Navigating Federal Compliance Amidst Regulatory Changes

Recent changes in federal regulations regarding affirmative action have left many employers wondering about their other federal obligations. Despite the executive order “Ending Illegal Discrimination and Restoring Merit-Based Opportunity” issued on January 21, 2025, compliance with Section 503 of the Rehabilitation Act and the Vietnam Era Veterans’ Readjustment Assistance Act (VEVRAA) remains mandatory for federal contractors.

Section 503 and VEVRAA: Unaffected by Recent Changes

The executive order primarily targets race and gender-based affirmative action programs under Executive Order 11246. However, it explicitly does not apply to “lawful Federal or private-sector employment and contracting preferences for veterans of the U.S. armed forces”

This means that the protections for individuals with disabilities under Section 503 and for protected veterans under VEVRAA remain intact.

Key Compliance Requirements for Federal Contractors

Federal contractors should continue their compliance efforts for both Section 503 and VEVRAA. No changes in requirements have been announced for either law. Federal contractors must continue to:

• Maintain plans for individuals with disabilities and protected veterans: This includes developing and updating affirmative action plans that outline the steps the contractor will take to ensure equal employment opportunities for these groups.
• Set hiring benchmarks for protected veterans: Contractors must establish annual hiring benchmarks or adopt the national benchmark provided by the Office of Federal Contract Compliance Programs (OFCCP).
• Provide reasonable accommodations to individuals with disabilities: This involves making necessary adjustments or modifications to the work environment that enable individuals with disabilities to perform their job duties.
• Avoid discrimination based on disability status or protected veteran status: Contractors must ensure that their employment practices do not discriminate against individuals based on their disability or veteran status.
• List job openings with appropriate employment service delivery systems: This requirement ensures that job openings are made available to a wide audience, including veterans and individuals with disabilities

Who Must Comply with Section 503 and VEVRAA

Organizations with federal contracts of $10,000 or more (Section 503) or $150,000 or more (VEVRAA) and 50 or more employees must comply with additional requirements. These include:

• Collecting and maintaining data on applicants, hires, promotions, and employees: Contractors must track and report this data to ensure compliance with affirmative action requirements.
• Preparing anti-discrimination plans: These plans outline the contractor’s commitment to preventing discrimination and promoting equal opportunity within their workforce

Enforcement of Section 503 and VEVRAA

While the Office of Federal Contract Compliance Programs (OFCCP) is currently in flux pending further guidance, this does not mean contractors should stop complying. These obligations are statutory and remain in effect. Non-compliance can result in severe consequences, including:

• Contract termination or suspension: Failure to comply with Section 503 or VEVRAA requirements can lead to the termination or suspension of federal contracts.
• Disbarment from future federal contracts: Contractors found to be non-compliant may be disbarred and declared ineligible for future federal contracts

Importance of Compliance

Compliance with Section 503 and VEVRAA remains essential for federal contractors for several key reasons:

• Legal Requirement: These laws are statutory obligations that remain in effect and enforceable, despite recent executive orders.
• Federal Obligations: Contractors must maintain plans for individuals with disabilities and protected veterans, including setting hiring benchmarks and workforce utilization goals.
• Non-discrimination Mandate: These laws prohibit discrimination based on disability status or protected veteran status in all employment practices.
• Reporting and Record-keeping: Contractors must document and annually update data on applicants and hires from protected groups, maintaining records for three years.
• Self-identification Procedures: Contractors are required to invite applicants and employees to self-identify as individuals with disabilities or protected veterans.
• Outreach and Recruitment: The laws mandate meaningful outreach efforts and self-analysis regarding established goals for hiring and retaining protected individuals.
• Potential Consequences: While OFCCP does not impose direct fines, non-compliance can result in violation findings, extended audits, and requirements for corrective actions.
• Strengthened Regulations: Recent updates to both Section 503 and VEVRAA have reinforced requirements to improve recruitment and hiring efforts for protected groups.
• Ongoing Enforcement: OFCCP continues to conduct compliance evaluations and audits, including for construction contractors.
• Broader Inclusivity Goals: These laws promote workplace diversity and equal opportunity, which can lead to improved company performance and innovation

What This Means for Your Organization

While the regulatory landscape is evolving, federal contractors must remain vigilant in their compliance with Section 503 and VEVRAA. These laws continue to play a crucial role in ensuring equal opportunities for individuals with disabilities and protected veterans in the workplace. Maintaining robust compliance programs is not just a legal necessity but a commitment to fostering diverse and inclusive work environments.

As we await further guidance on the changes to EO 11246, it is crucial for federal contractors to stay informed and proactive in their compliance efforts. By doing so, they can ensure they meet their legal obligations while promoting a diverse and inclusive workforce that benefits everyone.

Disclaimer: The information provided above is for informational purposes only and does not constitute legal advice. Please consult a legal professional before acting on any information provided.