The U.S. Department of Labor’s Office of Federal Contract Compliance Programs recently enacted two new ground-breaking regulations implementing the Section 503 of the Rehabilitation Act of 1973 and the Vietnam Era Veterans’ Readjustment Assistance Act.
The final rules, effective March 24, require federal contractors and subcontractors to affirmatively recruit, hire, train and promote qualified veterans and people with disabilities. The biggest change is newly required goals and benchmarks to measure federal contractors’ progress in hiring individuals with disabilities and protected veterans.
There are several changes to the Section 503 rules.
One involves utilization goals. The final rule establishes a new nationwide 7 percent utilization goal for individuals with disabilities — by job group or by total company for small employers. For the first time, contractors will be required to conduct an annual disability utilization analysis and assessment of problem areas and establish specific action-oriented programs and goals to address identified problems.
Contractors also are required to invite applicants to self-identify as individuals with disabilities at both the pre-offer and post-offer phases of the application process. Contractors must also invite their employees to self-identify as individuals with disabilities in the first year and every five years after.
Another change involves data collection. Contractors are required to document and update annually several quantitative comparisons of the number of individuals with disabilities who apply for jobs and the number of individuals with disabilities who are hired.
The new regulations under the Vietnam Era Veterans’ Readjustment Assistance Act also represent significant changes.
Under the final rule, contractors must establish annual hiring benchmarks for protected veterans. Contractors may choose a benchmark equal to the national percentage of veterans in the civilian labor force (currently 8 percent) or establish their own benchmarks using data from the Bureau of Labor Statistics and Veterans Employment and Training Service.
Contractors also must invite applicants to self-identify as protected veterans at both the pre-offer and post-offer phases of the application process. Employees must also be invited to disclose their veteran status in the first year the rules go into effect and at five-year intervals.
Regarding data collection, contractors are required to document and update annually several quantitative comparisons of the number of veterans who apply for jobs and the number of veterans who are hired.
There also are significant changes for contractors who list job openings with state or local job service agencies (now called Employment Service Delivery Systems).
Penalties regarding the new regulations can be severe.
Failing to implement an affirmative action plan and these new obligations, when required, can be expensive. The OFCCP conducts periodic audits of covered contractors, including a desk audit, an on-site visit and a further analysis off site. The audits often result in agency demands for significant back pay and hiring remedies.
In addition, an audit can take two to three years from start to completion and requires an enormous amount of HR staff time and resources.
The most stringent of all possible sanctions is that the OFCCP may disbar a contractor or subcontractor from receiving a federal contract or subcontract in the future.
Gary Chamberlin and Kelley Stoppels are employment and labor attorneys with Miller Johnson.