United States: Expanding Compliance Obligations: What Federal Contractors Need To Know About OFCCP's New Disability And Veterans Regulations

Federal government contractors will soon be subject to expansive new affirmative action regulations under the Vietnam Era Veterans' Readjustment Assistance Act ("VEVRAA") and Section 503 of the Rehabilitation Act ("Section 503"). Published on September 24, these new regulations impose, among other things, new hiring benchmarks and utilization goals for veterans and individuals with disabilities. The new regulations will take effect on March 24, 2014. While many provisions will take effect immediately on that date, contractors will not be required to amend affirmative action plans that are then in place; they will, however, have to ensure that affirmative action plans prepared after the effective date comply with the expanded obligations.

Shortly before issuing these regulations, the OFCCP also issued a new, comprehensive compliance manual to guide agency compliance officers in their compliance evaluations and complaint investigations. And, earlier in the year, the agency rescinded its prior guidance on compensation discrimination and issued a new Compliance Directive 307. Given these various developments, federal government contractors would be well advised to thoroughly review their affirmative action and OFCCP compliance efforts and put into place measures to ensure compliance going forward.

Key Provisions of New Regulations

The new regulations impose the following key new requirements on contractors:

Prime contractors will be required to include certain specified language in their subcontracts to make subcontractors aware of their affirmative action and compliance obligations. Lengthy equal opportunity clauses applicable to protected veterans and workers with disabilities are set out in both sets of regulations. Although prime contractors will not be required to include the entirety of these clauses verbatim in their contracts, the clauses must be made part of those subcontracts by referencing VEVRAA by citation to 41 C.F.R. § 60-300.5(a), and Section 503 by citation to 41 C.F.R. § 60-741.5(a). Contracts must also include specific language, set in bold text, stating that these regulations prohibit discrimination against qualified protected veterans and individuals on the basis of disability, and require affirmative action by covered prime contractors and subcontractors to employ and advance in employment qualified protected veterans and individuals with disabilities. For the specific language required, see 41 C.F.R. §§ 60-300.5(d), 60-741.5(d).

While this language is now required, the regulations also state that whether or not the language is physically incorporated into a contract, and whether or not there is a written contract between the agency and the contractor, these clauses will, by operation of law, be considered to be a part of every contract. See 41 C.F.R. §§ 60-300.5(e), 60-741.5(e). In other words, failure to include these clauses in a contract will not absolve subcontracting parties of their responsibility to abide by their terms.

Contractors will be required to establish annual hiring benchmarks for veterans based either on the national percentage of veterans in the workforce as reported annually by the OFCCP (currently 8 percent) or on their own availability estimates derived using the best available data. The VEVRAA regulations state that this new hiring benchmark "is not a rigid and inflexible quota which must be met, nor is it to be considered either a ceiling or a floor for the employment of particular groups." See 78 Fed. Reg. 58613, 58638 (Sept. 24, 2013). Rather, the OFCCP's stated purpose for establishing the benchmark "is simply to provide the contractor a quantifiable means to measure its progress towards achieving equal employment opportunity for protected veterans." See id. at 58639. Nevertheless, the OFCCP estimates that, to meet the 8 percent benchmark, federal contractors will need to hire an additional 205,500 protected veterans.

If contractors determine that the national average is not appropriate for their workplace, the regulations allow them to opt to establish their own hiring benchmark for protected veterans. If a contractor chooses to establish its own benchmark based on its own data, the regulations lay out five factors it must take into account in doing so. These factors are: (i) the average percentage of veterans in the labor force in the state where the contractor is located, as calculated by the Bureau of Labor Statistics; (ii) the raw number of veterans who participated in the employment service delivery system in the state where the contractor is located; (iii) the applicant ratio and hiring ratio for the previous year; (iv) the contractor's recent assessment of the effectiveness of its external outreach and recruitment efforts; and (v) any other factors, including the nature of the contractor's job openings and/or its location, which would tend to affect the availability of qualified protected veterans. See 41 C.F.R. § 60-300.45(b)(2). This last factor in particular allows a contractor flexibility to take into account additional factors it thinks may increase or decrease a reasonable benchmark and to weigh those factors in a reasonable manner. The OFCCP has stated that "[s]o long as the contractor adequately described and documented the factors it took into account, it would comply with the § 60-300.45 requirement." See 78 Fed. Reg. at 58638.

Thus, contractors are required to document the hiring benchmark they establish and retain this data for three years. Failure to implement a benchmark will be considered a violation and could lead to an enforcement action. The OFCCP has explained, however, that a contractor will not be subject to an enforcement action or additional affirmative action obligations based "solely" on its failure to meet the hiring benchmark. See id. Rather, the agency will "expect that as part of its annual recruitment and outreach assessment, the contractor would assess why it did not meet the benchmark and adjust its recruitment efforts for the following year based on what it has learned." See id.

Contractors will be subject to a 7 percent utilization goal for employment of qualified individuals with disabilities for each job group or, for smaller employers, for the entire workforce. OFCCP derived its 7 percent utilization goal by combining estimates of the current representation of individuals with disabilities in the workforce (5.7 percent) with an estimate of what the OFCCP deems to be the discouraged worker effect (estimated at 1.7 percent). Although OFCCP states that the "utilization goal," like VEVRAA's "hiring benchmark," is not an inflexible quota that must be met but, rather, "serves as an equal employment opportunity objective that should be attainable by complying with all aspects of the affirmative action requirements of this part," OFCCP also states that it expects that to meet this utilization target, government contractors will have to hire an additional 600,000 people with disabilities. See 78 Fed. Reg. 58684, 58708 (Sept. 24, 2013).

The OFCCP denies that the utilization goal will require "disability-based decision making," and insists that it should instead be used as a tool to measure the effectiveness of the contractor's employment practices as they relate to equal employment opportunity for qualified individuals with disabilities. Id. The regulations explicitly state, and the OFCCP has reiterated, that a contractor's failure to meet this goal will not result in any violation and does not in and of itself constitute either a finding or admission of discrimination. See id.; 41 C.F.R. § 60-741.45(g). However, the regulations make clear that if the utilization goal is not met, the contractor will have to take steps to determine whether and where impediments to equal opportunity exist and must develop and execute action-oriented programs designed to correct any identified problem areas. See 41 C.F.R. § 60-741.45(e), (f). Because this is not merely a hiring benchmark but a goal relating to the utilization of individuals with disabilities, contractors will need to evaluate not only their recruiting and hiring practices but also their retention of individuals with disabilities. Thus, contractors should be aware that failure to reach the 7 percent utilization goal may implicate their responsibility to take concrete steps to address the discrepancy and may lead to heightened scrutiny by the agency.

Contractors are to invite applicants to self-identify as protected veterans or individuals with disabilities at both the pre-offer and post-offer phases of the application process. The VEVRAA regulations require contractors to invite applicants to self-identify pre-offer as a "protected veteran" and then to invite a successful applicant to inform the employer whether he or she believes that he or she belongs to one or more of the specific categories of protected veterans (e.g., disabled veteran, Armed Forces service medal veteran, recently separated veteran, or active duty wartime or campaign badge veteran). The Section 503 regulations similarly require contractors to invite applicants to self-identify as an individual with a disability at both the pre- and post-offer phases of the application process, using language provided by the agency.

OFCCP has stated that it intends for the data provided through self-identification to enable the contractor and the OFCCP to measure the effectiveness of the contractor's recruitment and affirmative action efforts over time, and thereby identify and promote successful recruitment and affirmative efforts taken by the contractor community. See, e.g., 78 Fed. Reg. at 58627.

Many individuals and organizations that commented on these proposed rule changes, however, expressed concern that such invitations to self-identify were not legally permissible under the Americans with Disabilities Act ("ADA") and its respective regulations, which limit the extent to which employers may inquire about disabilities prior to an offer of employment. The OFCCP's position is that the ADA's affirmative action exception clearly allows the type of pre-offer self-identification proposed by the new regulations. Specifically, OFCCP points to the ADA and Section 503 regulations that state that a contractor may conduct a pre-offer inquiry into disability status if it is "made pursuant to a Federal, state or local law requiring affirmative action for individuals with disabilities," such as Section 503 or VEVRAA. See 78 Fed. Reg. at 58627 (citing 29 C.F.R. §§ 1630.13, 1630.14; 41 C.F.R. § 60-741.42). In defending this position, the OFCCP relies in part on a letter obtained from EEOC's Office of Legal Counsel, which affirmed that a requirement to invite pre-offer self-identification of disability is permissible under the ADA and its regulations. See 78 Fed. Reg. at 58627 n.19.

With respect to commenters' additional concern that obtaining information about the disability status of an applicant could potentially expose contractors to claims of discrimination by disappointed job seekers, OFCCP stated that although knowledge is a component of an intentional discrimination claim, it must also be proven that the contractor treated the person less favorably because of his or her disability. See 78 Fed. Reg. at 58623. In addition, OFCCP points out that generally, self-identification information would be obtained by and would reside with human resources offices and will not be provided to interviewing, testing, or hiring officials, as it is confidential information that must be kept separate from regular personnel records, which will help ensure that these officials do not, in fact, have knowledge of which applicants have chosen to self-identify as having a disability. See id.

The regulations make clear that all self-identification information must be kept confidential and that disability demographic information must be maintained in a data analysis file, not with an individual's application or in an individual's personnel file. Thus, with regard to veterans, the contractor is required to maintain a separate file on persons who have self-identified as disabled veterans.

Finally, the new Section 503 regulations add the requirement that employers invite employees to voluntarily self-identify every five years and to remind employees between these invitations that they may change their disability status at any time. Contractors will be required to make these invitations by using a new OFCCP form that will be posted on the OFCCP website.

VEVRAA regulations require contractors to list their job openings with appropriate state or local job services and do so in a manner that complies with the mandatory job listing requirements of the Equal Opportunity clause detailed in the regulations. State and local job service agencies, referred to in the new regulations as "employment service delivery systems," are required by statute to refer qualified protected veterans to fill employment openings listed by contractors. See 41 C.F.R. § 60-300.2(j). The new VEVRAA regulations require that contractors not only list job openings with those services but that they do so "in any manner and format" that the appropriate employment service permits that will allow it to provide priority referrals to the contractor. See 41 C.F.R. § 60-300.5(a)(2). In addition, the Equal Opportunity clause found in the regulations mandates that contractors now provide to the employment service not only the name and location of each of the contractor's hiring locations but also the contact information for the hiring official in each location in the state, its request for priority referral, and its status as a federal contractor.

Both sets of regulations impose new data collection obligations so contractors (and the OFCCP) will know the number of veterans and individuals with disabilities who have applied and been hired each year. For both sets of regulations, contractors must now, on an annual basis, document (i) the number of applicants who self-identify as protected veterans or individuals with disabilities, or who are otherwise known to be protected veterans or individuals with disabilities; (ii) the total number of job openings and total number of jobs filled; (iii) the total number of applicants for all jobs; (iv) the number of protected veteran applicants and applicants with disabilities hired; and (v) the total number of applicants hired. These computations and comparisons must be maintained for a period of three years. See 41 C.F.R. §§ 60-300.44(k), 60-741.44(k).

Both sets of regulations clarify that contractors must allow OFCCP access to their records on- or off-site and that the OFCCP may seek data beyond the current plan year. The new regulations require contractors to retain certain records for three years and to provide OFCCP access to any documents or records or to any other material the agency deems relevant to a compliance check or complaint investigation. In addition, contractors must now provide off-site access to materials if OFCCP so requests, and they must inform OFCCP of all formats in which records are maintained and provide those records to the agency in whichever of those formats OFCCP requests. The regulations clarify that contractors' records will be treated as confidential to the extent permitted by the Freedom of Information Act. See 41 C.F.R. §§ 60-300.81, 60-741.81.

Both sets of regulations contain "best practices" that contractors should note. Finally, in response to the many comments OFCCP received, the agency "dropped" as requirements some of the more controversial provisions from the final regulations. However, OFCCP included some of these same provisions as "best practices." For example, in the disability regulations, OFCCP dropped its proposed requirement that the contractor enter into linkage agreements with three different entities and list employment opportunities with certain organizations. Instead, the regulation now provides a number of "suggested resources." 41 C.F.R. § 741.44(f)(2). A similar provision appears in the VEVRAA regulations. 41 C.F.R. § 60-300.44(f)(2). OFCCP also dropped from the final disability regulations a provision requiring contractors to develop and implement written procedures for processing requests for reasonable accommodation. OFCCP decided not to incorporate this proposal in the final rule but instead included it as a best practice and added a new Appendix B titled "Developing Reasonable Accommodation Procedures." Contractors would be well-advised to review these sections as compliance officers will undoubtedly assess their compliance with these provisions in mind even though they are not requirements.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Brian Jorgensen
 
In association with
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Emails

From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

*** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.