Contractors Question New Rules on Hiring Veterans, People With Disabilities

Two rules set new goals for federal contractors on hiring veterans and people with disabilities will increase paperwork and costs for companies that do business with the government -- but by how much depends on who you ask.

A commercial construction contractors group has charged the rules will cost companies nearly $6 billion a year in compliance costs, a figure the government strongly disputes.

Under one of the new rules, federal contractors must set benchmarks for veteran hiring either at the the national level of 8 percent or based on their own analysis of the best available data, as part of an update to the 1974 Vietnam Era Veterans’ Readjustment Assistance Act. This rule increases record-keeping mandates and clarifies job listing and subcontractor requirements, the Labor Department’s Office of Federal Contract Compliance Programs said.

Under another rule, contractors also must strive to fill 7 percent of each job group in their workforces with qualified people with disabilities. This rule, which updates the 1973 Rehabilitation Act, also sets new recruiting, training and record-keeping requirements similar to those aiming to protect women and minorities in the workplace.

While the goals are laudable, Alan Chvotkin, executive vice president of the Professional Services Council, which advocates for federal contractors, had concerns about their implementation.  He said the first rule fails to fully address true barriers to hiring veterans -- getting employees with appropriate experience levels and meeting other workforce requirements.  With regard to the second rule, he said, applying the disability hiring goal to all job groups “may exponentially raise the challenge of compliance.”

“I understand some of the rationale behind it,” he said. “You don’t want people with disabilities slotted to only menial or nonprofessional work.” But, he added, it can be a real challenge to find find qualified disabled applicants in all job categories, which he said is uncharted territory for federal regulations.

Stephen E. Sandherr, CEO of Associated General Contractors of America, was sharper in expressing opposition to the regulations.

“These rules will force federal contractors to spend an estimated $6 billion a year to produce reams of new paperwork proving they are doing what the federal government already knows they are doing,” he said in a statement posted to his group’s website.

OFCCP Director Patricia Shiu rejected that figure, saying the disability hiring rule is expected to cost between $349 million and $659 million, and the veteran rule to run between $177 million and $483 million.

“That means that on the highest end of these estimates, the two rules will cost up to $1.1 billion in the first year of implementation,” Shiu said in a statement emailed to Government Executive. “The cost per establishment comes out to a max of $4,550 per establishment for the first year.”

In a statement accompanying OFCCP's announcement of the new rules, Labor Secretary Thomas E. Perez said, "In a competitive job market, employers need access to the best possible employees.These rules make it easier for employers to tap into a large, diverse pool of qualified candidates."

The rules are scheduled to take effect 180 days after they appear in the Federal Register, which should happen “shortly,” OFCCP said.