All employers contracting or subcontracting with the federal government are required to gather applicant data, prepare spreadsheets and update written materials to reflect affirmative action goals and changes in recruiting sources. With regard to veterans and individuals with disabilities, employers have historically only had to update some information. This is about to change because of two new rules issued by the Department of Labor, Office of Federal Contract Compliance Programs (OFCCP), which become effective in March, 20141, making employer updates and benchmarks more stringent.
On September 24, 2013, the OFCCP published final rules that significantly change previous regulations related to the Vietnam Era Veterans’ Readjustment Assistance Act (VEVRAA), at 41 CFR Part 60-300, and Section 503 of the Rehabilitation Act of 1973 (Section 503), as amended at 41 CFR 60-741. The new rules strengthen the affirmative actions and nondiscrimination obligations owed by companies contracting with the federal government. The goal of the new rules is to reduce “substantial disparities” in unemployment and pay rates for veterans and individuals with disabilities. If you contract directly or indirectly with the federal government (i.e., subcontracts), these changes apply to you.
The new rules implement, among other things, three major changes impacting employers.2
- Data Collection and Reporting: Employers are required to annually collect and document outreach, recruitment, applicants, and hiring for veterans and individuals with disabilities. This data must be kept confidentially and for a minimum of three years.
- Self-Identification: Under the VEVRAA rule, employers must provide job applicants with written notice under the Act and ask the applicant to voluntarily state (self-identify) whether s/he is a veteran as defined by the Act. Employers must seek self-identification before a job offer is made and, if applicable, again after making an offer. Under Section 503, employers have the same requirements but must also seek self-identification from existing employees “on a regular basis.”
- Benchmarks: Under VEVRAA, employers have two options for setting a benchmark for hiring veterans. Employers can use a national benchmark (currently 8%) or they can create a local benchmark under guidelines permitted by the new rule. Under Section 503, the OFCCP adopted a national utilization goal of 7%. This utilization goal applies to each employer job group, unless the employer has less than 100 employees.3
Employers should consider revising their employee manuals and/or affirmative action plans to incorporate these new rules. Failure to comply may result in the federal government withholding payments under existing contracts and, ultimately, terminating those contracts. Even employers not directly impacted would also be wise to consider implementing measures to track this information.
1 The new rules become effective 180 days from the date of issuance (September 24, 2013). Contractors with an Affirmative Action Plan already in place prior to September 24, 2013, have additional time until they create their next plans to achieve compliance under the new rules.
2 There are additional minor changes that are not discussed here. A copy of the final rules may be obtained here (www.dol.gov/ofccp/regs/compliance/vevraa.htm; www.dol.gov/ofccp/regs/compliance/section503.htm).
3 Employers with less than 100 employees must use a 7% utilization goal for the entire work force.