Employers holding contracts with the federal government in excess of $10,000, as well as their subcontractors, should be aware of some important changes to the Vietnam Era Veterans’ Readjustment Assistance Act (VEVRAA) and Section 503 of the Rehabilitation Act of 1973 (Section 503).

The U.S. Department of Labor (DOL) recently announced a Final Rule designed to increase the number of veterans and disabled individuals hired and employed by federal contractors. The Rule, published in the Federal Registeron Sept. 24, 2013, amends certain portions of VEVRAA, as well as Section 503, pertaining to the affirmative action and nondiscrimination obligations of subject employers toward those individuals.

Contractors subject to VEVRAA and Section 503 must take affirmative steps under those laws to, among other things, hire, employ and provide equal employment opportunities overall to veterans and disabled individuals. They must record their efforts and results in the form of an affirmative action plan (AAP), which is subject to review and analysis by the federal Office of Federal Contract Compliance Programs (OFCCP), a division of the DOL.

Employers subject to VEVRAA also receive oversight from the Veterans’ Employment and Training Service (VETS), another DOL branch.

The OFCCP has specifically identified the following highlights in the Final Rule that are of particular note to affected employers:

• Regarding Section 503, the Final Rule establishes a nationwide 7 percent utilization goal for qualified individuals with disabilities. Employers must conduct an annual utilization analysis and assessment of problem areas, and establish specific action-oriented programs to address any identified problems. Contractors must also establish annual hiring benchmarks for protected veterans using one of two methods specified in the Rule.
• Contractors must document and annually update several quantitative comparisons for the number of disabled individuals and veterans who apply for jobs and are hired. Related records must be retained for a three-year period in order to help employers assess the effectiveness of their outreach and recruitment efforts and to identify trends.
• Contractors must invite applicants to self-identify as either individuals with disabilities or protected veterans at both the pre-offer and post-offer phases of the application process using language specified by the OFCCP and sample invitations included in the Final Rule. Contractors must also invite their employees to self-identify as individuals with disabilities every five years using specified language that will be posted on the OFCCP’s website.
• Specific language must be used by contractors when incorporating the required equal opportunity clause into a subcontract by reference. The mandated language is designed to alert subcontractors to their responsibilities as federal contractors.
• The Final Rule clarifies that contractors must allow the OFCCP to review documents related to a compliance check or focused review, either on-site or off-site, at the OFCCP’s option. In addition, contractors must, upon request, inform the OFCCP of all formats in which it maintains records and provide them to OFCCP in the manner requested.
• The Final Rule implements changes necessitated by the passage of the ADA Amendments Act of 2008 by revising the definition of “disability” and certain nondiscrimination provisions of the implementing regulations.

(Soure: Department of Labor Website. http://www.dol.gov/ofccp/regs/compliance/vevraa.htm; and http://www.dol.gov/ofccp/regs/compliance/section503.htm)

The OFCCP also enforces the provisions of Executive Order 11246, as amended, and its related regulations. Executive Order 11246 prohibits federal contractors and subcontractors from discriminating against applicants or current employees on the basis of race, color, religion, sex or national origin, and requires that covered employers create and maintain an updated affirmative action plan. Employers who are required by law to maintain the plan, but fail to do so, will not only experience unpleasant entanglement with and increased oversight by the OFCCP, but may also lose their federal contracts and face other penalties.

The Final Rule discussed in this newsletter will generally take effect on March 24, 2014. Contractors should act now to understand the revised regulations. In addition, employers should analyze how they will meet these new obligations and consider necessary action items. Finally, employers may want to consider updating applicable paperwork, including self-identification forms, and should evaluate how to maintain and track the newly required information.