On March 24, 2014, new regulations for affirmative action requirements for protected veterans and individuals with disabilities from the Department of Labor's Office of Federal Contract Compliance Programs (OFCCP) took effect. The regulations apply to all businesses that have contracts with the federal government above certain dollar thresholds - some as low as $10,000. These new rules also apply to businesses that have subcontracts with prime federal contractors above the same dollar thresholds.

ABC's Challenge to the Regulations Denied

In November 2013, Associated Builders and Contractors, Inc. ("ABC") filed a lawsuit in United States District Court for the District of Columbia challenging the new regulations specifically with regard to federal construction contractors. On March 21, 2014, the Court rejected ABC's claim and found for the OFCCP on all points. Accordingly, the new regulations took effect as scheduled on March 24 for all federal contractors and subcontractors including those in the construction industry. A copy of the Court's decision can be found here.

What Has Changed?

The new regulations are a significant overhaul of the old regulations. For the first time, all federal contractors and subcontractors will have to collect data and perform analysis of the disability and veteran status of their applicants, new hires and employees. In addition, while the construction industry was previously exempt from much of the OFCCP's requirements due to the fluid and temporary nature of its workforce, under the new regulations, the construction industry is no longer exempt from the data collection, data analysis and goal setting requirements for disability and veteran status.

Specifically, the new regulations include the following significant new burdens for federal contractors and subcontractors including those in the construction industry:

  • A nationwide seven percent utilization goal for disabled individuals and analysis by job group of the contractor's applicants, new hires and employees.
  • A hiring benchmark for veterans based on a) the current national percentage of working veterans (currently 7.2 percent) or b) the contractor's own benchmark based on best available data.
  • Data collection and analysis requirements for veterans and disabled, including the number of veteran and disabled applicants, new hires and employees.
  • A requirement that all federal contractors and subcontractors invite applicants, new hires and employees to self-identify as a covered veteran and an individual with a disability including a requirement that federal contractors and subcontractors invite employees to identify themselves as disabled every five years.
  • Written notice to the state or local employment service with the following information: (1) the listing entity is a federal contractor subject to the Vietnam Era Veterans' Readjustment Assistance Act ("VEVRAA") and is seeking priority referral of protected veterans, (2) the name and location of each hiring location in the state and (3) the contact information for the hiring officer including the identity of any third party search companies.
  • Required notification to subcontractors regarding the company's affirmative action efforts and requesting appropriate action on the subcontractor's part.
  • Required changes to all form subcontracts and purchase orders that are covered by the regulations. Specifically, expanded mandatory EEO clause language in all covered subcontracts and purchase orders explaining that the regulations prohibit discrimination on the basis of protected veteran and disability status and requiring affirmative action to employ and advance veterans and qualified individuals with disabilities.
  • Increased recordkeeping requirements to three years.

A complete copy of the new regulations pertaining to veterans can be found here.

A complete copy of the new regulations pertaining to individuals with disabilities can be found here.