As President Obama prepares to be sworn in for another term in office, federal contractors brace themselves for 4 more years of robust regulatory activity and active enforcement of affirmative action requirements.

The Obama administration has brought unprecedented levels of change to federal contractors and their affirmative action obligations. Before Mr. Obama’s election in 2008, affirmative action laws had remained relatively unchanged since Executive Order 11246 was signed into force in 1965. Key changes to affirmative action already made under President Obama’s watch include:

• A new active case enforcement (ACE) system
• Increased enforcement activity
• New NLRA notice requirements
• Changes to functional affirmative action plan (FAAP) requirements
• New executive compensation reporting requirements for certain contracts

In addition, in the past 2 years, the Office of Federal Contract Compliance Programs (OFCCP), the agency that enforces the rules and regulations for federal government contractors, received an unprecedented increase in funding to hire more inspectors and conduct more audits at contractors’ worksites.

Now that President Obama has been re-elected

The Obama administration’s most recent proposed changes to affirmative action requirements for veterans and disabled individuals signal the way in which the administration will continue. The OFCCP’s Notice of Proposed Rulemaking (NPRM) contains proposed changes that would alter the way in which federal contractors and subcontractors would be required to act with regard to recruiting and training disabled individuals and veterans, as well as compliance with recordkeeping and policy requirements. Under the proposed rules, covered contractors would be required to take affirmative action measures for disabled individuals and veterans similar to those required for women and minorities.

Most notably, the NPRM proposes a “utilization goal” of 7 percent for the employment of individuals with disabilities in each job group of the contractor’s workforce. In lieu of a single national utilization goal, the OFCCP proposes a 4 percent to 10 percent “utilization range.”  This particular proposed change has raised a considerable amount of opposition from the contractor community. Objections to the proposed rule range from a lack of reliable data regarding availability to the cost of implementation.

The proposed rule incorporates the expanded definition of “disability” under the final regulations to the Americans with Disabilities Act Amendments Act of 2008 (ADAAA) and imposes major new requirements for applicant self-identification, data collection and recordkeeping, written reasonable accommodation request procedures, and increased recruitment efforts (i.e., “linkage” agreements with vocational rehab and other local organizations listed in SSA’s “Ticket to Work” employment network directory).

According to the OFCCP, the goal is neither a quota nor a restrictive hiring ceiling, and a failure to attain the goal does not necessarily constitute a violation of Section 503 or OFCCP’s regulations. Rather, the goal is intended to serve as an important tool for employers to measure their progress toward achieving equal employment opportunity and to assess where in their workforce barriers to such opportunity remain.

Note: The OFCCP is also considering a “sub-goal” of 2 percent for individuals with severe or “targeted” disabilities, such as total deafness, blindness, and missing extremities. The OFCCP sought comment on both the concept of using a sub-goal, and on the disabilities that should be included in such a sub-goal. The OFCCP also sought input on the use of a utilization range rather than the fixed 7 percent national goal the NPRM proposes.

What does this mean?

If the proposed rule is finalized as is, the number of covered disabled individuals would expand dramatically (with the ADAAA definition), as would contractors’ responsibilities to encourage applicant self-identification, carry out data collection and recordkeeping, implement written reasonable accommodation request procedures, and increase recruitment efforts.

However, the proposed rule has been challenged on multiple grounds as overly burdensome and unrealistic—especially with regard to the 7 percent utilization goal—so it is possible that the rule may be amended to address these public comments and concerns.

So, what, if anything, should contractors do now to prepare? First, contractors should ensure that their disability and accommodation policies are up to date with ADAAA changes (see the federal Equal Employment Opportunity Commissions’s own internal policy for an example at www.eeoc.gov/eeoc/internal/reasonable_accommodation.cfm). In addition, contractors should consider local vets and disability organizations as potential targets for linkage agreements. To do this, see SSA’s “Ticket to Work” employment network directory (www.choosework.net/resource/jsp/searchByState.jsp).

What about the proposed compensation data collection tool?

In addition to the NPRM for disabled individuals and veterans, the OFCCP had indicated that it wishes to develop and implement a new compensation data collection tool. Possible uses of the data collected include providing insight into potential problems of compensation discrimination at the establishment level, conducting analyses at the establishment level, and identifying and analyzing industry trends.

OFCCP’s plans may be on hold, however, due to an August 2012, report by the National Research Council (NRC). In its report, the NRC found that an effective tool for collection of earnings data would be “a significant undertaking … [and] that there is, at present, no clearly articulated vision of how the data on wages could be used in the conduct of enforcement responsibilities of the relevant agencies.”

The NRC suggested that a comprehensive plan first needs to be formulated to summarize, analyze, and protect earnings data. This would include collecting data on rates of pay (not actual earnings) and effectively masking data to protect confidentiality. This, says the NRC, will take time, pilot testing, and considerable resources to develop. As a result, contractors should expect no new tool in the near future. Instead, the U.S. Department of Labor will most likely pursue pilot testing and development of an effective tool, as recommended by the NRC.

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