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OFCCP Issues Final Regulations on Federal Contractors’ Obligations Regarding Veterans and Individuals With Disabilities October 2013

On September 24, 2013, the Department of Labor’s Office of Federal Contract Compliance Programs (OFCCP) published new regulations regarding the affirmative action and nondiscrimination obligations of federal contractors and subcontractors. One set of regulations updates obligations to veterans under the Vietnam Era Veterans’ Readjustment Assistance Act (VEVRAA), and another set updates obligations to disabled individuals under Section 503 of the Rehabilitation Act. Both sets of regulations become effective March 24, 2014.

This Aon Hewitt bulletin summarizes some of the primary changes to the VEVRAA and Section 503 regulations, as well as a federal contractor’s obligations.

Updated Definitions

Veterans Categories The VEVRAA regulations make changes to several definitions to further clarify the affected categories of veterans. Specifically, a definition of “protected veteran” has been added to provide a comprehensive term to refer to any veteran who is protected under VEVRAA. Additionally, the regulations replace “other protected veteran” with “active duty wartime or campaign badge veteran” as the name of the category of veterans who served on active duty in the U.S. military, ground, naval, or air service during a war or in a campaign or expedition for which a campaign badge has been authorized.

The four new categories of “protected veteran” are:

Disabled veteran;

Recently separated veteran;

Active duty wartime or campaign badge veteran; and

Armed Forces service medal veteran.

The regulations also add a definition of “pre-JVA veteran” to account for those veterans who were applicants or employees of a contractor with a contract of $25,000 or more entered into prior to December 1, 2003. “JVA” refers to the Jobs for Veterans Act, which updated the categories of protected veterans under VEVRAA. The four categories of “pre-JVA veteran” are: special disabled veteran; veteran of the Vietnam era; pre-JVA recently separated veteran; and other protected veteran.

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Disability-Related Definitions The regulations implement changes resulting from the Americans with Disabilities Act Amendments Act (ADAAA) by revising the definition of “disability,” as well as its component parts. Under the regulations, “disability” means: 1) a physical or mental impairment that substantially limits one or more major life activities; 2) record of an impairment; or 3) being regarded as having an impairment. Also, as noted in the regulations:

The definition of “disability” must be interpreted broadly. The question of whether an individual meets the definition should not require extensive analysis.

An impairment that substantially limits one major life activity need not limit other major life activities in order to be considered a disability.

An impairment that is episodic or in remission is a disability if it would substantially limit a major life activity when active.

The regulations also update the definitions of “major life activities,” “physical or mental impairment,” “record of such impairment,” “regarded as having such an impairment,” and “substantially limits.”

Equal Opportunity Clauses According to the regulations, every government contract/subcontract must include equal opportunity clauses, the specific language of which is included in the regulations. However, it is not necessary to include the clauses verbatim in a contract. Instead, a contract must cite the Equal Opportunity Clause provisions of the regulations (41 CFR 60-300.5(a) for veterans and 41 CFR 60-741.5(a) for disabled individuals) and include the specific language, in bold text, after the citation. These provisions prohibit discrimination against qualified protected veterans and qualified disabled individuals, and require affirmative action to employ and advance them in employment.

Following are details regarding some of the key obligations mentioned in the equal opportunity clauses, including mandatory job listing requirements, information to be provided to employment service delivery systems (ESDS), notice to disabled veterans/disabled individuals and labor organizations, and solicitation and advertisement requirements.

VEVRAA’s Mandatory Job Listings Under VEVRAA, contractors must immediately list all job openings (existing at the start of the contract term and that occur throughout the term) with the appropriate ESDS. The equal opportunity clause clarifies that contractors must provide information about the openings in any manner and format permitted by the ESDS, allowing it to provide the contractor with priority referral of protected veterans for the openings. Manners and formats can include electronic submission through a web-based form or electronic document format, paper transmission using mail or facsimile, or requiring particular types of information in submissions.

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VEVRAA’s ESDS Information A contractor that becomes contractually bound to the mandatory job listing requirements must advise the ESDS in each state where it has establishments that: 1) it is a federal contractor; and 2) it desires priority referrals of protected veterans for job openings at all locations within the state.

The contractor also must provide the ESDS with the name and location of each hiring location within the state, as well as contact information for the individual responsible for hiring at each location (e.g., chief hiring official, human resources contact, senior management contact). If the contractor uses any external job search organizations to assist in its hiring, it must also provide the ESDS with the contact information for the organizations.

Notices to Veterans and Disabled Individuals Under the regulations, contractors must conspicuously post notices to veterans and disabled individuals in a form set by the OFCCP. The notices must state the rights of these applicants/employees, as well as the contractor’s obligation to take affirmative action to employ and advance in employment qualified protected veterans and qualified disabled individuals. Contractors must ensure that applicants/employees who are disabled veterans or individuals are provided the notice in a form that is accessible and understandable. This can include providing Braille or large print versions of the notice, posting the notice at a lower height for easy viewing by a person using a wheelchair, or providing the notice electronically or on computer disc.

For those employees who do not work at a physical location of the contractor, the contractor satisfies its obligation by posting the notice in an electronic format (i.e., company intranet or email), if the contractor provides computers on which the employees can access the notice or the contractor has actual knowledge that the employees otherwise are able to access the notice. Furthermore, an electronic notice must be used by the contractor to notify job applicants of their rights if it uses an electronic application process. The notice must be conspicuously stored with, or as part of, the electronic application.

Notices to Labor Organizations A contractor should notify each labor organization or representative of workers with which it has a collective bargaining agreement that it is bound by the terms of VEVRAA and Section 503, committed to take affirmative action, and will not discriminate against protected veterans or disabled individuals.

Solicitations and Advertisements Finally, the contractor must state in all its solicitations and advertisements that all qualified applicants will receive consideration for employment and will not be discriminated against on the basis of their disability, and will be considered without regard for their protected veteran status.

Affirmative Action Programs Under VEVRAA, contractors with 50 or more employees and a contract of $100,000 or more must prepare and maintain an affirmative action program (AAP), setting forth its policies and procedures. Under Section 503, contractors with 50 or more employees and a contract of $50,000 or more must

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prepare and maintain an AAP. However, a contractor with an existing AAP as of March 24, 2014 is granted a “grace period” and may come into compliance at the start of the next standard AAP cycle. For example, an AAP with renewal dates of January 1, 2014 and January 1, 2015, would not have to be in compliance until January 1, 2015.

Following are details regarding key parts of an AAP, including invitations to self-identify, outreach and recruitment activities, data collection analysis, hiring benchmarks, and utilization goals.

Invitations to Self-Identify Pre-Offer According to the VEVRAA regulations, contractors must invite an applicant to self-identify as a “protected veteran” who may be covered by the law. The invitation may be included in the application materials but must be provided prior to making an offer of employment. According to the Section 503 regulations, contractors must invite an applicant to self-identify as an individual with a disability using language in a “Self-Identification Form” published by the OFCCP. The invitation must be provided to an applicant when he/she applies or is considered for employment.1 Also, while the invitation may be included in the application materials, it must be separate from the application.

In the preambles to the regulations, the OFCCP states that it will permit contractors to invite applicants to self-identify as protected veterans or disabled individuals when seeking the gender and race/ethnicity data required by the agency’s Internet Applicant rule. Although that rule allows contractors to screen out applicants whom they believe do not meet the basic qualifications of a position, basic qualifications that tend to screen out disabled veterans/individuals must be job-related and consistent with business necessity. Also, selection criteria related to an essential function may not be used to exclude disabled veterans/individuals if they could satisfy the criteria with a reasonable accommodation.

Post-Offer In addition to the pre-offer invitation to self-identify as a protected veteran, contractors also must invite an applicant to identify whether he/she belongs to one or more of the specific categories of protected veteran for which the contractor is required to report (i.e., VETS-100 or VETS-100A reporting). The invitation must be made at any time after an offer of employment but before the applicant begins his/her job duties. If an applicant self-identifies as a disabled veteran post-offer, the contractor should inquire whether an accommodation is necessary, and if so, should engage with the applicant regarding the accommodation. The contractor must maintain a separate file for those individuals who have self-identified as disabled veterans and must keep all information on self-identification confidential.

In addition to the pre-offer invitation to self-identify as a disabled individual, contractors also must invite an applicant to identify whether he/she is a disabled individual, using language in the form published by the OFCCP, any time after an offer of employment but before the applicant begins his/her job duties.

1 The OFCCP has attempted to allay concerns that the pre-offer invitations may violate the Americans with

Disabilities Act with an Equal Employment Opportunity Commission opinion letter addressing pre-offer invitations. The opinion letter is available at: http://www.dol.gov/ofccp/regs/compliance/sec503/OLC_letter_to_OFCCP_8-8-2013_508c.pdf

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Current Employees Because the disability status of employees may change during their employment, contractors must also invite all employees to voluntarily identify as a disabled individual using language in the form published by the OFCCP. This invitation must be extended the first year the contractor becomes subject to these requirements, and then every five years. Contractors also must remind employees at least once during the intervening years that they may voluntarily update their disability status. Contractors may not compel or coerce an employee to self-identify as a disabled individual, and all self-identification information must be kept confidential and maintained in a data analysis file (rather than in employees’ medical files).

Content of VEVRAA Invitations The pre-offer and post-offer invitations must:

State that the contractor is a federal contractor required to take affirmative action to employ and advance in employment protected veterans pursuant to VEVRAA;

Summarize the relevant portions of VEVRAA and the contractor’s AAP; and

State that the information is being requested on a voluntary basis, that it will be kept confidential, that refusal to provide it will not subject the applicant to any adverse treatment, and that it will not be used in a manner inconsistent with VEVRAA.2

AAP Content Outreach and Recruitment According to the regulations, contractors must undertake appropriate outreach and recruitment activities that are reasonably designed to recruit protected veterans and disabled individuals effectively. The regulations provide an illustrative list of activities. Contractors may choose from the list or engage in other activities appropriate to their particular circumstances. Following are some examples provided in the regulations:

Enlist the assistance and support of specified people/organizations in recruiting and developing on-the-job training opportunities for veterans and disabled individuals.

In making hiring decisions, consider applicants who are known protected veterans or to have disabilities for all available positions for which they may be qualified when the position(s) applied for is unavailable.

For veterans, consider listing its job openings with the National Resource Directory’s Veterans Job Bank or any future service that replaces or complements it. For disabled individuals, take steps to attract those who are not currently in the workforce and have requisite skills through state and local agencies supported by the U.S. Department of Education’s Rehabilitation Services Administration, local Ticket-to-Work Employment Networks, or local chapters of groups/organizations that provide services for disabled individuals.

Assessment of Outreach and Recruitment Efforts—Contractors must annually review the outreach and recruitment efforts taken over the previous 12 months to evaluate their effectiveness in identifying and recruiting qualified protected veterans and disabled individuals. The contractor must document each

2 Model invitations are included in an appendix to the VEVRAA regulations, which are linked to in the

Resources section of this bulletin.

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evaluation including, at a minimum, the criteria used and a conclusion as to whether each effort was effective. The criteria must include the computations/comparisons listed in the Data Collection Analysis section below, for the current year and the two previous years. If the contractor concludes that its efforts were not effective, it must identify and implement alternative efforts in order to fulfill its obligations. The contractor must document all activities it undertakes to comply with the outreach and recruitment obligations and retain the records for three years.

Data Collection Analysis Under the regulations, contractors must annually document the following computations/comparisons pertaining to applicants and hires and maintain them for three years:

The number of applicants who self-identified as protected veterans or disabled, or who are otherwise known as such;

The total number of job openings and total number of jobs filled;

The total number of applicants for all jobs;

The number of protected veterans and number or disabled applicants hired; and

The total number of applicants hired.

Reasonable Accommodations A contractor must make reasonable accommodations for known physical or mental limitations of a disabled veteran/individual who is otherwise qualified for a position, unless it can demonstrate that the accommodations would impose undue hardship on business operations. It is also unlawful for a contractor to deny employment opportunities to a job applicant or employee who is a disabled veteran/individual based on the need to make a reasonable accommodation, if he/she is otherwise qualified for the position.

Under the Section 503 regulations, if a contractor uses an electronic or online job application system, it must provide necessary reasonable accommodation to ensure that a disabled individual who is not able to fully utilize the system, but is otherwise qualified, is provided with equal opportunity to apply and be considered for all jobs. While the regulations do not require that the systems be accessible and compatible with assistive technologies used by disabled individuals, this is considered a best practice. The Section 503 regulations also do not require development and use of written reasonable accommodation procedures, but written procedures are a best practice that may assist contractors in meeting Section 503 obligations.3

Benchmarks and Goals Since announcing the regulations, the OFCCP has stressed that the hiring benchmarks and utilization goals are not quotas that must be met, as quotas are expressly forbidden. Instead, the OFCCP states that the purpose of the hiring benchmarks is “to create a quantifiable method by which the contractor can measure its progress toward achieving equal employment opportunity for protected veterans.” Also, the

3 Guidance for contractors that choose to develop and use written reasonable accommodation procedures is included in an appendix to the Section 503 regulations, which are linked to in the Resources section of this bulletin.

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purpose of the utilization goals is “to establish a benchmark against which the contractor must measure the representation of individuals within…its workforce.”

Hiring Benchmarks for Veterans Hiring benchmarks must be set annually by the contractor using one of the following two methods:

1. Establishing a benchmark equaling the national percentage of veterans in the civilian labor force (currently 8%), which will be published and updated annually on the OFCCP website; or

2. Establishing a benchmark by taking into account the following factors:

a. The average percentage of veterans in the civilian labor force in the states where the contractor is located over the preceding three years, as calculated by the Bureau of Labor Statistics and published on the OFCCP website;

b. The number of veterans, over the previous four quarters, who were participants in the ESDS in the state where the contractor is located, as tabulated by the Veterans’ Employment and Training Service and published on the OFCCP website;

c. The applicant and hiring ratio for the previous year, based on data collected pursuant to the data collection analysis discussed above;

d. The contractor’s recent assessments of the effectiveness of its external outreach and recruitment efforts, as discussed above; and

e. Any other factors, such as the nature of the contractor’s job openings and/or its location.

Contractors must annually document their established benchmark regardless of the method used, as well as retain the records for three years. However, if the contractor sets its benchmark using the second method, it must also document each of the factors that it considered in establishing the benchmark and the relative significance of each of these factors.

Utilization Goals for Disabled Individuals The OFCCP has established a nationwide 7% utilization goal, which will be periodically reviewed and updated, for employment of qualified individuals with disabilities. The goal applies to each job group in a contractor’s workforce (or the entire workforce if the contractor has 100 employees or fewer). Contractors must annually evaluate the utilization of disabled individuals in each job group. When the percentage of disabled individuals in one or more job groups is less than the goal, contractors must take steps to determine whether and where impediments to equal opportunity exist. When making this determination, contractors must assess their personnel processes, the effectiveness of their outreach and recruitment efforts, the results of their AAP audit, and any other areas that might affect the success of the AAP. Contractors also must develop and execute action-oriented programs designed to correct any identified problem areas.

If a contractor determines that it has not attained the utilization goal, it does not constitute a finding or admission of discrimination and will not result in a fine, penalty, or sanction.

Recordkeeping According to the regulations, any personnel or employment record (e.g., records relating to requests for reasonable accommodation, results of a physical examination, job advertisements/postings, applications

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and resumes, tests and test results, interview notes) made or kept by the contractor must be retained for two years from the date the record was made or the personnel action occurred, whichever occurs later. However, if the contractor has fewer than 150 employees or the applicable contract is less than $150,000, the minimum retention period is one year from the date the record was made or the personnel action occurred, whichever occurs later.

Additionally, when a contractor receives notice that a discrimination complaint has been filed, a compliance evaluation has been initiated, or an enforcement action has commenced, it must retain all relevant personnel records until resolution occurs. Failure to retain complete and accurate records constitutes noncompliance with VEVRAA and Section 503 obligations.

Resources The final VEVRAA regulations (including Sample Invitation to Self-Identify) are available at: http://www.gpo.gov/fdsys/pkg/FR-2013-09-24/pdf/2013-21227.pdf

The final Section 503 regulations (including Guidance on Reasonable Accommodation Procedures) are available at: http://www.gpo.gov/fdsys/pkg/FR-2013-09-24/pdf/2013-21228.pdf

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© 2013 Aon plc This document is intended for general information purposes only and should not be construed as advice or opinions on any specific facts or circumstances. The comments in this summary are based upon Aon Hewitt's preliminary analysis of publicly available information. The content of this document is made available on an “as is” basis, without warranty of any kind. Aon Hewitt disclaims any legal liability to any person or organization for loss or damage caused by or resulting from any reliance placed on that content. Aon Hewitt reserves all rights to the content of this document.