Final Federal Contractor Workforce Rules - March 2014 Effective Date


OFCCP Issues 

This week, the Office of Federal Contract Compliance Programs (OFCCP) issued final rules adding new requirements for federal contractors to establish goals in their workforce composition of 7% disabled employees and 8% veterans. These new rules go into effect in March 2014, or later when an existing contract expires.  AH&LA had lobbied OFCCP for reasonable regulations that will allow maximum flexibility in the workforce.  

Although these regulations do not apply to all businesses, two questions arise when considering the application.  First, who is the responsible party for compliance?  Second, who is a qualifying contractor that must comply? 

Responsible Party 

The entity responsible for compliance with the OFCCP final rule implementing Section 503 of the Rehabilitation Act and Vietnam Era Veterans' Readjustment Assistance Act is the party with control over hiring, firing, and general personnel matters.  Brand franchisors or investor owners that have little or no role in day-to-day personnel matters at their properties would not be considered the responsible party.  If employment decisions are controlled by a management company, that company would be the responsible party.  However, these issues may become blurry if a brand company owns some properties and manages others, and the control of employees is mixed.  In these instances, an entity may wish to seek legal expertise.

Qualifying Contractor  

Determining who is considered a federal contractor and subject to OFCCP regulations is a two-step process.  There are two questions to consider:  does the entity conduct $10,000 or more in business with the federal government in any consecutive 12-month period; and what is the definition of an entity?

The definition of an entity is important in the lodging industry.  Under certain circumstances, multiple properties might jointly meet the $10,000 threshold even if each individual property falls below that threshold. To help clarify this, the Labor Department has developed a list of "Five Factors" to determine when or if business revenue would be considered one business or separate.  These address, address common ownership, common directors and/or officers, de facto exercise of control, unity of personnel policies from a single source, and dependency of operations.  If multiple but loosely affiliated properties do not meet any of the five factors, then they would likely be considered separate entities.

Highlights of the Section 503 Rules  

  • Adopts an expansive definition of disability as defined by the EEOC under the ADA Amendments Act; 
  • Establishes a 7% goal for contractors to hire individuals with disabilities across all job classifications; 
  • Does not assume an automatic violation if an employer fails to meet the 7% goal; 
  • Reliance on self-identification; 
  • Employers can include individuals towards the 7% goal if their disability is obvious or known; 
  • Contractors are required to survey their current workforce, and conduct such surveys every five years; 
  • Online application websites are not required to be accessible; 
  • Other requirements include disability community outreach, paperwork retention, notification of subcontractors, recordkeeping, self-audit, and training of personnel employees. 

Highlights of Veterans Rules 

  • Establishes a general goal of 8% for contractors to hire individuals who are veterans, unless a different goal can be reasonably established; 
  • Reliance on self-identification; 
  • Does not assume automatic violation if employer fails to meet numeric goal; 
  • Initial survey of workforce, but no follow-up survey required; 
  • Other requirements include disability community outreach, paperwork retention, notification of subcontractors, recordkeeping, self-audit, and training of personnel employees. 

For additional information, contact Vanessa Sinders, AH&LA senior vice president for government affairs, at (202) 289-3121.