washington RCW 49.60.400 bars preferential treatment by public agencies in employment on the basis of race, sex, color, or national origin. Oregon requires state agencies to develop AAP plans 

Until new regulations are finalized, employers should prioritize compliance with current laws. This includes maintaining AAPs for veterans and individuals with disabilities and being prepared for OFCCP reviews and audits under existing VEVRAA and Section 503 rules. Although employers are no longer required to follow EO 11246-related policies or to certify AAPs in the Contractor Portal, they should continue to monitor any updates.  

Archbright is closely monitoring ongoing actions by the DOL and OFCCP and will keep members informed if any proposed rules become effective after the September 2025 comment period concludes. In the meantime, eligible members subject to VEVRAA or Section 503 requirements and needing assistance with APP compliance can obtain more information by contacting their Account Executive at info@archbright.com.