Disability Advocates Cheer OFCCP Rules; Employer Groups Cite Costly Requirements

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By Kevin P. McGowan  

Organizations representing people with disabilities cheered the Labor Department's Aug. 27 announcement of final rules on federal contractors' affirmative action obligations toward workers with disabilities and protected veterans, while employer representatives cited some improvements from DOL's proposed rules but still anticipate increased costs for contractors.

DOL's Office of Federal Contract Compliance Programs for the first time will require federal contractors to set and meet numerical goals for employing persons with disabilities and certain classes of military veterans under final rules implementing Section 503 of the Rehabilitation Act and the Vietnam Era Veterans' Readjustment Assistance Act (166 DLR AA-1, 8/27/13).

The rules, which also include new data collection and recordkeeping requirements for contractors, would take effect 180 days after publication in the Federal Register.

Disability rights organizations applauded the Obama administration's effort to spur more recruitment, hiring, and advancement of workers with disabilities, but some employer organizations criticized the rules as a misguided effort that will increase burdens on contractors while not necessarily benefiting persons with disabilities and protected veterans.

Employer Group Warns of Litigation

The HR Policy Association, a Washington, D.C., group representing chief human resource officers at large employers, said the final rules replace “good faith” affirmative action standards with a “rigid numerical system” and compel employers potentially to invade the privacy of job applicants and employees by asking them to self-identify as persons with disabilities.

Given apparent conflicts between DOL's new rules and the Americans with Disabilities Act, the HR Policy Association said it is “weighing action in the federal courts to enjoin the rules as a last resort.”

“Simply mandating a numerical 'goal' for all jobs in all contractors' workplaces and then requiring employers to invade the privacy of applicants and employees with questions about their physical and mental condition destroys everything companies have done to integrate individuals with disabilities into the workforce in a sensitive, discreet manner,” Daniel V. Yager, president and chief executive officer of the HR Policy Association, said in an Aug. 27 statement.

“The last thing the association wants to do is take legal action in this area but we will do so if it is necessary to preserve the ability of our members to comply with the law and maintain, refine, and expand their current efforts,” Yager said.

In an Aug. 28 interview with BNA, Yager said although legal action is “clearly an option” being considered, “it's not something we want to do” given that the HR Policy Association shares OFCCP's goals of nondiscriminatory and inclusive workplaces.

A decision to litigate would turn on how extensive the rules' burdens on contractors prove to be, the reactions of federal contractors to the new rules, and “what are our chances of success” in the courts, Yager told BNA.

Given apparent conflicts between DOL's new rules and the Americans with Disabilities Act, the HR Policy Association said it is “weighing action in the federal courts to enjoin the rules as a last resort.”  

Another option is to see how OFCCP enforcement plays out and whether a 7 percent utilization benchmark for persons with disabilities, for example, proves to be a “soft goal” or becomes an effective quota, Yager said.

In response to an OFCCP inquiry, the Equal Employment Opportunity Commission recently issued an opinion letter, now posted on OFCCP's website, indicating that compliance with a Labor Department regulation that requires contractors to invite job applicants to self-identify as persons with disabilities for affirmative action purposes “cannot violate Title I of the ADA.”

Yager said EEOC's letter affords some relief to contractors, but he added the ADA's “plain language” still seems to prohibit such employer inquiries and individuals as well as EEOC can sue to enforce the ADA.

Construction Industry Objections

Associated Builders and Contractors, also based in Washington, D.C., said OFCCP's final rules would “drastically alter” federal contractors' existing nondiscrimination and affirmative action obligations.

“Despite OFCCP's inability to demonstrate federal construction contractors' failure to meet requirements under existing federal law, the new rules contain numerous burdensome data collection and reporting provisions and set infeasible compliance requirements,” said Geoff Burr, ABC's vice president of government affairs.

In an Aug. 27 statement, Burr said studies indicate persons with disabilities and veterans already are “appropriately represented in the federal contracting sector,” but under the new rules, “contractors will be saddled with incredibly expensive recordkeeping obligations that will do nothing to increase employment of these individuals.”

“ABC has serious legal and practical concerns with [OFCCP's] new rules, and will explore avenues to challenge the rules in federal court,” Burr said.

Employers See Some Improvements

The Equal Employment Advisory Council, an employers' association in Washington, D.C., believes both final rules represent a “very substantial change” in OFCCP's approach toward affirmative action that will result in “significant” costs for contractors, said Michael Eastman, EEAC's vice president of public policy.

But OFCCP's final rules also include changes from the original proposals that will make compliance easier than contractors had originally feared, Eastman told BNA Aug. 28.

For example, the final rules drop a requirement that federal contractors must show multiple “linkage agreements” with disability or veterans' employment organizations, Eastman said. The Section 503 final rule eliminates OFCCP's earlier proposal that contractors have written reasonable accommodation plans and drops a “build a file” requirement for workers with disabilities and protected veterans in both proposed rules, Eastman said.

EEAC believes the rules still place significant new burdens on contractors, for example, in the costs of revising their human resources and information technology systems to track new data, Eastman said.

But he said given OFCCP's changes in response to comments on the proposed rules, employer groups may want to “digest them a little bit” before initiating a legal challenge to the final rules.

Putting Some Teeth in Rehabilitation Act

Meanwhile, disability rights groups hailed the Obama administration for issuing the final regulations, which they said could put some real teeth into the Rehabilitation Act's promise of greater employment opportunities for persons with disabilities.

“President Obama has once again demonstrated his historic commitment to creating equal economic opportunity for Americans with disabilities, who for too long have experienced widespread discrimination in the workplace,” said Mark Periello, president and chief executive officer of the American Association of People with Disabilities in Washington, D.C.

AAPD noted that more than 20 years after passage of the ADA, people with disabilities have a workforce participation rate of only 20.3 percent and the unemployment rate of persons with disabilities in the workforce stands at 14.7 percent, nearly double the overall unemployment rate.

Although the Rehabilitation Act was enacted 40 years ago, federal contractors previously were required only to make “good faith” efforts to hire people with disabilities, AAPD said. The new Section 503 regulations, including the employment benchmarks and data collection and recordkeeping requirements, will improve federal contractor accountability, AAPD said Aug. 27.

The National Organization on Disability, a nonprofit group based in New York, applauded the combination of the new VEVRAA and Section 503 regulations in an Aug. 27 statement.

“We applaud the Obama administration for elevating employment of people with disabilities--the nation's largest minority group, which includes a growing number of veterans--to the level of women and racial and ethnic minorities,” said NOD President Carol Glazer. “I feel confident in saying that the hurdles for employers will not be a difficult threshold. And there are many organizations in the disability field who stand prepared to help companies meet these goals.”

“President Obama has once again demonstrated his historic commitment to creating equal economic opportunity for Americans with disabilities, who for too long have experienced widespread discrimination in the workplace,” said Mark Periello of the American Association of People with Disabilities.  

Glazer cited a recent Harris survey, conducted in partnership with the Kessler Foundation, that found a “great majority” of employers report an average of 3 percent of their workforces already consists of persons with disabilities.

She suggested that is “probably an underestimation,” as employers are not routinely tracking that statistic, but that under the new regulations federal contractors will begin to do so.

Glazer decried as “simply unacceptable” that nearly eight in 10 Americans with disabilities remain outside the workforce, which she said demonstrates that prohibiting discrimination is not the same as “incentivizing hiring.”

“I'm encouraged by the notion that the work of recruiting this largely untapped talent pool on a larger scale can truly begin, and I think that American industry can benefit from the considerable talents that people with disabilities possess,” Glazer said. “A diverse workforce that includes people with disabilities and veterans makes good business sense.”

Text of EEOC's opinion letter sent to OFCCP is available at http://op.bna.com/dlrcases.nsf/r?Open=kmgn-9azrr4.