The Office of Federal Contract Compliance Programs dropped three proposed rules on July 1, offering revisions to its existing regulatory scheme.

Key highlights:

• Executive Order 11246. The OFCCP proposes to rescind the implementing regulations altogether.
• Vietnam Era Veterans’ Readjustment Assistance Act. The OFCCP proposes to update the regulations to remove references to Executive Order 11246 and its regulations.
• Section 503 of the Rehabilitation Act. In addition to eliminating references to Executive Order 11246, the OFCCP proposes to rescind all obligations relating to disability statistics, including voluntary invitations to applicants and employees to self-identify as disabled, the 7 percent utilization goal for individuals with a disability, and the data collection analysis.

Proposed rule to rescind Executive Order 11246 regulations

President Trump revoked Executive Order 11246 on January 21. That revocation effectively nullified the regulations that implemented the Executive Order because there was no longer any underlying authority for them. In its July 1 proposal, the OFCCP notes that

even though the E.O. 11246 regulations are null and void as there is no source of valid legal authority supporting the regulations, formal rescission of the regulations will avoid any potential for misunderstanding regarding the status of the regulations by covered contractors and the general public by removing these regulations from the Federal Register.

(Emphasis in original.)

The OFCCP’s proposal to rescind these regulations is hardly surprising and has been expected. The OFCCP intends to remove all of the regulations supporting Executive Order 11246:

• 41 C.F.R part 60-1. Obligations of Contractors and Subcontractors
• 41 C.F.R part 60-2. Affirmative Action Programs
• 41 C.F.R. part 60-3. Uniform Guidelines on Employee Selection Procedures
• 41 C.F.R part 60-4. Construction Contractors-Affirmative Action Requirements
• 41 C.F.R. part 60-20. Sex Discrimination Guidelines
• 41 C.F.R. part 60-30. Rules of Practice for Administrative Proceedings to Enforce Equal Opportunity Under Executive Order 11246
• 41 C.F.R part 60-40. Examination and Copying of OFCCP Documents
• 41 C.F.R part 60-50. Guidelines on Discrimination Because of Religion or National Origin

Part 60-30, which contains the rules of practice for administrative proceedings before the OFCCP, will not be jettisoned just yet. This component of the regulations applies to Section 503 and VEVRAA, and the OFCCP is proposing to remove all references to Executive Order 11246 and then move the revised version into the Section 503 and VEVRAA regulations. Once that process is complete, the OFCCP plans to rescind part 60-30 in its entirety. 

In addition, the rescission of part 60-3, which incorporates the Uniform Guidelines on Employee Selection Procedures into the OFCCP’s enforcement repertoire, would have no real consequence. The Uniform Guidelines exist independently of the OFCCP regulations, and the OFCCP notes that its proposal would “not impact other agencies’ interpretation and application of [the Guidelines].” Thus, the general principles of the Guidelines will still apply to employers’ selection processes. 

Proposed rule to revise VEVRAA regulations

The OFCCP’s proposed revisions to the VEVRAA regulations are non-substantive. The agency seeks to remove all references to the regulations implementing Executive Order 11246, which, as noted above, will be withdrawn. This change would ensure that the VEVRAA regulations are internally consistent and avoid creating confusion.

As noted above, the OFCCP intends to realign the rules relating to administrative practice and incorporate those into the VEVRAA regulations. 

Proposed rule to revise Section 503 regulations

The OFCCP’s proposed changes to the Section 503 regulations are both substantive and non-substantive.

On the non-substantive side, the revisions mirror those proposed for VEVRAA. In other words, they would eliminate references to Executive Order 11246 and its regulations and incorporate the updated rules for administrative practice.

On the substantive side, the OFCCP aims to remove those portions of the regulations that involve tracking or analyzing disability status. The OFCCP takes the position that the existing regulations may encourage contractors to set quotas for individuals with a disability. The agency “also has concerns that the self-identification and utilization goal regulations are inconsistent with the [Americans with Disabilities Act].”

Here is a summary of the OFCCP’s proposed changes:

• Voluntary self-identification of disability status. The OFCCP would eliminate the obligation of contractors to invite applicants, new hires, and employees to voluntarily self-identify as an individual with a disability. The agency notes that the ADA expressly prohibits employers from making disability-related inquiries before extending an offer of employment. The OFCCP also now disavows its prior reliance on an opinion from a former EEOC legal counsel that such invitations by contractors do not violate the ADA if certain conditions are met. The OFCCP predicts that any EEOC regulations or guidance that conflicts with the OFCCP’s current position is unlikely to survive a legal challenge.
• Utilization goal. Since 2014, contractors have been required to annually compare their workforce to the 7 percent utilization goal for individuals with a disability. Contractors with more than 100 employees must perform this comparison by job group, while those with 100 or fewer employees may assess their workforce as a whole against the 7 percent goal.

The OFCCP plans to remove this mandate, citing the reliance on job groups – an analytical framework rooted in the Executive Order 11246 regulations. With the rescission of those regulations, job groups will no longer have any legal significance or meaning. In addition, the OFCCP asserts that contractors may be “induced to using [sic] quotas to meet the utilization goal.” However, the OFCCP cites no evidence or examples of any contractor having done so in the decade that this rule has been in place.

• Data collection analysis. Since 2014, contractors have been required to report, among other things, the number of individuals with a disability who applied for employment and who were hired. With the removal of the self-identification disclosures, the OFCCP contends that the data collection analysis would no longer be applicable.

Despite the elimination of the data collection and analyses, the OFCCP does not propose to eliminate contractors’ existing obligations to analyze their outreach and recruitment efforts toward individuals with a disability. The OFCCP does not offer any suggestions regarding how contractors would be able perform this feat without data showing how many individuals with a disability applied for employment or were selected. It is not clear how contractors could make this assessment without the voluntary disclosures by applicants and employees.

How will these potential changes affect contractors?

If these proposed changes are adopted, contractors would need to

• Eliminate the invitation to self-identify as disabled, except where required by state or local laws, or contract obligations.
• Revise affirmative action plans and supporting documents to remove references to self-identification of disability, the 7 percent utilization goal, and the data collection analysis.

What won’t change for contractors?

Contractors should remember that elimination of the Executive Order 11246 regulations does not affect their general obligations to comply with Title VII of the Civil Rights Act and other anti-discrimination laws. Executive Order 14173 mandates that contractors “agree that . . . compliance in all respects with all applicable Federal anti-discrimination laws is material to the government’s payment decisions.”

Although the obligation to prepare affirmative action plans for females and minorities and to comply with related regulatory details has been lifted, contractors are strongly encouraged to proactively monitor their employment practices to ensure that their practices do not adversely affect individuals based on protected characteristics.

In addition, myriad requirements of Section 503 and VEVRAA will still exist:

• Engage in good faith efforts to recruit individuals with a disability and protected veterans.
• List job openings with the state unemployment agency.
• Insert an appropriate tagline on job listings and advertisements.
• Advise applicants and employees how to request a reasonable accommodation.
• Invite applicants and new hires to voluntary self-identify as a protected veteran.
• Prepare all required affirmative action plan components.
• Train managers on compliance with the applicable regulations.
• Post an appropriate affirmative action policy statement.
• Notify suppliers, vendors, and unions of the affirmative action policy and request their cooperation.
• Review personnel processes to determine whether procedures provide for careful, thorough, and systematic consideration of the job qualifications of known, qualified individuals with a disability and protected veterans.
• Assess physical and mental qualification standards to ensure that, to the extent they tend to screen out individuals with a disability or disabled veterans, they are job-related and consistent with business necessity, and keep records of any changes made.
• Evaluate the effectiveness of recruitment efforts in identifying and recruiting qualified individuals with a disability and protected veterans.
• Design and implement audit and reporting systems to measure the effectiveness of the affirmative action plans, review the reports with management, and advise top management of the effectiveness.

What about the DOL’s budget proposal?

As we previously reported, the U.S. Department of Labor has proposed dismantling the OFCCP and transferring enforcement of Section 503 to the EEOC and enforcement of VEVRAA to the Veterans Employment and Training Service. If it occurs, this restructuring will require yet another regulatory overhaul, as both the current and proposed regulations are filled with references to the OFCCP. The regulations will need to be revised to formally confer enforcement authority on the respective agencies. It remains unclear why the administration did not postpone the current proposed amendments until all necessary changes could be completed in a coordinated manner.

Comments to proposed rules

Interested individuals may submit comments to the proposed regulations by September 2.

Please note that the current regulations remain in effect unless and until any revisions are formally adopted. This is a complex and evolving area of the law, so please contact an attorney in Constangy’s EEO/Contractor Compliance, Reporting & Data Analytics Practice Group with questions.