Federal Contractors Just Lost a 60-Year-Old Paperwork Burden — Here's What Changed

If your business holds a federal contract or subcontract, you've likely spent hours — or paid someone else to spend hours — maintaining a written affirmative action plan tracking the race and sex makeup of your workforce. As of October 26, 2026, that requirement disappears for most contractors, after the Department of Labor finalized a rule rescinding regulations that trace back to 1965.

For a small business with a handful of federal contracts, this is one of the more meaningful compliance rollbacks in years — not because the underlying anti-discrimination laws changed, but because the specific paperwork and reporting obligations tied to Executive Order 11246 are going away.

What Actually Got Rescinded

The Department of Labor's Office of Federal Contract Compliance Programs (OFCCP) published a final rule in the Federal Register on August 21, 2026, rescinding the regulations that implemented Executive Order 11246. That order, signed in 1965, required federal contractors and subcontractors to develop written affirmative action plans based on race and sex, and gave OFCCP the authority to audit and enforce those plans.

The rescission removes an entire set of regulations — Code of Federal Regulations Parts 60-1, 60-2, 60-3, 60-4, 60-20, 60-40, 60-50, and 60-999 — along with the affirmative action components in Part 60-30. In practice, that means contractors are no longer required to maintain written affirmative action programs built around race- and sex-based workforce analysis, and OFCCP no longer has authority to audit contractors on that basis.

This follows Executive Order 14173, signed by President Trump in January 2025, which revoked EO 11246 and directed OFCCP to stop enforcing affirmative action and "workforce balancing" requirements tied to it. The rule finalized this month is the regulatory follow-through on that directive.

What's Staying in Place

This isn't a wholesale end to federal contractor compliance obligations. Two other sets of requirements remain intact, with some modifications:

• Veteran employment obligations under the Vietnam Era Veterans' Readjustment Assistance Act (VEVRAA) continue to apply.
• Disability-related obligations under Section 503 of the Rehabilitation Act continue to apply, though the Labor Department issued companion rules modifying some of those requirements alongside the EO 11246 rescission.

General anti-discrimination protections under Title VII of the Civil Rights Act, the Americans with Disabilities Act, and other federal employment laws are unaffected. What's changing is specifically the affirmative-action planning and reporting infrastructure that grew out of EO 11246 — not the underlying prohibition on discrimination itself.

Why This Matters More for Small Contractors

Larger federal contractors often have entire compliance departments or outside counsel dedicated to maintaining affirmative action plans, conducting the required workforce analyses, and preparing for OFCCP audits. Small and mid-sized contractors typically don't have that luxury — the same work often falls to an owner, an office manager, or an outside HR consultant billing by the hour. For a contractor with, say, 50 to 200 employees and a handful of federal contracts, maintaining a compliant affirmative action plan has historically meant real annual cost: workforce utilization analyses, goal-setting documentation, and the risk of a costly audit if the plan wasn't current. Removing that requirement doesn't just save paperwork — it removes a recurring line item from the compliance budget.

What Small Contractors Should Do Between Now and October 26

• Don't tear up your current plan yet. The rule isn't effective until October 26, 2026 — until then, existing affirmative action plan obligations technically remain in force.
• Confirm your contract type. If your contracts also involve veteran or disability-related set-asides, you'll still have VEVRAA and Section 503 obligations to maintain.
• Talk to whoever prepares your compliance filings. If you pay an outside consultant or law firm for annual affirmative action plan updates, this is worth a conversation now about what work is still necessary after October 26.
• Keep your underlying HR practices intact. Nondiscrimination in hiring, pay, and promotion remains legally required under other statutes — this rule removes a specific reporting framework, not the underlying obligation to avoid discrimination.

The Bigger Picture for Government Contracting

This rescission arrives alongside other changes reshaping who qualifies as a federal contractor and how they're classified, including the SBA's separate proposal to overhaul small business size standards. Together, these changes point toward a federal contracting environment that's easing some categories of compliance burden even as eligibility rules shift elsewhere.

If you're structuring your business to pursue more federal work, it's worth reviewing your business license and registration status now, since eligibility and compliance requirements for government contracts are moving on multiple fronts this year. Businesses that are still deciding on an entity structure before pursuing contract work may also want to compare options like an LLC vs. S-corp before bidding, since some contract vehicles have entity-specific advantages.

Bottom Line

If you hold a federal contract or subcontract subject to EO 11246, mark October 26, 2026 on your calendar. Until then, your existing affirmative action plan obligations stand. After that date, for most contractors, the written affirmative action plan requirement tied to race and sex disappears — though veteran and disability-related obligations, along with general anti-discrimination law, remain firmly in place.

Photo by Nastuh Abootalebi on Unsplash