The Office of Federal Contract Compliance Programs (OFCCP) released revised affirmative action rules for government contractors and subcontractors affecting hiring and retention practices for veterans and individuals with disabilities. The rules have not yet been published in the Federal Register and will take effect 180 days after publication. Affected employers can expect that compliance will be required by spring 2014.

The rules constitute a significant overhaul of the regulations under the Vietnam Era Veterans’ Readjustment Assistance Act of 1974 (VEVRAA) and Section 503 of the Rehabilitation Act of 1973. The revised regulations contain hiring targets both for veterans and disabled individuals and require that employers undertake voluntary self-disclosure surveys for applicants and employees seeking information about whether they have disabilities. The Equal Employment Opportunity Commission (EEOC) last month issued a letter to the OFCCP stating that it does not regard such surveys as inconsistent with the Americans with Disabilities Act (ADA).

Impact on Covered Employers

The new rules substantially expand the affirmative action requirements for covered employers. In addition to creating new and expanded recordkeeping and tracking obligations, the rules will require employers to develop more expansive affirmative action programs to address the new requirements.

In addition, employers will have to reassess and update existing personnel policies and procedures regarding affirmative action, reasonable accommodation, and harassment. Specific information must be disseminated to all employees, and training should be conducted for the overall workforce, management personnel, and those specifically involved in recruiting, screening, selection, promotion, disciplinary, and related processes.

Rules Governing Individuals with Disabilities

The affirmative action program (AAP) requirements of the Rehabilitation Act regulations apply to government contractors and subcontractors that have at least 50 employees and a contract of at least $50,000. Within 120 days of the commencement of such a contract, the contractor must prepare and maintain an affirmative action program at each establishment. Under the revised regulations, the definition of "disability" has been expanded to conform to the expanded definition under the ADA Amendments Act of 2008 (ADAAA).

Utilization Goal. The revised rules establish a 7 percent "utilization goal" for qualified individuals with disabilities for each job group, or, if the contractor has 100 or fewer employees, for the entire workforce. This goal, according to the regulations, "is not a rigid and inflexible quota which must be met … [q]uotas are expressly forbidden." The contractor must conduct a utilization analysis to evaluate its progress against the goal. The contractor also must identify problem areas and develop action-oriented programs to correct them.

Self-Identification. The regulations require contractors to invite applicants and employees to identify themselves as individuals with disabilities. Applicants must be invited to do so upon application through a form that is separate from the application form (although it may be included with the application). The OFCCP will prescribe the specific language and form of the self-identification. Once an employment offer has been made, but before the applicant begins his/her job duties, the contractor again must invite the individual to self-identify. In addition, employees must be invited to self-identify during the first year the contractor becomes subject to the rules and at five-year intervals thereafter. Employees also must be reminded at least one time during the intervening years that they may update their status.

AAP Development. Contractors are required to develop an affirmative action program that contains, at a minimum:

• A policy statement
• A review of personnel processes
• A schedule for review of all physical and mental job qualification standards
• Reasonable accommodation procedures
• External and internal dissemination of the policy
• Recordkeeping
• Audit and reporting systems to measure the effectiveness of the program
• Responsibility for implementation
• Training
• Data collection analyses covering applicant flow, jobs opened and filled, and applicants with disabilities hired

The full program must be made available for inspection by any applicant or employee, upon request, with the exception of applicant data.

Internal Dissemination. The regulations require a contractor to undertake various means of disseminating its affirmative action policy through a "strong outreach program." Required measures include placing the policy in the contractor's policy manual or otherwise making it available to employees; notifying union officials of the policy and seeking their cooperation; and disseminating the policy internally. Internal dissemination means using such measures as special meetings with employees and management personnel, media publicity, employee orientation, and company publications in which individuals with disabilities are portrayed. Contractors must develop "internal procedures" to comply with these dissemination obligations. Also, harassment policies must address the issue of harassment on the basis of disability.

Reasonable Accommodation Processes. Contractors are encouraged, but not required, to develop written procedures for processing requests for reasonable accommodation, which the OFCCP characterizes as a "best practice." The regulations anticipate that all such requests will be processed "swiftly, within a reasonable period of time." Notably, the regulations require employers to reach out to an employee with a known disability who is having performance problems to inquire whether the problem is related to the disability, when it is reasonable to conclude that this may be the case.

Training. Under the rules, all personnel involved in the recruiting, screening, selection, promotion, disciplinary, and related processes must be trained to ensure that the commitments in the contractor's affirmative action program are implemented. In addition, the OFCCP expects that contractors will conduct special meetings with executive, management, and supervisory personnel to explain the policy and their individual responsibilities for implementation—making clear the CEO's support of the program—and that contractors will conduct management training programs to discuss the policy.

Enforcement. The regulations contain enforcement and compliance review provisions, including rules for desk audits, on-site reviews, and off-site analysis of information. For awards of non-construction contracts exceeding $10 million or more, the contractor will be subject to a pre-award compliance evaluation, at OFCCP's discretion.  

Rules Governing Veterans

The affirmative action program requirements under VEVRAA apply to contractors that have at least 50 employees and a contract of at least $100,000. Within 120 days of the commencement of such a contract, the contractor is required to prepare and maintain an affirmative action program at each establishment. The veterans rules contain some, but not all, of the same provisions that OFCCP adopted for individuals with disabilities, as described above.

Hiring Benchmarks. The revised rules require contractors to establish "hiring benchmarks" for protected veterans. Unlike the disability regulations, the veterans rules do not establish a specific numerical benchmark. Rather, they require the contractor to develop the benchmarks annually either based on:

• the national percentage of veterans in the civilian labor force, estimated to be approximately 8 percent; or
• a benchmark developed by the contractor taking into account a variety of factors, including the average percentage of veterans in the civilian labor force in the state where the contractor is located over the preceding three years, as well as the contractor's recent applicant and hiring ratios.

Like the disability utilization goal, the OFCCP clarified that these benchmarks are not to be treated as rigid and inflexible quotas.

Self-Identification. The regulations require contractors to invite applicants to identify themselves as protected veterans. While these rules are similar to the rules for individuals with disabilities, there are two key differences: the pre-offer self-identification can appear on employment application forms, and there is no obligation to seek self-identification from current employees. Importantly, if an applicant identifies as a disabled veteran at the post-offer stage, the contractor should inquire whether an accommodation is necessary.

AAP Development. OFCCP adopted requirements for contractors to develop a veterans affirmative action program, many of which are identical to the requirements for individuals with disabilities.

Internal Dissemination. The regulations require internal dissemination of the contractor's affirmative action policy for veterans through all of the same channels as for individuals with disabilities, except that the veterans regulations do not discuss holding special meetings with employees (although employers must make an effort to inform all employees of their affirmative action commitment to veterans). 

Reasonable Accommodation Processes. The veterans regulations do not address the issue of adopting formal reasonable accommodation processes, although they do repeat the requirement that contractors must reach out to an employee with a known disability who is having performance problems to inquire whether the problem is related to the disability.

Training. The veterans regulations do not contain the same training requirements as the regulations for individuals with disabilities, with the exception of special meetings with executive, management, and supervisory personnel to explain the affirmative action policy and their individual responsibilities for implementation, making clear the CEO's support of the program.

Enforcement. The enforcement provisions are substantially similar to the rules for individuals with disabilities.