OFCCP Final Rule Updates & Expands VEVRAA RegulationsGretchen W. Ewalt & Leigh M. Nason
November 12, 2013 — 2,250 views
OFCCP Final Rule Updates and Expands VEVRAA Regulations
Today’s Federal Register contains the U.S. Department of Labor’s Office of Federal Contract Compliance Programs’ (OFCCP) Final Rule defining the obligations of federal contractors and subcontractors with regard to disabled veterans, recently separated veterans, active duty wartime or campaign badge veterans, and Armed Forces Service Medal veterans (“protected veterans”) under 41 C.F.R. Part 60-300. 78 Fed. Reg. No. 185 at 58613-58697 (September 24, 2013). The Final Rule rescinds veterans’ regulations codified at 41 C.F.R. Part 60-250, but imposes new requirements for recruiting and hiring protected veterans, adds a veterans hiring goal, and enhances recordkeeping requirements.
More information, including Frequently Asked Questions, is available at http://www.dol.gov/ofccp.regs/compliance/vevraa.htm.
NEW EFFECTIVE DATE
The Final Rule will be effective 180 days after it is published in the Federal Register, which means March 2014 at the earliest. 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 not 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 Veteran’s Readjustment Assistance Act of 1974 (VEVRAA), and Section 503 of the Rehabilitation Act (Section 503). VEVRAA and its current regulations prohibit discrimination by federal contractors and subcontractors against protected veterans, specific categories of which depend on the date of federal contracts and/or amendments and modifications.
According to OFCCP, the number of unemployed veterans is too high and disparities in pay rates and unemployment exist. The agency believes that the Final Rule will enable contractors to evaluate their compliance and to proactively identify and correct deficiencies in their employment practices. The Final Rule includes data collection requirements “to support meaningful self-assessments of employment practices.”
The nondiscrimination and general affirmative action requirements of VEVRAA, as amended by the Jobs for Veterans Act (JVA), apply to all federal contractors with at least one contract or subcontract entered into or modified on or after December 1, 2003, in excess of $100,000 for the purchase, sale, or use of personal property or non-personal services (including construction) in the United States. The requirement to prepare and maintain an affirmative action program applies to contractors and subcontractors that meet the coverage threshold and who employ 50 or more employees.
HIGHLIGHTS OF THE NEW RULE
New Veterans Categories
The Final Rule applies to disabled veterans, recently separated veterans, active duty wartime or campaign badge veterans, and pre-JVA veterans (protected under the rescinded Part 60-250).
New Mandatory Job Listing Obligations
Currently, a contractor must post job openings (excluding executive and senior management positions) for which it is considering external candidates with the state employment service delivery system. Under the Final Rule, a contractor must provide job listings “in any manner and format” required by the state employment service delivery system. In addition, each contractor must:
- Notify the state employment service delivery system that it is a federal contractor or subcontractor and that it requests priority referrals of protected veterans;
- Provide the state employment service delivery system with the name and location of each hiring location within the state and contact information for the hiring official in each such location; and
- If a contractor uses an outside job search company to assist in hiring, provide to the state employment service delivery system the contact information for such company.
These disclosures must be made simultaneously with the contractor’s first job listing at each employment service delivery system location after the effective date of the Final Rule, and must advice the employment service delivery system location of updated information simultaneously with the next job listing subsequent to the change.
New Incorporate the Equal Opportunity Clause
Each contracting agency and each contractor subject to VEVRAA must include an equal opportunity (EO) clause in each federal contract or subcontract. 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 protected veterans.
The Final Rule also mandates specific language that must be included when incorporating the EO clause by reference in covered subcontracts:
This contractor and subcontractor shall abide by the requirements of 41 CFR 60-300.5(a). This regulation prohibits discrimination against qualified protected veterans, and requires affirmative action by covered prime contractors and subcontractors to employ and advance in employment qualified protected veterans.
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 from 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 seekers who express interest through and electronic application process must also receive the electronic notice. A contractor must also notify any labor organization or worker representative with which it has a collective bargaining agreement of its commitment to take affirmative action to employ and advance in employment protected veterans and that it shall not discriminate against protected veterans.
New Affirmative Action Programs
Availability of AAP. The Final Rule makes clear that the AAP—but not 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. A covered contractor must give applicants the opportunity to voluntarily self-identify whether he or she is a protected veteran. OFCCP has prepared a template self-identification form to be used for applicant self-identification that is contained in Appendix B to the Final Rule. Once an offer of employment has been made to an applicant but before the applicant starts work, a contractor must invite the applicant to identify whether he or she belongs to one or more of the specific categories of protected veterans.
If a new hire identifies himself or herself as a disabled veteran on the post-offer self-identification form, the contractor “should” inquire of the applicant whether an accommodation is necessary. If so, the contractor should engage with the applicant in an interactive dialogue concerning possible reasonable accommodations. Because the applicant has revealed medical information in responding to the self-identification, that form and any documentation related to the interactive dialogue on reasonable accommodations must be maintained in a separate file to which access is limited to those in the contractor’s workforce with a legitimate need to know the information.
A contractor is not relived of its obligation to take affirmative action with respect to those applicants or employees “who are known to the contractor to be protected veterans.” Thus, contractors are charged not only with taking affirmative action with respect to individuals who self-identify as protected veterans but also with respect to applicants or employees who decline to self-identify as veterans but who the contractor knows through some other method to be protected veterans. We urge contractors to exercise extreme caution in “regarding” someone who has not self-identified as a disabled veteran, in order to steer clear of the Americans with Disabilities Act’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 identify the highest ranking official employed by the contractor in the United States and indicate his or her support for the AAP. The statement must be provided to employees in an accessible and understandable format.
Outreach and Recruitment. Contractors are required to undertake appropriate outreach and positive recruitment activities that are reasonably designed to effectively recruit protected veterans. 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 resources.
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 protected veterans. 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 is 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 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 sessions(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 protected veterans 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 protected veterans;
- For hires, the total number of job openings, the number of jobs filled, and the number of protected veterans 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 requirement.
Hiring Benchmark. The most controversial section of the Final Rule is the section that requires contractors to set an annual numerical hiring benchmark for protected veterans. This is a new concept for federal contractors. Unlike the new utilization goal for individuals with disabilities, the hiring benchmark for veterans is an “aspirational goal” of the percentage of protected veterans each contractor should endeavor to hire at each establishment on an annual basis, without regard to job group or EEO-1 category.
A contractor can use either of two hiring benchmark options for protected veterans. One option is to establish a benchmark that is equal to the national percentage of veterans in the civilian labor force (currently 8 percent), which will be provided on an annual basis to contractors by OFCCP. The second option, which is more complicated to establish, considers:
- The average percentage of veterans over the preceding three years in the civilian labor force in the state where the contractor is located (as published on the OFCCP website);
- The number of veterans over the previous four quarters who were participants in the employment service delivery system in the state where the contractor is located (as published on the OFCCP website);
- The applicant and hiring ratio for the previous year;
- The contractor’s recent assessments of the effectiveness of its external outreach and recruitment efforts; and
- Any other factors including, but not limited to, the nature of the contractor’s job openings and/or its location, which would tend to affect the availability of qualified protected veterans.
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 VEVRAA regulations.
As noted above, a contractor is required to maintain for three years its documentation and assessment of external outreach and recruitment efforts, its compliance with the data collection requirements, and records relating to the benchmark.
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 OFCCP 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.
OFCCP claims that it revised the VEVRAA regulations to update and strengthen contractors’ affirmative action and nondiscrimination responsibilities. Yet OFCCP Director Patricia Shiu recently noted that “OFCCP is first and foremost a work 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 protected veterans. Noncompliance can result in sanctions ranging from commitments to comply to debarment.
An oft-use mantra of OFCCP 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 protected veterans. 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.
Gretchen W. Ewalt & Leigh M. Nason
Ogletree Deakins is a leading labor and employment law firm serving as advocate for management on a nationwide basis. The firm has 45 offices located throughout North America and Europe. See www.ogletreedeakins.com.