Summary

On November 19, 2013, the Associated Builders and Contractors (“ABC”) filed a lawsuit seeking to prevent the implementation of new federal regulations affecting employers with more than 50 employees and with more than $50,000 in federal government contracts. The new regulations include a 7 percent disabled workforce goal and more stringent employer tracking of employment statistics. ABC has filed for an injunction to prevent the new regulations from taking effect on March 24, 2014.

On September 24, 2013, the Office of the Federal Contract Compliance Programs (“OFCCP”) published new regulations affecting employers of 50 employees or more and who conduct more than $50,000 of annual business with the federal government, by direct contract or subcontract.

The new regulations set more stringent requirements to encourage and monitor the number of disabled employees in the workplace.

The new regulations include:

• 7 percent workforce utilization goal for individuals with disabilities.
• Plans for proactive recruitment and engagement of disabled workers if the 7 percent workforce goal is not met.
• Affirmative Action programs must include “measurable objectives, quantitative analyses, and internal auditing and reporting systems that measure the contractor’s progress toward achieving equal employment opportunity for individuals with disabilities.”
• Job applicants must be invited to voluntarily disclose their disabilities before they receive offers of employment.
• New data collection, analysis and tracking requirements for employees with disabilities.

On November 19, 2013, ABC filed suit in the United States District Court for the District of Columbia seeking to invalidate the new regulations as they apply to the construction industry. A copy of ABC’s complaint can be found here.

In addition to ABC’s legal arguments, including an argument that the new regulations are not permitted by their governing statute, ABC argues that the new regulations should be struck down because: (1) the construction industry is unique in many ways, including the seasonal aspect of the business, which makes it difficult to hire and monitor disabled employees and leads to a wide variety of employees from day to day and project to project; (2) the construction industry’s demands of physical and hazardous labor often make it difficult to hire disabled employees, (3) there already is precedent for the construction industry to be exempt from certain workforce analytics, and (4) many smaller construction companies will move away from government contract work due to their financial inability to meet data collection/analysis and compliance costs.

Saul Ewing’s Construction Practice will monitor and keep the industry updated on whether the court upholds and allows for the implementation of these new regulatory burdens, which will force the construction industry to change its practices as of March 24, 2014. In the event the new regulations are implemented, government contractors will be required to update their staffing plans, subcontractor programs, employee benefits programs, and a host of other employment related plans.