New Year, New Compliance Landscape: Why Smart Employers Continue to Analyze Employment Practices

Best Practices for Federal Contractor Employers in 2026 

Federal contractors still have enforceable obligations in 2026. A comprehensive legal opinion from Roffman Horvitz, a reputable law firm that specializes in HR compliance and legal advice regarding employment data analysis, confirms that core federal contractor duties are still in play. Employers must continue to prepare affirmative action plans for individuals with disabilities and veterans, submit VETS‑4212 and EEO‑1 reports, and collect the disability and veteran status, race/ethnicity, and gender data necessary for these requirements.  

With employers having to juggle multiple competing interests, the need for employers to assess their employment practices by running data analytics is more important than ever. Those competing interests include:

• Defending unlawful DEI claims and investigations, including enforcement via the False Claims Act (FCA),
• Assessing inclusion initiatives, both for effectiveness and to ensure they are even-handed and aligned with meritocracy,
• Ensuring equal opportunity of employment decisions, and
• Complying with existing and new state and local requirements

What Federal Contractors Still Must Do in 2026 

Several pillars of the federal contractor regime have not moved. Employers with at least 50 employees and a contract of $50,000 or more must still prepare annual affirmative action plans for individuals with disabilities under Section 503, including outreach assessments and a 7% workforce utilization benchmark.

Employers with at least 50 employees and a contract of $200,000 or more must still maintain veteran AAPs, benchmark hiring against required standards, and file VETS 4212 reports. 

All non-academic employers with 100 or more employees must file EEO‑1 reports in 2026, which means continuing to collect race/ethnicity and gender data on employees. 

Bottom line: These requirements are not "optional." They are contractually required. OFCCP continues to oversee compliance with these obligations.. 

 The Importance of Continuing to Perform Data Analytics  

Running analyses of hires, promotions, terminations, and compensation enable employers to ensure equal employment opportunity and meritocracy, simultaneously addressing the multiple competing interests in the current compliance environment.

• Ensures Meritocratic Practices: The only way for employers to know that they continue to maintain nondiscriminatory and meritocratic employment practices is to run the analyses.
• FCA Certification: Running the analyses will enable the employer to confidently make the certifications required by Executive Order 14173 and defend against False Claims Act (“FCA”) allegations and enforcement actions. Every invoice, every System for Award Management (SAM) certification, and every contract renewal now carries an implicit representation of compliance with federal anti‑discrimination laws.
  • Certification: Employers must certify that they do not have any DEI programs that violate anti-discrimination laws. In addition, each time the company requests payment under a contract or grant, it represents that compliance with all federal anti-discrimination laws is material to its being paid. Although the extent of due diligence and the full list of applicable laws remain unclear, running these analyses significantly diminishes the government’s ability to argue that the employer acted with “reckless disregard” or “deliberate ignorance” of its compliance with federal anti-discrimination laws.
  • Liability: False Claims Act liability carries penalties such as treble damages, can result in contract withholding, criminal prosecution, and settlement costs that can be astronomically higher than the underlying contract value. The DOJ has explicitly positioned the FCA as its enforcement mechanism for civil rights violations.
• Enforcement Agencies Will Be Seeking Data: As part of its efforts in identifying the presence of unlawful DEI practices and programs, the Administration has been requesting employment data. Also, Andrea Lucas, the current Chair of the EEOC, has stated that the Agency intends to use employment data to identify DEI programs that show a pattern or practice of discrimination, and thus violate equal employment opportunity laws.
• New Executive Orders Emphasize Ensuring Meritocratic Employment Practices: Even with the new focus on unlawful DEI, there is consensus that employers should be ensuring that employment practices are merit-based and nondiscriminatory.
  • The name of Executive Order 14173 is “Ending Illegal Discrimination and Restoring Merit-Based Opportunity.”
  • The name of Executive Order 14281 is “Restoring Equality of Opportunity and Meritocracy.”

Bottom line: Running employment data analytics is the best way for employers to address all the simultaneous competing interests. It enables employers to ensure equal employment opportunity and meritocracy. It allows employers to evaluate that their inclusion initiatives are both effective and lawful. It puts employers in a position to make the required certifications under Executive Order 14173. Without running the analyses, employers will not know their exposure to claims under the False Claims Act; the analyses will help the employer formulate its defense to False Claims Act allegations.

The Dangerous Logic of "Doing Nothing” 

Some contractors are tempted to stop collecting demographic data and performing analysis and assume that minimizes risk. In its opinion letter, Roffman Horvitz asserts that the value and benefits of running analyses significantly outweigh any risks associated with doing them.  

Stopping analytics does not make risk disappear; it removes your ability to see problems early and to defend yourself if challenged. It is dangerous to wait for a discrimination charge, a DOJ information request, or a whistleblower lawsuit to first analyze your data. You want to be in a position to defend or revise your employment practices well before any investigation, enforcement action, or lawsuit.  

Workplace analysis is the best practice in risk prevention. It is risky to have periods of "darkness” with no monitoring of your own employment practices. The opinion warns that assuming broader AAP-like obligations will never return is short‑sighted; if future administrations restore those requirements, employers who went dark will have no historical data to show continuity of nondiscriminatory practices. 

Bottom line: Going dark on analytics doesn't lower your risk-it eliminates your ability to proactively identify issues. That's not risk management; that's risk amplification. 

The below chart summarizes the feedback from Roffman Horvitz regarding performing data analytics in 2026: 

Analytics Are Not “Illegal DEI,” They Are Legal Self-Defense 

The legal opinion notes that running analytics on hires, promotions, terminations, and pay to evaluate merit and nondiscrimination are not unlawful, nor are they identified as unlawful DEI in the guidance issues by the Trump administration DOJ or EEOC. In fact, the current administration's guidance emphasizes that employers should be ensuring merit‑based, nondiscriminatory employment practices. Executive Order 14173 itself is titled "Ending Illegal Discrimination and Restoring Merit‑Based Opportunity."  

The only way to prove your decisions are merit‑based is to analyze them. The best way to defend yourself against allegations of bias is to have data showing that selection rates are equitable across groups. The best way to make the certifications required under Executive Order 14173 with confidence is to know, from your own analysis, that your practices are compliant. 

Bottom line: Analytics are not your liability—they're your defense. Without data proving merit‑based decision‑making, you have nothing but hope when regulators, plaintiffs, or whistleblowers come asking questions. 

Guardrails and Best Practices: How to Protect What You Analyze 

The opinion advises employers to develop guardrails to protect the analyses from unwarranted use and disclosure.  The opinion also advises employers to conduct analyses under attorney-client privilege. 

This means: 

• Limit access to demographic data to HR and authorized data owners—keep it away from managers who make hire, promotion or compensation decisions. 
• Conduct analyses specifically to assess compliance and equal opportunity practices. Document the business purpose to understand whether employment decisions across the organization are merit-based and nondiscriminatory.
• Work with your HR compliance partner, in partnership with counsel, to direct the analytics efforts and to review findings.  

Done this way, analytics become both a risk-management tool and evidence of organizational diligence. They demonstrate that your company took its compliance obligations seriously and invested in understanding its own employment practices—without creating unnecessary exposure. 

Bottom line: Smart data governance turns analytics into proof of responsible compliance, not a liability waiting to be discovered. 

What This Means for Your 2026 Compliance Strategy 

Federal contractors face a clear choice in the new year: 

• Option 1 - Hope for the best and do minimal compliance work. This leaves you exposed to FCA liability, unable to defend certifications, and vulnerable to discrimination charges with no internal evidence of merit‑based decision‑making. 
• Option 2 - Lean into disciplined, data‑driven compliance. This means maintaining required AAPs, collecting mandated data, running analytics on hires/promotions/terminations/pay, and building a defensible record that your workplace operates on merit. 

The legal opinion is unambiguous: the value and benefits of running employment data analytics grossly outweigh any risk involved in preparing them. The real risk is not running them. 

Bottom line: In 2026, federal contractors don't have the luxury of a middle ground. It's either disciplined, data-driven compliance that can be defended, or exposure you can't explain away 

Federal contractors still have real, enforceable obligations in 2026, and the stakes have never been greater. The legal opinion from Roffman Horvitz is a roadmap for best practices in 2026. The safest place to be is not on the sidelines, but in a data‑driven compliance program that can prove your workplace is, and remains, merit‑based. 

For more information on 2026 requirements, and how Outsolve can support your federal contractor defense strategy, contact us at info@outsolve.com or 888.414.2410.

About Roffman Horvitz

Roffman Horvitz, PLC is an affordable outside counsel option for employers seeking human resources and regulatory compliance advice. The firm has unique capabilities in assisting employers with employment data analytics, including evaluations of hires, promotions, terminations, and pay.