The Office of Federal Contract Compliance Programs (“OFCCP”) recently issued new affirmative action regulations that apply to many federal construction contractors and subcontractors. The OFCCP has created two separate but related sets of rules that respectively impose new affirmative action requirements for qualified disabled workers (“Disability Regulations”) and protected veterans (“Veteran’s Regulations”). Covered contractors now face expanded affirmative action, data collection, and recordkeeping burdens when employing members of these two protected groups and will need to develop plans to ensure compliance with these rules.
Who Is a Covered Contractor, and When Do the Rules Take Effect?
The Disability Regulations apply to all contractors and covered subcontractors on federal contracts valued over $10,000. A separate threshold requires contractors and covered subcontractors who hold contracts over $50,000 and have 50 or more employees to develop detailed written Affirmative Action Plans (“AAPs”) and solicit disability information specified by the regulations.
The Veteran’s Regulations apply to contracts valued at $100,000 or more. The law requires numerous affirmative action steps for disabled veterans, Armed Forces service medal veterans, recently separated veterans, and other protected veterans who served during a war, campaign, or expedition for which a campaign badge was authorized. Covered contractors and subcontractors with 50 or more employees must also develop and maintain a written veterans’ AAP similar to that required under the Disability Regulations.
The new regulations take effect on March 24, 2014, except for the AAP requirements. For contractors with AAPs in place as of March 24, the plan can be continued, as is, until the end of their current AAP year; all affirmative action programs created or updated after March 24 will need to comply with the new regulations.
Requirements under the New Affirmative Action Rules
There are many detailed changes in the new OFCCP rules, ranging from new posting requirements to detailed annual hiring metrics. Some of the most significant provisions are summarized below.
Utilization Goals for Disabled Individuals. Contractors must set a utilization goal of seven percent (7%) for individuals with disabilities. Small contractors (i.e., with 100 or fewer employees) must strive to employ disabled individuals for at least 7% of their total workforce; for large contractors (i.e., with over 100 employees), the 7% goal must apply to each individual category of employment. Contractors are encouraged to conduct an annual utilization analysis, which should include a self-assessment of problem areas, and then develop action-oriented programs to address deficiencies.
Hiring Benchmarks for Veterans. Contractors must establish annual hiring benchmarks for protected veterans, using one of two methods. The first option uses a benchmark equal to the national percentage of veterans in the civilian labor force (published by the OFCCP, and currently at 8%). The second option allows contractors to create a unique benchmark based on numerous factors, including Bureau of Labor Statistics data on local percentages of veterans in the labor force, and the individual contractor’s veteran application and hiring ratios for the prior year, “as well other factors” that reflect the contractor’s specific hiring circumstances. Although this second method will be costly and time consuming to develop, it may be preferable to the default first option by allowing for a lower benchmark in areas with low veteran populations.
Invite Voluntary Identification of Status. Federal contractors are now required to invite applicants to self-identify as veterans or as individuals with disabilities at both (1) the pre-offer stage and (2) after an employment offer has been made but before the first day of work. This creates an exception to the Americans with Disabilities Act, under which such self-identification invitations are normally impermissible. The OFCCP supplies a mandatory form to invite applicants to self-identify as disabled, but contractors may develop their own forms for veteran self-identification. Contractors must invite their current workforce to self-identify their disability status within the first year of the Disability Regulations, and subsequently at five-year intervals.
Data Collection. Under both the Disability Regulations and the Veteran’s Regulations, contractors must annually track and document information such as the number of applicants self-identifying as disabled or veterans, the total number of company-wide job openings and jobs filled, and the number of veteran and disabled applicants hired versus the total number of hired applicants. These data must be maintained for three years and must be provided to the OFCCP on request.
Compliance Evaluations. Prime contractors and first-tier subcontractors with procurements of $10 million or more must undergo a compliance evaluation before the award of the contract, unless the contractor has been audited in the last 24 months and was found to comply.
Conclusion
The factors listed in this article are only a small sampling of the substantial additional burdens that the new OFCCP regulations will impose on covered federal contractors and subcontractors. Although the compliance deadlines are several months away, proper compliance will likely be time consuming, so contractors should start preparing now for the upcoming changes.