Summary

On March 24, 2014, new regulations issued by Department of Labor's Office of Federal Contract Compliance Programs (OFCCP) went into effect.  The most significant requirement is that covered federal contractors must adopt hiring benchmarks for veterans and utilization goals for individuals with disabilities. The regulations also impose requirements having to do with data collection, as well as invitations for job applicants to self-identify as individuals with a disability or as veterans.  Federal contractors should take immediate steps toconfirm that their documents, practicesand written affirmative action plans comply with the new regulations. 

Covered Contractors

Federal contractors with 50 or more employees and at least $50,000 in federal contracts must develop a written affirmative action program for minorities, females and individuals with disabilities. Federal contractors with 50 or more employees and at least $100,000 in federal contracts must develop an affirmative action program for veterans. Federal contractors with fewer than 50 employees, but more than $10,000 in federal contracts are not required to develop a written affirmative action program, but they have certain other affirmative action obligations.

Hiring Benchmarks for Veterans and Utilization Goals for Individuals with Disabilities

Veterans

The new regulations require a contractor to establish an annual benchmark for hiring veterans. Contractors may choose to use the national percentage of veterans in the civilian labor force, as updated annually by OFCCP (currently 8%), as a benchmark, or may establish their own benchmark using a combination of data from the Bureau of Labor Statistics, Veterans’ Employment and Training Service and the contractor’s unique hiring circumstances.  The regulations state that the "benchmark is not a rigid and inflexible quota that must be met." Further, "quotas are expressly forbidden." A contractor's failure to meet the benchmark does not constitute a violation.

Individuals with Disabilities

Under the new regulations, contractors must establish a 7% "workforce utilization goal" for employing individuals with disabilities in each job group. To measure its success against this goal, the contractor must calculate the percentage of individuals with disabilities in each job group and then compare that data with the 7% utilization goal. The OFCCP regulations allow contractors with fewer than 100 employees to apply the 7% goal to the entire workforce, as opposed to applying the 7% goal to each job group.  The regulations state that the utilization goal is not a quota, and that the failure to meet the goal does not automatically constitute a violation. But if a contractor fails to meet a goal, the contractor must take steps to find deficient areas and develop specific actions to correct any problem areas.

Self-Identification

The regulations mandate that employers invite applicants at both the pre-offer and post-offer stage to self-identify themselves as individuals with a disability and/or as veterans.  The regulations further require that contractors invite their current employees to self-identify at least every five years.  With the information obtained through the self-identification process, contractors can assess the effectiveness of their outreach and recruitment efforts of both individuals with disabilities and veterans. OFCCP has published sample self-identification forms for collecting information from applicants and employees.

Data Collection

The regulations impose data collection requirements on contractors for both veterans and individuals with disabilities. These requirements include maintaining records concerning the number of veterans and disabled workers who applied for jobs and the number hired. This data and supporting documents must be maintained for three years.

Equal Opportunity Clause

The regulations require that contractors include an equal opportunity clause (EO Clause) in its covered contracts and subcontracts. The regulations provide that contractors may incorporate the EO Clause by reference, but only by citing to the relevant regulations and including specific language in the contract. The EO Clause for individuals with disabilities includes a new provision that requires a contractor to state in solicitations and advertisements that it is an equal opportunity employer of individuals with disabilities.

Job Listings and Outreach

As with the previous regulations, the new regulations require contractors to provide job listings to state employment agencies. The new regulations also require that the contractor state on such listings that it is a federal contractor (e.g., by noting "VEVRAA Federal Contractor" on the listing), and indicate that it desires priority referrals from the state of protected veterans for job openings in the state. In the listing, the contractor must also list the contractor official responsible for hiring at each hiring location.  The regulations also require contractors to take appropriate outreach and positive recruitment activities. OFCCP recently posted on its website a list of outreach resources for veterans and individuals with disabilities.

Enforcement and Compliance

OFCCP periodically conducts reviews of a contractor's affirmative action program. The new regulations provide that during a review or compliance check, contractors must allow OFCCP to review documents related to such review or compliance check, if OFCCP deems it necessary to carry out its investigation of potential violations.  If OFCCP concludes that a contractor has violated its obligations, OFCCP may decide to propose a conciliation agreement to address alleged violations. If a conciliation agreement is not reached, OFCCP has the right to refer a matter to the Solicitor of Labor with a recommendation that the Department of Labor institute enforcement proceedings.

Effective Date

The new regulations went into effect on March 24, 2014. A contractor with a written affirmative action plan that was already in place on March 24, 2014 that was developed under the previous regulations may maintain that written plan until the end of the plan year, and delay compliance with the new affirmative action plan requirements until the start of the next plan cycle. A contractor that develops a written affirmative action plan for a plan year starting on or after March 24, 2014 must comply with the new regulations.

The new regulations impose certain requirements that are separate from the requirements concerning written affirmative action plans. Those requirements (such as the incorporation of the EO clause in subcontracts and compliance with all aspects of the EO Clause) are also effective March 24, 2014, regardless of when the contractor develops its affirmative action plan.

The Takeaway for Contractors

Federal contractors should take immediate steps to confirm that their documents, practices and written affirmative action plans comply with the new regulations.  These changes may include:

• updating self-identification forms and data-collection systems;

• updating references to EO Clause in subcontracts and purchase orders;

• including specific EEO language in job advertisements that all applicants will receive consideration for employment regardless of disability or protected veteran status;

• reviewing practices regarding posting job openings with state employment agencies;

• establishing hiring benchmarks for veterans and utilization goals for individuals with disabilities;

• assessing effectiveness of outreach efforts;

• documenting all outreach and recruitment activities and retaining the records;

• implementing new or revised pre-offer and post-offer self-identification forms;

• reviewing recordkeeping policies and practices to ensure compliance;

• reviewing practices concerning the internal dissemination of its affirmative action programs; and/or

• updating IT systems to address new data collection, including applicant and employee information.