New Rules for Federal Contractors on Hiring Disabled Workers

Federal contractors will be required to pay closer attention to their practices on the recruiting and hiring of individuals with disabilities under a new rule recently proposed by a federal government contractor watchdog agency.

The Office of Federal Contract Compliance Programs—the Labor Department division responsible for ensuring that federal contractors comply with Equal Employment Opportunity laws—proposed new rules in December that require federal contractors to heed an exhaustive list of obligations to ensure compliance with non-discrimination and affirmative action requirements regarding individuals with disabilities.

Among the controversial changes the agency has proposed is a provision that requires federal contractors and sub-contractors to set a 7 percent hiring goal for individuals with disabilities for each job group—such as management and operations—not just the workforce as a whole.

The agency proposed the new rules after recent labor employment statistics emerged that show 79 percent of people with disabilities are outside the labor force compared to 30 percent of their counterparts without disabilities.

“For nearly 40 years, the rules have said that contractors simply need to make a ‘good faith' effort to recruit and hire people with disabilities. Clearly, that's not working,” OFCCP Director Patricia Shiu said in a statement.

The proposed rules revise Section 503 of the Rehabilitation Act to broaden the definition of who qualifies as a person with a disability, effectively increasing the number of disabled individuals who are covered by the OFCCP's mandate.

The 7 percent target could be difficult for contractors to reach in some job groups, because it's unknown how many people who have a disability are qualified for some of the groups, notes Christine Hendrickson, senior counsel of law firm Seyfarth Shaw. If certain contractors hire only specialized mechanical or chemical engineers, for example, no available data currently exists to show whether 7 percent of those engineers are people with disabilities, she said.

The Associated General Contractors of America expressed concerns with the proposed rules. “While we agree that individuals with disabilities must not be discriminated against, given the unique seasonal and often transitory nature of the construction industry, this rule, if implemented, would place a significant burden on construction contractors,” says Tamika Carter, AGC's director of construction human resources.

“Federal construction employers and their sub-contractors would be required to complete additional statistical analysis on their workforce, regardless of where projects are located or how long such projects last,” says Carter. “In addition, the construction industry is a unique industry with safety-sensitive jobs, and the decision to hire should be made on a case-by-case basis based on the candidate's ability to perform the essential functions of a particular job safely, with or without a reasonable accommodation.”

The OFCCP is further considering the adoption of a secondary sub-goal for workforce composition of 2 percent individuals with certain, more severe, disabilities, such as complete blindness or deafness, paralysis, epilepsy, and psychiatric disabilities.

“For nearly 40 years, the rules have said that contractors simply need to make a ‘good faith' effort to recruit and hire people with disabilities. Clearly, that's not working.”

—Patricia Shiu,

Director,

OFCCP

If finalized, the rule also requires contractors to invite all applicants to self-identify the existence of a disability—but not the nature or type—before and after receiving an offer of employment. Current rules require contractors to solicit this information only from those who have been offered employment. Government contractors would also be required to conduct annual surveys of employees to allow them to anonymously disclose a new or existing disability.

The OFCCP stresses that both the invitation to self-identify and the language provided in the annual survey must be prescribed by OFCCP. Mandating specific text will “ensure consistency” and “minimize any burden on contractors resulting from this responsibility,” said Naomi Levin, OFCCP branch chief of policy development and procedures, during a recent Webcast on the proposed rules.

The problem is that if a person is unwilling to report a disability, especially hidden ones like a psychiatric disability, this unfairly falls upon the contractor, notes Hendrickson.

David Thomas, chair of the National Industry Liaison Group, raised another concern. “Disabilities, particularly as broadly defined under the recently enacted ADA Amendments Act, often will be temporary in nature. Thus, a self-identification by an employee indicating a disability often will change over time,” he stated in a comment letter to the OFCCP.

Thomas added that annual or more frequent requests for employees to update their self-identified disability status “would likely be confusing for employees, would be unnecessarily burdensome for employees and employers alike, and would go beyond any historical requirements under the affirmative action regulations.”

Recordkeeping Requirements

The new rule also would require contractors on an annual basis to:

EXPLANATION OF RULE

Below, the Department of Labor provides details on its proposed rule for federal contractors and sub-contractors and information on how to comment:

The U.S. Department of Labor is proposing a new rule that would require federal contractors and sub-contractors to set a hiring goal of having 7 percent of their workforces be people with disabilities, among other requirements. The department's Office of Federal Contract Compliance Programs invites public comment on this proposal, which [was] published in the Dec. 9 edition of the Federal Register.

OFCCP's proposed rule would strengthen the affirmative action requirements established in Section 503 of the Rehabilitation Act of 1973 obligating federal contractors and sub-contractors to ensure equal employment opportunities for qualified workers with disabilities. The proposed regulatory changes detail specific actions contractors must take in the areas of recruitment, training, record keeping, and policy dissemination—similar to those that have long been required to promote workplace equality for women and minorities. In addition, the rule would clarify OFCCP's expectations for contractors by providing specific guidance on how to comply with the law.

“This proposed rule represents one of the most significant advances in protecting the civil rights of workers with disabilities since the passage of the Americans with Disabilities Act,” said Secretary of Labor Hilda L. Solis. “President Obama has demonstrated a commitment to people with disabilities. This proposed rule would help federal contractors better fulfill their legal responsibility to hire qualified workers with disabilities.”

Although Section 503 regulations have been in place for decades, the current unemployment rate for people with disabilities is 13 percent, 1 1/2 times the rate of those without disabilities. Even more discouraging, data published last week by the department's Bureau of Labor Statistics show stark disparities facing working-age individuals with disabilities, with 79.2 percent outside the labor force altogether, compared to 30.5 percent of those without disabilities.

“For nearly 40 years, the rules have said that contractors simply need to make a ‘good faith' effort to recruit and hire people with disabilities. Clearly, that's not working," said OFCCP Director Patricia A. Shiu. “Our proposal would define specific goals, require real accountability and provide the clearest possible guidance for employers seeking to comply with the law. What gets measured gets done. And we're in the business of getting things done.”

Establishing a 7 percent hiring goal for the employment of individuals with disabilities would be a tool for contractors to measure the effectiveness of their affirmative action efforts and thereby inform their decision making. The proposed rule also would enhance data collection and recordkeeping requirements—including for documentation and processing of requests for reasonable accommodation—in order to improve accountability. Additionally, it would ensure annual self-reviews of employers' recruitment and outreach efforts, and add a new requirement for contractors to list job openings to increase their pools of qualified applicants.

To read the notice of proposed rulemaking or submit a comment, visit the federal e-rulemaking portal at http://www.regulations.gov. Comments also can be submitted by mail to Debra Carr, Office of Federal Contract Compliance Programs, U.S. Department of Labor, Room C-3325, 200 Constitution Ave. NW, Washington, D.C. 20210. All comments must be received by Feb. 7, 2012, and should include identification number (RIN) 1250-AA02.

Source: Department of Labor.

Identify vacancies and training programs for which applicants and employees with disabilities are considered;

Provide a statement of reasons explaining why individuals with disabilities were rejected for such vacancies or training programs; and

Describe the nature and type of accommodations for individuals with disabilities who were selected for hire, promotion, or training programs.

In any instance in which an applicant or employee with a disability is not selected, contractors must explain the reasons for their personnel decisions available to the employee or applicant upon request.

These steps should be reviewed and documented on at least an annual basis to ensure that its obligations are being met. OFCCP found under the current rules, which require such a review only periodically, “that many contractors were not following these steps,” said Levin, “and that documentation maintained by contractors who did take these steps was generally not sufficient to permit a meaningful review of the contractor by OFCCP.”

Contractors must establish “linkage agreements” with either their local State Vocational Rehabilitation Agency office or a local Employment Network organization and at least one other organization from a list specified in the regulations.  

Additionally, the proposed rule requires contractors to maintain quantitative measurements and comparisons related to individuals with disabilities. Such measurements include:

The total number of referrals from state employment services and others that the contractor has linkage agreements;

The total number of job applicants, the number of applicants who are known to have disabilities, and the “applicant ratio” of those with disabilities to total applicants;

The total number of job openings, and the “hiring ratio” of those with disabilities to total hires; and

The total number of job openings, the number of jobs that are filled, and the “job fill ratio” of job openings to job openings filled.

Some contractors have expressed concerns that they do not have systems in place to track referrals, and that since they are supplied by the job seeker, are prone to inaccuracies.

Burdensome Paperwork

The proposal would increase the retention time for information relating to a contractor's affirmative action program and its outreach efforts to five years, rather than one or two years. “This will allow contractors and OFCCP to evaluate the effectiveness of recruitment efforts over time and to refine those efforts as needed,” said Levin. “It will also allow for trending analysis to be conducted.”

Contractors must annually review the physical and mental job qualifications of each of their positions, as well as document why each relates to the position to which it corresponds.

All of these proposed requirements for individuals with disabilities are in addition to the proposed hiring goals that contractors would also have to meet for veterans, minorities, and women.

“I'm not entirely sure that contractors aren't going to consider abandoning their federal contracts,” Hendrickson adds.  “We've definitely heard some rumbling about that.”

Comments on the proposed rules must be received by OFCCP by Feb. 7.