New Affirmative Action Rules Draw Fire
New hiring rules for federal contractors aimed at increasing employment of veterans and people with disabilities have sparked an outcry from a major industry association.
The Associated General Contractors of America says the U.S. Labor Department's new hiring rules are unnecessary and will cost companies billions of dollars each year.
The Labor Department announced the new rules Tuesday (Aug. 27).
One rule updates requirements under the Vietnam Era Veterans' Readjustment Assistance Act of 1974; the other updates requirements under Section 503 of the Rehabilitation Act of 1973.
The rules prohibit federal contractors and subcontractors from employment discrimination against protected veterans and individuals with disabilities, respectively.
For decades, these rules have required federal contractors and subcontractors to affirmatively recruit, hire, train and promote qualified veterans and people with disabilities.
'Best Possible Employees'
"In a competitive job market, employers need access to the best possible employees," Secretary of Labor Thomas E. Perez said in a statement.
Added Patricia A. Shiu, director of the department's Office of Federal Contract Compliance Programs (OFCCP): "Strengthening these regulations is an important step toward reducing barriers to real opportunities for veterans and individuals with disabilities."
Shiu said the rules would affect about 171,000 companies, mainly contractors with at least 50 employees and $50,000 in government contracts, The Huffington Post reported.
AGC blasted the measures.
Federal data make it clear that the rules aren't needed, AGC CEO Stephen E. Sandherr said in a statement on Tuesday.
"The administration's decision to finalize two new oppressive employment regulations for federal contractors forces us to object to measures whose goals we support and objectives our members already meet," Sandherr said.
The rules will force federal contractors to spend about $6 billion annually to "produce reams of new paperwork proving they are doing what the federal government already knows they are doing," Sandherr said, citing a 2012 analysis from Applied Economic Strategies LLC.
According to the OFCCP, the rules are "economically significant" and each will have an annual effect on the economy of $100 million or more.
Stephen Sandherr, CEO of AGC, says the new rules lack justification and will force "billions in unneeded new regulatory costs."
The office estimates first-year costs for the disability rule at $349,510,926 to $659,877,833, and the first-year costs for the veterans' rule at $177,296,772 to $483,560,138, including one-time, recurring, capital start-up, operations and maintenance costs.
OFCCP puts recurring costs at $120,386,058 to $347,617,359 for the veterans' rule and $162,371,816 to $480,476,442 for the disability rule.
VEVRAA (Veterans) Rule
The veterans' rule "strengthens accountability and record-keeping requirements, enabling contractors to assess the effectiveness of their recruitment efforts," as well as clarifying job listing and subcontract requirements.
In a fact sheet, the OFCCP called the veterans' rules published in 1976 "inadequate for addressing the alarming rates of veterans' unemployment," adding that "increasing numbers of veterans are returning from duty in Iraq, Afghanistan, and other places around the world, and many face substantial obstacles in finding employment once they leave the military."
However, Sandherr, citing federal construction data, said that veterans of all ages were already more likely than non-veterans to be employed by construction firms.
Highlights of the Final Rule requirements include:
Section 503 (Disability) Rule
The Section 503 rule sets a hiring goal for federal contractors and subcontractors that 7 percent of each job group (or their entire workforce if 100 employees or less) be qualified individuals with disabilities. Similar to rules in place for women and minorities, the measure details actions contractors must take in recruiting, training, record keeping and policy dissemination.
"A substantial disparity in the unemployment rate of individuals with disabilities continues to persist despite years of technological advances that have made it possible for people with disabilities, sometimes severe, to apply for and successfully perform a broad array of jobs," the OFCCP stated in a fact sheet.
|Department of Labor|
The two new rules will become effective 180 days after being published in the Federal Register. AGC plans to review legal options for employers.
Citing data from the Bureau of Labor Statistics, the office said that the workforce participation rate in 2012 for working-age people with disabilities was 31.6 percent, compared to 76.5 percent for working-age individuals without disabilities.
Sandherr said people with disabilities were as likely to be employed in construction as people without disabilities, according to federal data.
Highlights of the Final Rule requirements include:
The rules become effective 180 days after their publication in the Federal Register. Current contractors with a written affirmative action program already in place will have additional time to comply.
The AGC, however, suggested that a fight may be ahead for the measure.
"Given the lack of justification for these new measures, we will closely review all appropriate legal options available to employers—who have already made sure veterans and the disabled are well represented in the workforce—from billions in unneeded new regulatory costs," said Sandherr.