On January 22, 2014, the Office of Management and Budget (“OMB”) approved the Office of Federal Contract Compliance Program’s (“OFCCP’s”) new self-identification form for individuals with disabilities. According to OFCCP’s new regulations under Section 503 of the Rehabilitation Act (“Disability Regulations”), federal contractors and subcontractors will be required to use this new form to offer all applicants and employees an opportunity to self-identify as individuals with disabilities.
After receiving thoughtful comments from the contractor community, there were number of improvements that were made to proposed version. For example, the final form now includes a section for applicants to indicate that they do not have a disability and allows candidates to identify their name and the date the form was completed. Significantly, however, the form still asks individuals to disclose if they “ever had a disability.” This is problematic because this may increase the number of candidates who self-identify as disabled thereby (1) increasing the chance of there being statistically significant adverse impact on unselected applicants who self-identified as disabled; and (2) increasing contractors exposure to failure to hire claims under the “regarded as” prong of the ADA because employers will be on notice that these candidates are disabled.
Despite some of the lingering concerns with the form, contractors must prepare to put this in place by their first affirmative action plan cycle following the March 24, 2014 effective date of the Disability Regulations. Contractors will be required to use this exact form without modification, but they can create an electronically fillable copy of the form that displays the OMB number and expiration date, contains the text of the form without alteration, use a sans-serif font (such as Arial or Calibri), and at least 11-pitch font size (with the exception of the footnote and burden statement, which must be at least 10-pitch in size). Contractors will also be required to provide this form to applicants both pre and post-offer, and the form must be provided to employees at least once every five years.
On November 26, 2013, the Office of Federal Contract Compliance Programs (“OFCCP”) released its semiannual regulatory agenda revealing that it plans to introduce several new regulatory initiatives in 2014. Among those initiatives are:
• Updating Affirmative Action Requirements for Construction Contractors: OFCCP intends to issue a proposed rule by April 2014 overhauling the affirmative action regulations for construction contractors. The last revision of these regulations was in 1980. OFCCP indicated that the dated rules for construction contractors “have proven ineffective at making meaningful progress in the employment of women and certain minorities in the construction industry.” OFCCP intends for the new rules to implement a “new method for establishing affirmative action goals” and implement new requirements that “reflect the realities of the labor market and employment practices in the construction industry today.”
• Developing a New Compensation Tool: Over the last several years, OFCCP has expressed its intent to develop a new tool that it could use to analyze contractors’ compensation practices. OFCCP released an Advanced Notice of Public Rulemaking in August 2011 asking for contractors to provide input on a potential compensation tool. In the 2014 regulatory agenda, OFCCP indicated that it would be developing the new compensation tool to “identify contractors likely to violate” OFCCP’s laws and for OFCCP’s “establishment-specific, contractor-wide, and industry-wide analyses.”
• Overhauling the Sex Discrimination Guidelines: OFCCP plans to issue a proposed rule revising its sex discrimination guidelines in May 2014. These guidelines have not been revised in more than 30 years. OFCCP indicated that, because the current guidelines are outdated, they warrant a “regulatory lookback” so that OFCCP can “create sex discrimination regulations that reflect the current state of the law in this area.”
On August 27, 2013, the Office of Federal Contract Compliance Programs (“OFCCP”) released the long awaited final rules increasing protections for veterans under the Vietnam Era Veterans’ Readjustment Assistance Act of 1974 (“VEVRAA”) and individuals with disabilities under Section 503 of the Rehabilitation Act of 1973 (“Section 503”). These new rules will require federal contractors to engage in a number of additional affirmative action and other requirements related to the hiring and retention of veterans and individuals with disabilities.
As expected, the final rules deviate little from the rules OFCCP proposed for veterans and individuals with disabilities in 2011. We will be providing additional analyses of these final rules in the coming weeks, but we have provided a brief summary of some of the highlights of the final rules below. Hold on to your hats as OFCCP continues its game-changing year.
Highlights of Changes to the Veterans Regulations
- Hiring Benchmarks: Under VEVRAA, contractors will now be required to set annual hiring benchmarks for protected veterans. Contractors can establish benchmarks either (1) equal to the national percentage of veterans in the civilian labor force, which will be provided by OFCCP annually; or (2) establish their own benchmarks using certain data from the Bureau of Labor Statistics and the Veterans’ Employment and Training Service/Employment and Training Administration that will also be published by OFCCP, as well other factors that are unique to the contractor’s hiring circumstances.
- New Data Collection and Analyses Requirements: Contractors will be required for the first time to “document and update annually several quantitative comparisons” analyzing the number of veterans hired by the contractor. Contractors must maintain this data for at least three years.
- Revised Procedures for Self-Identification: Before these final rules were issued, contractors were required to offer applicants an opportunity to self-identify their veteran status after being offered employment with the contractor. Under the new rules, contractors are now required to offer candidates an opportunity to self-identify as covered veterans both before and after the offer phase in the application process.
- Mandatory Flow-Down Language: OFCCP is now mandating that contractors use specific language to flow down the veteran requirements to covered subcontractors.
- Required Forms: Contractors will now be required to implement certain formats for listing job openings with State or local job services.
Highlight to Changes to the Disability Regulations
- Mandatory Utilization Goal: The final rule for Section 503 mandates contractors set hiring benchmarks for individuals with disabilities. Contractors will be required to establish a nationwide seven percent utilization goal and conduct annual utilization analyses for individuals with disabilities. The goal will apply to each job group in the contractor’s affirmative action plan or, for contractors with 100 or fewer employees, their entire workforce.
- New Data Collection and Analyses Requirements: Similar to the requirements relating veterans, contractors will also for the first time be required to “document and update annually several quantitative comparisons” analyzing the number of individuals with disabilities hired by the contractor. Contractors will also be required to maintain this data for at least three years.
- Revised Procedures for Self-Identification: Prior to the final rules on Section 503, contractors only invited candidates to self-identify their disability status after they were offered employment. The new rules change that requirement to now obligate contractors to offer candidates an opportunity to self-identify as individuals with disabilities both before and after the offer phase in the application process. In addition, contractors must use specific language proscribed by OFCCP and offer employees an opportunity to self-identify as individuals with disabilities every five years.
- Mandatory Flow-Down Language: Contractors will be required to use OFCCP’s specific language to flow down Section 503 requirements to covered subcontractors.
OFCCP Provides Guidance and Training on Final Rules
For both of the final rules, OFCCP has provided webpages with additional information, including the text of the final rules, fact sheets, and frequently asked questions. OFCCP will also be holding webinars explaining the final rules on August 30 and September 18 for Section 503 and on August 29 and September 11 for VEVRAA. You can sign up for these webinars and find the additional information by following these links: Section 503 and VEVRAA.
Effective Date of Final Rules
The final rules are expected to be published in the Federal Register within the next two weeks and will take effect 180 days after publication. This means that contractors will have to implement many of these requirements by the spring of 2014.
Late last week, OFCCP released the much anticipated update to the Federal Contractor Compliance Manual (“FCCM”). The FCCM provides the procedural framework compliance officers use when auditing federal contractors and subcontractors. The last version of the FCCM was published in the late 1980s, and OFCCP has been hinting over the last couple of years that it would be releasing a new FCCM.
The new 500-plus page FCCM includes the same basic structure as the previous version, but adds a new section for reviews of functional affirmative action plans. The FCCM has also been updated to reflect OFCCP’s current policies and procedures regarding investigating contractor’s practices for compliance and the remedies it will pursue if violations are uncovered. For example, the new FCCM contains new procedures for compliance officers to use when conducting adverse impact analyses, reviews of compensation, and calculating back pay awards for discrimination.
The new FCCM covers the following topics:
- Desk audits of contractors’ compliance with OFCCP’s laws;
- Onsite reviews of contractors’ establishments;
- Compliance reviews of construction contractors;
- Procedures for conducting Corporate Management Compliance Evaluations;
- Compliance reviews of FAAPs;
- Investigations of individual and class complaints;
- Designing remedies for employment discrimination violations; and
- Procedures for resolving violations during compliance evaluations.
The FCCM also contains a glossary of key words and phrases and includes examples of model forms, letters, and worksheets compliance officers can use during compliance evaluations.
OFCCP was quick to note that the revised FCCM is nonbinding and is “subject to change without public notice.” OFCCP released the new FCCM internally to its compliance officers earlier this summer, so many of them are prepared to implement the new procedures in the FCCM. OFCCP also held a public webinar explaining the updated FCCM on August 27, 2013 and will be making the slides and recording from the webinar available on its website.
We anticipate that with the official release of the FCCM, contractors will notice a change in the posture of audits. For the last several years, OFCCP has been overhauling its entire investigatory platform “piece-by-piece,” including revamping how it investigates contractors’ compensation systems. The new FCCM is yet another signal that OFCCP will be conducting more intensive and far-reaching reviews of contractors’ practices.
On July 31, 2013, the Office of Federal Contract Compliance Programs (“OFCCP”) submitted to the Office of Management and Budget (“OMB”) for approval its final regulations for individuals with disabilities under Section 503 of the Rehabilitation Act. This comes on the heels of OFCCP submitting the final regulations for covered veterans under the Vietnam Era Veterans Readjustment Assistance Act (“VEVRAA”) to OMB on Tuesday. OMB will have sixty (60) days to approve or reject these final regulations.
As we previously reported, if passed in their final form, these regulations will usher in game-changing requirements for federal contractors and subcontractors subject to OFCCP’s jurisdiction. In April 2011, OFCCP released its proposed changes to VEVRAA. Under OFCCP’s proposed changes, contractors would be required to engage in a number of additional recordkeeping and other obligations designed to increase protections for covered veterans. See our prior post for a complete list of the proposed changes under VEVRAA.
In December 2012, OFCCP also released proposed changes to Section 503 of the Rehabilitation Act. The proposed rules contemplate requiring contractors to undertake a number of additional affirmative action obligations for individuals with disabilities, including establishing a seven percent goal in each job group at the contractors’ establishments for disabled individuals. The complete details concerning the proposed changes to Section 503 can be found here.
Now that the new Department of Labor Secretary Perez has finally been confirmed, OFCCP will move very quickly to put these and other backlogged items on its regulatory agenda into action. We will continue to monitor these developments and inform you of any further changes.
On May 15, 2013, the Office of Federal Contract Compliance Programs (“OFCCP”) posted a notice informing federal contractors that they must begin using the 2006-2010 EEO Tabulation (“2010 Census Data”) for affirmative action plans (“AAPs”) created after January 1, 2014.
Federal contractors with fifty or more employees and a covered federal contract or subcontract of $50,000 or more are required to create and maintain AAPs annually. One key requirement of an AAP is the determination of the availability of qualified minorities and women for the contractor’s job openings. Contractors use availability numbers to establish benchmarks to determine if they have any underrepresentation of females or minorities in their current workforce. OFCCP requires contractors to “use the most current and discrete statistical information available” to determine their external availability estimates for their AAPs.
As we previously reported, the Census Bureau began releasing the 2010 Census Data last November. This data is the most current statistical information available for contractors to determine availability. The 2010 Census Data is set of over 100 tables that break down the labor force in the United States by sex, race, and ethnicity that is searchable by various variables, such as geography and occupation.
In its notice, OFCCP indicated that it solicited input from contractors about transitioning to the 2010 Census Data. Although it found that some contractors had already implemented the 2010 Census Data, it realized that, for many contractors, “converting their IT systems and availability calculations to the new data will take time due to changes in the coding and categorization” of the 2010 Census Data. As a result, the OFCCP is allowing contractors until January 1, 2014 to use the 2010 Census Data in their AAPs, but noted that contractors could use it earlier if they wished to do so.
In light of this notice, contractors should start assessing how they can incorporate the 2010 Census Data into their availability analysis for their 2014 plans. In addition, contractors who establish goals for their 2013 plans using old census data should consider rerunning their availability analysis using the 2010 Census Data to see if it eliminates or reduces goals.
According to a January 17, 2013 press release, the Office of Federal Contract Compliance Programs (“OFCCP”) has filed a lawsuit against U.S. Security Associates, Inc. (“USA”) with the Office of Administrative Law Judges (“OALJ”) seeking to cancel its contracts and debar it from being award future contracts for refusing to submit affirmative action plans and other documents during audits. USA has previously been awarded $8 million in federal contracts to provide uniformed and trained guards and other emergency responders to the federal government.
OFCCP sent USA scheduling letters on December 7, 2011 and December 13, 2011 to conduct a compliance reviews of USA’s Milwaukee and Portage establishments. USA refused to submit the information OFCCP requested. On June 21, 2012, USA filed a complaint with the OALJ seeking declaratory relief from OFCCP’s compliance reviews. An Administrative Law Judge (“ALJ”) dismissed USA’s complaint for lack of subject matter jurisdiction, and USA appealed the decision to the Administrative Review Board where the matter is currently pending.
Since USA filed its complaint, OFCCP has continued to request documents from the company, which USA has refused to submit. According to the press release, USA currently has twenty sites with open compliance evaluations.
In OFCCP’s complaint, it has requested the OALJ order USA to provide it with access to “all documents and information requested” and “cooperate” with the compliance reviews. If USA fails to comply, OFCCP has requested the OALJ to “cancel all of USA’s current government contracts and to debar the entire company from entering future contracts.”
OFCCP has issued this press release as a warning that it will vigorously pursue enforcement actions against contractors who fail to provide OFCCP access to documents. Director Patricia Shiu stated that “[p]roviding OFCCP investigators with access to the documents they need in order to do their jobs is not optional.” OFCCP also noted that the “issue of providing OFCCP with access to such information has been affirmed by the courts numerous times. In November 2011, Chief Judge Royce C. Lamberth of the U.S. District Court for the District of Columbia ruled, in a similar case, that ‘Submission to such lawful investigations is the price of working as a federal contractor.’”