According to Acquisition.GOV, compliance with Executive Order 11246 includes the rules and regulations of the Secretary of Labor and applicable clauses in the contract.
Verify 8 compliance items for federal staffing work
The following table lists the eight specific compliance items to verify for federal staffing work. Each item is tied to the publisher that states the rule in its source document.
| Compliance Item | Publisher | Source Quote |
|---|---|---|
| Contract clause | Acquisition.GOV | 11246, rules and regulations of the Secretary of Labor, and applicable clauses in the contract. |
| State exemption | Legal Information Institute | (4) Contracts with State or local governments. |
| Religious exception | Acquisition.GOV | 11246, shall not apply to a Government contractor or subcontractor that is a religious corporation... |
| Indian preference | Acquisition.GOV | 11246 for a contractor to extend a publicly announced preference in employment to Indians... |
| Facility scope | Acquisition.GOV | 11246 any of a contractor’s facilities that the Deputy Assistant Secretary finds to be in all respects separate... |
| Investigation right | National Archives | (a) The Secretary of Labor may investigate the employment practices of any Government contractor... |
| Termination power | National Archives | (5) After consulting with the contracting agency, direct the contracting agency to cancel, terminate, suspend... |
| National interest | Acquisition.GOV | 11246 in any contract if the Deputy Assistant Secretary deems that special circumstances in the national interest so require. |
Review your current federal and state government contracts to identify which ones include the EO 11246 equal employment opportunity clauses specified in Section 202.
Key takeaways for eo 11246 contract compliance checks for staffing firms
- For covered, nonexempt federal contracts, compliance includes Executive Order 11246, the Secretary of Labor's rules, and applicable contract clauses, according to Acquisition.GOV.
- Contractors are required to comply with all provisions of Executive Order No. 11246 as stated in the contract, according to National Archives.
- Contracting agencies must refrain from entering further contracts or extensions with noncomplying contractors until the Secretary of Labor is satisfied that compliant personnel and employment policies are established, according to National Archives.
- The Secretary of Labor may direct a contracting agency to cancel, terminate, or suspend any contract or portion thereof for failure to comply with equal employment opportunity provisions, according to National Archives.
Understanding the scope of covered contracts and facilities
Equal opportunity clause requirements do not apply to state or local government agencies, instrumentalities, or subdivisions that do not participate in work on or under the contract or subcontract. According to the Legal Information Institute, 41 CFR 60-1.5 lists "(4) Contracts with State or local governments" among its exemption categories.
The scope of these obligations is not limited to the entire business entity. The Legal Information Institute notes that specific contracts and facilities can be addressed individually, citing the provision "(b) Specific contracts and facilities—(1) Specific contracts." This structural distinction allows firms to assess compliance for each contract rather than assuming a blanket application across all operations. For staffing agencies, this means you should map each government contract to its specific facility or operational unit to determine which hiring records and policies fall under the order's purview.
Facility exemptions provide a mechanism for excluding certain physical locations from EO 11246 requirements, but the process is strictly controlled. The Acquisition.GOV source states that the Deputy Assistant Secretary may exempt "any of a contractor’s facilities that the Deputy Assistant Secretary finds to be in all respects separate and distinct from activities of the contractor related to performing the contract." This finding is conditional; the Acquisition.GOV text adds that the exemption is valid "provided, that the Deputy Assistant Secretary also finds that the exemption will not interfere with, or impede the effectiveness of, E.O. 11246."
To apply this rule, a staffing firm must demonstrate that a specific facility operates independently from the contract performance activities. If your firm maintains a dedicated office solely for non-government work, you may consider seeking this exemption. However, the determination rests entirely with the Deputy Assistant Secretary. You cannot self-declare a facility as exempt. The Deputy Assistant Secretary must find the facility to be "in all respects separate and distinct" from contract performance activities and find that the exemption will not interfere with or impede the effectiveness of EO 11246.
Identifying valid exemptions for state and local government work
When your staffing firm holds a contract with a state or local government, specific provisions may exempt certain entities from equal employment opportunity requirements. The Federal Acquisition Regulation (FAR) addresses contracts with state or local governments as a distinct category under its exemptions section, according to Acquisition.GOV. This classification helps determine whether specific clauses apply to your engagement.
A critical exemption exists for government subdivisions that do not actively participate in the work. According to Legal Information Institute, the requirements of the equal opportunity clause in any contract or subcontract with a State or local government (or any agency, instrumentality or subdivision thereof) shall not be applicable to any agency, instrumentality or subdivision of such government which does not participate in work on or under the contract or subcontract. This rule is reiterated in the FAR, stating that EO 11246 in any contract with a State or local government (or any agency, instrumentality, or subdivision thereof) shall not be applicable to any agency, instrumentality, or subdivision of such government that does not participate in work on or under the contract, according to Acquisition.GOV.
To apply this exemption, you must verify which specific agency, instrumentality, or subdivision is performing the work. If a subdivision is not participating in the work on or under the contract, the equal opportunity clause requirements do not apply to that specific entity. This distinction is crucial for staffing firms that may place personnel across multiple government entities. You should document which entities are actively participating in the contract work to ensure you are applying the correct compliance standards. If a subdivision is not involved in the work, the exemption applies to that subdivision.
Review your contract documents to identify the specific state or local government entities involved. Confirm whether each entity is participating in the work on or under the contract. If an entity is not participating, note that the equal opportunity clause requirements do not apply to that entity. This verification step ensures you are compliant with the specific exemptions outlined in the FAR and CFR.
Special provisions for religious organizations and Indian reservations
Two specific exceptions modify how Executive Order 11246 applies to staffing firms in particular contexts. The first concerns religious organizations, and the second concerns work performed on or near Indian reservations.
Religious exemption
Under the FAR provision 22.807 Exemptions, Executive Order 11246 does not apply to a Government contractor or subcontractor that is a religious corporation, association, educational institution, or society, with respect to the employment of individuals of a particular religion to perform work connected with the carrying on by such corporation, association, educational institution, or society of its activities, according to Acquisition.GOV. This exemption is narrow: it covers only the employment of individuals of a particular religion for work connected with the carrying on of the organization’s own activities. It does not extend to every hiring decision made by a religious entity, nor does it apply to secular staffing firms that happen to serve religious clients. If your firm is not itself a religious corporation, association, educational institution, or society, this exemption does not apply to you.
Indian reservation preference
The same FAR provision 22.807 Exemptions permits a contractor to extend a publicly announced preference in employment to Indians living on or near an Indian reservation in connection with employment opportunities on or near an Indian reservation, according to Acquisition.GOV. This is not a blanket preference for all federal contracts nationwide. It applies specifically to employment opportunities on or near an Indian reservation, and the preference must be publicly announced. A staffing firm placing workers on a reservation-based project may lawfully announce and apply such a preference, but the preference is tied to the geographic and employment context, not to the contractor’s general hiring practices.
Scope reminder
The Legal Information Institute’s summary of 41 CFR § 60-1.5 lists “Work on or near Indian reservations” as a category of exempt work, according to Legal Information Institute. This categorization helps you identify which of your contracts or placements might fall within the reservation-related exception. The exemption is defined by the location and nature of the work, not by the contractor’s size or industry.
Enforcement mechanisms including investigation and contract termination
The National Archives outlines specific enforcement powers tied to Executive Order 11246 compliance. Under the provisions described in the "Executive Orders | National Archives" document, the Secretary of Labor holds the authority to investigate the employment practices of any Government contractor or subcontractor to determine whether or not the contractual provisions specified in Section 202 of this Order have been violated, according to National Archives. This investigative scope covers the specific contractual obligations required for federal staffing work.
If an investigation reveals noncompliance, the Secretary of Labor may, after consulting with the contracting agency, direct the contracting agency to cancel, terminate, suspend, or cause to be cancelled, terminated, or suspended, any contract, or any portion or portions thereof, for failure of the contractor or subcontractor to comply with equal employment opportunity provisions of the contract, according to National Archives. This termination power applies to the entire contract or specific portions thereof, depending on the nature of the failure to comply.
Furthermore, the National Archives specifies that any contracting agency shall refrain from entering into further contracts, or extensions or other modifications of existing contracts, with any noncomplying contractor, until such contractor has satisfied the Secretary of Labor that such contractor has established and will carry out personnel and employment policies in compliance with the provisions of this Order, according to National Archives. This ban on new contracts or modifications remains in effect until the contractor demonstrates compliance to the Secretary of Labor.
Contractors are also required to furnish all information and reports required by Executive Order 11246, as stated in the contractual provisions outlined by the National Archives, according to National Archives. This reporting requirement is part of the broader compliance framework that supports the investigation and enforcement mechanisms.
The Secretary of Labor may, when he deems that special circumstances in the national interest so require, exempt a contracting agency from the requirement of including any or all of the provisions of Section 202 of this Order in any specific contract, subcontract, or purchase order, according to National Archives. This exemption power is limited to situations where special circumstances in the national interest so require.
To verify your firm's compliance status, review your current federal and state government contracts to identify which ones include the EO 11246 equal employment opportunity clauses specified in Section 202.
Next step: Review your current contracts
Pull the master file for every active federal and state government contract your firm holds. For each covered, nonexempt contract, locate the applicable Executive Order 11246 equal employment opportunity clause. Verify that the clause text matches the specific language mandated for your contract type. If a contract is missing this clause or contains outdated wording, flag it for immediate review with your legal counsel.
Check your internal recordkeeping systems to ensure they align with agency expectations. The EEOC Notice of Charge form that you receive should explain the agency's record keeping requirements, according to the U.S. Equal Employment Opportunity Commission. Use this guidance to audit how your firm stores applicant data, selection records, and promotion histories. Check your recordkeeping against the requirements explained in that notice.
Related guides
- Interview Scorecard Example for Consistent Hiring Teams
- Hiring Decision Debrief: Notes to a Recorded Decision
- Conviction timing rules for 3 jurisdictions
FAQ: Eo 11246 contract compliance checks for staffing firms
Does EO 11246 apply to contracts with state or local governments?
Equal opportunity clause requirements do not apply to state or local government agencies, instrumentalities, or subdivisions that do not participate in work on or under the contract or subcontract, according to Legal Information Institute. The state and local government exemption concerns participation in the contract work, excluding nonparticipating government agencies, instrumentalities, and subdivisions from the clause requirements.
Can a staffing firm exempt specific facilities from EO 11246 requirements?
Yes, a firm may seek exemption for facilities that the Deputy Assistant Secretary finds to be in all respects separate and distinct from activities related to performing the contract, according to Acquisition.GOV. This exemption is conditional on the Deputy Assistant Secretary also finding that it will not interfere with or impede the effectiveness of EO 11246. Firms should document the distinct nature of these facilities to support any exemption request.
What happens if a contractor fails to comply with EO 11246 provisions?
Contracting agencies must refrain from entering into further contracts, or extensions or other modifications of existing contracts, with any noncomplying contractor, according to National Archives. This restriction remains in place until the contractor satisfies the Secretary of Labor that it has established and will carry out personnel and employment policies in compliance with the order. Noncompliance effectively halts new business opportunities with federal agencies.
Are religious corporations exempt from EO 11246 employment requirements?
Yes, EO 11246 does not apply to a government contractor or subcontractor that is a religious corporation, association, educational institution, or society, with respect to the employment of individuals of a particular religion to perform work connected with the carrying on of its activities, according to Acquisition.GOV. This exemption concerns employment of individuals of a particular religion for work connected with carrying on the organization's activities. Staffing firms operating as religious entities should ensure that any claimed exemption applies strictly to these specific employment contexts.
Can the Secretary of Labor exempt a contract from EO 11246 clauses?
Yes, the Secretary of Labor may exempt a contracting agency from the requirement of including any or all of the provisions of Section 202 of the order in any specific contract, subcontract, or purchase order, when special circumstances in the national interest so require, according to National Archives. This authority allows for case-by-case deviations from standard compliance requirements. Firms should monitor official announcements for any such exemptions that might affect their specific contracts.