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Labor & Employment Alert >> Federal Contractors Should Prepare for New OFCCP Regulations Covering Individuals with Disabilities and Veterans

April 21, 2014

The Final Rules became effective March 24, 2014 and apply to both federal supply and service and construction prime contractors and subcontractors (collectively referred to as “federal contractors”).  This Alert provides a brief overview of some of these changes.

During September 2013, the United States Department of Labor’s Office of Federal Contract Compliance Programs (OFCCP) issued Final Rules that make significant changes to the regulations implementing the Vietnam Era Veterans’ Readjustment Assistance Act (VEVRAA) and Section 503 of the Rehabilitation Act of 1973  (Section 503) (the Final Rules). 

Under the Final Rules, all applicants – both Internet and other applicants – must be given the opportunity to self-identify as an individual with disabilities (IWD) or a veteran at both the pre-offer and post-offer phases of the application process.  With respect to IWDs, the OFCCP has created a form that must be used at both the pre-offer and post-offer stage.  The form may not be altered.  In addition, a sample form is available on the OFCCP website for voluntary use in soliciting veteran status. Each form may be used in electronic form.

In addition to initial self-identification, federal contractors are required to resurvey their entire workforce to obtain disability status. Federal contractors must invite their employees to self-identify every five years, beginning the first year that they become subject to the Section 503 Final Rules voluntary self-identification requirements. In addition, at least once during the years between these invitations, contractors must remind their employees that they may voluntarily update their disability status at any time.

Federal contractors will be required to establish utilization/benchmark goals for both IWDs and veterans. The Final Rules establish a nationwide seven percent utilization goal for qualified IWDs. The utilization goal is intended to be used as a benchmark by federal contractors against which they can measure the success of their efforts in outreach to and recruitment of IWDs.  The goal is applied to each job group or to the entire workforce if the federal contractor has 100 or fewer employees.  With respect to veterans, the Final Rules require that federal contractors establish an annual “hiring benchmark” equal to either eight percent of the Federal contractor’s total workforce at each establishment, rather than to each job group, or an alternative benchmark which can be calculated by Federal contractors based on other data concerning veteran employment.

Outreach and Recruiting
The Section 503 Final Rules require that federal contractors undertake appropriate outreach and positive recruitment activities. Federal contractors must document all outreach and recruitment activities and retain these records for three years.  The objective is to enable contractors and the OFCCP to evaluate the effectiveness of outreach and recruiting efforts in identifying and recruiting qualified individuals with disabilities.

Data Collection/Assessment
The Final Rules require federal contractors to undertake new data collection and retention activities in order to bolster and improve upon the data available regarding the employment of IWDS and veterans.  Federal contractors must document and update hiring activity annually. In addition, written assessments of the effectiveness of recruitment efforts are now required in the Affirmative Action Program (AAP).  The assessment must include the criteria the contractor used to evaluate its efforts and a conclusion on the effectiveness of its efforts.

Job Postings
Both the Section 503 Final Rules and the VEVRAA Final Rules specify mandatory language, formats, and procedures to be used when posting notices and job advertisements. Federal contractors are required to indicate in their tagline for job advertisements they are an equal opportunity employer of IWDs and protected veterans. When reporting job openings to the appropriate state employment service delivery system (ESDS), federal contractors must adhere to the specific formats and transmission methods required as they may vary from state to state. 

Federal contractors with a written AAP in place on the March 2014 effective date of the Final Rules may maintain their AAPs until the end of the AAP year and delay compliance with certain of the Final Rules until the start of the next AAP cycle.  For example, if a federal contractor’s plan year runs from January 1, 2014 to December 31, 2014, the federal contractor does not need to change its AAPs for veterans and disabled individuals until the new plan year, beginning on January 1, 2015.  Note, however, that the federal contractor will need to comply with the other requirements of the Final Rules, including, for example, job postings, equal opportunity clause inclusion, nondiscrimination provisions, and recordkeeping requirements by the effective date of the Final Rules.

Next Steps
Federal contractors should, among other things,  take the following steps to ensure compliance with the Final Rules:

  • Revise pre-offer and post-offer self-identification applicant process for Veterans and IWDs using the new IWD form and the revised veteran definitions 
  • Identify and begin listing job openings at the ESDS that will allow the ESDS to provide priority referral of protected veterans.  
  • Update contracts and purchase orders with the new EO clause
  • Incorporate a means of accessing an electronic version of the “EEO is the Law” poster on applicant websites
  • Begin tracking job openings and metrics for utilization reporting purposes
  • Begin surveying the existing workforce to identify IWDs status using the new OFCCP form
  • Identify a process to be used to identify IWDs every five years
  • Include new metric statistics in your AAP beginning on and after March 24, 2015
  • Develop and document all outreach efforts and retain for AAP reporting purposes

The Bottom Line

The Office of Federal Contract Compliance Programs (OFCCP) introduces new rules covering Individuals with Disabilities (IWDs) and Veterans, which will have a significant impact on the compliance requirements of federal contractors. Employers should consult with legal counsel for more detailed information regarding the Final Rules to ensure the proper procedures are being implemented. Significantly, federal prime contractors and subcontractors will need to implement new procedures to identify, recruit and track IWDs and Veterans beginning with the next AAP plan year.