Contractors: Keep Disability Status and Gig Economy Workers on Compliance Radar

Gig Econ_Disability

Certain bread-and-butter compliance activity will likely remain untouched by the new leadership at the Labor Department’s Office of Federal Contract Compliance Programs.

For instance, inviting job applicants and employees to disclose their disability status and determining whether gig economy workers need to be counted as employees for affirmative action purposes are issues that federal contractors need to be mindful of, according to recent webinars addressing OFCCP compliance matters.

Disability-Status Inquires Are Difficult

A Cornell University survey shows that contractors have difficulty getting applicants and employees to voluntarily self-identify as individuals with a disability, which is a relatively new practice introduced under revised regulations implementing Section 503 of the Rehabilitation Act of 1973.

Around 37 percent of contractors indicated that more than 80 percent of their employees had completed the self-identification form on disability status, while one-third of the survey respondents reported that 30 percent or fewer of the company’s employees had completed the form.

The online survey was conducted in September and October 2017 by the K. Lisa Yang and Hock E. Tan Institute on Employment and Disability at Cornell University's School of Industrial and Labor Relations. It included 235 federal contractors, with 45 percent of the respondents representing organizations with 5,000 or more employees, and 30 percent representing companies with 500 or fewer employees.

“The purpose of the survey was to understand the initial impact of these recently updated 503 regulations on federal contractors’ practices related to disability,” said Susanne Bruyère, director at the institute, during a May webinar on the survey’s findings.

Glimpse Into Revised Disability Rules

The revised Section 503 rules took effect in March 2014. They require federal contractors to invite job applicants to voluntarily self-identify as disabled at the pre- and post-offer phases of the hiring process. Contractors also have to provide current employees the opportunity to voluntarily self-identify as individuals with a disability every five years.

Employers must then analyze the collected data on disability status to determine whether they meet a 7 percent utilization goal for disabled individuals in each job group of their workforce. If a contractor establishment has fewer than 100 employees, the 7 percent goal applies to its entire workforce.

Change Disability Inclusion Practices, Policies

According to the survey, 15 percent of respondents said that their organization had met or exceeded the 7 percent utilization goal. However, nearly 50 percent of respondents indicated that the utilization rate at their organization was 2 percent or less.

“It’s been about three years since the initiation of the Section 503 regulations. The results of this survey suggest that the revised regulations have already had an important impact,” said Sarah von Schrader, assistant director of research at the institute. The survey found that over 88 percent of respondents had changed their affirmative action goals and targets on employing people with disabilities because of the revised regulations.

Federal contractors are responding to the regulatory changes by implementing disability inclusion policies and practices, said von Scharder. “Many believe that these efforts are going to lead to an increase in employment of individuals with disabilities in their organization, which is really the ultimate objective” of the Section 503 rules.

Raise Disability Self-ID Rates

The most common challenge with implementing the revised Section 503 regulations was the self-identification requirement to invite individuals to disclose disability status, according to the survey.

“Organizations clearly struggle with getting employees to self-identify,” von Schrader said. One reason cited by the respondents was that it was difficult to build trust so that job seekers and employees felt comfortable with sharing their disability status, she added.

To encourage self-identification, contractors rely on various options. For example, the most common practice cited by contractors was to make the self-identification form available when employees update personal information. However, only 16 percent of respondents said they made the form part of the annual open enrollment process.

Does Affirmative Action Include Gig Workers?

Federal contractors that rely on gig economy workers may have to start thinking strategically and deeply about who counts as an employee for affirmative action purposes, said Lynn Clements, director of regulatory affairs for Berkshire Associates Inc. in Columbia, Md., during an April webinar sponsored by DirectEmployers Association in Indianapolis.

The question of who is included in the written affirmative action plan (AAP) is fundamental to the OFCCP’s mission of enforcing its regulations on nondiscrimination and affirmative action compliance, she said. Therefore, the issue of contingent workers may come up during a compliance audit.

The gig economy is broader than just companies, such as Uber, that offer app-based services. It represents an economic sector that offers alternative work arrangements, and this segment of the labor force includes part-time, temporary, freelance, contingent, contractor, and visa-status workers.

Think About Employment Relationship

Yet determining if a worker is an employee subject to the company’s AAP is “a very fact-specific inquiry,” Clements said. The OFCCP regulations require that all employees be included in the AAP, but they don’t define the term employee.

However, the agency’s internal guidance addresses the issue, instructing compliance auditors to assess employee status through the common-law agency test known as the Darden analysis, which is named after the U.S. Supreme Court’s 1992 decision.

The analysis is a multifactor assessment to decide if a business controls the manner and means of an individual’s work. The contractor must consider, among other things, skills required for the job, method of payment, location of the work, and the duration of the working relationship. The agency will assume that the contractor has analyzed all of the Darden factors to determine employees who are subjected to the AAP.

It’s important that government contractors assess the set of facts surrounding the employer-employee relationship because a small change in those facts could potentially alter whether the company moves forward in presenting gig economy workers in their AAPs or not, said Clements.

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