OFCCP Announces Big Changes for Federal Contractors’ Affirmative Action Obligations

McCarter & English, LLP

How will the new rules impact your business as a government contractor?

The U.S. Department of Labor Office of Federal Contract Compliance Programs (OFCCP) just announced sweeping changes to the rules for federal government contractors that are required to prepare and maintain affirmative action plans for veterans and individuals with disabilities.  The final rules expand contractors’ current obligations for maintaining a written affirmative action plan and impose new requirements for data collection and reporting on applicants, new hires and existing employees and the setting of benchmarks and goals for the hiring of protected veterans and individuals with disabilities.

The Final Rule under Section 503 of the Rehabilitation Act establishes a nationwide 7% utilization goal for qualified individuals with disabilities.  Contractors will be required to apply the goal to each job group, or the entire workforce if it has 100 or fewer employees.  Data will have to be collected for applicants and new hires to identify individuals with disabilities and to perform certain annual analyses comparing applicants with new hires as well as a utilization analysis of the current workforce.  Contractors will be required to establish specific action-oriented programs to address underutilization or issues identified in the hiring process.

The Final Rule under the Vietnam Era Veterans’ Readjustment Assistance Act is aimed at improving job opportunities for protected veterans and focuses on application and hiring statistics.  Changes include the setting of annual hiring benchmarks for protected veterans based on data published by the Bureau of Labor Statistics and the OFCCP.  Similar to the new rule for individuals with disabilities, contractors will have to collect data from applicants and new hires regarding their veteran status and perform analyses to compare application and hiring statistics.  

Under both rules, employers will be required to invite applicants for employment to self-identify as individuals with disabilities and/or protected veterans at both the pre-offer and post-offer phases of the hiring process, using language that will be provided by the OFCCP.  Currently, contractors are only required to ask applicants to self-identify based on gender and race, so self-identification forms will have to be revised once the OFCCP releases the required language.

The new rules will be effective 180 days after being published in the Federal Register, giving contractors approximately six months to implement the changes.  Employers will have to incorporate the new requirements into their affirmative action programs for veterans and individuals with disabilities beginning with the plan year following the effective date of the regulations.  Compliance with other parts of the rules will be required on the effective date, and contractors should begin updating systems to collect and process the data that will be required to prepare new plans.

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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