2026 is quickly approaching, and HR professionals working in federal contractor organizations have more than just recruiting goals, engagement strategies, and technology investments to think about. A new year means new goals and expectations, and when it comes to federal contractor compliance requirements, staying ahead is a must.
From I-9 compliance to pay equity audits and DEI assessments, now is the time to start budgeting for HR compliance requirements for the year ahead. Failing to prepare means potentially exposing your company to costly audits, penalties, and even lost contracts.
The good news? With a proactive plan, your HR team can maintain compliance, reduce risk, and strengthen internal processes.
Here are three key takeaways you’ll learn in this article:
- Key 2026 compliance areas for federal contractors to have in their budgets
- How federal contractors can be proactive towards meeting 2026 compliance requirements
- Benefits of partnering with compliance experts in the planning process
Key Federal Contractor Budget Items
Below are all the necessary items that federal contractors need to budget for annually.
1. Form I-9 Compliance Solutions
Let’s start with I-9 employment verification compliance which has only become more important in the past several months. Every employer in the U.S. must make sure that all new W-2 hires are legally authorized to work in the U.S. For federal contractors, the scrutiny is even higher since they’re also required to use the E-Verify system. Don’t let your guard down when it comes to I-9 compliance.
Why It Matters
I-9 errors can lead to compliance issues and consequences like steep fines and reputational damage. ICE audits are on the rise, so now is the time to make sure your I-9 process is strong with checks and balances in place.
What to Budget For
- I-9 software solutions with audit trails and E-Verify integration
- Digital I-9 verification tools for remote onboarding.
- Outsourced services to conduct internal audits and manage compliance
Key Benefits
- Streamlined and smoother onboarding process
- Reduced risk of technical or administrative violations
- Better preparedness for unexpected audits
OutSolve offers a suite of I-9 employment verification solutions, including:
- Access to a dedicated team of trained agents
- Mobile-friendly capability for Section 1 completion
- Remote Section 2 verification by trained agents
- E-Verify case creation and escalation capabilities for Tentative Nonconfirmations (TNCs)
- Centralized dashboard with reporting capabilities
- Digital storage
- Audit-ready proactive compliance checks
2. Section 503 and VEVRAA Compliance
If your company holds federal contracts over $50,000 and has at least 50 employees, then you’re subject to affirmative action obligations under Section 503 (individuals with disabilities). If you have a federal contract or subcontract of $150,000 or more and 50 or more employees, you are subject to written affirmative action plans under VEVRAA (protected veterans).
Why It Matters
These programs aren’t optional—They’re legally required if you meet the threshold.
What to Budget For
- Affirmative action plan (AAP) consulting
- Data collection and analysis tools
- Annual reporting and documentation services
Key Benefits
- Reduces exposure to discrimination claims
- Demonstrates commitment to workforce diversity
OutSolve offers a host of solutions related to 503/VEVRAA, including:
- Section 503 plan development, risk prevention and documentation, self-identification and data collection, workforce utilization analyses, and training
- Development of VEVRAA plans, veteran recruitment and outreach programs, accurate data collection and voluntary self-identification process, risk prevention and support
3. EEO-1 Reports
The EEO-1 Component 1 Report is a must-have for federal contractors with 50+ employees and a contract worth $50,000 or more, or private sector employers with 100 or more employees.
Why It Matters
Accurate, timely submission of your workforce demographic data is required by this reporting regulation. The report can determine if there are any patterns of discrimination within your organization. It also helps to improve diversity and inclusion efforts in the workplace.
What to Budget For
- Tools to track and validate demographic data
- Consulting or outsourced support to file reports
- Training for HR teams on proper categorization
Key Benefits
- Accurate, compliant filings
- Avoids last-minute work and late penalties
OutSolve offers EEO-1 solutions, including:
- A team of experts that will file the report accurately and timely
- Team support of your single download of data, including an EEO-1 checklist.
4. VETS-4212 Reports
If you have federal contracts of $150,000 or more, then you must file a VETS-4212 Report which tracks your veteran hiring and employment.
Why It Matters
This report shows your organization’s commitment to hiring and advancing employment for veterans in the workforce.
What to Budget For
- Preparation and submission of the required reports
- Internal systems to track veteran status accurately
- Audit readiness tools
Key Benefits
- Meet compliance deadlines with accurate information
- Maintain a reputation as a veteran-friendly employer
OutSolve offers VETS-4212 solutions, including:
- Preparation, completion and submission of your VETS-4212 report with a single download of your data
- VETS-4212 checklist.
5. Pay Equity Audits
Anti-discrimination laws and regulations are here to stay, and federal contractor compliance requirements include maintaining fair pay practices across all demographics. When you evaluate your pay equity, you ensure you are complying with all anti-discrimination laws and not underpaying one particular group.
Why It Matters:
Pay equity audits reduce the risk of wage discrimination claims and support efforts to ensure all members of your team are paid fairly.
What to Budget For
- Pay equity audit software
- Compensation consultants
- Market benchmarking tools
Key Benefits
- Uncover and address pay disparities
- Improve employee trust and retention
- Reduce legal risk under Equal Pay Act
OutSolve offers a variety of pay equity solutions, including:
- Completion of annual pay equity reviews
- Compensation analyses using statistical techniques
- Post-estimations and pay change implementation strategies
- Pay data reporting services for CA, MA and IL
- OutSolve’s Pay Equity Audit checklist
6.Compensation Benchmarking
Setting competitive and equitable salaries is part of both talent strategy and HR compliance budgeting. Federal contractors should be especially careful to demonstrate fairness in compensation practices.
Why It Matters
Fair and competitive pay attracts top talent and can assist with employee retention. If employees feel valued and like they are being paid fairly, they are less likely to leave.
What to Budget For
- Access to industry-specific salary surveys
- Benchmarking software with equity insights
- Data analytics services
Key Benefits
- Retain top talent in a competitive market
- Pay with industry standards
- Support internal equity reviews and pay transparency initiatives
OutSolve offers compensation benchmarking solutions, including:
- Salary benchmark survey services
- Development and implementation of fair and competitive compensation strategies to attract top talent
7. Labor Law Posters
You might think of labor law posters as a simple compliance item, but with changing laws, especially at the state level, staying current can be a challenge. Having a subscription to a service that automatically sends updated labor law posters is a no-brainer when it comes to compliance.
Why It Matters
Federal contractors must make sure that all employees have access to current federal, state, and local labor law posters, including those for remote teams.
What to Budget For
- Updated posters for all physical locations
- Poster compliance subscriptions
- Digital delivery options for hybrid and remote workers
Key Benefits
- Updated posters automatically ship direct to your locations when laws change
- 24/7 compliance across multiple locations
- Prevents fines during audits or inspections
OutSolve offers Labor Law poster solutions, including:
- Labor Law poster subscription service where posters are automatically shipped when an update is made. You no longer need to worry about carefully monitoring these changes and always remain compliant
- Access to compliance specialists that can help simplify and streamline this process for your company
- Automatic-poster updates and shipments, consultation on what specific posters are required for your company, e-compliance digital poster options, and access to compliance portal where you can find past and upcoming poster shipments
8. DEI Audits
DEI programs are valuable, but as a federal contractor, your initiatives must comply with anti-discrimination laws. A DEI audit can assess your practices and help prevent them from unintentionally crossing legal lines. This is especially important now that federal contractors will need to certify they comply with all anti-discrimination laws on contracts and grants.
Why It Matters
In serious cases, falsely certifying compliance on these contracts and grants can lead to False Claims Act violations, a critical risk for contractors with steep monetary penalties.
What to Budget For
- Third-party DEI compliance audits, potentially under attorney-client privilege
- Policy reviews and resolution services
- Documentation support for certifications
Key Benefits
- Reduce risk of legal claims and audit failures
- Certify compliance with confidence
- Sync your DEI strategy and good faith efforts with legal standards
OutSolve offers DEI solutions, including:
- Minimize risk by reducing False Claims Act exposure by verifying your company has no unlawful DEI programs
- Compliance with EO 14173 by conducting a complete review of all your company’s DEI policies and procedures
- Conduct a full and thorough DEI audit and review, under attorney-client privilege, to help identify any DEI practices that may violate federal law, align programs to current compliance standards, assess your company’s legal and reputational risk
What 2026 Federal Contractor Budgeting Means for Your Organization
HR teams of federal contractors are juggling a lot, but building a clear HR compliance budgeting roadmap for 2026 can save your company serious time, money, and risk.
Here’s a quick recap of what to include in your 2026 compliance budget:
- I-9 compliance software and services
- Section 503 and VEVRAA reporting support
- EEO-1 and VETS-4212 preparation
- Pay equity and compensation benchmarking tools
- Labor law poster subscriptions
- DEI audits and policy reviews
The earlier you plan, the better prepared you’ll be to meet compliance for federal contracting regulations and minimize exposure to audits, penalties, and enforcement actions. Proactive compliance planning isn’t just good HR - it’s good business.
Ready to streamline your federal contractor compliance for 2026?
OutSolve offers expert solutions for compliance audits, reporting, and workforce planning so you can focus on building a great place to work, while we keep you compliant.
Contact us today to schedule a consultation or explore how we can help with your 2026 HR compliance strategy.
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