Labor Department Halted Federal Contractor Audit Program
Contractors no longer face routine disability compliance audits or mandatory employment tracking requirements.
Updated on Oct. 13, 2026 in Employment
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The Office of Federal Contract Compliance Programs ended its routine audit program for federal contractors following regulatory updates in August 2026. These changes removed the requirement for contractors to set a 7% disability employment goal or track applicant self-identification.
Why it matters
The shift ends a long-standing oversight mechanism that previously identified violations in 15.7% of contractor audits. Operators must now navigate a significantly reduced federal enforcement presence regarding affirmative action and disability protections.
The agency reduced its staff from 500 full-time employees in fiscal 2025 to fewer than 80 in 2026, while field offices dropped from 50 to six. These changes follow a period where federal contract spending reached $793 billion in fiscal 2025, supporting approximately 1 million workers.
The players
Office of Federal Contract Compliance Programs
A Labor Department agency tasked with overseeing the affirmative action and non-discrimination obligations of companies holding federal contracts.
Government Accountability Office
The non-partisan legislative branch agency that audits federal programs and monitors the performance of executive agencies.
Labor Department
The federal executive department responsible for occupational safety, wage and hour standards, and federal contract compliance.
The details
The agency repealed Executive Order 11246 and implemented regulatory updates that fundamentally changed compliance obligations for federal contractors. Contractors are no longer required to conduct self-identification tracking for applicants or manage the previous 7% disability employment goal. While the agency has ceased routine audits, it maintains a narrowed scope, focusing investigations solely on individual complaints alleging disability discrimination.
Timeline
1965: Executive Order 11246 was originally established.
Fiscal 2017-2025: Agency conducted nearly 9,000 contractor audits.
Fiscal 2025: Agency began the year with 500 full-time employees.
August 2026: Labor Department updated contractor disability employment regulations.
October 2026: GAO report published regarding OFCCP audit practices.
Market Landscape
This policy shift marks a departure from the long-standing regulatory framework established by Executive Order 11246. It follows a decade of active oversight where nearly 9,000 audits were conducted between 2017 and 2025.
Federal contractors should review internal HR policies to determine how to adjust their affirmative action record-keeping in light of the removed 7% goal. While routine audits have ended, firms must still prepare for individual discrimination investigations, which remain an active agency function.
The takeaway
The end of routine federal audits signals a shift toward complaint-based enforcement rather than systematic compliance monitoring. Operators should maintain internal documentation of employment practices as a risk-mitigation step, even as formal federal affirmative action reporting requirements are lifted.
Further reading
Learn more about evolving labor standards at the Employment section.
Source note: This article includes information reported by Government Executive.
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