On August 27, 2013, the U.S. Department of Labor announced new
final regulations under the Vietnam Era Veterans Readjustment
Assistance Act of 1974 (VEVRAA) and Section 503 of the
Rehabilitation Act of 1973, two laws that impose nondiscrimination
and affirmative action requirements on covered federal contractors.
The new regulations expand existing recordkeeping, data-collection,
and affirmative action requirements for contractors with respect to
the hiring and employment of protected veterans and disabled
workers and include, for the first time, numerical utilization
goals for the employment of individuals with a disability and
numerical benchmarks for the hiring of protected veterans. The new
requirements regarding disabled workers are similar to existing
requirements regarding the employment of women and minorities under
Executive Order 11246. All three laws, VEVRAA, Section 503, and
Executive Order 11246, are enforced by the Office of Federal
Contract Compliance Programs (OFCCP), a division of the U.S.
Department of Labor.
These regulations were first proposed in 2011, but were delayed in
their final publication in response to public comments and other
push-back by contractor groups. Their release at this time is
viewed as an indication of an aggressive agenda on workers'
rights by newly appointed Secretary of Labor Thomas Perez. In its
press release regarding the regulations, the Department explains
that the rules are intended to reduce barriers to employment
opportunities for protected veterans and individuals with a
disability. Federal contractor groups have warned, however, that
the new regulations will burden contractors with significant
additional compliance costs.
Highlights of the New Regulations
Under the new disability rules, covered federal contractors must
for the first time invite applicants to self-identify their
disability status at the time of application and must prepare
annual quantitative comparisons for the number of individuals with
disabilities who apply for jobs and the number who are hired.
Contractors must also collect, compile, and maintain additional
records regarding outreach efforts and analyze the effectiveness of
those efforts annually. The new veteran regulations require similar
documentation, data collection, and analysis for protected
veterans. Contractors must maintain the data and records
regarding their hiring and outreach efforts for a period of
three years.
Affirmative action plans for veterans must include a hiring
"benchmark" for protected veterans, and those for
disabled workers must include a utilization analysis for each job
group. While the rules do not set quotas for employment of either
protected group, they establish a utilization "goal" of
seven percent for disabled workers and a hiring benchmark for
protected veterans that initially is either eight percent or a
different percentage calculated in light of several factors set
forth in the new rules. Failure to reach these percentages does not
establish a violation of the law, but may invite increased scrutiny
of a contractor's efforts with regard to recruitment and
hiring. Noncompliance with the regulations can lead to withholding
of contract payments and debarment from future contracting for up
to three years.
Practical Implications
The new regulations become effective 180 days following their publication in the Federal Register, which is expected to occur by early September. Contractors with affirmative action plans in place on the effective date do not have to come into compliance with the new regulations until the anniversary date when their plans are due for renewal and updating. Nevertheless, given the extensive new recordkeeping burdens and the costs that are likely to be incurred in complying with the additional requirements, federal contractors covered by VEVRAA and Section 503 should review existing recruitment efforts, hiring practices, and affirmative action plans now and consider what changes will be necessary to comply with the new regulations.
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