New Regulations Create New Obligations for Federal Contractors

Beginning sometime this winter, companies that are federal contractors will have to track, recruit, and/or hire veterans and disabled individuals.  The U.S. Department of Labor (“DOL”) announced this week that the Office of Federal Contract Compliance Programs (“OFCCP”) will be publishing regulations in the Federal Register, perhaps as soon as mid-September.  These new regulations will put in place certain requirements under the Vietnam Era Veterans’ Readjustment Assistance Act (“VEVRAA”) and Section 503 of the Rehabilitation Act, which covers disabled workers.  The rules will go into effect 180 days after their publication in the Federal Register.

What will the new regulations require?
Here’s a brief summary:

VEVRAA:  Under the new regulations, federal contractors must adopt an annual “benchmark” for the hiring of veterans, based on either the national percentage of veterans in the workforce (8%) or their own measurement, the Bureau of Labor Statistics and Veterans’ Employment and Training Service/Employment and Training Administration calculations, which will be also be published by OFCCP, and/or other factors that reflect the contractor’s unique hiring circumstances.  Contractors will also be required to document the number of veterans who apply for jobs and the number of veterans they hire, and update this data annually, in order to assess the effectiveness of their outreach and recruitment efforts.  Contractors must ask applicants to self-identify as protected veterans at both the pre-offer and post-offer phases of the application process.  Specific language will also be required when incorporating the equal opportunity clause into a subcontract by reference.  There are other, technical requirements as well.  You can access the DOL’s summary of the rule at www.dol.gov/ofccp/regs/compliance/vevraa.htm.

Section 503:  The new regulations establish a nationwide 7% “utilization goal” for qualified individuals with disabilities (IWDs), and incorporates the changes to the Americans with Disabilities Act’s definition of disability into Section 503.  Contractors are required to apply the goal to each of their job groups, or to their entire workforce if the contractor has 100 or fewer employees and to conduct an annual utilization analysis and assessment of problem areas, in addition to establishing specific, action-oriented programs to address any identified problems.  As with the VEVRAA Rule, contractors will be required to document the number of IWDs who apply for jobs and compare that to the number hired, so that they can measure the effectiveness of their outreach and recruitment efforts, and IWDs will be invited to self-identify at both the pre- and post-offer phases of the application process.  In addition, contractors must invite all of their employees to self-identify as IWDs every five years.  The OFCCP website will provide the required language for this invitation.  And, as with VEVRAA, specific language will also be required when incorporating the equal opportunity clause into a subcontract by reference and there are other, technical requirements as well.  You can access the DOL’s summary of this new rule at www.dol.gov/ofccp/regs/compliance/section503.htm.

Contractors must be in compliance with most of the requirements no later than the effective date, but affirmative action plans have some breathing room.  Written affirmative action plans are covered under Subpart C of the new rules, and contractors with existing affirmative action plans in place at the time that the regulations become effective are permitted to delay compliance regarding written plans until the start of their next affirmative action plan cycle.  The OFCCP is supposed to be providing technical assistance to contractors to help with this change.

The OFCCP advises that federal contractors should begin updating their employment practices and information technology systems now so that they can come into compliance on written affirmative action plans as soon as possible.

As far as implementation is concerned, employers who are affected by these new regulations should note that the new veterans hiring benchmark applies only to their workforce as a whole, not to individual job groups.  And, as noted above, the rule requiring contractors to recruit and hire IWDs to a level equal to 7% of their workforce only applies to individual job groups if an employer has more than 100 employees.  For employers with 100 or fewer employees, the 7% figure can be applied to the workforce as a whole.  This means that smaller employers will not be required to do disability analyses by job group.  But those are small concessions.  Employers who are federal contractors should plan now for compliance with these new, onerous requirements.

As always, if you have any questions, we encourage you to contact the attorneys at Skoler, Abbott & Presser.

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