New Rules for Federal Contractors and Subcontractors

by Kate Grado

The Office of Federal Contract Compliance Programs (OFCCP) in the Department of Labor (DOL) recently finalized new rules affecting the affirmative action and nondiscrimination obligations of federal contractors and subcontractors.  

The OFCCP’s final rule amends federal contractor and subcontractor requirements under the Vietnam Era Veterans’ Readjustment Assistance Act (VEVRAA) and Section 503 of the Rehabilitation Act of 1973 (Section 503). The final rule becomes effective on March 24, 2014. 

VEVRAA requires federal contractors and subcontractors to take affirmative action to recruit, hire, promote, and retain protected veterans. Section 503 requires federal contractors and subcontractors to take affirmative action to recruit, hire, promote, and retain individuals with disabilities. Significant amendments created by the final rule include:

  • Hiring Benchmarks/Utilization Goals: The final rule requires contractors to establish annual hiring benchmarks for protected veterans. Contractors must use one of two methods to establish their benchmarks. The final rule includes an aspirational utilization goal of 7% designed as a yardstick against which contractors can measure the success of their efforts in outreach to, and recruitment of, individuals with disabilities. 
  • Data Collection and Retention: The final rule requires contractors to document quantitative comparisons for the number of veterans and individuals with disabilities who apply for jobs and the number of veterans and individuals with disabilities they hire. The data must be maintained for three years.
  • Invitation to Self-Identify: The final rule requires contractors to invite applicants to self-identify as protected veterans and/or individuals with disabilities at both the pre-offer and post-offer phases of the application process.
  • Equal Opportunity Clause: The final rule requires specific language to be used when incorporating the equal opportunity clause into a subcontract by reference.
  • Job Listing Obligations: The final rule clarifies the job listing requirements set forth in VEVRAA, mandating the OFCCP’s policy that contractors must provide job listing information in a format that is permitted by the appropriate state workforce agency.
  • Access to Records: The final rule requires contractors to provide documents, either on-site or off-site—whichever OFCCP’s requests—during compliance checks, and permits OFCCP to conduct focused reviews both on-site and off-site. The final rule also requires contractors to specify all formats in which its records are available, including electronic formats, and to provide records—if required—to OFCCP in the formats it selects.

Do the new rules apply to you?

Generally speaking, DOL guidance provides that an entity is subject to one or more of the laws enforced by the OFCCP if it (1) holds a federal contract, subcontract, or federally assisted construction contract in excess of $10,000; (2) holds multiple federal contracts or subcontracts with a combined total in excess of $10,000 in any 12-month period; or (3) holds government bills of lading, serves as a depository of federal funds, or is an issuing and paying agent for U.S. savings bonds and notes in any amount. Additionally, certain entities that do not independently hold federal contracts or subcontracts may still be covered by the new rules if they are considered a “single entity” with a business or organization that holds such contracts.