Compliance with Section 503 and VEVRAA: Still Required

Although compliance may not be the most exciting part of HR management, it’s still one of the most important, especially if you're a federal contractor. With some of the recent regulatory changes, including the January 2025 rescission of Executive Order 11246, you may be wondering where that leaves your obligations under Section 503 of the Rehabilitation Act and the Vietnam Era Veterans' Readjustment Assistance Act (VEVRAA). 

Section 503 and VEVRAA are still fully in effect. That means if you’re a covered contractor or subcontractor, then you’re still required to comply, regardless of what agency is enforcing the rules. 

Let’s get into more specifics on all of this and how trusted partners like OutSolve can help. Here are three key takeaways you’ll learn in this article: 

1. A quick refresher of Section 503 and VEVRAA 
2. Upcoming enforcement changes for Section 503 and VEVRAA 
3. Key compliance requirements, how you can position your organization to remain compliant, and consequences for noncompliance.  

Section 503 and VEVRAA: A Quick Refresher 

If your organization holds federal contracts or subcontracts, then you're likely expected to comply with the following: 

• Section 503 of the Rehabilitation Act: Prohibits discrimination against individuals with disabilities (IWD) and requires affirmative action to recruit, hire, and retain them. 
• VEVRAA: Extends similar protections and affirmative action obligations to protected veterans. 

It’s important for HR to remember that these laws require annual tracking of hiring benchmarks and utilization goals (for now), detailed recordkeeping, outreach, and inclusion strategies. The requirements are extensive, but they’re essential to cultivating and supporting inclusive and equitable workplaces, and to maintaining eligibility for federal work. 

2025 Changes and What Remains the Same 

Rescission of Executive Order 11246 

In January 2025, Executive Order 11246 was officially rescinded, which had long prohibited federal contractors from discriminating on the basis of race, color, religion, sex, sexual orientation, gender identity, and national origin. This rescission marked a major change in the landscape of federal contractor DEI requirements. But the critical takeaway here is that Section 503 and VEVRAA were not impacted by this rescission. They remain fully intact and enforceable. 

Upcoming Transfer of Enforcement in October 2025 

As part of the Department of Labor’s FY 2025 budget proposal, the Office of Federal Contract Compliance Programs (OFCCP) will be dismantled and enforcement of its programs redistributed. This too, is a major change. Here’s a summary of what that looks like: 

• Section 503 enforcement will move to the Equal Employment Opportunity Commission (EEOC). This makes sense, as the EEOC already enforces the Americans with Disabilities Act (ADA) and other disability-related employment laws. The utilization goal may also be removed as a requirement.  
• VEVRAA enforcement will be transferred to VETS (Veterans' Employment and Training Service), which is already involved in veteran workforce policy. 

So, while the OFCCP may no longer be around in its current form after October 2025, your obligations under Section 503 and VEVRAA will continue. It will just be under new enforcement leadership. 

Who Must Comply? 

If your organization meets the following thresholds, then you're required to comply: 

• Section 503: Federal contracts or subcontracts of $15,000 or more 
• VEVRAA: Federal contracts or subcontracts of $50,000 or more, and file VETS 4212 reports annually for contracted amounts exceeding $150,000 

It’s important to note that this includes subcontractors and not just primary contractors. Remember that the obligations cover not only recruitment and hiring but also retention, accommodations, and ongoing outreach efforts. 

Key HR Compliance Requirements 

Complying with Section 503 and VEVRAA requires more than annual paperwork. It’s an active, ongoing process. Here’s what HR teams need to prioritize: 

1. Affirmative Action Program (AAP) Development: Both laws require a written affirmative action program that is updated annually. These plans should include: 
   • Workforce analysis 
   • Goals and benchmarks 
   • Action-oriented programs 
   • Internal audits and reporting mechanisms 
2. Hiring Benchmarks and Utilization Goals: The government updates these annually: 
   • VEVRAA hiring benchmark (currently 5.1% companywide)  
   • Section 503 utilization goal (currently 7% across all job groups) 
   • You are not expected to meet these numbers exactly, but you must demonstrate good-faith efforts toward achieving them. 
3. Self-Identification and Recordkeeping: You are required to: 
   • Invite applicants and employees to voluntarily self-identify as veterans or individuals with disabilities. Again, self-identification is voluntary, and not mandatory 
   • Retain records securely and separately from personnel files 
   • Track responses for AAP reporting and audits 
4. Job Listing and Outreach: Under VEVRAA, job postings must be listed with your state employment service delivery system (ESDS). In addition, you’re expected to: 
   • Build relationships and list jobs with veteran and disability-focused community organizations 
   • Document outreach efforts 
   • Evaluate the effectiveness of those partnerships annually 
5. Reasonable Accommodations and Nondiscrimination Policies: Your policies should be comprehensive, accessible, and well-communicated. This includes: 
   • Clear accommodation processes 
   • Anti-discrimination policies aligned with Section 503 
   • Training for managers and HR staff on inclusivity and accessibility 

Download our Section 503 and VEVRAA checklist to help your team stay ahead of these requirements.

Consequences of Non-Compliance  

Ok, so what happens if you don’t comply? Non-compliance can have serious consequences, such as: 

• Contract suspension or termination 
• Debarment from future federal contracts 
• Reputational damage with enforcement moving to the EEOC and VETS, you may see a shift in audit style and focus. Being prepared now is the best way to ensure a smooth transition later. 

How OutSolve Can Help 

At OutSolve, we understand that HR teams are juggling multiple initiatives. That’s why we offer comprehensive compliance support for federal contractors, especially in times of regulatory change. 

Here’s how we help you stay on track: 

• Customized AAPs that meet all Section 503 and VEVRAA requirements 
• Benchmark tracking tools and automated reporting 
• Self-ID program guidance, forms, and confidentiality protocols 
• Job posting assistance and outreach program recommendations 
• Mock audits and readiness reviews ahead of enforcement shifts 
• We monitor changes at the federal level, so you don’t have to and we adapt your compliance strategy before it becomes a problem. 

What Section 503 and VEVRAA Mean for Your Organization 

As a federal contractor, it’s understandable to think, “Maybe we’ll see how things play out in 2025.” The reality is that Section 503 and VEVRAA are still active and enforcement is just shifting, not going away. 

Remaining vigilant and getting ahead of the transition now will protect your contracts, improve workforce inclusion, and keep you prepared for whatever comes next. If your team isn’t sure whether your current processes are compliant, or if you’ve been putting off your next AAP, then it’s time to take action. Let our experts here at OutSolve take care of the legwork for you. Contact us today and let’s get started.