December 21, 2014

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December 19, 2014

New Requirements for Federal Contractors Outlined in Revised Vietnam Era Veterans' Readjustment Assistance Act of 1974 (VEVRAA) and Section 503 Rules

On Tuesday, August 27, less than one month after submission for Office of Management and Budget review, the Office of Federal Contract Compliance Programs (OFCCP) announced its long-promised revised regulations to the Vietnam Era Veterans' Readjustment Assistance Act of 1974 (VEVRAA) and Section 503 of the Rehabilitation Act of 1973, which require covered federal contractors and subcontractors to recruit, hire, train and promote qualified veterans and people with disabilities, respectively. The revised rules increase contractors' outreach and affirmative action responsibilities, impose new data collection requirements, and require contractors to establish benchmarks and utilization goals. In keeping with the trend of increased OFFCP activity and a revitalized Department of Labor under Secretary Thomas Perez, the rules come just days after the OFCCP published its new Federal Contractor Compliance Manual and approximately six months after it rescinded its previous enforcement guidance on pay discrimination.

According to the OFCCP, the revised regulations will be published in the Federal Register within the next two weeks and will become effective 180 days after publication. At that time, covered contractors must comply with all elements of the new regulations; however, contractors with an affirmative action program (AAP) in place on the effective date may delay compliance with the new AAP requirements set forth in Subpart C of the revised regulations until the start of their next AAP cycle.

As reported in the OFCCP's announcements on its website and as set forth in the new regulations, some of the highlights of the new rules include the following:

VEVRAA Regulations

  • Rescission of 41 CFR Part 60-250: The outdated regulations applying to contracts entered prior to December 1, 2003, were rescinded in their entirety. Veterans that were formerly protected only under Part 60-250, however, are still protected from discrimination under the revised regulations.

  • New Hiring "Benchmarks": Contractors must establish annual hiring "benchmarks" for protected veterans, either using a benchmark equal to the national percentage of veterans in the civilian labor force (currently 8%) or establishing their own benchmarks using certain federal data and criteria outlined by the OFCCP. According to OFCCP guidance, "benchmarks" are different than the "goals" expressed in Executive Order 11246 and the new Section 503 rule (described below) and serve only as a yardstick to measure the success of outreach efforts.

  • New Data Collection Requirements: Contractors must document and update annually quantitative comparisons for the number of job openings, the number of veterans who apply for open jobs as well as the number hired, and the total number of applicants and hires for all jobs.

  • Invitation to Self-Identify both Pre- and Post-Offer: Contractors must invite applicants to self-identify as protected veterans at both the pre-offer and post-offer phases of the application process.

  • Specific Language for Incorporation of the EEO Clause in Subcontracts: In order to incorporate the equal opportunity clause by reference in subcontracts, contractors must include specific language outlined in the new regulations that notifies subcontractors of their responsibilities as federal contractors.

  • Required Job Listings, Solicitations and Advertisements: The rules clarify and extend requirements for providing information to the appropriate employment service delivery system for applicable openings. They also require that the contractor notify the agency that it is a federal contractor and desires priority referrals from the state. Further, all solicitations and advertisements must indicate that the contractor is an equal opportunity employer of protected veterans.

  • Record Retention: Records and data pertaining to the requirements of outreach and recruitment, comparisons of applicants and employees, and hiring benchmarks set forth in the regulations must be maintained for three years.

Section 503 Regulations

  • Applicant Invitation to Self-Identify both Pre- and Post-Offer:Contractors must invite applicants to self-identify as individuals with disabilities at both the pre-offer and post-offer phases of the application process, utilizing a form for this purpose to be developed by the OFCCP. Of key note, in a letter published on the OFCCP's website, EEOC Legal Counsel opined that compliance with these requirements will not violate Title I of the Americans with Disabilities Act.

  • Employee Self-Identification: Contractors must invite their employees to self-identify as individuals with disabilities the first year the contractor becomes subject to this new requirement and every five years, with language to be provided by the OFCCP.

  • New Utilization Goal: Contractors must now establish a nationwide 7% utilization goal for qualified individuals with disabilities, applied to each job group, or to the entire workforce if the contractor has 100 or fewer employees, along with an annual utilization analysis and assessment of problem areas and specific action-oriented programs to address identified problems.

  • New Data Collection Requirements: Contractors must document and update annually quantitative comparisons for the number of job openings, the number of known individuals with disabilities who apply for open jobs and the number hired, as well as the total number of applicants and hires for all jobs.

  • Specific Language for Incorporation of the EEO Clause in Subcontracts: In order to incorporate the equal opportunity clause by reference in subcontracts, contractors must include specific language outlined in the new regulations that notifies subcontractors of their responsibilities as federal contractors.

  • Solicitations and Advertisements: All solicitations and advertisements must indicate that the contractor is an equal opportunity employer of individuals with disabilities.

  • Record Retention: Records and data pertaining to the requirements of outreach and recruitment and comparisons of applicants and employees set forth in the regulations must be maintained for three years.

  • ADAAA: The definition of "disability" and certain nondiscrimination provisions of the implementing regulations were revised in accordance with the ADA Amendments Act (ADAAA) of 2008.

Although these rules will not take effect until 180 days after publication in the Federal Register, now is the time for federal contractors to start the process of reviewing and updating forms, invitations, contract language, and employment and IT practices in order to achieve compliance by the effective date.

© 2014 Schiff Hardin LLP

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About this Author

Nora Kersten Walsh concentrates on all areas of labor and employment law, with an emphasis on employment-related litigation and employee counseling.

She has conducted federal and state court litigation, including appellate litigation, and has participated in hearings before:

  • The Equal Employment Opportunity Commission (EEOC)
  • Illinois Department of Human Rights
  • Chicago Commission on Human Rights, the National Labor Relations Board (NLRB)
  • State unemployment compensation tribunals

Ms. Kersten Walsh also provides input on labor and...

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