Certain federal laws require covered federal contractors to engage in affirmative action efforts, submit reports detailing those efforts and maintain related records. Specifically, the Vietnam Era Veterans Readjustment Assistance Act requires federal contractors and subcontractors to take affirmative action with respect to veterans and Section 503 of the Rehabilitation Act imposes similar requirements for individuals with disabilities. For more information, see Veteran Reporting and Individual With a Disability.

Additionally, since 1965, under Executive Order 11246, every federal contractor and subcontractor had to include nondiscrimination clauses in their contracts stating they will not discriminate against any employee or applicant because of race, color, religion, sex, sexual orientation, gender identity, or national origin. Federal contractors and subcontractors were also required to take affirmative action to ensure that all applicants and employees are employed without regard to those factors.

Under Executive Order 11246 and related federal regulations, contractors and subcontractors with 50 or more employees and a contract or subcontract of $50,000 or more and banks that receive deposits of any type of federal funds were required to develop written affirmative action plans. Affirmative action plans must contain all of the following:

• An analysis of the contractor’s workforce by race and sex
• An analysis of the labor force by race and sex
• A determination of whether the contractor is underemploying minorities or women in any job categories

On January 21, 2025, however, President Donald Trump revoked Executive Order 11246.

The revocation doesn’t change contractors’ nondiscrimination obligations under generally applicable laws such as Title VII, the Fair Employment and Housing Act (for California employers) and others, nor does it change existing federal laws with affirmative action obligations, including the Vietnam Era Veterans Readjustment Assistance Act and Section 503 of the Rehabilitation Act. Covered contractors must continue to comply with these laws and should consult with legal counsel to help ensure compliance.

The Office of Federal Contract Compliance Programs (OFCCP) enforces the obligations of federal contractors and subcontractors. Allegations of violations may result in an OFCCP audit of your employment practices. If substantial evidence is found that supports the employee’s charge, formal adjudication will happen before the OFCCP, the EEOC or the U.S. Department of Justice (DOJ).

A finding that a contractor or subcontractor violated the federal requirements can result in an OFCCP order that, among other things, may result in cancellation, termination or suspension of the contractor’s or subcontractor’s government contract(s) and/or being barred from holding government contracts in the future. Compliance with federal contract rules can be complex. Employers should consult with legal counsel to help ensure compliance.

State Contractor and Subcontractor Nondiscrimination Programs and Reporting

California law requires state contractors to take certain measures to prevent discrimination and prohibits discrimination by recipients of state funding. State contracts and subcontracts must have a nondiscrimination clause prohibiting discrimination. Contracts of $5,000 and over must also have a nondiscrimination program.1 The state nondiscrimination program differs from the federal affirmative action plan in that you need not include hiring goals or timetables.

The Civil Rights Department (CRD) regulations state the requirements of state-mandated nondiscrimination programs. The Office of Compliance Programs (OCP), a branch of the CRD, reviews and monitors state contractors’ discrimination programs. The OCP can establish and maintain a list of barred contractors. It updates the list monthly and places it in the California Notice Registry, which is published each month. No contractor, during the performance of any contract with the state, can enter into any subcontract with any employer that is on the OCP list of barred contractors. To do so may constitute a material breach of the state contract.

You must do the following when creating a nondiscrimination program:2

• Develop your equal employment opportunity policy that covers all personnel actions or affirm that your policy does so.
• Formally disseminate your policy internally and externally. Inform all employees and applicants of that policy.
• Establish personnel policies to implement the program.
• Annually identify all existing policies or practices that resulted in disproportionately inhibiting the employment, promotion or retention of any group protected by FEHA.
• Develop and execute policies and procedures that are designed to correct problems that prevent equal employment opportunities for all applicants and employees.
• Design and implement an internal audit and reporting system to measure the entire program’s effectiveness.

State agencies must inform the CRD of any contracts over $5,000 using a Department of General Services form STD 16 (Contract Award Report). The form should be sent to CRD. You can find more information on non-discrimination requirements for state contracts at the CRD website at https://calcivilrights.ca.gov/.

1. Govt. Code sec. 12990(c); 2 CCR secs. 11102, 11111

2. 2 CCR sec. 11103