On August 27, 2013, the U.S. Department of Labor’s Office of Federal Contract Compliance Programs (OFCCP) announced Final Rules that make changes to the regulations implementing the Vietnam Era Veterans’ Readjustment Assistance Act, as amended (VEVRAA), and Section 503 of the Rehabilitation Act of 1973, as amended (Section 503).
These laws prohibit covered federal contractors and subcontractors from discriminating in employment against protected veterans and individuals with disabilities, and require these employers to take affirmative action to recruit, hire, promote, and retain these veterans and individual with disabilities.
The Final Rules will be published in the Federal Register shortly and are effective 180 days after their publication. However, current contractors with a written affirmative action program (AAP) already in place on the effective date have additional time to come into compliance with the AAP requirements. OFCCP claims it will allow contractors the opportunity to maintain their current AAP cycle.
Something Old and Something new
Much of what is contained in the Final Rules simply codifies current OFCCP desk audit practices, at least as we have experienced them in recent months, and also brings the rules into compliance with the ADA Amendments Act of 2008.
However, they also impose significant new burdens on federal contractors, as noted below.
Contractors are required under the Final Rules to collect and analyze data for protected veterans and individuals with disabilities for their annual AAPs. Contractors should be familiar with the detailed availability and utilization analyses they are required to conduct based on race and gender for their annual AAPs for women and minorities. Now, the Final Rules impose somewhat similar burdens on contractors for protected veterans and individuals with disabilities; thus, contractors must:
establish annual hiring benchmarks for protected veterans;
adopt a mandatory national hiring goal for individuals with disabilities;
conduct annual utilization analyses to measure their performance against these benchmarks by assessing problem areas; and
establish specific action-oriented programs to address identified problems.
Without any touch of irony, we add that, lest you think benchmarks are quotas, the Rules expressly disclaim this.
The Final VEVRAA Rule requires that contractors establish annual hiring benchmarks for protected veterans. Contractors must use one of the following two methods to establish their benchmarks:
Contractors may choose to establish a benchmark equal to the national percentage of veterans in the civilian labor force, which will be published and updated annually by OFCCP; or
Contractors may establish their own benchmark using certain data from BLS and Veterans’ Employment and Training Service/Employment and Training Administration (VETS/ETA) (to be published by OFCCP), as well as other factors that reflect the contractor’s unique hiring circumstances. It remains to be seen how contractors will do this.
The Final Section 503 Rule establishes a nationwide 7% utilization goal for qualified individuals with disabilities. Contractors must apply this goal to each of their job groups, or to their entire workforce if the contractor has 100 or fewer employees.
The final rules clarify some outstanding issues, including the following:
Invitation to Self-Identify: The Final Rules answer the question of how contractors are to invite applicants to self-identify as protected veterans and individuals with disabilities: at both the pre-offer and post-offer phases of the application process. In our experience, OFCCP has been inconsistent with these requirements; however, OFCCP desk audits have been focusing on this requirement, so the Final Rules are not new in this sense. In the case of individuals with disabilities, the language is prescribed by OFCCP; in the case of veterans, they may use sample invitations to self-identify contained in the Final Rules. The Final Rules require contractors to invite employees to self-identify as individuals with disabilities every five years, using prescribed language.
Incorporation of the EO Clause: The Final Rules require that specific language be used when incorporating the equal opportunity clause into a subcontract by reference.
Job Listings: The Final Rules clarify that when listing their job openings, contractors must provide that information in a manner and format permitted by the appropriate State or local job service so that the service can access and use the information to make the job listings available to job seekers.
Records Access: The Final Rules clarify that contractors must allow OFCCP to review documents related to a compliance check or focused review, either on-site or off-site, at OFCCP’s option. In addition, the Final Rule requires contractors, upon request, to inform OFCCP of all formats in which it maintains its records and provide them to OFCCP in whichever of those formats OFCCP requests.
As noted above, the Final Rules spell out in detail the provisions of the ADAAA on reasonable accommodation, undue hardship, medical examinations, etc.
What You Need to Know
Preparing New AAPs under the Final Rules
Once the Final Rules become effective, covered federal contractors will need to prepare new AAPs for protected veterans and individuals with disabilities to comply with these detailed new Final Rules. Heretofore, plans for protected veterans and individuals with disabilities have required little time and effort and have easily passed muster in OFCCP desk audits. However, the new AAPs will require additional and more costly data collection and analysis.
Anticipate New Legal Risks
We can expect close scrutiny by OFCCP of AAPs. In particular, we expect that OFCCP desk audits will closely scrutinize contractors’ progress on their new benchmarks, their data collection for applicants and hires, and their hiring decisions. OFCCP has considerable leverage to enforce compliance, including class relief on behalf of veterans and individuals with disabilities, and ultimately debarment from federal contracts.
Moreover, employers may find that their plans, and any information they submit to OFCCP are discoverable in litigation brought by individual plaintiffs, in class actions, or under freedom of access laws.
Thus, it will be critically important for covered federal contractors to prepare their AAPs, and, in particular, their analyses of their hiring decisions, under the protection of the attorney-client privilege before finalizing their AAPs and/or responding to an OFCCP desk audit.