OFCCP Final Rule for Individuals with Disabilities Establishes Controversial New Requirements for Federal Contractors & Subcontractors

Dara DeHaven
November 11, 2013 — 2,116 views  
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Today’s Federal Register contains the U.S. Department of Labor’s Office of Federal Contract Compliance Programs’ (OFCCP) Final Rule revising the affirmative action regulations for individuals with disabilities. 78 Fed. Reg. No. 185 at 58681-58752 (September 24, 2013). The Final Rule imposes major new requirements for applicant self-identification, data collection and recordkeeping, and increased recruitment efforts. In addition, despite significant opposition from the federal contractor community, the Final Rule requires federal contractors and subcontractors to set a nationwide 7 percent utilization goal for individuals with disabilities. In implementing this controversial provision, OFCCP suggested that “[w]hile not perfect, the goal will provide a yardstick against which contractors will be able to measure the effectiveness of the equal employment opportunity efforts.” Other significant provisions are detailed below.

More information, including Frequently Asked Questions, is available at www.dol.gov/ofccp/503Rule.

New Effective Date

The Final Rule will be effective on March 24, 2014, 180 days after publication in the Federal Register. Compliance with the written affirmative action program (AAP) requirements will be phased in; contractors with current AAPs in place on the effective date of the Final Rule can delay compliance with the Final Rule’s AAP requirements (but no the outreach and self-identification requirements) until their next annual AAP update (2015 for contractors on a January 2014 AAP update schedule). Compliance with the Final Rule’s AAP and other requirements will be verified in OFCCP compliance evaluations.

BACKGROUND AND COVERAGE

OFCCP is a civil rights, worker protection agency that enforces Executive Order 11246, the Vietnam Era Veterans’ Readjustment Assistance Act of 1974 (VEVRAA), and Section 503 of the Rehabilitation Act (Section 503). Section 503and its current regulations prohibit discrimination by federal contractors and subcontractors against individuals with disabilities and also require affirmative action on behalf of individuals with disabilities.

According to OFCCP, employment discrimination and under-utilization of qualified workers, including individuals with disabilities, contribute to income inequality and poverty. The agency contends that, in part because of inadequate data collection requirements, the current regulations do not provide contractors with adequate tools to assess their compliance with the nondiscrimination and affirmative action requirements to recruit and employ qualified individuals with disabilities. OFCCP believes that the Final Rule has the potential to reduce the employment gap for individuals with disabilities by strenthening affirmative action requirements for outreach and recruitment of qualified individuals with disabilities, establishing an aspirational goal for employment of qualified individuals with disabilities, providing greater accountability regarding employment of individuals with disabilities through quantitative data collection, and providing stronger dissemination of contractor obligations. OFCCP anticipates that these new and strengthened requirements “will assist contractors in averting potentially expensive violation findings by OFCCP.”

The nondiscrimination and general affirmative action requirements of Section 503 apply to all government contractors with contracts or subcontracts in excess of $10,000 for the purchase, sale, or use of personal property or nonpersonal services (including construction) in the United States. The requirement to prepare and maintain an affirmative action program applies to those contractors that have at least one contract or subcontract of $50,000 or more and who employ 50 or more employees.

HIGHLIGHTS OF THE NEW RULE

New Expanded Definition of Disability

The Final Rule revises the definitions of “individual with disability,” and conforms nondiscrimination and accommodation requirements to the ADA Amendments Act (ADAAA). Like the ADAAA, OFCCP intends to ensure a broad scope of protection for “disability.”

New Incorporation of Equal Opportunity Clause

Each contracting agency and each contractor subject to Section 503 must include an equal opportunity (EO) clause in all federal contracts or subcontracts. The Final Rule amends the EO clause to reference electronic posting and adds a provision requiring contractors to state in solicitations and advertisements that they are equal opportunity employers of individuals with disabilities.

The Final Rule also mandates specific language that must be included when incorporation the EO clause by reference in covered subcontracts:

This contractor and subcontractor shall abide by the requirements of 41 CFR 60-741.5(a). This regulation prohibits discrimination against qualified individuals on the basis of disability, and requires affirmative action by covered prime contractors and subcontractors to employ and advance in employment qualified individuals with disabilities.

Contractors must ensure that employee notice rights are posted in conspicuous places, and that applicants and employees are provided such notice in a form that is accessible and understandable, such as in Braille or large print, or at a lower height, When there are employees who work at home or who do not work at a physical location of the contractor, this notice-posting obligation can be satisfied by electronic means if the contractor provides computers or access to computers to remote employees. Electronic postings must be posted in a conspicuous location and format on the contractor’s intranet or sent by email to employees; job applicants who express interest through an electronic application process must also receive the electronic notice.

New Reasonable Accommodation Enhancements

Use of Electronic or Online Application Systems. The reasonable accommodation obligation extends to the contractor’s use of electronic or online job application systems. If a contractor uses this type of system, it must reasonably accommodate individuals with disabilities who cannot fully utilize the system. Though not required, OFCCP suggests that the contractor make its online application system accessible and compatible with assistive technologies used by individuals with disabilities.

Written Procedures for Processing Reasonable Accommodation Requests. The Final Rule recommends using written reasonable accommodation procedures as a “best practice.” Contractors are not required to develop or use such procedures, but for those who wish to do so, OFCCP has provided guidance through an Appendix to the Final Rule.

New Affirmative Action Programs

Availability of AAP. The Final Rule makes clear that the AAP—but no its data metrics—is available for review to applicants and employees upon request. The AAP can be provided in hard copy or electronically to applicants and employees.

Voluntary Self-Identification Process for Applicants and Employees. For the first time, covered contractors must give applicants the opportunity to voluntarily self-identify as individuals with disabilities and must do so with specific language soon to be published by OFCCP on its website. Employers may not use their own verbiage for this purpose and thus must wait until the form is posted by OFCCP to begin compliance with this requirement for applicants and the similar requirements for employees.

In additon, contractors must give the invitation:

  • For job seekers, at the time of application for employment (along with race/gender information);
  • For applicants, after an offer is received, but before employment beings;
  • For employees, within the first year after the Final Rule becomes effective and every five years thereafter; and
  • Periodically (at least once between the five-year intervals), as an interim reminder to all employees of their ability to change their disability status at any time.

Contractors cannon compel applicants or employees to self-identify but OFCCP contends that contractors can identify an individual as having a disability if the individual does not self-identify when the disability is obvious, or the disability is known to the contractor. We urge contractors to exercise extreme caution in “regarding” someone as having a disability who has not self-identified, in order to steer clear of the ADA’s proscriptions.

Policy Statement. Contractors are required to include their equal employment opportunity policy statement in their AAP and to post it on company bulletin boards. The Final Rule requires that this statement shall indicate the top U.S. executive’s support for the AAP and shall be provided to employees in an accessible and understandable format.

Reasonable Accommodation to Physical and Mental Limitations. With regard to nondiscrimination, the Final Rule requires contractors to make reasonable accommodation to the known physical and mental limitations of a qualified individual with a disability. With regard to affirmative action, the Final Rule instructs contractors to inquire whether an employee’s known disability affects the employee’s work performance if “it is reasonable to conclude” that the performance issues may be related to a known disability.

Outreach and Recruitment. Contractors are required to undertake appropriate outreach and positive recruitment activities that are reasonably designed to effectively recruit qualified individuals with disabilities. The Final Rule also contemplates that contractors will send written notification of their affirmative action efforts to all subcontractors , requesting that they take appropriate action. The Final Rule provides an extensive list of suggested outreach activities and resource.

In addition, a contractor must conduct and document an annual assessment of its outreach efforts in order to evaluate their effectiveness in identifying and recruiting qualified individuals with disabilities. The documentation must include the criteria the contractor used to evaluate the effectiveness of each effort and the contractor’s conclusion as to whether each effort was effective. The contractor’s conclusion must be reasonable as determined by OFCCP in light of the regulations.

As with other records, a contractor must document all of its outreach and recruitment efforts and assessments and retain those records for a period of three years.

Internal Policy Dissemination. Under the current regulations, a contractor is encouraged to include its affirmative action policy in its policy manual and otherwise make the policy available to employees. Moreover, any contractor who is a party to a collective bargaining agreement is encouraged to notify union officials and/or employee representatives of the contractor’s policy and request their cooperation. The Final Rule makes these “suggestions” mandatory.

Audit and Reporting System. A contractor will be required under the Final Rule to document its efforts to comply with its internal audit and reporting system that measures the effectiveness of the AAP and the contractor’s objectives/remedial action.

It is not surprising that the Final Rule contains the following warning to contractors: “[t]he contractor’s conclusion as to the effectiveness of its outreach efforts must be reasonable as determined by OFCCP in light of” the regulations. If the contractor concludes that the totality of its efforts was not effective in identifying and recruiting qualified protected veterans, it shall identify and implement alternative efforts in order to fulfill its obligations. This is akin to the old adage that “it is the definition of insanity to do the same things over and over and expect a different result.”

Training. The Final Rule mandates that all “personnel involved in the recruitment, screening, selection, promotion, disciplinary, and related processes shall be trained to ensure that the commitments in the contractor’s affirmative action program are implemented.” As with all other compliance issues, this training should be documented both by retaining any materials used in the training and by recording attendance at the training session(s).

Additional Data Collection Responsibilities. The Final Rule significantly increases a contractor’s data collection and record retention obligations. These new obligations are intended to assist in determining the availability of individuals with a disability as well as the effectiveness of the contractor’s outreach efforts. The additional data must be retained for three years and includes:

  • For applicants, the total number of applicants for employment and the total number of applicants who self-identified as individuals with disabilities or are otherwise known individuals with disabilities;
  • For hires, the total number of job openings, the number of jobs filled, and the number of individuals with disabilities hired; and
  • The total number of job openings and total number of jobs filled.

The Final Rule extends the recordkeeping requirements for this data and other outreach and recruiting efforts to three years from the current two-year requirements.

Utilization Goal by Job Group and Facility. A federal contractor preparing AAPs for minorities and females is familiar with the required analysis comparing minorities and females in the contractor’s workforce to the availability of minorities and females in the reasonable recruitment area. This Final Rule creates a “yardstick” requirement for a utilization analysis in Section 503 AAPs, to include an assessment of a contractor’s utilization of individuals with disabilities in its job groups or workforce to a national utilization goal. OFCCP characterizes this goal as “an equal employment opportunity objective that should be attainable by complying with all aspects of the affirmative action requirements” in the Final Rule.

Federal contractors and subcontractors that employ more than 100 employees have an annual 7 percent utilization goal for qualified individuals with disabilities in each of its AAP job groups (or EEO-1 categories if the contractor employs less than 150 employees). Federal contractors with 100 or fewer employees can apply the annual utilization goal to their total workforce, rather than individual job groups. Every contractor must conduct an annual utilization analysis and assessment of problem areas, and establish specific, action-oriented programs to address any identified problems.

According to OFCCP, the goal is neither a quota nor a restrictive hiring ceiling and failure to attain the goal does not necessarily constitute a violation of Section 503 or OFCCP’s regulations. Rather, the goal is intended to serve as an important tool for employers to measure their progress toward achieving equal employment opportunity and for assessing where in their workforce barriers to such opportunity remain.

Voluntary Affirmative Action Programs for Employees with Disabilities.  A contractor is permitted under the Final Rule to develop and implement training and employment specifically for individuals with disabilities. If such a program is developed, an annual report describing the contractor’s activities and outcomes achieved should be (but is not required to be) included in the contractor’s AAP. Such programs may not be used to segregate individuals with disabilities or to limit or restrict such individual’s employment opportunities and should not result in discrimination against other groups.

New Compliance Evaluations (Audits)

Types of Reviews. The Final Rule anticipates that OFCCP may conduct compliance evaluations (including a desk audit and on-site and off-site reviews of records), compliance checks, and focused reviews (restricted to one or more components of the contractor’s organization or employment practices; may be conducted on-site or off-site).

Temporal Scope. Recent litigation has focused upon OFCCP’s authority to obtain and investigate information after the date set forth in the audit scheduling letter. Although there is no final decision on this issue from the courts, the Final Rule expressly authorizes OFCCP to examine information created after the date of the audit scheduling letter “if OFCCP deems it necessary to carry out its investigation of potential violations of” the Section 503 regulations.

New Recordkeeping

As noted above, a contractor is required to maintain for three years its documentation and assessment of external outreach and recruitment efforts as well as its compliance with the data collection requirements.

New Access to Records

The Final Rule retains the current regulatory requirement that a contractor must provide OFCCP access during normal business hours for purposes of conducting a compliance evaluation or compliant investigation.  The Final Rule further requires, however, that a contractor provide OFCCPA off-site access to records, including electronic records. A contractor must inform OFCCP of the format(s) in which records are maintained and records must be provided upon OFCCP request in any format in which they are maintained.

CONCLUSION

OFCCP contends that the requirements contained in the Final Rule will bring more qualified individuals with disabilities into the federal contractor workforce and will provide them with an equal opportunity to advance in employment. OFCCPA Director Patricia Shiu recently noted that “OFCCP is first and foremost a worker protection agency… [and the] commitment to fairness and opportunity begins with enforcement.”

Under the Final Rule, every covered contractor and subcontractor will have to significantly enhance and document efforts to recruit and employ qualified individuals with a disability. Noncompliance can result in sanctions ranging from commitments to comply to debarment.

And oft-used mantra of OFFCP is that “being a federal contractor is a privilege, not a right.” Consequently, every contractor subject to the Final Rule should take note of OFCCP’s expectations and obligations with regard to affirmative action and nondiscrimination for individuals with disabilities. OFCCP intends to offer technical assistance to contractors on compliance with the Final Rule. In addition, please feel free to direct your questions to any member of our Affirmative Action and OFCCP Compliance Practice Group.

Dara DeHaven

Ogletree Deakins

Dara DeHaven is a shareholder in the Atlanta office of Ogletree, Deakins. She represents federal contractors and subcontractors nationwide on affirmative action matters. Her practice includes the successful defense of hundreds of audits conducted by The Office of Federal Contract Compliance Programs, AAP preparation and review, management and employee training, and general guidance and advice on affirmative action coverage and obligations. Ms. DeHaven is a frequent speaker to local and national business, professional, and civic organizations on labor and employment-related issues. She is listed in Best Lawyers in America, Chambers USA America’s Leading Lawyers for Business, and is rated AV Preeminent by Martindale-Hubbell.