Federal Contractor Compliance Requirements for New Contractors

So, you just landed your first federal contract—congratulations! Whether you're a startup celebrating your first opportunity or an established company branching into government work, one thing’s clear: understanding federal contractor compliance requirements needs to be at the top of your list. 

Let’s walk through what new contractors need to know, why it matters from day one, and how to build a solid compliance foundation that will serve you and your organization for years to come. 

Here’s three key takeaways you’ll learn in this article: 

1. Who falls under the umbrella of federal contractor compliance requirements and action steps they need to take. 
2. The specifics of state and federal reporting requirements. 
3. Consequences of non-compliance with federal contractors’ nondiscrimination requirements 

Why Compliance Matters from Day One 

From the moment you enter into a contract with the federal government, regardless of whether you are a direct prime contractor or a subcontractor, you agree to follow any and all applicable rules and laws based on your company size and contract value, especially concerning equal employment opportunity (EEO) and nondiscrimination. 

And it’s not just about staying “out of trouble”, getting compliance right early on helps in many areas, such as: 

• Protecting you from costly penalties 

• Building credibility with contracting officers 

• Helping to create fair workplace practices 

• Positioning you for future contracts with broader scopes 

As a general rule, if you're unsure which regulations apply to you, it's better to overprepare. Federal compliance reporting has strict deadlines and data requirements that are non-negotiable. Late or missing reports can trigger audits, fines, or even suspension of your contracts.
 

First Steps Toward Compliance 

So, where do you start? 

Checklists can be an effective and simple tool, so here’s a “new federal contractor” checklist to help you hit the ground running: 

1. Review your contract value and employee headcount: Different thresholds trigger different reporting and compliance rules, so knowing what your company falls under and what your associated compliance requirements are is a must.  
2. Identify which agencies you’ll be reporting to: The Equal Employment Opportunity Commission (EEOC), Department of Labor (DOL), to include the Office of Federal Contractor Compliance Programs (OFCCP), or your state and local governments. 
3. Assign an internal point person for compliance: Designate someone in HR, legal, or operations. This will help the company stay organized and on top of compliance and provides a main point of contact for related questions or concerns. 
4. Understand the data you need to collect now: Even if you don’t need to submit reports for a few months, being proactive will save a lot of time and headaches come reporting season. 
5. Explore tools or third-party services: They can support compliance reporting and non-discrimination in employment analysis. OutSolve is an HR advisory partner and can assist you with preparing and filing these reports and more.  

Many contractors make the mistake of waiting until just before a deadline to pull reports together. In fact, compliance starts much earlier with consistent data collection, documentation, and planning. 

Who This Applies To (Even If You’re a Small Company) 

You don’t need to have 100 employees to fall under federal contractor requirements. In fact, many compliance regulations apply as soon as you have 50 employees and a qualifying federal contract. Here are the key triggers: 

• EEO-1 Reporting for Contractors: Required if you have 50 or more employees and a contract worth $50,000 or more. 

• VETS-4212 Reporting: Kicks in at $150,000+ contract value   

• Section 503 Data Collection & Reporting: Also triggered by 50 employees and contracts of $50,000+. 

• VEVRAA Data Collection & Reporting: triggered by 50 employees and contracts of $150,000+ 

Finally, even smaller employers with at least 15 employees will need to comply with certain anti-discrimination laws. These laws include, but is not limited to: 

• Title VII of the Civil Rights Act of 1964: Required for 15 or more employees  

• Equal Pay Act of 1963: Required for 15 or more employees 

• Lilly Ledbetter Fair Pay Act of 2009 

• Pregnancy Discrimination Act of 1978: Required for 15 of more employees 

• Americans with Disabilities Act (ADA) of 1990: Required for 15 or more employees 

• ADA Amendments Act of 2008 

Core Federal HR Reporting Requirements 

Here’s a breakdown of the most common HR compliance obligations for federal contractors, including who must comply, what’s required, and how to stay ahead. When in doubt, or if you need assistance with any of these requirements, consider communicating with a compliance consultant or HR advisory firm, such as the experts at OutSolve. 

1. EEO-1 Report (Equal Employment Opportunity Commission) 

• Who needs to file: All employers with at least 100 employees OR federal government contractors and first-tier subcontractors with 50+ employees and at least $50,000 contracts must file annually with the EEOC. 

• Due date: Annually, proposed filing window for 2024 reports is May 20, 2025 – June 24, 2025. 

• What to include: Workforce data categorized by race, gender, and job category. 

• How to file: Online through the EEOC’s portal. 

• Retention: Keep for three years minimum. 

• Why it matters: It’s the only report tied directly to enforcement of the Civil Rights Act. 

2. VETS-4212 Report  (Department of Labor) 

• Who needs it: Federal contractors with contracts of $150,000 or more. 

• Due date: Every year by September 30. 

• What to include: Information about hiring and employment of protected veterans. 

• How to file: Submit via the DOL’s VETS-4212 portal. 

• Retention: At least three years. 

• Pro tip: Your recruiting team should document veteran outreach efforts year-round. 

3. Section 503 of the Rehabilitation Act (OFCCP) 

• Who it applies to: Contractors with 50+ employees and a contract of $50,000+. 

• Requirement: Must develop and maintain a written Affirmative Action Plan (AAP) for individuals with disabilities. 

• AAP Due: Within 120 days of starting a covered contract. 

• Record retention: Maintain for three years. 

4. VEVRAA (Vietnam Era Veterans' Readjustment Assistance Act) 

• Who it applies to: 50+ employees, contract of $150,000+. 

• Requirement: Create and maintain a written, veteran-specific, AAP and document outreach and hiring efforts. Companies must also list jobs utilizing their state’s Employment Service Delivery System (ESDS). 

• Filing overlaps: Aligns with your VETS-4212 reporting, but AAPs are separate documents and must be kept on file.

• Who needs to file: All state and local governments in the United States that employ 100 or more employees are required to file the EEO-4 Report.  

• Due date: The EEO-4 Report is a mandatory biennial data collection, with submissions required every two years. For instance, the 2023 EEO-4 data collection was due on December 5, 2023. The next collection is scheduled for 2025. 

• What to include: The report must include demographic workforce data, detailing employees by race/ethnicity, sex, job category, and salary band.  

• How to file: Eligible entities must submit their EEO-4 Reports electronically through the EEOC's dedicated EEO-4 Online Filing System. 

• Retention: State and local governments are required to retain all personnel and employment records for two years from the date of the making of the record or the personnel action involved, whichever occurs later. In cases of involuntary termination, records must be retained for two years from the date of termination. 

• Why it matters: The EEO-4 Report is crucial for ensuring compliance with federal equal employment opportunity laws. It enables the EEOC to monitor employment patterns, identify potential disparities, and enforce anti-discrimination statutes within state and local governments. 

6. FAR Clauses for Construction Contractors 

Construction contractors must meet specific contract terms under Federal Acquisition Regulation (FAR), which often include equal opportunity clauses and affirmative action language. Non-compliance here can impact your eligibility for future projects.

7. State-Level Reporting: More Than Just Federal

Did you know that 15 states currently require their own versions of Affirmative Action Plans (AAP)? These vary in scope and format but often mirror federal AAP requirements. If you’re doing work with a state government agency, you may need to: 

• Submit a state-level AAP 

• Affirm you have non-discriminatory policies 

• Maintain specific outreach and hiring records 

Currently, there are 15 states, and the District of Columbia, requiring some form of written AAPs for contractors and/or employers. These states include Connecticut, Idaho, Illinois, Kentucky, Maine, Minnesota, New Jersey, New York, North Dakota, Ohio, Pennsylvania, Rhode Island, Virginia, Wisconsin, and Wyoming.

8. Executive Order 14173 – What’s Coming Next

As you may already be aware, Executive Order 14173 was enacted in January 2025, and it’s changing the compliance game—especially around affirmative action and DEI programs. 

Soon, contractors may be required to: 

• Certify compliance with all federal anti-discrimination laws 

• Modify existing contracts to include this certification 

• Ensure that DEI efforts align with Title VII and don’t unintentionally violate it 

This is still unfolding, but it’s a strong signal that the government is tightening expectations on how federal funds are tied to employment practices. 

Why It Pays to Stay Compliant 

We know that compliance mistakes can be expensive, both in legal penalties and employee turnover. Some of the main risks of non-compliance include: 

• Contract suspension or termination 

• Financial penalties and/or conciliatory agreements 

• Public exposure and announcements made against egregious violators 

• Legal liability for discrimination claims 

• Decrease in employee morale and an increase in employee turnover 

But, there are upsides as well, such as: 

• Allowing employees to reach their full potential while driving innovation and workforce optimization 

• Attracting and retaining top talent 

• Reducing potential liability of financial remedies 

• Organizational accountability at all levels of employment 

• Developing meaningful relationships with community organizations 

What Federal Contractor Compliance Means for Your Organization 

Federal contractor compliance requirements might feel overwhelming at first, but with the right strategy and tools, you can make them second nature and part of your company’s natural “rhythm.” 

Start early, document everything, and lean on the expertise of HR and compliance experts here at OutSolve. The earlier you integrate compliance into your onboarding, hiring, and workforce planning, the smoother your federal contracting journey will be. 

Compliance is more than just checking boxes; it’s about building a workplace and reputation that makes you and your team proud.