What Is an Affirmative Action Plan in the USA and How Do You Comply in 2025?

If you work in HR, run a company, or handle bids for federal contracts, you’ve probably come across the term “affirmative action.”

To explain affirmative action in simple terms, it’s just about making sure jobs, promotions, and training are open to everyone, especially people who’ve historically had fewer chances, like women, racial and ethnic minorities, individuals with disabilities, and protected veterans.

The way that promise turns into action is through an affirmative action plan. Think of it as a written playbook: you look at your workforce, spot where certain groups are missing or underrepresented, and then set out practical steps to close those gaps.

There’s also a bigger reason to understand why affirmative action is needed. Done right, it’s not just a legal requirement. This brings more perspectives into decision-making, strengthens team culture, and reduces the risk of bias creeping into hiring or promotions.

And the rules aren’t frozen in time.

In January 2025, Executive Order 14173 changed what federal contractors have to do. Race and sex no longer need to be tracked in these plans, but contractors still have to outline how they’ll hire and support people with disabilities (Section 503) and protected veterans (VEVRAA).

In this blog, we’ll walk you through what’s changed, what still applies, and how to update your plan so it meets today’s rules while also providing equal opportunities to the people whom these laws are meant to serve.

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What Is an Affirmative Action Plan?

The U.S. EEOC and the Department of Labor’s OFCCP define an affirmative action plan as a written program that explains how an employer will make sure all qualified people have a fair chance at jobs, promotions, and training.

Please note it’s not a generic statement about diversity; it’s a compliance tool with a clear structure, timelines, and records that can be checked during an audit.

What goes into an affirmative action plan:

• Legal backbone: Often tied to Section 503 of the Rehabilitation Act and VEVRAA. Historically, race and sex goals came from Executive Order 11246, though that part changed in 2025.
• Looking at the numbers: Breaking down your workforce by job group, gender, race, and ethnicity to see where gaps are.
• Comparing to the outside world: For example, if women make up 30% of qualified engineers in your region but only 10% in your company, that’s a gap you’d flag.
• Setting placement goals: Targets based on real labor market data. These are not quotas; you’re not required to hire someone just to hit a number.
• Action steps: Recruitment drives, outreach to specific communities, mentoring schemes — whatever fits the gap you’re trying to close.
• Checking progress: Plans are reviewed each year, adjusted if needed, and kept on file in case the OFCCP asks to see them.

As we discussed earlier, In terms of affirmative action meaning, these plans are different from broad diversity programs. 

For example, a company can run diversity events or community outreach with no legal mandate. But when it is creating an affirmative action plan, this process will be guided by regulation, backed by data, and its goal would be to remove obstacles. With this, the qualified candidates from underrepresented groups will have a genuine chance to compete for roles.

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Who Needs an Affirmative Action Plan?

The affirmative action definition under U.S. law isn’t just about promoting fairness; in many cases, it’s a legal requirement. Whether you must have one depends mainly on your relationship with the federal government, your industry, and where you do business.

Here are the different coverage rules:

Federal Contractors and Subcontractors

If your company has 50 or more employees and at least one federal contract or subcontract worth $50,000 or more, you’re generally covered. This falls under the OFCCP affirmative action plan requirements, enforced by the Office of Federal Contract Compliance Programs, which audits and monitors contractors for compliance.

Construction Contractors

These are covered if they have any direct federal construction contract worth $10,000 or more. Their AAP requirements differ from non-construction contractors and focus more on job site workforce composition and outreach efforts.

Multiple thresholds for specific laws

Some affirmative action obligations come from laws beyond general contractor rules:

• Section 503 of the Rehabilitation Act applies to federal contracts worth $15,000 or more and requires a plan for recruiting, hiring, and advancing individuals with disabilities.

• VEVRAA (Vietnam Era Veterans’ Readjustment Assistance Act) kicks in at $150,000 or more in federal contracts, requiring plans to employ and promote protected veterans.

Voluntary Adoption

Even if they’re not required, many private employers still choose to keep an AAP. Reasons include preparing for future government bids, creating a structured diversity program, and demonstrating commitment to fair hiring.

State-level rules

Federal rollbacks don’t always apply at the state level. For example, California’s Fair Employment & Housing Act still requires certain contractors to maintain nondiscrimination and affirmative action measures, even after changes to federal law in 2025.

Who is required to have an affirmative action plan can change with time as laws change. That’s the same reason why many businesses review their contracts, employee counts, and the state-specific rules at least yearly to ensure they are always compliant.

How to Create an Affirmative Action Plan?

If you’re covered by the law or simply want to build a structured approach to fair hiring, you must learn how to create an affirmative action plan. This plan has to fit compliance requirements and also your workplace strategy. Also, one can’t treat it as an on-off project because hiring happens in an ongoing cycle. 

Here’s the step-by-step process: 

Step 1: Determine coverage & obligations

Check if your organization meets the criteria for an AAP. Look at your workforce size, the value of any federal contracts or subcontracts, and whether you’re in construction or non-construction work. 

Federal contractors should review the thresholds under OFCCP, Section 503 (disabilities), and VEVRAA (protected veterans) to confirm which rules apply. Knowing this up front saves time and keeps your plan focused only on the requirements that matter to you.

Step 2: Collect workforce & applicant data

Collect information for both current employees and latest applicants, and also cover their demographic information, like race, ethnicity, gender, disability, veteran status, etc.

Since keeping gaps during this time can lead to incorrect decisions later, many employers use HRIS or applicant tracking systems. This ensures the information is organized, and you can retrieve it during any audit.

Step 3: Perform self-analysis for underrepresentation

Compare your workforce makeup to the demographics of the relevant labor market. Significant gaps point to areas that need action, and documenting these comparisons will be important if your plan is ever audited.

Step 4: Set goals & timelines

Based on the gaps you’ve identified, establish placement goals that serve as progress benchmarks rather than quotas. Tie these goals to clear timelines, often one year, so they can be measured and adjusted during the next AAP cycle.

Step 5: Draft policy statements & assign responsibility 

Create a simple, clear statement showing your commitment to equal opportunity. Share it with staff and display it for job applicants. Choose one person or a small team to manage the plan and track results. This ensures someone is accountable for making it happen and maintaining compliance.

Step 6: Put your plan into action

Start the programs you’ve planned. This could mean widening your job ads to new channels, working with local organizations, or offering training to help underrepresented groups move into your open roles. Keep records of what you do; you may need them to show your efforts during compliance reviews.

Step 7: Monitor and make changes

Check progress regularly, ideally every quarter. If you see a goal slipping, adjust your approach early. Record both the changes you make and why you made them. It keeps the process transparent and makes the next review easier.

Affirmative Action Plan Example

A logistics company finds that veterans make up only 8% of its maintenance team, even though they represent 22% of the local labor pool. To close this gap, the company partners with a veteran employment program, updates job requirements to focus on relevant skills instead of fixed credentials, and reviews progress every quarter.

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2025 Update: Current Rules After Executive Order 14173

In January 2025, Executive Order 14173 changed affirmative action plan requirements for federal contractors. Some obligations were removed, but others remain, making it important to know exactly what’s different.

Even with these changes, you still need clear steps for hiring and supporting veterans and individuals with disabilities. If your state adds its own rules, or you choose to keep broader coverage, update your plan and ensure your team gets the right affirmative action training.

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Monitoring, Reporting & OFCCP Audits of AAP

Putting an affirmative action program on paper is one thing; proving you follow it is another.

For federal contractors, the OFCCP can ask for your outreach, hiring, and promotion records for veterans and individuals with disabilities at any time. If those files are missing details or haven’t been updated in months, you’re in trouble.

The easiest way to avoid that? Run quarterly reviews of your workforce makeup, see if your outreach is actually bringing in candidates, and keep every note, spreadsheet, and email in one place. Small reporting gaps have cost contractors their bids; it’s not worth the risk.

This is where outsourced payroll and HR teams earn their keep. They can centralize workforce data, automate demographic reports, and have a clean compliance file ready before the OFCCP even calls. That way, if an audit lands on your desk, you’ve already got the proof.

Your Next Smart Move in 2025

Affirmative action plans work best when supported by clear tracking, timely reports, and solid accountability. Whether required by law or adopted voluntarily, the aim is simple: keep accurate workforce data and show that your outreach and hiring efforts are delivering results.

Many employers struggle here. Payroll errors, missing records, and slow reporting can wipe out months of progress and put compliance at risk. Over half of employees have experienced payroll problems at least once, issues that damage trust and make it harder to keep data accurate and ready for audits.

You don’t have to add more work to fix these gaps. Outsourcing payroll and HR lets you centralize data, ensure every payment is correct, and keep compliance documents ready at all times.

It’s a simple way to stay audit-ready and give your affirmative action plan a strong, reliable foundation. Contact us to learn how our payroll and HR outsourcing can help you stay compliant, inclusive, and free from unnecessary admin stress.

FAQs on Affirmative Action Plan