Government Contractors Face Expanded Affirmative Action Requirements

Contractors have been accustomed to performing individualized availability analyses in their AAPs for minorities and women under Executive Order 11246; on an annual basis, contractors must compare the actual representation of minorities and women in their workforce to the expected availability of candidates from these groups, based on Census and labor pool data for the contractor’s recruiting area for each job group, as well as on data about the contractor’s actual applicant pool. The VEVRAA and Section 503 regulations forge new ground in setting a numerical expectation on a nationwide basis for the percentage of protected veterans and individuals with disabilities that government contractors should employ in their workforce. The “hiring benchmark” for the employment of veterans in the civilian workforce is currently set at 8 percent, but it will be updated annually by the OFCCP. Contractors also have the option of establishing their own annual benchmarks by taking into account prescribed factors, including state-level data on veteran availability and the contractor’s own past applicant and hiring ratio for veterans, among other data. The Section 503 national “utilization goal” for employment of qualified individuals with disabilities is fixed at 7 percent for each job group in a contractor’s workforce. Smaller contractors, however, with 100 or fewer employees, may measure the 7 percent utilization goal with respect to their entire workforce.

The hiring benchmarks and utilization goals are the centerpiece of the new regulations. The numerous other new regulatory obligations are all designed either to promote contractors’ efforts at increasing employment of protected veterans and individuals with disabilities or to enable the OFCCP to monitor more closely contractors’ compliance with the regulations. Importantly, the regulations require only that contractors make good faith, documented efforts to increase employment opportunities for individuals with disabilities and protected veterans. The hiring benchmarks and utilization goals serve as yardsticks for measuring the contractor’s progress, not mandated employment percentages. “Quotas are expressly forbidden” under the regulations. A contractor that makes good faith efforts to comply with its obligations will not be deemed to violate the regulations simply because its employment data falls short of the applicable hiring benchmark and utilization goal.

For many contractors, achieving these benchmarks and goals may in fact be feasible. The federal government’s own efforts to increase employment of individuals with disabilities and of veterans have produced results. According to a report by the Office of Personnel Management (“OPM”), individuals with disabilities comprised 11.89 percent of the federal government workforce in Fiscal Year 2012.¹ OPM also reported that 28.9 percent of its new hires in FY 2012 were veterans, bringing the total percentage of veterans employed in the federal workforce in FY 2012 to 29.7 percent.² Not all contractors, of course, should expect to achieve such high percentages. The federal government’s sizable civilian workforce at the Department of Defense and in law enforcement, for example, presents a good skills match for many veterans that might not have a counterpart for contractors with a different industry focus. Nonetheless, according to the Preambles to the VEVRAA and Section 503 regulations, the new requirements are designed to counteract the statistical trend outside of federal government employment in which veterans and individuals with disabilities experience unemployment rates that are significantly higher than those of non-veterans and individuals without identified disabilities.

A Long List of New To-Do Items

Many of the provisions of the VEVRAA and Section 503 regulations (at 41 CFR Part 300 and 41 CFR Part 741, respectively) predated the September 24, 2013 publication of the new regulations. Thus, covered government contractors have already been required to comply with substantial portions of the regulations. Contractors already maintain annual AAPs for veterans and individuals with disabilities (although without significant data-gathering requirements), and they have already been required under VEVRAA to list job openings with local employment service delivery systems or state workforce agency job banks. The regulations now include, however, a panoply of new requirements, some of which become effective on March 24, 2014, and some which go into effect up to one year later.

The regulations are each divided into five subparts. Subpart C governs AAPs and applies only to covered contractors with 50 or more employees. Because the AAP effective date and accompanying twelve-month data period varies from contactor to contractor, the OFCCP is permitting contractors to delay their compliance with the AAP requirements of Subpart C until the start of their next AAP cycle after the March 24, 2014 effective date of the other subparts. The OFCCP expressly encourages contractors to begin bringing their employment practices and HR information systems into compliance with Subpart C as soon as possible and has stated that they will insist on strict compliance with all parts of the new regulations immediately upon the new AAP year. As some of the new provisions may entail significant changes to internal and/or vendor-maintained human resources information systems and applicant tracking systems, contractors who wait until the start date of their new AAPs to implement and test their compliance are at risk if they are audited during that AAP year or the one that follows.

Download: Government Contractors Face Expanded Affirmative Action Requirements

We would like to thank Maryelena Zaccardelli with MEZ Consulting, LLC for contributing to this publication.

1. See OPM’s “Report on the Employment of Individuals with Disabilities in the Federal Executive Branch for Fiscal Year 2012.”
2. See OPM’s “Message on Employment of Veterans in the Federal Executive Branch [for] Fiscal Year (FY) 2012.”