Today, the Office of Federal Contract Compliance Programs (OFCCP) published two long-awaited final rules in the Federal Register. The final rules significantly change the regulations implementing the Vietnam Era Veterans’ Readjustment Assistance Act (VEVRAA), at 41 CFR Part 60-300, and Section 503 of the Rehabilitation Act of 1973 (Section 503), as amended at 41 CFR Part 60-741. The OFCCP revised VEVRAA and Section 503’s regulations to strengthen contractor’s affirmative action and nondiscrimination obligations due to the disproportionately high number of unemployed veterans and individuals with disabilities. The final rules largely resemble the earlier-proposed versions; nonetheless, the OFCCP has stated that it tried to loosen the rules’ obligations in light of the hundreds of comments it received from contractors, veterans organizations, and disability rights organizations. These final rules require federal contractors and subcontractors to take affirmative action to recruit, hire, promote, and retain protected veterans and individuals with disabilities. Although not exhaustive, below are the key highlights of the recently issued final rules.
Key Feature of the Final Rule for Protected Veterans
- Hiring Benchmarks: Changes to VEVRAA’s regulations require contractors to establish annual hiring benchmarks. This hiring benchmark assesses the effectiveness of the contractor’s effort to recruit and employ protected veterans. Contractors can establish their benchmark by using one of two methods. Contractors may choose to establish a benchmark equal to the national percentage of veterans in the civilian labor force, currently at eight percent (8%), or establish their own benchmark. When contractors create their own benchmark, however, they must consider: (1) the data from the Bureau of Labor Statistics and Veterans’ Employment and Training Service; (2) the applicant and hiring ratio for the previous year; (3) the contractor’s assessment of outreach and recruitment efforts; and (4) any other factors that would affect the availability of qualified protected veterans, such as the nature of job openings or its location. Both methods require contractors to document their hiring benchmark. In addition, if a contractor establishes its own benchmark, it must document and explain each factor it considered in establishing its benchmark and maintain records related to the hiring benchmark for three years.
Key Feature of the Final Rule for Individuals with Disabilities
- National Utilization Goal: The Section 503 revised rule establishes a national seven percent (7%) utilization goal, which measures the contractor's success of hiring individuals with disabilities. Contractors are required to apply and annually assess the utilization goal in each job group, or the contractor’s entire workforce when it has 100 or fewer employees. When a contractor’s job group or entire workforce falls below the national utilization goal, it must assess its personnel processes, the effectiveness of its outreach and recruitment efforts, and the results of its affirmative action program audit to determine whether impediments to equal employment opportunity exist. To correct identified problems, contractors must develop and execute action-oriented programs. It is important to note, however, that non-attainment of the utilization goal is neither an admission nor a finding of discrimination.
Similar Changes Under the Final Rules for Both Protected Veterans and Individuals with Disabilities
- Self-Identification: The final rules require contractors to invite applicants to disclose whether they self-identify as a protected veteran or as an individual with a disability during the pre-offer and post-offer stages of the application process. These invitations must use language prescribed by the OFCCP or the final rule. The pre-offer invitation may be included in the application materials, but must be provided to applicants prior to making an offer of employment. Because the Internet Applicant Rule under Executive Order 11246 allows contractors to screen out individuals who do not meet basic qualifications prior to collecting demographic data, the OFCCP will permit contractors to invite applicants to self-identity after meeting an initial qualification screening. Contractors are required to keep all information on self-identification confidential and must provide the information to the OFCCP upon request.
- Data Collection: To measure outreach and recruitment efforts under the final rules, contractors must annually document the number of veterans or individuals with disabilities who applied for jobs and the number of veterans and individuals with disabilities who were hired. Contractors are required to maintain these documented comparisons for three years to notice trends.
- Incorporation of the Equal Opportunity Clause: Under the final rules, contractors are permitted to incorporate by reference the Equal Opportunity (EO) Clause into its subcontracts. To alert subcontractors of their responsibilities as federal contractors, prime contractors must provide the EO Clause’s citation and certain mandated language in bold text.
- Record Access: The final rules further require that contractors allow the OFCCP, at its discretion, to review documents as part of a compliance check or focused review either on-site or off-site.
The final rules will take effect on March 24, 2014. Contractors with written affirmative action programs (AAPs) already in place do not have to change their AAPs during the middle of the plan year. For example, contractors with January plan years will not have to comply with most of the regulatory changes until January 2015. Contractors are encouraged, however, to start updating their affirmative action practices as soon as possible to come into compliance with the requirements of the final rules.