On August 27, 2013, the U.S. Department of Labor’s Office of Federal Contract Compliance Programs (OFCCP) announced a Final Rule that makes changes to the regulations implementing Section 503 of the Rehabilitation Act of 1973, as amended (Section 503) at 41 CFR Part 60-741. You can view the Final Rule on the OFCCP Web site here, and on the Federal Register Web site, when published. Additional information about the Final Rule is provided in the Frequently Asked Questions (FAQs), below.
General Information
- Why did OFCCP revise the Section 503 regulations?
- Did OFCCP change all of the Section 503 regulations?
- Does the Section 503 Final Rule differ from the Notice of Proposed Rulemaking (NPRM)?
- Where can I get a copy of the new regulations?
- Will the “EEO is the Law” poster be revised in light of the new regulations? If so, should contractors stop using the current poster once the new regulations become effective on March 24, 2014?
Effective Date and Compliance Schedule
- When does the Final Rule become effective?
- The Final Rule’s effective date falls in the middle of my company’s AAP year. Do we have to have a new AAP in place by the time the Final Rule becomes effective?
Overview of the Final Rule
The following FAQs address key changes to the regulations made by the Final Rule.
- What changes does the Final Rule make to the definitions section of the regulations?
- Are there different coverage and waiver provisions in this Section 503 Final Rule?
- Do the new regulations include a national utilization goal? What is a utilization goal?
- How did OFCCP determine the utilization goal?
- If I am a federal contractor, does my company have to use the utilization goal? How do I apply it to my workforce?
- What happens if my company does not meet the 7 percent goal? Will we be sanctioned or fined?
- What is a sheltered workshop? How does a contractor’s use of a sheltered workshop effect its assessment of whether it has met its utilization goal?
- What changes does the Final Rule make to the contractor’s current obligation to invite applicants to self-identify in 60-741.42?
- When should my company invite pre-offer self-identification from applicants? Is the timing the same for Internet applicants?
- Are there other new provisions related to voluntary employee self-identification, in addition to the requirement that contractors provide applicants a voluntary pre-offer self-identification opportunity?
- Does the Final Rule still permit my company to incorporate the Equal Opportunity (EO) Clause into subcontracts by reference?
- Are there any new provisions in the EO Clause?
- were any existing EO Clause provisions revised or updated?
- Can a contractor satisfy its obligation to post a notice informing applicants and employees of their EEO rights by posting the notice electronically?
- Did the new regulations change the contractor’s obligations to conduct a review of physical and mental job qualification?
- Does the Final Rule require the use of mandatory job listings?
- What changes does the Final Rule make to the existing Section 503 data collection requirements?
- Does the Final Rule change the requirement that contractors document the design and implementation of an audit and reporting system for their affirmative action program?
- Does the Final Rule change the requirements for conducting outreach and recruitment?
- How does the Final Rule change the current Section 503 record-keeping requirements?
- Does the Final Rule update how compliance officers conduct compliance evaluations?
Compliance Assistance and Education
- How can I contact OFCCP if I have questions about the Final Rule?
- Will OFCCP provide technical assistance for contractors on the new Section 503 requirements?
Implementation Questions
In General
Must OFCCP amend the Scheduling Letter in order to obtain from contractors the data and information required in the Final Rule?
Compliance Schedule
- What do contractors need to do between now and the effective date of the final rules?
- What do contractors with AAPs in place under the old regulations need to do beginning on the effective date of the new Section 503 rule to make sure that their first AAPs under the new regulations are as compliant as possible?
- What new elements should be included in the first AAP under the new Section 503 regulations, that is, after the effective date?
Data Collection Analysis
The data collection requirements in section 60-741.44(k)(2) of the Final Rule require contractors to document “the total number of job openings and total number of jobs filled.” Does the “total number of openings” refer to the number of requisitions or job vacancy announcements, or to the number of individual open positions referenced in the requisitions or announcements?
The data collection requirements in section 60-741.44(k) also ask contractors to report the number of jobs “filled” (60-741.44(k)(2)) and those “hired” (60-741.44(k)(4) and (5)). How does the number of “jobs filled” differ from the number of people “hired?”
Self-Identification
May contractors create an electronically fillable copy of the form used to invite voluntary self-identification of disability?
Vacancy Announcement Tagline
May contractors satisfy the EEO tagline requirement by abbreviating “disability” and “protected veteran status” as “D” and “V,” respectively?
General Information
1. Why did OFCCP revise its Section 503 regulations?
OFCCP revised the Section 503 regulations to update and strengthen contractors’ affirmative action and nondiscrimination responsibilities. The framework articulating contractors’ Section 503 responsibilities has been in place since the 1970’s. However, both the unemployment rate of working age individuals with disabilities and the percentage of working age individuals with disabilities that are not in the labor force remain significantly higher than for those without disabilities. A substantial disparity in the employment rate of individuals with disabilities continues to persist despite years of technological advancements that have made it possible for people with disabilities to apply for and successfully perform a broad array of jobs. In addition, we are finding more Section 503 violations during compliance investigations. This seems to indicate that the current compliance framework is not as effective as hoped.
Several factors contribute to limiting the ability of individuals with disabilities to seek, find, keep, and thrive in jobs. The existence of an outdated framework that does not reflect the realities of today’s workplace or current disability rights law; the persistent unemployment and underutilization of individuals with disabilities; and certain institutional and process barriers are all limiting factors. It is these factors, and others, that highlight the need for new regulations.
2. Did OFCCP change all of the Section 503 regulations?
No, several Section 503 requirements remain unchanged. OFCCP republished all of the Section 503 implementing regulations in the Final Rule, whether or not the individual regulation changed, to make the Final Rule easier to read and understand.
3. Does the Section 503 Final Rule differ from the Notice of Proposed Rulemaking (NPRM)?
Yes. OFCCP received more than 400 comments on the NPRM from contractors, disability rights organizations, and others during the public comment period. In light of the comments, we made several changes in the Final Rule. The result is a Final Rule that increases contractor accountability for compliance with their affirmative action obligations, but provides contractors with greater flexibility than the NPRM originally proposed.
4. Where can I get a copy of the new regulations?
The Final Rule is on the OFCCP Web site www.dol.gov/ofccp/503Rule. You can also view it on the Web site of the Federal Register at https://www.federalregister.gov/index/2013 once they make it available electronically.
5. Will the “EEO is the Law” poster be revised in light of the new regulations? If so, should contractors stop using the current poster once the new regulations become effective on March 24, 2014?
It is likely that the “EEO is the Law” poster will be revised in light of changes in the new regulations; for example, the new poster will reflect the change in the terminology used to describe the veterans protected by VEVRAA. Even though OFCCP is working with the Equal Employment Opportunity Commission (EEOC) to revise the poster, contractors should continue using the existing poster. OFCCP will post a notice on its Web site to let contractors know when the new poster is available for use.
Effective Date and Compliance Schedule
1. When does the Final Rule become effective?
The Final Rule becomes effective on March 24, 2014. Contractors should expect to comply with the nondiscrimination provisions of the regulations as of this effective date. However, OFCCP is providing contractors with an extended compliance date for the Affirmative Action Program requirements in Subpart C. During this extended period, OFCCP will provide technical assistance to facilitate the transition for contractors.
2. The Final Rule’s effective date falls in the middle of my company’s AAP year. Do we have to have a new AAP in place by the time the Final Rule becomes effective?
No. Contractors with an AAP in place on the Final Rule’s effective date may maintain that AAP until the end of their AAP year and delay their compliance with the AAP requirements of Subpart C of the Final Rule until the start of their next AAP cycle. Contractors are nevertheless encouraged to begin updating their employment practices and IT systems to come into compliance with the revised requirements of Subpart C of the Final Rule as soon as possible. In addition, contractors are reminded that they must comply with the other requirements of the Final Rule, in subparts A, B, D and E, by the effective date.
Overview of the Final Rule
The following FAQs address key changes to the regulations made by the Final Rule.
1. What changes does the Final Rule make to the definitions section of the regulations?
The Final Rule makes several changes to the definitions section of the regulations:
- The title “Director” replaces the term “Deputy Assistant Secretary” to reflect the current title of the head of OFCCP;
- The word “disability” and its component parts are made consistent with the definitions resulting from the passage of the ADAAA, which became effective on January 1, 2009, and which amends both the ADA and Section 503; and
- The terms “individual with a disability” and “qualified individual with a disability” are changed to “disability” and “qualified individual,” respectively, in accordance with the ADAAA.
2. Are there different coverage and waiver provisions in this Section 503 Final Rule?
No, there are no substantive changes but we deleted the “contract work only” exception in 60-741(a)(2) that applied to “employment decisions and practices occurring before October 29, 1992.” This provision expired in 1992.
3. Do the new regulations include a national utilization goal? What is a utilization goal?
Yes, the new regulations include an aspirational utilization goal of 7 percent. OFCCP created this goal to give contractors a yardstick against which they can measure the success of their efforts in outreach to and recruitment of individuals with disabilities. More specifically, contractors should use the goal to measure the change in the representation of individuals with disabilities in their workforce. The utilization goal, with its focus on the entire workforce, differs from the placement goal under the Executive Order 11246 program, which focuses on those employees newly placed into positions. The goal is not a quota.
4. How did OFCCP determine the utilization goal?
OFCCP established the utilization goal primarily using information taken from the disability data collected as part of the American Community Survey (ACS). We based the goal on the 2009 ACS disability data for the “civilian labor force” and the “civilian population,” first averaged by EEO-1 job category, and then averaged across EEO-1 category totals. Specifically, we used the mean across these EEO-1 groups to estimate that 5.7% of the civilian labor force has a disability as defined by the ACS. Due to the fact that ACS uses a narrower definition of disability, this 5.7% does not include all individuals with disabilities as defined under the broader definition in Section 503 and the ADAAA.
This number does not take into account discouraged workers, or the effects of historical discrimination against individuals with disabilities that has suppressed the representation of such individuals in the workforce.1 Therefore, OFCCP adjusted the 5.7% after estimating the size of the discouraged worker effect. We compared the percent of the civilian population with a disability (7.42 percent per the ACS definition) who identified as having an occupation to the percent of the civilian labor force with a disability (5.7 percent) who identified as having an occupation to arrive at the discouraged worker effect. The result, rounded, is a 7 percent utilization goal for individuals with disabilities.
5. If I am a federal contractor, does my company have to use the utilization goal? How do I apply it to my workforce?
Yes, you do have to use the national 7 percent utilization goal, and, in most instances, you apply it to the same job groups that you created for your Executive Order 11246 affirmative action program (AAP). If you are a small contractor using the EEO-1 job categories as your job groups in your Executive Order AAP, you apply the goal to your EEO-1 job categories. However, if you are a contractor with a total workforce of 100 or fewer employees, you may apply the goal to your workforce as a whole.
While you will not have to calculate your own goal, you will need to know how many individuals with disabilities are currently in your workforce and in what job groups or EEO-1 job categories, as applicable.
6. What happens if my company does not meet the 7 percent goal? Will we be sanctioned or fined?
Failure to meet a disability goal will not be a violation of the regulations and will not lead to a fine, penalty or sanction. The regulations specifically provide that the disability goal is not to be used as a quota or a ceiling that limits or restricts the employment of individuals with disabilities. It further states that a contractor’s determination that it failed to meet the disability goal does not constitute either a finding or admission of discrimination in violation of the regulation.
When the percentage of individuals with disabilities in one or more job groups (or EEO-1 categories, or workforce as a whole, as appropriate, for small contractors) is less than the utilization goal, the contractor must take steps to determine whether and where impediments to equal employment exist. This includes assessing existing personnel processes, the effectiveness of its outreach and recruitment efforts, the results of its affirmative action program audit, and any other areas that might affect the success of the affirmative action program. After conducting this assessment, the contractor must develop and execute action-oriented programs to correct any identified problem areas.
7. What is a sheltered workshop? How does a contractor´s use of a sheltered workshop effect its assessment of whether it has met its utilization goal?
Sheltered workshops are segregated facilities that exclusively or primarily employ persons with disabilities. These workshops were created to provide an environment where individuals with certain disabilities can gain job skills and work experience.
Many sheltered workshops are authorized to pay special minimum wages under an exemption in section 14(c) of the Fair Labor Standards Act (FLSA), 29 U.S.C. 214(c), after receiving a certificate from the U.S. Department of Labor´s Wage and Hour Division. The certificate allows the payment of special minimum wages to certain workers with disabilities. Section 60-741.45 of the existing section 503 regulations (renumbered section 60-741.47 in the Final Rule) provides that “[c]ontracts with sheltered workshops do not constitute affirmative action in lieu of employment and advancement of qualified disabled individuals in the contractor´s own workforce.”
Contractors may include a contract with a sheltered workshop in its affirmative action program only if the sheltered workshop is training individuals that the contractor is obliged to hire at full compensation when they become qualified individual with disabilities. Such trainees are not included in the contractor´s utilization analysis or counted toward the contractor’s goal because they are not part of the contractor’s workforce. Only after the trainees become employees of the contractor, and are receiving the same compensation as other employees, may the contractor count these employees toward its utilization goal. If a contractor pays some of its own employees under an FLSA section 14(c) certification, the contractor counts those employees toward its goal in the job group in which they are employed. Contractors with more than 100 employees must apply the goal to each of their job groups, not to their workforce as a whole. therefore, having a sheltered workshop inside the company will only count toward the contractor’s goal with respect to the specific job group in which work is performed by the sheltered workshop at that facility.
8. What changes does the Final Rule make to the contractor´s current obligation to invite applicants to self-identify in 60-741.42?
The new Section 503 regulations require contractors to invite applicants to self-identify at the pre-offer stage, in addition to the existing post-offer self-identification requirement. OFCCP is developing a form for contractors to use to invite applicants to self-identify and will post it on the OFCCP Web site when it becomes available.
OFCCP added this requirement so that contractors can track the number of individuals with disabilities who apply for jobs and use this information to assess the effectiveness of their outreach and recruitment efforts. The pre-offer invitation to self-identify may be included in the contractors´ application materials for a position, but must be separate from the application.
9. When should my company invite pre-offer self-identification from applicants? Is the timing the same for Internet applicants?
The Final Rule permits contractors to invite applicants to self-identify as an individual with a disability at the same time that the contractor collects demographic data regarding race, gender, and ethnicity from applicants as required by Executive Order 11246. Under Executive Order 11246, the Internet Applicant Rule generally allows contractors to screen out individuals whom they believe do not meet the basic qualifications for the position prior to collecting demographic data regarding race, gender, and ethnicity. in order to harmonize Section 503’s pre-offer invitation to self-identify requirement with Executive Order 11246’s Internet Applicant recordkeeping provisions, OFCCP will permit contractors to invite applicants to self-identify after they meet the Internet Applicant requirements, including the basic qualification screen.
When designing basic qualification screens, contractors should be mindful of the requirements that Section 503 places on the use of qualification standards and selection criteria, including the use of “basic qualification” screens. Section 503 prohibits contractors from using qualification standards and selection criteria that screen out or tend to screen out an individual with a disability or a class of individuals with disabilities unless the contractor can show that the standard or criteria is job-related for the position in question and consistent with business necessity. Moreover, contractors may not use selection criteria that relate to the performance of an essential function of the job to exclude an individual with a disability if that person could satisfy the criteria with a reasonable accommodation.
10. Are there other new provisions related to voluntary employee self-identification, in addition to the requirement that contractors provide applicants a voluntary pre-offer self-identification opportunity?
Yes. There is now a requirement that contractors also regularly invite all of their employees to voluntarily self-identify as an individual with a disability using the self-identification form OFCCP provides. Contractors must invite their employees to self-identify every five years, beginning the first year that they become subject to the Section 503 voluntary self-identification requirements. In addition, at least once during the years between these invitations, contractors must remind their employees that they may voluntarily update their disability status at any time.
Through the new invitation and reminder to employees to self-identify, contractors can capture data on employees who become disabled while employed, as well as those with existing disabilities who may feel more comfortable self-identifying once they have been employed for some time. It also allows contractors to monitor and improve their practices regarding placement, retention, and promotion.
We also added new language to the voluntary self-identification requirements emphasizing that contractors may not compel or coerce individuals to self-identify, and that contractors must keep all self-identification information confidential.
11. Does the Final Rule still permit my company to incorporate the Equal Opportunity (EO) Clause into subcontracts by reference?
Yes. The Final Rule permits contractors to incorporate the EO Clause into subcontracts by reference, but only by citing to the EO Clause in the regulations AND including the following sentences in bold text:
“This contractor and subcontractor shall abide by the requirements of 41 CFR 60-741.5(a). This regulation prohibits discrimination against qualified individuals on the basis of disability, and requires affirmative action by covered prime contractors and subcontractors to employ and advance in employment qualified individuals with disabilities.”
12. Are there any new provisions in the EO Clause?
Yes. A new provision is added to be consistent with a comparable EO 11246 requirement regarding race and sex. The paragraph requires that contractors state in solicitations and advertisements that they are equal employment opportunity employers of individuals with disabilities.
13. Were any existing EO Clause provisions revised or updated?
Yes. The Final Rule updates Paragraph 4 of the EO Clause so that it now reflects changes in technology and the business practices of contractors. In addition, OFCCP revised 60-741.5(d) to improve notice to contractors of the nature of their EO obligations.
14. Can a contractor satisfy its obligation to post a notice informing applicants and employees of their EEO rights by posting the notice electronically?
When a contractor has employees who do not work at its physical location, the contractor can satisfy its posting obligation by posting the EEO notice in electronic format. To have the ability to use electronic postings to satisfy this obligation, a contractor must either provide these employees with computers that can access the electronic posting or the contractor must have actual knowledge that the electronically posted notice is otherwise accessible to these employees. Contractors must post electronic notices for employees in a conspicuous location and format on their Intranet or send them to employees by electronic mail (i.e., email). If the contractor uses an electronic application process, it must post an electronic notice to inform job applicants of their EEO rights. Electronic notices for applicants must be conspicuously stored with, or as part of, the electronic application. In addition, in individual instances, a contractor may have to provide a notice of EEO rights electronically as a form of reasonable accommodation for a disabled employee, even if the employee works at the contractor’s physical location.
15. Did the new regulations change the contractor’s obligations to conduct a review of physical and mental job qualification?
No. In § 60-741.44(c), these qualification reviews are still to be conducted “periodically.”
16. Does the Final Rule require the use of mandatory job listings?
No. The Final Rule does not mandate that contractors list employment opportunities with the American Job Centers, nor does it require that contractors enter into linkage agreements. Rather, the Final Rule requires that contractors undertake “appropriate outreach and positive recruitment activities,” and provides a number of suggested resources that contractors may use to carry out this general outreach and recruitment obligation.
The approach in the Final Rule gives contractors the flexibility to choose the specific resources they believe will be most helpful in identifying and attracting qualified individuals with disabilities, given their particular needs and circumstances.
17. What changes does the Final Rule make to the existing Section 503 data collection requirements?
There is a new requirement specific to data collection and analysis. As a contractor, you must document and update annually the following information in 60-741.44(k):
- for applicants: the total number of applicants for employment, and the number of applicants who are known individuals with disabilities;
- for hires: the total number of job openings, the number of jobs filled, and the number of individuals with disabilities hired; and
- the total number of job openings, and the number of jobs that are filled.
This data must be retained for three years.
18. Does the Final Rule change the requirement that contractors document the design and implementation of an audit and reporting system for their affirmative action program?
OFCCP always intended that contractors document the actions they take to comply with the requirement to design and implement an audit and reporting system. The Final Rule makes this intention explicit by requiring that contractors document these actions and retain these documents as employment records.