New regulations toughen requirements for federal contractors

Federal contractors soon will have to establish benchmarks for hiring veterans and employing individuals with disabilities as a result of two new rules from the U.S. Department of Labor’s (DOL) Office of Federal Contract Compliance Programs (OFCCP).

The new regulations are expected to be published in the Federal Register within the next couple of weeks, according to information from the OFCCP. The rules will go into effect 180 days after publication.

Vice President Joe Biden announced the rules August 27 in an address to the American Legion. The rules strengthen requirements under two laws affecting employers that have contracts with the federal government—the Vietnam Era Veterans’ Readjustment Assistance Act (VEVRAA) and Section 503 of the Rehabilitation Act.

Here’s a look at the new requirements:

• The VEVRAA rule will require contractors to annually adopt a benchmark for hiring veterans. That benchmark is to be based on the national percentage of veterans in the workforce—currently 8%—or their own benchmark based on the best available data, according to the OFCCP announcement. The rule also clarifies job listing and subcontract requirements.
• The Section 503 rule sets an aspirational goal for federal contractors and subcontractors that 7% of each job group in their workforce be qualified individuals with disabilities, according to the OFCCP announcement. The OFCCP says the rule doesn’t establish a quota, but it does require contractors to take specific actions in the areas of recruitment, training, record keeping, and policy dissemination that are similar to those that previously have been required to promote workplace equality for women and minorities.

Written affirmative action plans are covered under Subpart C of the new rules applying to VEVRAA and Section 503. Contractors with affirmative action plans already in place on the new rules’ effective date may keep those plans until the end of their plan year, meaning they can delay compliance regarding written plans until the start of their next affirmative action plan cycle, during which time the OFCCP is to be providing contractors technical assistance with the transition.

Even with that bit of breathing room on the deadline, the OFCCP says contractors should begin updating their employment practices and information technology systems now so that they can come into compliance on written affirmative action plans as soon as possible. There is no leeway in the compliance timetable for the other parts of the rules. Contractors must be in compliance with Subparts A, B, D, and E no later than the effective date.

In finalizing the new rules, the OFCCP made a couple of concessions favorable to employers:

• The new veterans hiring benchmark applies to a contractor’s workforce as a whole, meaning contractors won’t have to do an analysis of individual job groups.
• The rule requiring steps aimed at getting 7% of a contractor’s workforce to be made up of individuals with disabilities applies to job groups for employers with more than 100 employees. For employers with 100 or fewer employees, the 7% figure can be applied to the workforce as a whole. Therefore, smaller employers aren’t required to do disability analyses by job group.

In a DOL blog post, Labor Secretary Tom Perez said the new rules are necessary to make the laws more effective. He said that although laws have prohibited employment discrimination on the basis of veteran status or disability for decades, veterans and people with disabilities “are still disproportionately represented among the unemployed and those out of the workforce entirely.”

“Being a federal contractor is a privilege—one that comes with the reasonable responsibility to abide by the law and provide equal employment opportunity to all workers,” Perez wrote.

The new rules have sparked an outcry among some contractors. Stephen E. Sandherr, CEO of the Associated General Contractors of America, issued a statement calling the rules oppressive and unnecessary. He said the rules “will force federal contractors to spend an estimated $6 billion a year to produce reams of new paperwork proving they are doing what the federal government already knows they are doing.” He also said federal employment data show that veterans and people with disabilities are more likely to be employed by construction firms than nonveterans.

The rules are being praised in other circles. Carol Glazer, president of the National Organization on Disability, issued a statement applauding the rules “for elevating employment of people with disabilities—the nation’s largest minority group, which includes a growing number of veterans—to the level of women and racial and ethnic minorities.” She said that despite the existence of the Americans with Disabilities Act, the number of people with disabilities who are unemployed “demonstrates the fact that preventing discrimination and incentivizing hiring are not one in the same.”

Want to learn more? Attorney David S. Fortney of Washington, D.C.-based law firm Fortney & Scott, LLC, will lead the live webinar “OFCCP Final Rules for Federal Contractors: New Affirmative Action and Equal Opportunity Obligations Explained” on October 21. Participants will get a better understanding of the specifics of the new OFCCP rules, and best practices for federal contractors’ compliance with the Vietnam Era Veterans’ Readjustment Assistance Act and Section 503 of the Rehabilitation Act when recruiting and hiring veterans and individuals with disabilities. For more information or to sign up for the webinar, go to http://store.hrhero.com/ofccp-final-rules or call 800-274-6774.