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It’s been more than a year since the Office of Federal Contract Compliance Programs issued groundbreaking new rules related to Section 503 and the Vietnam Era Veterans’ Readjustment Assistance Act, yet the Agency shows no signs of slowing down.  In the past several months, the OFCCP has issued proposed rules on hot topics such as pay discrimination and discrimination based on sexual orientation and gender identity. 

Meanwhile, contractors are now required to be in full compliance with the Section 503 and VEVRAA Final Rules, despite limited guidance from the OFCCP. So what do federal contractors need to do to prepare for the new rules and avoid a desk audit?

  1. Update your sexual orientation and gender identity discrimination policies. On July 21, 2014, President Obama banned discrimination based on sexual orientation and gender identity with Executive Order 13672 (which amends EO 11246). The corresponding final rule, which took effect in April 2015, requires federal contractors to take affirmative steps to prevent discrimination based on sexual orientation and gender identity. This includes amending internal policies, as well as communicating support for the final rule in job solicitations as well as all contracts and subcontracts. Contractors should immediately comply with this EO if they haven’t already.
  2. Review your compensation standards. Any contractor who has been through a desk audit knows the importance of keeping detailed compensation data. Now the OFCCP may require even more data from contractors, even in the absence of a compliance notice.  Under the OFCCP’s proposed rule to combat pay discrimination, contractors with 100 or more employees would have to submit an “Equal Pay Report” each year detailing their compensation practices.  Although this rule is far from final, contractors should ensure they are using fair, objective, and measurable standards for paying their employees.
  3. Let your employees talk compensation. In tandem with the proposed “Equal Pay Report,” the OFCCP has issued a proposed rule to prohibit contractors from “chilling” discussions on compensation. If implemented, the rule would prohibit employers from discriminating against employees who discuss, inquire about, or reveal information related to compensation.  Note:  This proposed rule parallels employers’ obligations under the National Labor Relations Act. (For more information, see Baker & McKenzie’s Labor Year in Review.)
  4. Get your affirmative action house in order. Last year’s grace period has expired, and contractors must now comply with all aspects of the Section 503 and VEVRAA final rules, including Subpart C, which lays out new guidelines for annual Affirmative Action Plans. The regulations include:

•  Asking applicants and new hires to voluntarily self-identify as veterans or individuals with disabilities
•  Creating and maintaining quantitative data about the number of hires and applicants who identify as disabled or veterans
•  Engaging in targeted outreach and recruitment efforts of veterans and individuals with disabilities
•  Amending the Equal Opportunity policy in all contracts and subcontracts to reflect expanded protections for veterans and individuals with disabilities

For more information about the OFCCP’s Subpart C requirements, please visit the following sections of the OFCCP website:

Section 503 FAQ