OFCCP Moves Forward With Persons with Disabilities and Veterans Rules

This week, the Office of Federal Contract Compliance Programs (OFCCP) sent two final rules to the Office of Management and Budget (OMB) on revising the regulations implementing Section 503 of the Rehabilitation Act of 1973 and the Vietnam Era Veterans Readjustment Assistance Act. This marks the last step in the regulatory rulemaking process. Typically, final rules are under OMB review for 30 to 90 days and after that allotted period of time, the far reaching rules could be finalized and published. The two rules would apply to companies with a direct contract (as opposed to federally-assisted contracts) or subcontract with the federal government. The rules would expand the obligations of federal contractors toward veterans and individuals with disabilities.  Under the rules, direct federal contractors will be required to track the veteran status and disability status of applicants (in addition to new hires) and establish hiring goals.  Federal contractors would be required to document employment decisions affecting these individuals thoroughly and to retain such records for an expanded period of time. In addition, covered federal contractors will be required to establish “linkage agreements” with certain organizations (which has been a focus of the OFCCP in recent audits).  The regulations also implement mandatory obligations for internal communications about the contractor’s affirmative action policy.  Each of these proposed changes will increase the affirmative action burdens of federal contractors and the cost of doing business with the federal government. Previous AGC analysis shows that OFCCP has grossly underestimated the financial and administrative burdens that these rules will impose on construction contractors, particularly on small businesses.  AGC also participated in a report that demonstrates OFCCP’s own enforcement data, which states that "discrimination against protected veterans and individuals with disabilities, especially with regard to hiring, is not a frequent finding that OFCCP finds and may not support the major shift in policy that the proposed regulations would necessitate."  As a result, the report concludes that OFCCP's enforcement "results fail to provide the evidence needed to make an evidence-based policy decision such as those proposed in the regulations." AGC will continue to work with OMB and highlight that the real costs of these two proposed rules are too significant to ignore in order to fix a non-existent problem. For more information, please contact Jim Young at (202) 547-0133 or youngj@agc.org.