Interview transcript:
Terry Gerton After months of uncertainty, the Department of Labor is resuming enforcement of affirmative action requirements for federal contractors who hire veterans and people with disabilities. While broader affirmative action rules tied to race and gender were rescinded earlier this year, these programs remain in place by law, and they’re now being revised to reflect the administration’s policy priorities. Here to break down what contractors need to know, what’s being proposed, and why this moment matters for compliance and equity alike is partner at Haynes Boone, Dan Ramish. Dan, it’s great to see you again.
Dan Ramish Great to see you too, Terry.
Terry Gerton We’re going to talk about the Office of Federal Contractor Compliance Programs in DOL. That’s been a topic on the president’s agenda since he came in. And there’s been some puts and takes in the organization itself and some confusion about mission. But you’ve got some clarity for us today. So let me turn it over to you for some background.
Dan Ramish Back in January, after the president took office, he rescinded the long-standing general applicability affirmative action requirements that apply to government contractors. Those were under a Johnson-era Executive Order 11246. And that was one of the actions in his first week in office. Of course, this has been one of the policy focuses of the administration. But there were outstanding questions when that happened about other affirmative action requirements that are statutory. And those are affirmative action requirements under the Vietnam Era Veterans Readjustment Assistance Act, or VEVRA, and Section 503 of the Rehabilitation Act of 1973, or Section 503. And those affirmative action requirement apply specifically to classes of protected veterans and people with disabilities. And because those were statutory, the administration didn’t have the same latitude to make changes. But also those affirmative action programs were kind of enmeshed with the broader Executive Order 11246 programs. And so shortly after the president took office, they issued an order, Department of Labor holding in abeyance enforcement activities under Section 503 and VEVRA. And the question was, what was the future of those programs and how? We didn’t know how long it would be on pause. And we now have several actions by the administration that give at least some additional information about how they’ll move forward with those programs.
Terry Gerton So before we get into the particulars of the new information, could you just refresh us on what VEVRA and 503 requirements are?
Dan Ramish In brief, VEVRA and Section 503 include non-discrimination requirements, and that’s both the statutes, and then Department of Labor has implementing regulations. And those implementing regulations are mirrored in the FAR and kind of refer back to the Department of Labor, which incidentally is one of the things that the FAR Council will be looking at, the relationship between the FAR and DOL regulations. But in the first place, implementing regulations require non-discrimination throughout the employment process, from recruiting to hiring to compensation. There’s a long list of different areas where contractors need to ensure that they’re not discriminating against these classes. Then there are notice requirements, both for job applicants and for employees, notifying labor unions, including legends in employment solicitations and advertisements. There are flow-down requirements, so this isn’t just a prime contract requirement where subcontractors meet the thresholds. They need to be subject to these requirements as well and comply with them, and the prime needs to make sure it goes down the chain. And then the most significant obligation for contractors, and this has an employee threshold, but the most significant obligation is Affirmative Action Program. And so contractors with 50 or more employees that also meet dollar thresholds are required to take affirmative steps to employ and advance employment in the case of VEVRA, protected veterans and in the case of Section 503, persons with disabilities. And their detailed requirements in the regulations about what that entails.
Terry Gerton Thanks for that reminder. So now let’s go back…the Secretary of Labor has issued a new rule lifting that abeyance. So I guess the old rules are back in place, but help us understand exactly what the current situation is.
Dan Ramish Some important points in that. So this is the July 2nd Secretary’s Order 08-2025. And it did lift the previous order abeyance of Section 503 in VEVRA. It addressed a number of different elements of the enforcement activities around those programs. So first, complaints. In many cases, actions by OFCCP would be triggered by an employee complaint or an applicant complaint. And the Department of Labor indicated that any pending complaints would now move forward and new complaints would be processed normally now that the abeyance is lifted. On the other hand, there were pending audits for 2025, which are normally announced in the fall of the previous year; there was a scheduling order back in November and those compliance reviews, the administration said they’re going to exercise their discretion to take no further action on those compliance reviews. So they’re administratively closing them. So companies that were selected for audit last year and were scheduled for an audit this year, that won’t move forward as originally planned. Then one other element that they specifically address is affirmative action program certifications, which is a more recent requirement developed a few years back where there’s a portal for the Department of Labor where contractors have been required to certify their affirmative action programs. And it sounds like DOL is still sorting out how that’s going to work as they disentangle the Executive Order 11246 piece. There isn’t a certification window this year, so that will kind of remain on hold. But DOL emphasized that of course the Section 503 and VEVRA obligations, which are part of the statute and regulation and contract obligations for government contractors, remain in place and contractors need to follow them.
Terry Gerton I’m speaking with Dan Ramish, he’s a partner at Haynes Boone. So speaking of contractors, which contractors do need to follow these rules?
Dan Ramish So these requirements are broadly applicable to government contractors. So Section 503 applies to all companies with a government prime contract or subcontract over $15,000, unless the work is being performed outside of the United States by employees that were recruited outside of the United States or unless another exemption applies. And then VEVRA generally applies to companies with government prime or sub contracts valued over $150,000 with the same exceptions. And then there is the higher employee standard that separately applies specifically for the affirmative action program requirements.
Terry Gerton So now there’s some proposed rules that may change these requirements. What are you hearing about that?
Dan Ramish Around the same time of the order, early July, the Department of Labor issued proposed rules for both VEVRA and Section 503 implementing regulations within the DOL regulations. And the VEVRA changes are largely administrative, kind of moving things around and removing cross-references to the now-rescinded Executive Order 11246 and making corresponding relocation of coverage of administrative enforcement proceeding procedures. But there are some substantive changes on the Section 503 regulatory side, two notable ones. One of them is the proposed rule would rescind the requirements that contractors invite job applicants and employees to self-identified disability status. And then the second change is they’re proposing to rescind utilization analysis and utilization goal requirements. So I guess to offer a little bit of context of those requirements, Section 503 contemplates that government contractors will invite job applicants and employees to identify disability status for purposes of taking affirmative action to encourage and promote employment of people with disabilities. And then the utilization analysis, there’s a regulatory utilization goal of 7% and there’s also a utilization analysis that’s required where contractors are supposed to look at how their program is working and what the actual utilization of people with disabilities is. And if they’re not satisfying the 7% utilization goal, they’re supposed to review their program and processes to see if there are impediments to equally employing people with disabilities. And the administration, they acknowledge that the regulations specifically say that the utilization goals aren’t quotas, because quotas are not permitted under anti-discrimination law. But they said that the structure with the utilization goals, they were concerned that this could lead contractors to have quotas in order to meet the goals. And they said the regulations went beyond what the statute required, that the utilization assessment was not statutory, that it was just a regulatory mechanism. So that’s kind of part of the basis. The other thing is they mentioned that the Americans with Disabilities Act actually precludes employers from asking job applicants about disability status or the related questions and has restrictions on asking employees about disability status. And so there were some concerns about inconsistency with that statute. So those were kind of the administration’s explanation for making those changes.
Terry Gerton And those rules are open for comment until when?
Dan Ramish Comments are due for both proposed rules September 2nd, 2025, so the standard 60-day public comment period.
Terry Gerton Great. And so, Dan, what do you want to make sure that contractors know as takeaways from this discussion?
Dan Ramish It’s important for government contractors to know that enforcement is back in full effect for VEVRA and Section 503 requirements. Of course, the requirements didn’t go away, but they are now fully back in effect, subject to, of course, the certification still being on hold for affirmative action programs. And the audits will presumably proceed in the next audit season. So unlike the general applicability of affirmative action requirements, of course, government contractors in the first place need to be aware that the Section 503 and VEVRA requirements for people with disabilities and veterans are still in place and aren’t going anywhere and remain a contractual regulatory statutory requirement. Contractors and subcontractors should make sure that they’re meeting those requirements. And this is probably a good time to review programs, partly because of these proposed rules and the change in direction, and partly because of changes in the administration’s policy.
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