Federal Contractors and the Fair Chance Act: 2026 Compliance Walk-Through

If your company holds a federal contract or subcontract, the Fair Chance to Compete for Jobs Act of 2019 applies to every hire that touches the work of that contract. Effective December 20, 2021, codified at 41 U.S.C. § 4714, it bars any inquiry into criminal history until after a conditional offer of employment.

The teeth are unusual: the contracting officer can suspend contract payments for repeat violations and refer the matter to the agency suspension and debarment official. There is no individual private right of action, but the contractual exposure is significant.

Who is covered

• Prime contractors holding any federal contract above the simplified acquisition threshold.
• Subcontractors at any tier whose work supports the federal contract.
• All hiring for positions whose duties relate to performance of the federal contract — not just W-2 positions on the contract billing line.

What is actually prohibited

• Any verbal or written request for criminal-history information before the conditional offer.
• Application questions, interview questions, third-party investigations, and informal reference checks that elicit criminal history pre-offer.
• Use of any criminal-history screening service before the conditional offer is documented.

What is permitted

• Inquiries required by other federal law (FBI fingerprint checks for certain DOD or DHS positions, FAA airport-badge requirements, NRC fitness-for-duty).
• Inquiries for positions involving national-security clearances at the Secret level or above.
• Inquiries for positions involving access to classified information.

The compliance program SafestHires recommends

1. Mark every federal-contract-related requisition in the ATS with a Fair Chance flag that disables criminal-history screening pre-offer.
2. Move the conditional offer into the ATS as a stamped event — the offer is the trigger that unlocks the screening.
3. Capture which statutory exception applies for any pre-offer inquiry (FBI fingerprinting, clearance, etc.) and store it with the requisition.
4. Run a monthly contractor-side audit to confirm zero pre-offer screens shipped against Fair Chance requisitions.

Bottom line

The Fair Chance Act is a procurement-side risk, not an employment-litigation risk. Treat it as such — wire it into the contract requisition workflow, not the standard FCRA workflow — and the payment-suspension exposure goes to zero.