Federal Contractor Affirmative Action Regulations Take Effect March 24, 2014

by Holland & Knight LLP
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  • New regulations issued by Department of Labor's Office of Federal Contract Compliance Programs take effect March 24, 2014.
  • Requirements include establishing hiring benchmarks for veterans and adopting utilization goals for employing individuals with disabilities, and new obligations regarding data collecting, self-identification, and recordkeeping. Contractors can take steps now to comply.

On March 24, 2014, the U.S. Department of Labor’s Office of Federal Contract Compliance Programs' (OFCCP) new regulations concerning Section 503 of the Rehabilitation Act and the Vietnam Era Veterans' Readjustment Assistance Act go into effect. The most significant requirement is that covered federal contractors must adopt utilization goals for individuals with disabilities and hiring benchmarks for veterans. The regulations also impose requirements having to do with data collection, as well as invitations for job applicants to self-identify as individuals with a disability or as veterans.

With the effective date approaching, federal contractors should take immediate steps to confirm that their documents, practices and written affirmative action plans comply with the new regulations.

Covered Employers

Federal contractors with 50 or more employees and at least $50,000 in federal contracts must develop a written affirmative action program for minorities, females and individuals with disabilities. Federal contractors with 50 or more employees and at least $100,000 in federal contracts must develop an affirmative action program for veterans. Federal contractors with fewer than 50 employees and more than $10,000 in federal contracts are not required to develop a written affirmative action program, but they have certain other affirmative action obligations.

Hiring Benchmarks for Veterans and Utilization Goals for Individuals with Disabilities

Veterans

The new regulations require a contractor to establish an annual "hiring benchmark" for veterans. The benchmark must be established as either 8 percent of the contractor’s workforce (which represents the current national percentage of veterans in the workforce), or a figure established through other sources concerning veteran employment. Those sources are the average percentage of veterans in the civilian labor workforce in the state in which the contractor is located during the preceding three years (as calculated by the Bureau of Labor Statistics); the number of veterans over the previous four quarters who participated in state employment service delivery system; the contractor's applicant and hiring ratios for veterans in the previous year; and other factors, such as the nature and location of the contractor's particular job openings that “would tend to affect the availability of qualified protected veterans."

The regulations state that the "benchmark is not a rigid and inflexible quota that must be met." Further, "quotas are expressly forbidden." A contractor’s failure to meet the benchmark does not constitute a violation.

Individuals with Disabilities

Under the new regulations, the contractor must establish a 7 percent "workforce utilization goal" for employing individuals with disabilities in each job group. To measure its success against this goal, the contractor must calculate the percentage of individuals with disabilities in each job group and then compare that data with the 7 percent utilization goal. The OFCCP regulations allow contractors with fewer than 100 employees to apply the 7 percent goal to the entire workforce, as opposed to applying the 7 percent goal to each job group.

The regulations state that the utilization goal is not a quota, and that the failure to meet the goal does not automatically constitute a violation. But if a contractor fails to meet a goal, the contractor must take steps to assess whether impediments exist and develop action-oriented programs to correct any problem areas.

Self-Identification

The regulations impose new requirements concerning self-identification of applicants and employees. The new regulations addressing individuals with disabilities require that the contractor: (1) invite applicants to self-identify as an individual with a disability; (2) invite individuals, after an offer of employment is extended but before the employees begins the job, to voluntarily self-identify (this was an existing requirement under the previous regulations); (3) invite all employees to self-identify (within the first year that the contractor becomes subject to the new regulation addressing self-identification and at five-year intervals thereafter); and (4) remind employees, at least once during the intervening years of the employee self-identification process, that they may voluntary update their disability status. The regulations state that the contractor may not compel or coerce individuals to self-identify.

Similar steps are required with respect to inviting applicants and employees to self-identify as a veteran. The regulations addressing veterans require that the contractor: (1) invite all applicants to self-identify as a "protected veteran" before the offer of employment (without disclosing the particular category of veteran); and (2) invite individuals, after an offer of employment has been made but before the employee has started the job, to inform the contractor whether the applicant believes that he or she belongs to one or more of the specific categories of "protected veteran" (this was an existing requirement under the previous regulations).

With the information obtained through the self-identification process, contractors can assess the effectiveness of their outreach and recruitment efforts of both individuals with disabilities and veterans. OFCCP has published sample self-identification forms for collecting information from applicants and employees.

Data Collection

The regulations impose data collection requirements for both veterans and individuals with disabilities. These requirements include maintaining records concerning: (1) the number of applicants who self-identify; (2) the total number of job openings and jobs filled; (3) the total number of applicants for all jobs; (4) the number of applicants for all jobs; and (5) the total number of applicants hired. This data and supporting documents must be maintained for three years.

Equal Opportunity Clause

The regulations require that contractors include an equal opportunity clause (EO Clause) in its covered contracts and subcontracts. The regulations provide that contractors may incorporate the EO Clause by reference, but only by citing to the relevant regulations and including specific language in the contract. The EO Clause for individuals with disabilities includes a new provision that requires a contractor to state in solicitations and advertisements that it is an equal opportunity employer of individuals with disabilities.

Job Listings and Outreach

As with the previous regulations, the new regulations require contractors to provide job listings to state employment service delivery systems. The new regulations also require that the contractor state on such listings that it is a federal contractor (e.g., by noting "VEVRAA Federal Contractor" on the listing), and indicate that it desires priority referrals from the state of protected veterans for job openings in the state. In the listing, the contractor must also list the contractor official responsible for hiring at each hiring location.

The regulations also require contractors to take appropriate outreach and positive recruitment activities. OFCCP recently posted on its website a list of outreach resources for veterans and individuals with disabilities.

Enforcement and Compliance

OFCCP periodically conducts reviews of a contractor's affirmative action program. OFCCP uses compliance reviews, off-site reviews, compliance reviews and focused review to investigate compliance. The new regulations provide that during a review, OFCCP may extend the temporal scope of an evaluation and request information after the date set forth in OFCCP's compliance evaluation letter, if OFCCP deems it necessary to carry out its investigation of potential violations. In any OFCCP review, a contractor should expect and prepare for OFCCP investigators to review whether the contractor is complying with all aspects of the new regulations.

If OFCCP concludes that a contractor has violated its obligations, OFCCP may decide to propose a conciliation agreement to address alleged violations. If a conciliation agreement is not reached, OFCCP has the right to refer a matter to the Solicitor of Labor with a recommendation that the Department of Labor institute enforcement proceedings.

Effective Date

The new regulations go into effect on March 24, 2014. A contractor with a written affirmative action plan in place on March 24, 2014 that was developed under the current regulations may maintain that written plan until the end of the plan year, and delay compliance with the new affirmative action plan requirements until the start of the next plan cycle. A contractor that develops a written affirmative action plan for a plan year starting on or after March 24, 2014 must comply with the new regulations.

The new regulations impose certain requirements that are separate from the requirements concerning written affirmative action plans. Those requirements (such as the incorporation of the EO clause in subcontracts and compliance with all aspects of the EO Clause) are effective March 24, 2014, regardless of when the contractor develops its affirmative action plan.

The Takeaway for Contractors

Contractors should take steps now to plan for and implement the necessary changes to their affirmative actions programs. These changes may include:

  • updating self-identification forms and data-collection systems
  • updating references to EO Clause in subcontracts
  • reviewing practices regarding posting job openings with state employment services
  • establishing hiring benchmarks for veterans and utilization goals for individuals with disabilities
  • assessing effectiveness of outreach efforts
  • documenting all outreach and recruitment activities and retaining the records
  • implementing new or revised pre-offer and post-offer self-identification forms
  • reviewing recordkeeping policies and practices to ensure compliance
  • reviewing practices concerning the internal dissemination of its affirmative action programs
  • updating IT systems to address new data collection, including applicant and employee information

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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