The law requires that, every five years, the monetary thresholds triggering federal contractor Affirmative Action Plan obligations under Section 503 of the Rehabilitation Act and VEVRAA are adjusted for inflation.

Effective October 1, 2025, the new thresholds are:

Section 503:

• A single federal contract of $50,000 or more (up from $20,000) and
• At least 50 employees

VEVRAA:

• A single federal contract of $200,000 or more (up from $150,000) and
• At least 50 employees

Affirmative Action Compliance with 503 & VEVRAA is More Important Than Ever

With the revocation of Executive Order 11246, some federal contractors have overlooked their Section 503 and VEVRAA annual Affirmative Action Plan obligations – which have not changed – but that could be a harmful mistake for several reasons.

Potential Big False Claims Act Liability

Pursuant to President Trump’s Executive Order 14173 “Ending Illegal Discrimination and Restoring Merit-Based Opportunity” 

“compliance in all respects with all applicable Federal anti-discrimination laws is material to the government’s payment decisions…”

Federal contractors cannot accurately represent they comply if they are not annually preparing written Affirmative Action Plans “at each establishment” (41 C.F.R. § 300.40(b) and 41 C.F.R. § 741(b)(2)), as well as complying with the many other regulatory requirements, such as conducting outreach and assessing the effectiveness of such outreach.

The risk is real. The current Administration is weaponizing the False Claims Act (FCA) to impose liability on federal contractors and other employers in a variety of areas. FCA claims may be pursued not only by the federal government, but also by employees and anyone else with knowledge that a federal contractor has “knowingly” made a false claim for payment to the federal government.

Liability under the FCA can be severe because it allows for civil penalties, treble damages, and recovery of legal fees. As an example of the government’s forceful use of the FCA, it recently settled for $4 million an FCA claim that a federal contractor violated employment eligibility requirements by failing to comply with E-Verify obligations.

Audits May Resume

With a new OFCCP Director (as well as an EEOC quorum) audits of Section 503 and VEVRAA compliance may resume – conducted either by OFCCP or by the EEOC (Section 503) or by the Veterans Employment Training Service (VEVRAA).

Employee Complaints

It has always been the case that federal contractor employees can lodge complaints with OFCCP under Section 503 and VEVRAA, which may include complaints that their federal contractor employer is out of compliance.

Compliance Means Preparing Affirmative Action Plans for 2026, and 2025

With all OFCCP, and related big changes of 2025, it is understandable that some federal contractors may not have prepared plans for 2025. That should be remedied because the data for 2025 plans is also important to 2026 plans. Recall that effectiveness of outreach efforts is, in part, gauged by trends in applicant and hire numbers for Veterans and Individuals with Disabilities. Without data from 2025 no trend analysis is possible.

Audits are also a look back at what a contractor has done to advance employment opportunities for Veterans and Individuals with Disabilities during the prior 12 months – meaning an audit of a 2026 plan will evaluate efforts taken during 2025. If a contractor has no 2025 plan or program – let alone no 2026 plan – an audit will be more challenging and could result in violations and a conciliation agreement.

Possible Changes to Section 503 Regulations May Not Impact 2026 Obligations

While the current Administration has proposed changes to Section 503 obligations, to which many have vociferously objected, those regulations – if implemented – are not likely to be effective for 2026 plans, especially for those contractors with a January 1, 2026 plan date.

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If you have any questions or would like assistance with Section 503 and VEVRAA compliance, simply reply to this Alert or reach out to the Silberman Law attorney with whom you work.