Minnesota State Contractors Must Use New MDHR Two-Part Annual Compliance Report Beginning July 1

Quick Hits

• Starting July 1, 2025, Minnesota contractors must use the updated two-part annual compliance report (ACR) which includes a year in review narrative and data analysis sections.
• The new ACR requires contractors to provide detailed narratives on their compliance efforts and corrective actions, along with structured data reporting on employee movements and training.
• Contractors with workforce certificates issued on or after July 1, 2025, can choose from four different reporting periods for their ACR, ending up to three months prior to the certificate approval date.

Part 1: Year in Review Narrative

Section 1: Company Information

This section basically solicits the same information as was requested in the previous ACR. The differences include:

• Clarification that the company name must be the name as registered with the Minnesota secretary of state.
• The mailing address (if different from physical address) is now also requested.
• The job title and email address of the person who prepared the ACR is now requested.
• The email address of the senior management official who reviewed the ACR is now requested.

Section 2: Narrative on Good Faith Efforts

In the previous ACR, contractors were required to complete an affirmative action plan (AAP) progress report narrative where they would explain their good faith efforts and action steps taken to address areas of minority and/or female underutilization or ensure continued utilization levels. The new narrative section is more structured and requires the contractor to answer two questions:

1. “In the past year, we meaningfully implemented our company’s Compliance Plan in the following ways:
2. In the past year, we meaningfully implemented our company’s Equal Opportunity Statement in the following ways:”

Section 3: Good Faith Efforts for All Companies

In this section, contractors are required to identify the areas in which they determined they were not in compliance with MDHR requirements and detail the corrective action taken in the prior year with respect to their hiring process, current employees, and workplace.

Section 4: Additional Good Faith Efforts for Construction Contractors Only

Construction contractors are required to answer additional questions concerning prime contracts awarded in the prior twelve months and whether timely preconstruction and/or monthly reports were submitted to MDHR. They must also identify areas where they were out of compliance concerning their hiring process, current employees, and workplace, and the corrective action taken to address identified deficiencies.

Part 2: Data Analysis

Contractors still report:

• “Total Employees – Beginning of Reporting Period
• Total Applicants
• Total Hires
• Applicants Interviewed
• Applicants Tested
• Employees Promoted – From
• Employees Promoted – To
• Employees Demoted – From
• Employees Demoted – To
• Employees Terminated
• Total Current Employees”

The differences involve the definitions of employees transferred out and in, and employees trained. In the prior ACR, transfers were defined as movements out of and into job groups. In the new ACR, the definition of transfers is clarified to include movements out of or into the company’s facilities that are included in the ACR.

The old ACR requested data on all employees who received company-sponsored training. The new ACR clarifies that contractors are to report all employees who received company-sponsored equal employment opportunity (EEO) training during the reporting period.

Contractors are still required to complete an availability and underutilization analysis (AUA). The instructions for the new AUA require contractors to use 2018 census data and emphasize that contractors are not to adopt quotas. Likewise, the new AUA form no longer includes annual percentage goals.

Change to ACR Reporting Period

Contractors whose workforce certificates are issued before July 1, 2025, may use data up to two months prior to their certificate approval date to complete their ACRs. For example, if a contractor’s certificate was issued on June 1, 2024, the ACR reporting period may be one of the following three periods:

• June 1, 2024 – May 31, 2025
• May 1, 2024 – April 30, 2025
• April 1, 2024 – March 31, 2025

Contractors whose certificate is issued July 1, 2025, or later, may use reporting periods that end up to three months prior to their certificate approval date. For example, a contractor whose certificate is issued July 15, 2025, may use the following four reporting periods to complete the ACR:

• July 15, 2025 – July 14, 2026
• June 15, 2025 – June 14, 2026
• May 15, 2025 – May 14, 2026
• April 15, 2025 – April 14, 2026

Conclusion

Beginning July 1, 2025, Minnesota contractors holding an active workforce certificate of compliance must begin using MDHR’s new two-part annual compliance report, which requires a more comprehensive narrative to identify and address compliance deficiencies. Likewise, the definitions and instructions included in the data analysis section of the new ACR help to clarify contractors’ reporting obligations with respect to employee transfers and employees trained, and now require use of 2018 census data for the preparation of the availability and underutilization analysis. Finally, when completing the ACR, contractors whose certificate is issued July 1, 2025, or later, may use a twelve-month reporting period that matches the certification period dates or ends exactly one, two, or three months before the certificate approval date.

Ogletree Deakins’ Minneapolis office and Workforce Analytics and Compliance and Government Contracting and Reporting Practice Group will continue to monitor developments and will post updates on the Workforce Analytics and Compliance, Diversity, Equity, and Inclusion Compliance, Government Contracting and Reporting, and Minnesota blogs as additional information becomes available.

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