OFCCP Issues New Compensation, Recognition and Certification Directives
August 24, 2018
On August 24, 2018, OFCCP issued three new Directives, the most important of which rescinded the Obama Administration’s Directive 307, “Procedures for Reviewing Contractor Compensation Systems and Practices.” The agency also issued Directives creating a program to certify that contractors have prepared an Affirmative Action Plan (AAP) and are in compliance with federal affirmative action program requirements, and an initiative establishing a recognition program for contractors with high-quality and high-performing compliance programs and initiatives.
According to the agency, these Directives are part of the Department’s efforts to maximize the effectiveness of compliance assistance outreach.
- Clear Guidance for Contractor Compensation Practices : The new Compensation Directive , Directive 2018-05, rescinds Directive 307 (which had been renamed as 2013-03). Principally, the agency’s compensation analysis will now “mirror a contractor’s compensation system” when the contractor provides sufficient information. The Directive provides transparency to contractors on OFCCP’s approach to conducting compensation evaluations by further outlining the agency’s practices and approaches to similarly-situated employees, creating pay analysis groups, conducting statistical analysis and modeling, and other analytical matters relevant to conducting sound, compensation compliance evaluations and contractors’ self-audits. The Directive also emphasizes that where OFCCP “believes there are indicators of disparate impact in compensation, it will work collaboratively with the contractor to understand any defense that a policy or practice that caused the disparate impact is job-related and consistent with business necessity, and will fully consider supporting evidence the contractor provides.” The Directive takes effect for “all reviews scheduled on or after August 24, 2018 and they apply to open reviews to the extent they do not conflict with OFCCP guidance or procedures existing prior to the effective date.” Directive 2018-05 specifically outlines when information provided to OFCCP will be released as there have been some unauthorized releases of information about ongoing audits. Specifically, Paragraph 8 states “OFCCP does not release data obtained during the course of a compliance evaluation until the investigation and all subsequent proceedings, if any, are complete.”
- Affirmative Action Program Verification Initiative : Directive 2018-07 implements a verification process with the objective of ensuring that all covered federal contractors are meeting the most basic equal employment opportunity (EEO) regulatory requirement, namely, the preparation of a written AAP and annual updates to that program.
- Contractor Recognition Programs : Directive 2018-06 is re-establishing its contractor recognition program that will now include awards that highlight implementable best or model contractor practices, a contractor mentoring program that uses contractors to help their peers improve compliance, and other initiatives that provide opportunities for contractors to collaborate or provide feedback to OFCCP on its compliance assistance efforts.
The team at FortneyScott is reviewing these Directives in detail and determining what impact these new policies will have on federal contractor compliance and, more importantly, what next steps contractors should take to ensure compliance with the three new directives. Please contact your FortneyScott attorney or send an email to info@fortneyscott.com for more information.
Federal contractors are facing immediate changes to implement stepped-up efforts to restrict DEI discrimination, including new mandatory contract clauses, expanded audits, and significant potential legal exposure. These far-reaching changes will impact prime contractors and all tiers of subcontractors. Any employer that is a federal contractor should immediately prepare for these new compliance obligations. The Federal Acquisition Regulatory Council (FAR Council), which sets government-wide procurement policy and regulation for all federal agencies, has moved quickly to implement Executive Order (EO) 14398 , Addressing DEI Discrimination by Federal Contractors. Specifically, the FAR Council: Issued government-wide implementation guidance and class deviation language for all federal agencies to incorporate a mandatory contract clause, as prescribed in EO 14398, as soon as April 24, 2026, in new solicitations, and by July 24, 2026, for bilateral modifications of existing contracts. The class deviation authorizes agency-wide implementation of new requirements in federal contracts before the Federal Acquisition Regulations (FAR) are amended formally. Requested emergency approval, under the Paperwork Reduction Act (PRA), to allow immediate enforcement of EO 14398’s information collection and reporting requirements. Join FortneyScott for a complimentary briefing on Monday, April 27, at noon ET . Please register here . Contact your FortneyScott attorney for additional information on how to prepare for this new contract clause.
Employers need to continue to be vigilant in their compliance efforts for DEI and related programs. Here are two quick updates: To assist employers, our most recent DC Insider-Employer Update podcast – EO 14398 and the Procurement Power Play: Compliance, Contracts, and Consequences – provides a great overview of the newest Executive Order and federal contractor compliance. Additionally, late Friday, April 10 th , DOJ announced the first False Claims Act settlement based on DEI claims against IBM for $17 million. Please contact your FortneyScott attorney for more information, and visit our website ( www.fortneyscott.com ) for our recent special webinar .
The Trump Administration continues to push for the elimination of “illegal DEI.” Join FortneyScott attorneys on Thursday, April 9, 2026 at noon EDT to learn the latest developments by multiple federal agencies targeting DEI programs and policies. The webinar will address the key federal agencies’ expansive efforts, including: EEOC , focusing on the agency’s latest challenges to DEI, including expansive investigations of corporate DEI programs, subpoena enforcement litigation and limiting the rights of trans workers; DOJ , including the False Claims Act investigations, and challenges to the constitutionality of EO 14173 in 4th and 7th Circuits; FTC & FCC , highlighting the Mansfield Program, and warning law firms about antitrust compliance, and how DEI can impact regulatory approvals; and, Certification of Compliance , including GSA’s proposed Certification for grantees, and the implications for federal contractors. We also will provide key takeaways for DEI compliance, and steps to mitigate the risks of federal government enforcement actions based on illegal DEI matters. This webinar is the final in a three-part series designed for compliance professions, in-house counsel, HR and inclusion leaders, and other business leaders responsible for labor and employment law compliance.
In this special webinar we will address: Details of the new EO; The specific prohibition on “racially discriminatory DEI activities” in five key areas; The new requirements that add materiality to the contract payments and the expansion of the basis for False Claims Act exposure; New subcontractor management and reporting duties; Penalties and enforcement, including contract cancellation, debarment from future contracts and FCA actions by DOJ; and, The detailed implementation deadline for actions, including the new contract clauses, FAR Council guidance and agencies compliance report to the White House.
In collaboration with FortneyScott and Fragomen law firms, LRQA officially launched TriAge: Age & Eligibility Verification Framework , designed to help employers strengthen hiring and workforce monitoring amid rising age and eligibility verification risks. TriAge goes beyond basic I‑9 compliance by providing a structured set of best practices to verify identity, age, and eligibility across operations. The framework also supports enhanced oversight and allows for independent validation through audits and assessments. We are proud to have contributed to the development of LRQA’s TriAge, a practical tool that helps employers build stronger, more defensible hiring practices.
President Trump issued a new Executive order ( EO 14398 ) on March 26, 2026, entitled “Addressing DEI Discrimination by Federal Contractors,” and accompanying Fact Sheet . The new EO fundamentally alters the compliance landscape for government contractors. While prior executive orders addressed DEI programs through policy directives, this new EO creates a mandatory, enforceable contract clause that exposes contractors to contract termination, debarment, and False Claims Act (FCA) liability. The Core Requirement: A New Mandatory Contract Clause Within 30 days (by April 25, 2026), agencies must insert a specific clause into all covered contracts, subcontracts, and lower-tier subcontracts. By accepting a contract containing this clause, contractors agree to six binding obligations: 1. The contractor will not engage in any “racially discriminatory DEI activities,” as defined in Section 2 of the Executive Order of March 26, 2026 (Addressing DEI Discrimination by Federal Contractors): 2. The contractor will furnish to contracting agencies all information and reports, including providing access to books, records, and accounts, for purposes of ascertaining compliance; 3. In the event of the contractor’s or a subcontractor’s noncompliance with this clause, the government contract may be canceled, terminated, or suspended in whole or in part, and the contractor or subcontractor may be declared ineligible for further Government contracts; 4. The contractor will report any subcontractor’s known or reasonably knowable conduct that may violate this clause to the contracting department or agency and take any appropriate remedial actions directed by the contracting department or agency; 5. The contractor will inform the contracting department or agency if a subcontractor sues the contractor and the suit puts at issue, in any way, the validity of this clause; and, 6. The contractor recognizes that compliance with the requirements of this clause are material to the Government’s payment decisions for purposes of section 3729(b)(4) of title 31, United States Code (False Claims Act). Immediate Action to Meet Deadlines Federal contractors face very short deadlines for the implementation of these new obligations, including the inclusion of the new contracting clauses within 30 days, by April 25, 2026. Federal contractors should initiate steps immediately to ensure compliance, including: 1. Audit Internal Programs: Review mentorship programs, ERGs, leadership development tracks, and supplier diversity initiatives for eligibility criteria based on race or ethnicity. 2. Update Subcontractor Agreements: Immediately begin flowing the mandatory clause down to all subcontractors and establish a monitoring system to satisfy the “known or reasonably knowable” reporting standard. 3. Review Invoicing and Certifications: Ensure that no compliance certifications or payment requests are submitted if prohibited activities exist. For More Information and Assistance Register now for FortneyScott’s special webinar, Federal Contractors’ New DEI Obligations that will be held on Tuesday, March 31, 2026 from 12:00 noon to 1:00 ET. This special webinar we will address: - Details of the new EO - The specific prohibition on “racially discriminatory DEI activities” in five key areas - The new requirements that add materiality to the contract payments and the expansion of the basis for False Claims Act exposure - New subcontractor management and reporting duties - Penalties and enforcement, including contract cancellation, debarment from future contracts and FCA actions by DOJ - The detailed implementation deadline for actions, including the new contract clauses, FAR Council guidance and agencies compliance report to the White House For more information on how federal contractors can comply with this new EO, contact your FortneyScott’s attorney or email us at info@fortneyscott.com .
Federal contractors are facing immediate changes to implement stepped-up efforts to restrict DEI discrimination, including new mandatory contract clauses, expanded audits, and significant potential legal exposure. These far-reaching changes will impact prime contractors and all tiers of subcontractors. Any employer that is a federal contractor should immediately prepare for these new compliance obligations. The Federal Acquisition Regulatory Council (FAR Council), which sets government-wide procurement policy and regulation for all federal agencies, has moved quickly to implement Executive Order (EO) 14398 , Addressing DEI Discrimination by Federal Contractors. Specifically, the FAR Council: Issued government-wide implementation guidance and class deviation language for all federal agencies to incorporate a mandatory contract clause, as prescribed in EO 14398, as soon as April 24, 2026, in new solicitations, and by July 24, 2026, for bilateral modifications of existing contracts. The class deviation authorizes agency-wide implementation of new requirements in federal contracts before the Federal Acquisition Regulations (FAR) are amended formally. Requested emergency approval, under the Paperwork Reduction Act (PRA), to allow immediate enforcement of EO 14398’s information collection and reporting requirements. Join FortneyScott for a complimentary briefing on Monday, April 27, at noon ET . Please register here . Contact your FortneyScott attorney for additional information on how to prepare for this new contract clause.
Employers need to continue to be vigilant in their compliance efforts for DEI and related programs. Here are two quick updates: To assist employers, our most recent DC Insider-Employer Update podcast – EO 14398 and the Procurement Power Play: Compliance, Contracts, and Consequences – provides a great overview of the newest Executive Order and federal contractor compliance. Additionally, late Friday, April 10 th , DOJ announced the first False Claims Act settlement based on DEI claims against IBM for $17 million. Please contact your FortneyScott attorney for more information, and visit our website ( www.fortneyscott.com ) for our recent special webinar .
The Trump Administration continues to push for the elimination of “illegal DEI.” Join FortneyScott attorneys on Thursday, April 9, 2026 at noon EDT to learn the latest developments by multiple federal agencies targeting DEI programs and policies. The webinar will address the key federal agencies’ expansive efforts, including: EEOC , focusing on the agency’s latest challenges to DEI, including expansive investigations of corporate DEI programs, subpoena enforcement litigation and limiting the rights of trans workers; DOJ , including the False Claims Act investigations, and challenges to the constitutionality of EO 14173 in 4th and 7th Circuits; FTC & FCC , highlighting the Mansfield Program, and warning law firms about antitrust compliance, and how DEI can impact regulatory approvals; and, Certification of Compliance , including GSA’s proposed Certification for grantees, and the implications for federal contractors. We also will provide key takeaways for DEI compliance, and steps to mitigate the risks of federal government enforcement actions based on illegal DEI matters. This webinar is the final in a three-part series designed for compliance professions, in-house counsel, HR and inclusion leaders, and other business leaders responsible for labor and employment law compliance.
In this special webinar we will address: Details of the new EO; The specific prohibition on “racially discriminatory DEI activities” in five key areas; The new requirements that add materiality to the contract payments and the expansion of the basis for False Claims Act exposure; New subcontractor management and reporting duties; Penalties and enforcement, including contract cancellation, debarment from future contracts and FCA actions by DOJ; and, The detailed implementation deadline for actions, including the new contract clauses, FAR Council guidance and agencies compliance report to the White House.
In collaboration with FortneyScott and Fragomen law firms, LRQA officially launched TriAge: Age & Eligibility Verification Framework , designed to help employers strengthen hiring and workforce monitoring amid rising age and eligibility verification risks. TriAge goes beyond basic I‑9 compliance by providing a structured set of best practices to verify identity, age, and eligibility across operations. The framework also supports enhanced oversight and allows for independent validation through audits and assessments. We are proud to have contributed to the development of LRQA’s TriAge, a practical tool that helps employers build stronger, more defensible hiring practices.
President Trump issued a new Executive order ( EO 14398 ) on March 26, 2026, entitled “Addressing DEI Discrimination by Federal Contractors,” and accompanying Fact Sheet . The new EO fundamentally alters the compliance landscape for government contractors. While prior executive orders addressed DEI programs through policy directives, this new EO creates a mandatory, enforceable contract clause that exposes contractors to contract termination, debarment, and False Claims Act (FCA) liability. The Core Requirement: A New Mandatory Contract Clause Within 30 days (by April 25, 2026), agencies must insert a specific clause into all covered contracts, subcontracts, and lower-tier subcontracts. By accepting a contract containing this clause, contractors agree to six binding obligations: 1. The contractor will not engage in any “racially discriminatory DEI activities,” as defined in Section 2 of the Executive Order of March 26, 2026 (Addressing DEI Discrimination by Federal Contractors): 2. The contractor will furnish to contracting agencies all information and reports, including providing access to books, records, and accounts, for purposes of ascertaining compliance; 3. In the event of the contractor’s or a subcontractor’s noncompliance with this clause, the government contract may be canceled, terminated, or suspended in whole or in part, and the contractor or subcontractor may be declared ineligible for further Government contracts; 4. The contractor will report any subcontractor’s known or reasonably knowable conduct that may violate this clause to the contracting department or agency and take any appropriate remedial actions directed by the contracting department or agency; 5. The contractor will inform the contracting department or agency if a subcontractor sues the contractor and the suit puts at issue, in any way, the validity of this clause; and, 6. The contractor recognizes that compliance with the requirements of this clause are material to the Government’s payment decisions for purposes of section 3729(b)(4) of title 31, United States Code (False Claims Act). Immediate Action to Meet Deadlines Federal contractors face very short deadlines for the implementation of these new obligations, including the inclusion of the new contracting clauses within 30 days, by April 25, 2026. Federal contractors should initiate steps immediately to ensure compliance, including: 1. Audit Internal Programs: Review mentorship programs, ERGs, leadership development tracks, and supplier diversity initiatives for eligibility criteria based on race or ethnicity. 2. Update Subcontractor Agreements: Immediately begin flowing the mandatory clause down to all subcontractors and establish a monitoring system to satisfy the “known or reasonably knowable” reporting standard. 3. Review Invoicing and Certifications: Ensure that no compliance certifications or payment requests are submitted if prohibited activities exist. For More Information and Assistance Register now for FortneyScott’s special webinar, Federal Contractors’ New DEI Obligations that will be held on Tuesday, March 31, 2026 from 12:00 noon to 1:00 ET. This special webinar we will address: - Details of the new EO - The specific prohibition on “racially discriminatory DEI activities” in five key areas - The new requirements that add materiality to the contract payments and the expansion of the basis for False Claims Act exposure - New subcontractor management and reporting duties - Penalties and enforcement, including contract cancellation, debarment from future contracts and FCA actions by DOJ - The detailed implementation deadline for actions, including the new contract clauses, FAR Council guidance and agencies compliance report to the White House For more information on how federal contractors can comply with this new EO, contact your FortneyScott’s attorney or email us at info@fortneyscott.com .
The Trump Administration continues to push for the elimination of “illegal DEI.” Join FortneyScott attorneys on Thursday, April 9, 2026 at noon EDT to learn the latest developments by multiple federal agencies targeting DEI programs and policies. The webinar will address the key federal agencies’ expansive efforts, including: EEOC , focusing on the agency’s latest challenges to DEI, including expansive investigations of corporate DEI programs, subpoena enforcement litigation and limiting the rights of trans workers; DOJ , including the False Claims Act investigations, and challenges to the constitutionality of EO 14173 in 4th and 7th Circuits; FTC & FCC , highlighting the Mansfield Program, and warning law firms about antitrust compliance, and how DEI can impact regulatory approvals; and, Certification of Compliance , including GSA’s proposed Certification for grantees, and the implications for federal contractors. We also will provide key takeaways for DEI compliance, and steps to mitigate the risks of federal government enforcement actions based on illegal DEI matters. This webinar is the final in a three-part series designed for compliance professions, in-house counsel, HR and inclusion leaders, and other business leaders responsible for labor and employment law compliance. To register for FortneyScott’s Workplace Legal Compliance training series, please click here .
Having been fully funded for FY2026 and with new leadership in place, employers can expect much more from the Department of Labor in the second year of Trump 2.0. Join FortneyScott attorneys on Tuesday, March 3, 2026 at noon EDT to learn DOL’s priorities for 2026 and how to ensure compliance. Key Topics to be Covered Include: Overview of DOL Trump 2.0 officials Budget for FY2026 Next Steps from Wage & Hour Status of regulations PAID Program Return of Opinion Letters Child Labor enforcement FY2025 recovery Project Firewall Joint project with DOJ, EEOC and USCIS over H-1Bs Future of OFCCP – What to expect from the agency now that it has been funded Key Takeaways to ensure compliance This webinar is the second in a three-part series designed for compliance professions, in-house counsel, HR and inclusion leaders, and other business leaders responsible for labor and employment law compliance.
The regulatory landscape continues to shift – both the U.S. Department of Labor (DOL) and the National Labor Relations Board (NLRB) have announced regulatory changes relating to independent contractors and joint employment. Overview DOL has proposed largely returning to the independent contractor rule issued in the first Trump Administration that includes a streamlined five factor economic‑reality test. The NLRB has proposed reinstating the 2020 joint employer regulation. Both of these proposed regulatory changes are positive developments for employers and, if finalized, will provide greater clarity and certainty for employer compliance. More Detailed Information DOL Rulemaking : The DOL issued a significant proposed rule to determine employee versus independent contractor status under the Fair Labor Standards Act (FLSA). DOL’s proposed rule will reinstate, with modifications, the streamlined economic‑reality test adopted during the first Trump Administration in the January 7, 2021 final rule. Under the 2021 rule, the DOL applied a streamlined economic‑reality test that focused on whether a worker is economically dependent on the employer or is operating an independent business. The 2021 rule identifies five factors to apply with the first two factors carrying more weight : (1) the nature and degree of control over the work; (2) the worker’s opportunity for profit or loss; (3) skill required for the work; (4) permanence of the working relationship; and (5) whether the work is part of an integrated unit of production. The DOL’s modifications to the 2021 standard seek to clarify whether a worker depends on the company to provide work, as opposed to depending on their own business to generate work opportunities. The analysis focuses on the source of work, not the percentage of income the worker earns from a particular company. The DOL also proposes to extend this updated analysis to the Family and Medical Leave Act (FMLA) and the Migrant and Seasonal Agricultural Worker Protection Act (MSPA), both of which rely on the FLSA’s definition of “employment.” Key Takeaways for DOL IC Rule: The DOL’s 2024 rule, which established a six-factor test that created significant uncertainties when applied, will be rescinded. The DOL proposes returning to the 2021 rule’s five-factor test, with certain updates. The same analysis would apply under the FMLA and MSPA, aligning worker classification standards across these laws to reduce compliance and enforcement risks. The proposed changes support employer interests and will enable employers to assess independent contractor relationships and mitigate compliance and enforcement risks. If finalized, this rule should have wide-reaching implications for employers, contractors, gig economy platforms, and industries that rely on flexible labor models. NLRB Withdraws and Replaces its Joint Employer Regulation: The National Labor Relations Board will issue a final rule withdrawing its 2023 Joint Employer Rule in the Federal Register on Friday, February 27, 2026. This is following a March 8, 2024 decision by the U.S. District Court for the Eastern District of Texas. Chamber of Commerce v. NLRB , 723 F.Supp. 3d 498, 519 (E.D. Tex. 2024) vacated the 2023 Rule before it took effect. As a result, the Board is reinstating the prior 2020 Joint Employer Status Under the National Labor Relations Act, codified at 29 C.F.R. § 103.40, as the governing standard for determining joint‑employer status under the National Labor Relations Act. We will continue to monitor these rulemakings closely. Please reach out to FortneyScott, if you would like to submit comments to the agencies or conduct a proactive assessment of the existing independent contractor or joint employerrelationships.
Having been fully funded for FY2026 and with new leadership in place, employers can expect much more from the Department of Labor in the second year of Trump 2.0. Join FortneyScott attorneys on Tuesday, March 3, 2026 at noon EDT to learn DOL’s priorities for 2026 and how to ensure compliance. Key Topics to be Covered Include: Overview of DOL Trump 2.0 officials Budget for FY2026 Next Steps from Wage & Hour Status of regulations PAID Program Return of Opinion Letters Child Labor enforcement FY2025 recovery Project Firewall Joint project with DOJ, EEOC and USCIS over H-1Bs Future of OFCCP – What to expect from the agency now that it has been funded Key Takeaways to ensure compliance This webinar is the second in a three-part series designed for compliance professions, in-house counsel, HR and inclusion leaders, and other business leaders responsible for labor and employment law compliance. To register for FortneyScott’s Workplace Legal Compliance training series, please click here .
