On March 21, 2014, in Associated Builders & Contractors, Inc. v. Shiu, the U.S. District Court for the District of Columbia reached a seminal decision in a case challenging a final rule promulgated by the U.S. Department of Labor’s Office of Federal Contract Compliance Programs (OFCCP). The rule, which is scheduled to go into effect on March 24, 2014, implements new regulations under section 593 of the Rehabilitation Act, which requires that government contractors “take affirmative action to employ and advance in employment qualified individuals with disabilities.”

The federal district court considered three challenges brought against the rule by Associated Builders & Contractors, Inc. (ABC), a trade association representing construction-industry firms. According to ABC, portions of the rule should be enjoined because, (1) OFCCP exceeded its section 503 authority in promulgating the rule; (2) the rule is arbitrary and capricious; and (3) the rule does not comply with the Regulatory Flexibility Act. The court rejected these arguments and denied the trade association’s motion for summary judgment.

Practical Impact

The ease with which the court in this case dealt with the alleged Americans with Disabilities Act (ADA) conflict and the 7 percent utilization goal estimate is surprising. But the battle is not over yet. We are likely, of course, to see ABC appeal this decision, although any requested stay should apply only to construction contractors. Most federal contractors (both supply and service and construction) have been diligently preparing for the new section 503 regulations and are anticipating working cooperatively with OFCCP to ensure compliance and inclusion of qualified individuals with disabilities into their workforces.