Federal contractors are facing another significant shift in their compliance obligations.
On August 21, 2026, the U.S. Department of Labor's Office of Federal Contract Compliance Programs (OFCCP) published three final rules addressing requirements under Executive Order 11246, Section 503 of the Rehabilitation Act and the Vietnam Era Veterans' Readjustment Assistance Act (VEVRAA).
The changes follow President Trump's January 2025 revocation of Executive Order 11246, which had required covered federal contractors to take affirmative action based on race and sex and prohibited certain forms of employment discrimination.
But the latest rules do more than formally remove outdated regulations. They also make significant changes to requirements affecting individuals with disabilities, while leaving important obligations for protected veterans and individuals with disabilities in place.
For federal contractors, the key question is now: What is changing, what remains required and what should employers do next?
Executive Order 11246 Regulations Are Being Rescinded
Executive Order 11246 had been a cornerstone of federal contractor compliance for decades. Among other requirements, covered contractors were required to develop written affirmative action programs addressing women and minorities and conduct analyses of their workforce.
President Trump revoked Executive Order 11246 through Executive Order 14173, Ending Illegal Discrimination and Restoring Merit-Based Opportunity in January 2025.
The Department of Labor's new final rule rescinding the regulations implementing Executive Order 11246 now formally removes that regulatory framework.
The rescission becomes effective October 26, 2026.
Once effective, federal contractors will no longer be subject to the affirmative action requirements established under Executive Order 11246, including the associated requirements for written affirmative action programs based on race and sex.
That does not, however, mean federal contractors are free from employment discrimination requirements.
Federal anti-discrimination laws, including Title VII of the Civil Rights Act of 1964, remain in effect, as do applicable state and local employment laws.
Major Changes Are Coming to Section 503 Disability Requirements
The Department of Labor also finalized significant changes to regulations implementing Section 503 of the Rehabilitation Act, which applies to certain federal contractors and prohibits employment discrimination against individuals with disabilities.
The new Section 503 final rule removes several familiar compliance requirements.
The 7% Disability Utilization Goal Is Going Away
Previously, covered federal contractors were required to apply a 7% utilization goal for individuals with disabilities to each job group or, for certain smaller contractors, to their entire workforce.
The final rule eliminates this utilization-goal requirement.
This means contractors will no longer be required to perform the associated utilization analysis comparing representation of individuals with disabilities against the 7% goal.
Disability Self-Identification Requirements Are Being Removed
The rule also eliminates the requirement that contractors invite applicants and employees to voluntarily self-identify as individuals with disabilities for purposes of Section 503 compliance.
Related data collection requirements are also being removed.
These changes are particularly significant because disability self-identification and utilization analyses have been longstanding components of Section 503 affirmative action programs.
The Section 503 changes generally take effect September 21, 2026. A separate procedural amendment takes effect December 21, 2026.
Section 503 Has Not Been Eliminated
This is an important distinction for employers.
The new rule does not repeal Section 503 itself.
Covered federal contractors continue to have obligations regarding qualified individuals with disabilities. The remaining regulations continue to require affirmative action in areas such as recruitment, outreach and employment practices, while prohibiting discrimination against qualified individuals with disabilities.
For example, contractors remain responsible for periodically reviewing their personnel processes and evaluating their outreach and recruitment efforts.
In other words, eliminating the utilization goal and self-identification requirements should not be interpreted as eliminating disability-related federal contractor compliance altogether.
Employers should also remember that separate federal disability discrimination protections, including the Americans with Disabilities Act (ADA), may apply to their employment practices.
What Is Changing Under VEVRAA?
The third final rule addresses the Vietnam Era Veterans' Readjustment Assistance Act (VEVRAA), which establishes nondiscrimination and affirmative action requirements for certain federal contractors regarding protected veterans.
Unlike the Section 503 rule, the new VEVRAA rule does not eliminate its core affirmative action requirements.
Instead, the Department of Labor primarily updated the regulations to account for the revocation of Executive Order 11246. This includes moving administrative enforcement procedures directly into the VEVRAA regulations and removing outdated references to Executive Order 11246.
The rule also reflects an increase in the basic VEVRAA coverage threshold from $150,000 to $200,000, an inflation adjustment that became effective October 1, 2025. Employers can review OFCCP's current Section 503 and VEVRAA jurisdictional thresholds to determine which requirements may apply.
The VEVRAA final rule takes effect September 21, 2026.
What Federal Contractors Should Do Now
For employers covered by federal contractor requirements, these changes provide an opportunity to review existing compliance practices before the new rules take effect.
Employers should consider:
Employers should be careful not to assume that the changes eliminate all affirmative action requirements for federal contractors. The requirements now differ depending on the law involved.
Federal contractors may also want to review other areas where their obligations differ from those of other employers. For example, CTR recently covered the 2026 federal contractor minimum wage requirements and continues to track other federal employment compliance developments.
Organizations conducting a broader compliance review may also want to evaluate their Form I-9 and E-Verify compliance practices, particularly as federal enforcement priorities continue to evolve.
Frequently Asked Questions About the New Federal Contractor Rules
Do federal contractors still need affirmative action plans in 2026?
It depends on the requirement.
The regulations implementing Executive Order 11246's race- and sex-based affirmative action requirements are being rescinded. However, Section 503 and VEVRAA remain in effect, and covered federal contractors continue to have affirmative action obligations relating to individuals with disabilities and protected veterans.
Is the 7% disability utilization goal still required?
Not under the new Section 503 regulations once the applicable changes take effect. The final rule eliminates the 7% utilization goal and the associated utilization analysis requirement.
Do federal contractors still need to ask employees to self-identify as having a disability?
The new Section 503 rule eliminates the regulatory requirement for contractors to invite applicants and employees to voluntarily self-identify as individuals with disabilities for Section 503 affirmative action purposes.
Employers should distinguish this change from other disability-related employment obligations that may continue to apply.
Is VEVRAA being eliminated?
No. VEVRAA remains in effect. Covered federal contractors continue to have nondiscrimination and affirmative action responsibilities involving protected veterans.
OFCCP maintains additional VEVRAA compliance resources for federal contractors, including information about hiring benchmarks, self-identification and other requirements.
When do the new federal contractor rules take effect?
Key effective dates include:
The Bottom Line for Federal Contractors
The federal contractor compliance landscape has changed considerably since Executive Order 11246 was revoked in January 2025, and these final rules provide additional clarity about what the new framework will look like.
The biggest takeaway is that federal contractor affirmative action requirements have not simply disappeared across the board.
Race- and sex-based affirmative action requirements under Executive Order 11246 are being formally removed. Several significant Section 503 disability requirements, including the 7% utilization goal and disability self-identification requirements, are also being eliminated.
At the same time, Section 503 and VEVRAA remain in effect, and covered contractors continue to have important nondiscrimination and affirmative action responsibilities related to individuals with disabilities and protected veterans.
With key changes taking effect beginning September 21, federal contractors should review their current affirmative action and compliance practices now to determine what needs to change and what needs to stay.
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This information is provided for general informational purposes only and is not intended as legal advice. Employers should consult qualified legal counsel regarding their specific compliance obligations.
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