Labor Department Issues New Rules for Federal Contractors in Hiring Veterans and Disabled Workers
August 30, 2013
On August 27th, 2013, the Labor Department announced new requirements issued for most federal contractors in hiring veterans and individuals with disabilities. The new rules, issued by Labor’s Office of Federal Contract Compliance Programs (OFCCP), make changes to the affirmative-action requirements that have already been in place for federal contractors for about 40 years, under the 1973 Rehabilitation Act and the 1974 Vietnam Era Veterans’ Readjustment Assistance Act.
The new rule pertaining to veterans requires federal contractors to adopt an annual Labor Department veterans-hiring “benchmark” of 8 percent. However, depending on the overall number of veterans in the workforce, the rate could change from year to year. As for the new regulation regarding disabled individuals, federal contractors are required to set a goal of having people with disabilities account for at least 7 percent of their “job groups.” If a contractor’s workforce totals 100 or fewer employees, then the “aspirational goal” of 7 percent may be applied to its entire workforce instead of each individual job group.
According to the OFCCP, the new benchmarks are only goals that contractors should aspire to meet and are not specific hiring quotas. Failure to reach the benchmark goals alone does not violate the regulations, nor will it lead to fines, penalties or sanctions. However, contractors that cannot provide proper documentation showing they have attempted to meet the goals are at risk of having their federal contracts revoked. For those companies unable to immediately meet the new goals, they are required to examine recruitment or outreach practices to decide on ways to improve.
Labor Secretary Thomas Perez considered the new policy a “win-win,” saying it will benefit workers “who belong in the economic mainstream and deserve a chance to work and opportunity to succeed.” Perez also said employers would benefit from the policy since it would increase their access to a diverse pool of new workers. Also praising the new policy was Carol Glazer, president of the National Organization on Disability. Glazer predicted that employers would have no trouble meeting the benchmarks for disabled workers, saying “[t]here are many organizations in the disability field who stand prepared to help companies meet these goals.” However, not everyone is as optimistic about the effects of the new regulations.
Daniel Yager, president of the HR Policy Association, which represents more than 350 large U.S. corporations, made the suggestion that his association might challenge the disability rules in court. “Simply mandating a numerical ‘goal’ for all jobs in all contractors’ workplaces, and then requiring employers to invade the privacy of applicants and employees with questions about their physical and mental condition, destroys everything companies have done to integrate individuals with disabilities into the workforce in a sensitive, discreet manner,” said Yager.
Also opposing the new policy is the chief executive officer of the Associated General Contractors of America (AGC), Stephen E. Sandherr. AGC issued a press release stating there’s no need for the government to impose anti-discriminatory measures when federal data clearly shows contractors are already doing their part in hiring veterans and individuals with disabilities. “The administration’s decision to finalize two new oppressive employment regulations for federal contractors forces us to object to measures whose goals we support and objectives our members already meet. That is because these rules will force federal contractors to spend an estimated $6 billion a year to produce reams of new paperwork proving they are doing what the federal government already knows they are doing,” said Sandherr.
The new regulations will generally affect those contractors with at least 50 employees and $50,000 government contracts, and they are slated to take effect six months after publication in the Federal Register.