OFCCP Adopts Final Rules Expanding Veteran Hiring Requirements for Federal Contractors

Posted on by Craig Ballew in Labor & Employment.

The past few years have seen a flurry of regulatory activity by the Department of Justice’s Office of Federal Contract Compliance Programs (OFCCP).  A previous post discussed the newly-revised rules concerning disability hiring requirements for federal contractors.  Another important development has been the adoption of new rules imposing requirements for the hiring of veterans, now codified as Title 41 of the Code of Federal Regulations, Part 60-300.  Like the disability-related rules, these amendments took effect on March 24, 2014.

The newly-amended rules impose several new requirements that will change the way federal contractors do business.  Among the most important are a new requirement that contractors add an annual hiring benchmark to measure the success of hiring and recruitment efforts and new language inviting job applicants to self-identify as veterans.

New Hiring Benchmark for Contractors

The OFCCP will now require federal contractors to set an annual hiring “benchmark” against which to measure their progress in hiring qualified veterans.  This requirement is codified at 41 C.F.R. § 60-300.45.  The new rules make clear that the benchmark “is not a rigid and inflexible quota which must be met,” and that failure to meet the benchmark is not, of itself, a violation.  The benchmark is designed as a tool to allow contractors to analyze the success of hiring efforts and to raise awareness of the number of veterans struggling to find employment.

Contractors may adhere to the new benchmark requirements in one of two ways: either by adopting as its benchmark the national average number of veterans in the civilian labor force, or by establishing its own individual benchmark using a “five-factor” method.  Contractors choosing to establish their own benchmark must be guided by these five factors: (i) average percentage of veterans in the civilian labor force over the preceding three years in the state where the contractor is located, (ii) number of veterans who were participants in the “employment service delivery system” in the state where the contractor is located over the previous four quarters, (iii) the applicant ratio and hiring ratio for the previous year, (iv) the contractor’s recent assessments of the effectiveness of its external outreach and recruitment efforts, (v) any other factors which would tend to affect the availability of qualified protected veterans, with examples given.  If the national benchmark is used, the contractor may simply refer to the OFCCP’s website, where the national numbers will be provided and periodically updated.

Records pertaining to the benchmark calculations must be retained by contractors for a minimum of three years.  Further details are provided in the final rule and the summary thereof.

Invitation to Self-Identify

Existing rules require federal contractors to invite disabled veterans to self-identify at the “post-offer” stage (meaning after a job offer has been extended, but before an applicant has begun employment).  All other protected veterans can self-identify at any stage before beginning employment.  The new rules revise this requirement in several ways.  First, they eliminate separate invitation requirements for disabled veterans and other protected veterans.  Going forward, all protected veterans, as defined, are to be invited to self-identify at the pre-offer stage.  Veterans who are protected in any category subject to Veterans Employment and Training Service (VETS) reporting requirements are permitted to further voluntarily self-identify at the post-offer stage.

The new rules also require that the invitation to self-identify declare that the employer is a federal contractor required to take affirmative action on behalf of protected veterans.  This invitation to self-identify can be made at the same time as race and gender information is collected (in order to harmonize procedures under Executive Order 11246).

Elimination of Part 60-250

Previously, the rule governing hiring and affirmative action requirements for veterans involved two separate parts within the subtitle, Part 60-250 and Part 60-300.  Part 60-250 applied to contractors with contracts of $25,000 or more entered into before December 1, 2003, and not since modified.  Part 60-300 applied to contracts or subcontracts of $100,000 or more entered into on or after December 1, 2003.

The OFCCP has determined that all contracts covered by Part 60-250 have expired, unless they have subsequently been modified or brought under Part 60-300. In acknowledgement of this fact, Part 60-250 has been repealed in its entirety.

OFCCP to be Given Off-Site Access to Contractors’ Records

Finally, the new rules specify that the OFCCP must now be given “off-site” access to materials and documents when conducting reviews and compliance checks.  A similar requirement was imposed in the OFCCP’s new disability hiring rules, and was discussed in the previous post covering that subject.  “Off-site” access refers to access at a place other than at the contractor’s own establishment.  Additionally, the new rules require contractors to provide records and documents to the OFCCP in the format of the OFCCP’s choosing.

As was the case with the disability hiring rules, the OFCCP’s explanation expresses the position that the risks and burdens associated with such new requirements are minimal.  Nonetheless, contractors should be sensitive to the possibility of reviews and compliance checks taking place away from their own location, and of the potential ramifications of this requirement.

This post analyzes only some of the most salient changes, and is not intended to be an exhaustive compliance guide.  Federal contractors should be alert and active in seeking to maintain compliance with all OFCCP requirements.  As always, any contractor or party seeking assistance in staying within the bounds of these rules is invited to contact Ferguson, Schetelich & Ballew, P.A. at (410) 837-2200.