OFCCP Announces ‘Historic' Final Rules On Contractor Hiring of Veterans, Disabled

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By Jay-Anne B. Casuga  


Federal contractors and subcontractors for the first time must adopt quantifiable hiring goals for individuals with disabilities and hiring benchmarks for military veterans, according to final rules announced Aug. 27 by the Labor Department's Office of Federal Contract Compliance Programs.

OFCCP's final regulations under Section 503 of the Rehabilitation Act (41 C.F.R. part 60-741) require contractors to establish a nationwide 7 percent utilization goal for disabled individuals in each job group of their workforce, as first suggested by the agency in a December 2011 proposed rule (29 HRR 1323, 12/12/11). If a contractor has less than 100 employees, the final rule requires the 7 percent goal to be applied to the entire workforce.

In addition, OFCCP's final rules under the Vietnam Era Veterans' Readjustment Assistance Act (41 C.F.R. part 60-300) provide two methods for contractors to establish hiring benchmarks for veterans based on either “the current national percentage of veterans in the workforce,” which currently stands at 8 percent, or “their own benchmark based on the best available data.” OFCCP's April 2011 proposed rule did not include the 8 percent benchmark (29 HRR 459, 5/2/11).

Both sets of final rules retain a number of new data collection, outreach, recruitment, and self-identification requirements regarding individuals with disabilities and veterans that were introduced in OFCCP's 2011 notices of proposed rulemaking. But they also eliminate several proposals found in the NPRMs.

OFCCP Director Patricia A. Shiu Aug. 27 called the final rules “historic,” and said they should be published in the Federal Register “within the next 10 days or so.” The rules, which she said will apply to about 200,000 federal contractor establishments, will go into effect 180 days after publication.

By providing “specific metrics to measure federal contractors' progress for achieving equal opportunity” for veterans and individuals with disabilities, Shiu said the rules will ensure “that qualified workers have meaningful opportunities to find good jobs.”

Labor Secretary Tom Perez Aug. 27 described the final regulations as a “win-win.” He said they benefit disabled individuals and veterans by providing them with an opportunity to succeed, benefit employers by increasing their access to a “large diverse pool of qualified workers,” and benefit the nation by fulfilling the American promise of “equal opportunity for everyone.”

Shiu Calls Goals 'Aspirational.'

During a press call, Shiu clarified that the goals and benchmarks are “aspirational,” and are neither ceilings nor quotas.

If contractors do not meet the targets, she said, they must analyze their recruitment and outreach practices in order to ascertain how they can improve the hiring of veterans and individuals with disabilities. Contractors will not be subject to a fine, penalty, or “any sort of sanction” in failing to meet the goals or benchmarks in and of themselves, Shiu said.

However, if a contractor fails to provide OFCCP with required documentation or bars OFCCP from accessing its records or facilities, she said the agency can take steps to revoke the contractor's federal contracts or subcontracts.

“Most of the time, we are able to resolve these issues,” Shiu said.

Data, Self-Identification, Other Requirements

The Section 503 and VEVRAA final rules introduce new data collection and analysis requirements for contractors, who must retain the records for three years.

For example, contractors must collect the following information:

• the total number of job openings and jobs filled;

• the total number of job applicants for all jobs and the number of applicants known to be veterans or to have disabilities; and

• the total number of applicants hired and the total number of individuals with disabilities and veterans hired.


Both rules respectively retain requirements for contractors to invite job applicants to self-identify either as protected veterans or as individuals with disabilities, or both, at the pre-offer and post-offer phases of the employment process.

The Section 503 rule also requires contractors to invite current employees to self-identify as an individual with a disability every five years. Both rules include sample language for the invitations.

In addition, the Section 503 rule implements changes introduced by 2008 amendments to the Americans with Disabilities Act.

Meanwhile, the VEVRAA final rule includes clarification of contractors' job-listing requirements with the appropriate state or local job services. The rule states that contractors must provide job information in a “manner and format” permitted by the services.

OFCCP Eliminated Some NPRM Proposals

Meanwhile, the final rules eliminate some of the proposals introduced by OFCCP in its NPRMs.

In its regulatory procedures and burden analyses for bothrules, OFCCP cited one example involving a proposal to require contractors to establish three “linkage” agreements with various veterans and disability organizations for recruitment purposes.

The agency said it also eliminated proposed requirements for contractors to incorporate in full, instead of by reference, an equal opportunity clause in all their contracts and subcontracts, to annually review their personnel policies, and to identify officials responsible for their affirmative action programs under Section 503 and VEVRAA.

“OFCCP reconsidered whether the cost of several proposals in the NPRM[s] could be justified by their potential benefits, and whether alternative methods or approaches could achieve comparable or acceptable benefits for less cost or burden,” the agency said.

Rules Include Revised Burden Estimates

When OFCCP first proposed the rules, many employers raised concerns that the requirements would place undue burdens on them (29 HRR 950, 9/5/11).

Both final rules include “revised and increased burden estimates” based on the number of contractor establishments, with “low and high range estimates for certain requirements.”

For example, if the new requirements in the Section 503 rules apply to approximately 171,000 establishments, OFCCP estimated that contractors as a whole may face a one-time burden between $4 million and $4.5 million and recurring burdens between $253 million and $296 million.

Those burden estimates increase to between $4.3 million and $5 million for one-time burdens, and between $284 million and $348 million for recurring burdens, if the new Section 503 requirements apply across the board to approximately 251,000 establishments.


Text of OFCCP's final Section 503 rules is available at http://op.bna.com/dlrcases.nsf/r?Open=jaca-9aytxq, and the final VEVRAA rules at http://op.bna.com/dlrcases.nsf/r?Open=jaca-9ayty9. Text of OFCCP's Section 503 summary and preamble is available at http://op.bna.com/dlrcases.nsf/r?Open=jaca-9aytxb, and VEVRAA's summary and preamble at http://op.bna.com/dlrcases.nsf/r?Open=jaca-9aytxj. Text of OFCCP's regulatory procedures and burdens analysis for Section 503 is available at http://op.bna.com/dlrcases.nsf/r?Open=jaca-9aysgw, and for VEVRAA at http://op.bna.com/dlrcases.nsf/r?Open=jaca-9aysgs.

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