Contractors Beware: New Regulations Impose Additional Affirmative Action Burdens

by K&L Gates LLP
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The Department of Labor’s Office of Federal Contract Compliance Programs (“OFCCP”) issued new regulations governing the recruiting and hiring of individuals with disabilities and veterans. See 41 CFR Part 60-741 [1] and 41 CFR Part 60-300. [2] The focus of these new regulations is on government contractors’ outreach obligations and collection of data regarding their efforts to recruit, hire, promote and retain individuals with disabilities and veterans. As a result, contractors need to review and may need to revise their current policies and procedures with respect to employment of such individuals and documenting compliance. As OFCCP contractor audits continue to increase, contractors should move quickly to implement these measures and ensure they are in compliance.

Individuals with Disabilities
The regulations at 41 CFR Part 60-741 implement Section 503 of the Rehabilitation Act of 1973, as amended, and are intended to foster job opportunities for individuals with disabilities. Although contractors with 50 or more employees and a government contract of $50,000 or more have been subject to regulations implementing Section 503 for many years, the revised regulations impose more onerous requirements, including the following:

  • Set a nationwide 7% utilization goal for individuals with disabilities in each job group, or to the contractor’s entire workforce for employers with less than 100 employees.
  • Invite applicants to self-identify as an individual with a disability both pre-offer and post-offer using the identification form to be published on the OFCCP website. Contractors must also invite all their employees to self-identify during the first year the contractor is subject to the new regulations and every five years thereafter.
  • Conduct required outreach and recruitment efforts that are “reasonably designed to effectively recruit qualified individuals with disabilities” and annually review these efforts to evaluate their effectiveness.
  • Develop internal procedures for communication of the contractor’s obligations to engage in affirmative action efforts to employ and advance in employment qualified individuals with disabilities. The regulations provide for a number of required steps a contractor shall take to disseminate this policy, but also acknowledge that a contractor’s efforts need not be limited to those listed. 
  • Collect and retain data on an annual basis regarding:  (1) the number of applicants who self-identified as individuals with disabilities or who are otherwise known to be individuals with disabilities, (2) the total number of job openings and total number of jobs filled, (3) the total number of applicants for all jobs, (4) the number of applicants with disabilities hired, and (5) the total number of applicants hired.

The OFCCP has stated that the 7% utilization goals are not quotas; however, contractors must ensure that they sufficiently document all efforts taken to meet the stated goals.

Veterans
The regulations implementing the Vietnam Era Veterans’ Readjustment Assistance Act, as amended, (“VEVRAA”) at 41 CFR Part 60-300 completely replace the rescinded regulations at 41 CFR Part 60-250. The revised regulations seek to improve veterans’ job opportunities and require that government contractors with 50 or more employees and a contract of $100,000 or more take affirmative action to recruit and hire protected veterans. The VEVRAA regulations, much like the Section 503 regulations, impose significant new requirements on government contractors, including:

  • Establish hiring “benchmarks” for protected veterans using one of two possible calculations – either a benchmark equal to the national percentage of veterans in the civilian workforce, currently at 8%, or a benchmark using data provided by the Bureau of Labor Statistics, other data published by the OFCCP, and other factors unique to the contractor’s hiring circumstances.
  • Invite applicants to self-identify as a protected veteran both pre-offer and post-offer. The regulations provide an acceptable self-identification form at Appendix B to Part 60-300.
  • Conduct required outreach and recruitment activities that are “reasonably designed to effectively recruit protected veterans” and annually review these efforts to evaluate their effectiveness.
  • Develop internal procedures for communication of the contractor’s obligations to engage in affirmative action efforts to employ and advance in employment qualified protected veterans. The regulations provide for a number of required steps a contractor shall take to disseminate this policy, but also acknowledge that a contractor’s efforts need not be limited to those listed.
  • Collect and retain data on an annual basis regarding: (1) the number of applicants who self-identified as protected veterans or who are otherwise known as protected veterans, (2) the total number of job openings and total number of jobs filled, (3) the total number of applicants for all jobs, (4) the number of protected veteran applicants hired, and (5) the total number of applicants hired.

The OFCCP emphasizes that the required “benchmarks” are not quotas but are designed to “create a quantifiable method by which the contractor can measure its progress toward achieving equal employment opportunity for protected veterans.”

Similar Requirements
Both the Section 503 and the VEVRAA regulations contain extensive requirements for the design and implementation of an audit and reporting system that will measure the effectiveness of the contractor’s affirmative action program, indicate any need for remedial action, determine the degree to which a contractor’s objectives have been attained and measure the contractor’s compliance with the affirmative action program’s specific obligations. These obligations should not be taken lightly as contractors will need to dedicate substantial resources and personnel to ensure they are in compliance.

The Section 503 and VEVRAA regulations also require that contractors document all activities taken to comply with their affirmative action obligations and retain those records for three years. Further, the regulations allow the OFCCP to request that contractors identify all formats in which records are kept so that the OFCCP can decide which format best meets its needs.

The regulations will go into effect 180 days after the Final Rule is published in the Federal Register, which should occur shortly. Contractors that have an existing affirmative action program may delay compliance with the new requirements until the start of their next affirmative action program cycle. Given the significant changes and additional burdens contained in the new regulations, contractors should take steps now to review their current procedures and make any necessary changes to ensure compliance with the new requirements.

 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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