While employers with qualifying supply and service or direct federal contracts are required to comply with the equal opportunity (EO) clause found at 41 C.F.R. § 60-1.4(a), federally-assisted construction contractors that hold either a single contract, or multiple contracts in a 12-month period, valued at more than $10,000 are subject to the EO clause found at 41 C.F.R. § 60-1.4(b) which is essentially the same, but requires some additional responsibilities regarding subcontractors. “Federally-assisted” construction contracts typically involve a federal grant, loan, insurance, or guarantee.

The EO clause lays out the basic promise not to discriminate on the basis of race, color, religion, sex, sexual orientation, gender identity, or national origin, familiar to employers that subject to Title VII of the Civil Rights Act. This seemingly duplicate promise essentially gives the U.S. Department of Labor’s Office of Federal Contract Compliance Programs (OFCCP) the authority (jurisdiction) to investigate and remedy discrimination complaints, in addition to the Equal Employment Opportunity Commission (EEOC) which enforces Title VII.

Unlike Title VII, the EO clause for federal contractors also lays out specific steps and requirements to implement the general nondiscrimination policy, such as: including “EO taglines” in job advertisements; providing applicants, employees, and union officials with notice of EEO rights and responsibilities; filing annual EEO-1 reports; and general recordkeeping requirements.

The EO clause applies to all federal contractors and subcontractors that hold qualifying contracts valued at more than $10,000 in any 12-month period. Unlike the contract threshold for AAP requirements, multiple contracts of $10,000 or less can be aggregated over a 12-month period to meet the EO clause threshold. Contracts for indefinite quantities are assumed to meet the contract dollar threshold unless the purchaser (typically the federal contracting agency) has reason to believe that the amount to be ordered in any given year under the contract will not exceed $10,000.

Note that the term, “contractor,” as used throughout OFCCP’s regulations, includes subcontractors of any tier. For a subcontract to qualify, it must be necessary for the performance of either the prime contract, or another qualifying subcontract. Moreover, the term, “subcontract,” includes purchase orders.

The EO clause does not apply to contracts for work performed outside the United States by employees who were not recruited within the United States, which includes the District of Columbia, Puerto Rico, the Panama Canal Zone, and the possessions of the United States (such as Guam, the U.S. Virgin Islands, and the Northern Mariana Islands).

For contracts with state or local governments (or agencies, instrumentalities, or subdivisions), the EO clause applies only to those portions of the state or local government that performs work on the contract. In contrast, the EO clause applies to every establishment of a private employer with a qualifying federal contract, regardless of whether or not any employees at a particular establishment will perform contract work.

There are other, partial exemptions for contracts with religious entities, certain educational institutions, and for work on or near Indian reservations. See 41 C.F.R. § 60-1.5(a)(5)-(7) (external link) for more detail regarding these exemptions.

 It is a common misperception that federal contractors that do not meet the contract dollar and/or employee headcount thresholds for OFCCP’s E.O. 11246 affirmative action program requirements for women and people of color (POC) are not required to engage in affirmative action. That is simply not true; the very first paragraph of the EO clause states clearly that all federal contractors subject to the EO clause are required to engage in affirmative action on behalf of women and POC.

The EO clause requirements are all forms of affirmative action, which can be thought of as the things an organization does to ensure that discrimination does not occur (such as putting policies in place and posting notices). Contractors are not required to prepare and implement formal affirmative action plans with the required elements laid out in 41 C.F.R. § 60-2 unless they meet the contract dollar and employee headcount thresholds for those requirements.

The EO clause requires contractors to post in conspicuous places, available to employees and applicants for employment, notices to be provided by the contracting officer setting forth the provisions of this nondiscrimination clause.” OFCCP provides this notice in the form of a formatted poster titled, “Equal Employment Opportunity is the Law” (referred to as the “EEO is the Law” poster for short). 

Contractors are required to physically display the poster where employees and applicants can see it, typically in break rooms and/or in the Human Resources office. The EO clause in OFCCP’s regulations implementing Section 503 of the Rehabilitation Act for individuals with disabilities also requires contractors to provide a link to the “EEO is the Law” poster on their career website. Because the contract dollar thresholds for Executive Order (E.O.) 11246 and Section 503 are identical, that requirement applies here as well.

OFCCP also allows contractors to make the poster available electronically, where appropriate. Typically this is the solution of choice for employees that work remotely, either from home, from client sites not controlled by the employer, or “on the road.” Contractors must be prepared to demonstrate that employees receiving the notice electronically have access to it (are provided or otherwise have laptops or other devices, for instance).

 Download the "EEO is the Law" poster and required supplement from the OFCCP's website.

The EO clause requires contractors to state “in all solicitations or advertisements for employees” that “all qualified applicants will receive consideration for employment without regard to race, color, religion, sex, sexual orientation, gender identity, or national origin. This is colloquially referred to as the “EO tagline.”

If your current EO tagline reads, “EEO/AA m/f/d/v,” it is not compliant.

41 C.F.R. § 60-1.41 (external link) provides contractors with several options for meeting the EO tagline requirement:

• State expressly, “All qualified applicants will receive consideration for employment without regard to race, color, religion, sex, sexual orientation, gender identity, or national origin”
• Include an “appropriate insignia” prescribed by OFCCP (which is not currently available)
• Group advertisements together and state expressly that all qualified applicants will receive consideration for employment without regard to race, color, religion, sex, sexual orientation, gender identity, or national origin just once (rather than on each advertisement)
• Use the phrase, “an equal opportunity employer.”

Not surprisingly, most contractors choose to use the simpler and shorter phrase, “[Company] is an equal opportunity employer.”

OFCCP’s regulations implementing Section 503 of the Rehabilitation Act for individuals with disabilities require contractors to, at a minimum, add the word, “disability” to the end of the standard E.O. 11246 tagline.

OFCCP’s regulations implementing the Vietnam Era Veterans’ Readjustment Assistance Act (VEVRAA) for protected veterans require contractors to, at a minimum, add the word, “vet” to the end of the standard E.O. 11246 tagline. BCG recommends that contractors spell out “veteran” rather than use the abbreviation, “vet,” which can be offensive to some veterans.

OFCCP guidance makes clear that abbreviating “disability” and “veteran” as “d/v” is not compliant. Nor is the common abbreviation, “m/f/d/v,” for POC (minorities), women (female), individuals with disabilities, and veterans.

Such hyper-abbreviations were popular during the George W. Bush administration, including replacing "an equal opportunity employer" with "EEO/AA," though that was never officially endorsed by the OFCCP. During the Obama administration, the agency clamped down on technical requirements like the EO tagline and cited contractors for their use. However, recent OFCCP guidance (external link) has now officially endorsed the abbreviation, "EOE," to stand for equal opportunity employer.

Accordingly, the shortest, compliant EO tagline for contractors that are subject to all three EO clauses (women/POC, individuals with disabilities, and protected veterans) is:

EOE disability vet

However, as noted above, some veterans may be put off by the abbreviation, "vet," so BCGi recommends spelling out "veteran" whenever possible.

E.O. 13665 amended E.O. 11246 to prohibit federal contractor employers from “discriminating” (retaliating) against employees or job applicants who inquire about, discuss, or disclose their own compensation or the compensation of other employees or applicants. There are exceptions for employees with access to pay information as part of their normal job duties.

The regulations implementing E.O. 13665 require contractors to adopt OFCCP’s prescribed compensation nondiscrimination policy and to make that policy available to employees and applicants, much in the same manner as the “EEO is the Law” poster. In fact, although the “EEO is the Law” poster does include reference to compensation nondiscrimination, just providing employees and applicants with that poster is not enough. The agency requires that the compensation nondiscrimination policy be posted separately and in addition to the “EEO is the Law” poster.

OFCCP provides downloadable PDF files containing the required compensation nondiscrimination policy language on their website (external link), along with guidance. The agency provides the language in both “formatted” and “unformatted” versions. The formatted version includes information for employees and applicants regarding how to contact OFCCP to file a complaint, which is not language required by the regulations. Accordingly, most contractors use the unformatted version, which only contains the required statutory language.

Like OFCCP, contractors are allowed to provide additional information along with the prescribed policy notice but cannot change the required language. Technically, this includes replacing the words, “The contractor,” with the actual company name, though the OFCCP has not been so strict about that in recent years. To the extent that contractors do wish to provide additional information or context along with OFCCP’s required policy language, the materials should clearly indicate what is and is not part of the “official” notice.

The EO clause requires contractors to “send to each labor union or representative of workers with which it has a collective bargaining agreement or other contract or understanding, a notice to be provided by the agency contracting officer, advising the labor union or worker’s representative of the contractor’s commitments under section 202 of Executive Order 11246… .”

Note that the requirement is union-specific and is not a recurring annual or periodic requirement. OFCCP expects that notices will be sent to local union officials (not the national office).

Visit the Union Notification BCGi Resources page for more detailed information and a sample notice letter.

The EO clause requires contractors to include the clause in every “nonexempt” subcontract or purchase order. Note that while transactions of $10,000 or under are exempted by 41 C.F.R. § 60-1.5(a)(1) (external link), the exemption does not apply where an organization holds contracts in any 12-month period that either have, or can reasonably be expected to have, an aggregate value exceeding $10,000. Accordingly, a contract for $10,000 or less is not necessarily “exempt.” As a practical matter, the EO clause only needs to be included in subcontracts or purchase orders that are necessary for the performance of a federal contract.

OFCCP’s regulations state that the EO clause must be incorporated into the contract in such a way as to “bind” the other contracting party. In other words, it is part of what they agree to when they enter into an agreement to do business with your organization. This is a bit of a misnomer in that the contract clause itself does not technically create or confer any obligations, just as its absence or omission does not relieve a subcontractor of potential obligations. The clause is “binding” in that if a covered subcontractor violates its provisions, OFCCP can order the prime or higher-tier contractor to enact remedies to enforce the EO clause.

Contractors have the option of including the entire clause (eight paragraphs of text) or incorporating the clause “by reference.” “By reference” simply means including shorter language that refers to the contract clause, leaving it up to the other party to find and read the whole text of the clause on their own, if they are so inclined.

OFCCP does not prescribe any particular language or format for incorporating the EO clause by reference with regard to Executive Order 11246 (women and POC), but it does with respect to Section 503 (disability) and VEVRAA (veterans). Visit the EO Clause “Flow-Down” Requirement BCGi Resources page for more detailed information.

Note that the E.O. 11246 affirmative action program requirements for supply and service contractors also contain a separate notice requirement for subcontractors and vendors that is not satisfied by including the EO clause in subcontracts and purchase orders. This separate, written notice is only required if the contractor is also required to prepare and implement formal, written affirmative action plans.

Federally-assisted construction contractors also agree to “assist and cooperate actively” with the contracting agency and OFCCP in “obtaining the compliance of contractors and subcontractors” and will furnish OFCCP with information necessary for enforcement. Furthermore, federally-assisted construction contractors agree to refrain from entering into contracts or contract modifications with a contractor that has either been debarred from government contracting or “has not demonstrated eligibility for” government contracting.

The extent to which federally-assisted construction contractors are actually responsible for the compliance of their subcontractors or vendors is unclear. At a minimum, such contractors should make a good faith effort to not do business with entities on OFCCP’s list of debarred companies (external link).

Title VII of the Civil Rights Act already requires most private employers with 100 or more employees to annually file “Standard Form 100,” also known as the “Employer Information EEO-1 report,” or simply the “EEO-1” for short. The report provides a demographic breakdown of the employer’s work force by race and gender within 10 broad EEO-1 job categories (executive/senior level officials and managers; first/mid level officials and managers; professionals; technicians; sales workers; administrative support workers; craft workers; operatives; laborers and helpers; and service workers).

OFCCP’s regulations also require federal contractors that are subject to the E.O. 11246 affirmative action requirements and are either a prime or first-tier subcontractor to file the EEO-1 report. This gives OFCCP the authority (jurisdiction) to actively enforce the EEO-1 requirement on federal contractors. In fact, in every compliance evaluation, OFCCP requests proof of EEO-1 filing for the prior 3 years (if applicable). Non federal contractor employers that are required to file reports but fail to do so can be ordered to file by a federal court (there are no direct penalties for failing to file but there would be consequences for failing to comply with a court order). However, federal contractors that are required to file but fail to do so can be immediately sanctioned by OFCCP and penalties can include federal contract termination and debarment from further federal contracting opportunities.

Annual EEO-1 reports are currently due March 31 of each year. The past several years have seen substantial changes to the EEO-1 report, specifically the addition of "Component 2" reporting on hours worked and total compensation. Component 2 was added and approved by the White House Office of Management and Budget (OMB) during the Obama administration. However, under the Trump administration the OMB re-examined the burden on employers and recinded approval. This was followed by a lawsuit in which a federal district court ordered the reinstatement of Component 2. The EEOC was given a few options and chose to collect Component 2 data for 2017 and 2018. Recently, the EEOC has indicated that Component 2 may not be required for 2019 as the agency evaluates data collected under the court order and determines the path forward. The lawsuit is under appeal and the future of Component 2 reporting is unclear.

BCGi will be developing a dedicated EEO-1 reporting Resource page with more detailed information and guides. In the meantime, click here for more information regarding the standard ("Component 1") EEO-1 requirements, and here for the current Component 2 requirements (external links).

OFCCP does not always prescribe that certain employment records be kept, or in what form, but to the extent that they are, the agency generally requires federal contractors to maintain and be able to make accessible employment records for a period of 2 years from the date the record is made, or two years from the date of the employment action being recorded, whichever is longer. OFCCP’s regulations implementing the affirmative action requirements of Section 503 of the Rehabilitation Act for individuals with disabilities, and the Vietnam Era Veterans’ Readjustment Assistance Act (VEVRAA) for protected veterans impose a special 3-year recordkeeping requirement for specific elements of the disability and veteran AAPs.

Contractors with fewer than 150 total employees (enterprise-wide, not at each establishment), or does not have a qualifying federal contract valued at $150,000 or more, are only subject to a 1-year recordkeeping requirement.

“Employment records” include, but are not limited to data, information, and documents (including emails) pertaining to:

• Hiring
• Assignment
• Promotion
• Demotion
• Transfer
• Lay-off or termination
• Rates of pay or other terms of compensation
• Selection for training or apprenticeship
• Records having to do with requests for reasonable accommodation
• Results of any physical examination
• Job advertisements and postings
• Applications
• Resumes
• Any and all expressions of interest through the Internet or related electronic data technologies as to which the contractor considered the individual for a particular position

"Expressions of interest" include, but are not limited to:

• On-line resumes
• Internal resume databases
• Records identifying job seekers contacted regarding their interest in a particular position
• Tests and test results
• Interview notes

With respect to internal resume databases, the contractor must maintain a record of each resume added to the database, a record of the date each resume was added to the database, and corresponding to each search: the position for which each search of the database was made; the substantive search criteria used; and the date of the search.

With respect to external resume databases, the contractor must maintain: a record of the position for which each search of the database was made; the substantive search criteria used for each search; the date of the search; and the resumes of job seekers who met the basic qualifications for the particular position and were actually “considered” by the contractor.

Note that substantive evaluation of qualifications, even if done by a computer program, constitutes "consideration" for these purposes.

Records of contractors "good faith efforts" (typically outreach and recruiting efforts for people with protected characteristics) and written AAPs are included in the OFCCP's record retention requirements. Contractors are required to have available the current year AAP and the AAP from the immediately prior year (if they were required to prepare AAPs). Accordingly, the OFCCP can "go back" two years in an audit, but generally no more since contractors are generally not required to retain documents beyond that point.

The OFCCP's recordkeeping provisions also require contractors to maintain information on the sex and race/ethnicity of employees and, to the extent possible, applicants for employment. Accordingly, contractors are required to solicit sex and race/ethnicity self-identification.

Once an audit or investigation is initiated by OFCCP, employment and other records relevant to the audit or investigation must be maintained for the duration of OFCCP’s inquiry, including any appeals that might follow. This is often referred to as a “legal hold,” and you should always consult with your legal counsel in such circumstances.