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- Employment Law Guide

Federal Contracts-Equal Opportunity in Employment: Employment Nondiscrimination and Equal Opportunity for Qualified Individuals with Disabilities


Section 503 of the Rehabilitation Act of 1973, as amended (41 CFR Parts 60-741(/cgi-bin/leave-dol.asp?exiturl=http://www.ecfr.gov/cgi-bin/text-idx^Q^tpl=/ecfrbrowse/Title41/41cfr60-741_main_02.tpl&exitTitle=www.ecfr.gov&fedpage=yes) and 60-742(/cgi-bin/leave-dol.asp?exiturl=http://www.ecfr.gov/cgi-bin/text-idx^Q^tpl=/ecfrbrowse/Title41/41cfr60-742_main_02.tpl&exitTitle=www.ecfr.gov&fedpage=yes))

Who is Covered

Section 503 of the Rehabilitation Act of 1973, as amended, 29 U.S.C. 793(http://www4.law.cornell.edu/uscode/29/793.html), is administered by the Office of Federal Contract Compliance Programs (OFCCP). Section 503 requires employers with federal contracts or subcontracts that exceed $15,000, and contracts or subcontracts for indefinite quantities (unless the purchaser has reason to believe that the cost in any one year will not exceed $15,000), to treat applicants and employees without discrimination on the basis of disability and to take affirmative steps to hire, retain, and promote qualified individuals with disabilities.

The following types of contracts and subcontracts are exempt from Section 503:

  • Those not exceeding $15,000
  • Those for indefinite quantities where the agency determines that the cost in any one year will not exceed $15,000;
  • Those for work that is performed outside the U.S.
  • Those with state or local governments, except for the specific government entity that participates in work on or under the contract

The Director of the Office of Federal Contract Compliance Programs may grant a waiver from the requirements of Section 503 in the following circumstances:

  • For specific contracts, subcontracts, or purchase orders, if special circumstances in the national interest require such an exemption
  • For facilities not connected to performance of the Federal contract, upon the written request of the contractor, if certain conditions listed in the regulations are met. This type of waiver will terminate, at the very latest, two years after the date on which the waiver is granted, and earlier under certain specific circumstances
  • Contracts and subcontracts involving national security, if the head of the contracting agency determines both that (1) the contract is essential to national security, and (2) noncompliance with a particular requirement of the regulations with respect to the process of awarding the contract is essential to national security

Section 503 and its implementing regulations apply only to the specific state or local government entities that participate in work on or under a Federal contract or subcontract. This coverage is narrower than that which applies to employers in the private sector.

Under Section 503 and its implementing regulations, an "individual with a disability" means a person who has a physical or mental impairment that substantially limits one or more major life activities, has a record of such impairment, or is regarded as having such an impairment.

A “qualified individual” means a person who satisfies the job-related requirements of the employment position he or she holds or is applying for, and who, with or without reasonable accommodation, can perform the essential job functions of that position.

Additional information on the definitions of “individual with a disability" and “qualified individual with a disability" can be found in the regulations and in several of the Enforcement Guidance documents published by the Equal Employment Opportunity Commission (EEOC).


Basic Provisions/Requirements

Under Section 503 and its implementing regulations, covered employers with federal contracts or subcontracts must not discriminate against applicants or employees on the basis of disability. This obligation covers the full range of employment and personnel practices, such as recruitment, hiring, rates of pay, upgrading, and selection for training. Covered employers with federal contracts or subcontracts must also take affirmative steps to employ and advance in employment qualified individuals with disabilities. All covered contractors must also include a specific equal opportunity clause in each of their nonexempt subcontracts. The regulations provide the required language for this clause.

Under Section 503, each employer that has both a Federal contract or subcontract of $50,000 or more, and 50 or more employees, must prepare, implement, and maintain a written affirmative action program (AAP) covering each of its establishments. The employer must review and update the program annually and must make it available for inspection by any employee or applicant for employment, as well as by the OFCCP. The program may be integrated with, or kept separate from, any other affirmative action program the employer is required to prepare.


Employee Rights

Employees of and applicants for employment with a covered contractor or subcontractor have the right to file a complaint with OFCCP if they believe that a Federal contractor or subcontractor has discriminated against them on the basis of a disability. Anyone may call OFCCP with a question about interpreting the regulations, filing a complaint, or any other related matter. Additional telephone numbers are located on OFCCP’s Office Contact Web page(http://www.dol.gov/ofccp/contacts/ofcpkeyp.htm).


Recordkeeping, Reporting, Notices and Posters


Notices and Posters

Contractors and subcontractors who have a covered Federal contract or subcontract are required to post the EEO notice, “Equal Employment Opportunity is the Law” poster(http://www.dol.gov/ofccp/regs/compliance/posters/ofccpost.htm). The notice must be posted prominently, where it can be readily seen by employees and applicants for employment, (e.g., personnel office, work-out facility, lunchroom, or company bulletin board).

The notice is also available in Spanish(http://www.dol.gov/ofccp/regs/compliance/posters/pdf/eeosp.pdf) and Chinese(http://www.dol.gov/ofccp/regs/compliance/posters/pdf/eeopost(chinese).pdf). Posting of the notice in languages other than English is not required.

Contractors that have the obligation to develop a written Section 503 AAP must post a notice at each establishment providing the location and hours the AAP may be obtained. Additionally, the policy statement required by the Section 503 AAP regulations must be posted on company bulletin boards, and made available in accessible format, if necessary, (e.g., large print; audio file) so that applicants and employees with disabilities are informed of the contents of the policy statement.


Recordkeeping

Personnel and other employment records. Federal contractors are required to maintain any personnel or employment records for two years from the date of the making of the record or the personnel action involved, whichever occurs later. Records relevant to a complaint investigation or compliance evaluation must be retained until the investigation or evaluation has concluded. Examples of records that must be maintained include:

  • Job descriptions
  • Job postings and advertisements
  • Records of job offers
  • Applications and resumes
  • Interview notes
  • Tests and test results
  • Requests for reasonable accommodations
  • Results of physical examinations
  • Written employment policies and procedures
  • Personnel files

Contractors with fewer than 150 employees or who do not have a government contract of at least $150,000, only need to keep records for one year from the date of the making of the record or the personnel action involved, whichever occurs later. Records relevant to a complaint investigation or compliance evaluation must be retained until the investigation or evaluation has concluded.

In addition, all contractors with a federal contract or subcontract of $50,000 or more, and 50 or more employees, must retain certain records related to outreach and recruitment, and to data analysis, for a period of three years from the date of the making of the record.

Affirmative Action Program. Under Section 503, each employer that has both a Federal contract or subcontract of $50,000 or more, and 50 or more employees, must prepare, implement, and annually update a written affirmative action program (AAP) covering each of its establishments. The employer must make it available for inspection by any employee or applicant for employment, as well as by OFCCP. The program may be integrated with, or kept separate from, any other AAP the employer is required to prepare.

A contractor establishment required under Section 503 to develop and maintain a written AAP must preserve its AAP supporting documentation for the immediately preceding year, unless the contractor establishment was not then covered by the AAP requirement.


Reporting

There are no reporting requirements under Section 503.

Note that contractors may be asked to submit AAPs or other employment records to OFCCP if selected for a compliance evaluation or because of a complaint investigation.


Penalties/Sanctions

OFCCP investigates for violations of Section 503 either through compliance evaluations or in response to complaints. If a violation is found, OFCCP may ask the federal contractor or subcontractor to enter into conciliation negotiations. If conciliation efforts succeed, the contractor will enter into a binding conciliation agreement with OFCCP that includes corrective action the contractor will take, and may also include the submission of follow-up reports from the contractor, for a fixed period of time, to assure compliance. If conciliation efforts fail, OFCCP may initiate an administrative enforcement proceeding by issuing an administrative complaint against the contractor or subcontractor.

If OFCCP files an administrative complaint, the matter will be referred to an Administrative Law Judge, who hears the case and recommends a decision. If the contractor or subcontractor is dissatisfied with the Administrative Law Judge's decision, it may appeal the decision to the Department of Labor's Administrative Review Board. The Board issues the final decision, whether or not there is an appeal.

If the Board finds that a violation of Section 503 has occurred, it may order the contractor or subcontractor to provide appropriate relief, which may include back pay and benefits, and restoration of employment status, for the victim(s) of discrimination. Depending on the circumstances, violations also may result in cancellation, suspension, or termination of contracts, withholding of progress payments, or debarment.

If the contractor or subcontractor is dissatisfied with the Board's decision, it may appeal that decision to the Federal courts.


Relation to State, Local, and Other Federal Laws

Section 107(b) of the Americans with Disabilities Act of 1990 (ADA) required agencies with enforcement responsibilities under the Rehabilitation Act of 1973 (e.g., OFCCP) and under Title I of the ADA (i.e., the Equal Employment Opportunity Commission(http://www.eeoc.gov/)) to develop procedural regulations to ensure that complaints filed under these laws are addressed in a manner that avoids duplication of effort and prevents application of inconsistent or conflicting standards for the same requirements under the two laws. These regulations are found at 41 CFR Part 60-742(/cgi-bin/leave-dol.asp?exiturl=http://www.ecfr.gov/cgi-bin/text-idx^Q^tpl=/ecfrbrowse/Title41/41cfr60-742_main_02.tpl&exitTitle=www.ecfr.gov&fedpage=yes).


Compliance Assistance Available

The Department of Labor provides employers, workers, and others with clear and easy-to-access information and assistance on how to comply with Section 503 of the Rehabilitation Act of 1973. Among the many resources available are:

  • elaws Federal Contractor Compliance Advisor(/elaws/ofccp.htm) - Helps Federal contractors and subcontractors answer basic questions about coverage and compliance issues related to the equal employment opportunity laws administered by OFCCP.
  • OFCCP Webpage on Section 503 – Includes FAQs, recruitment resources and other materials to assist federal contractors in achieving their goals under Section 503.

Additional compliance assistance including explanatory brochures, fact sheets, and regulatory and interpretive materials is available on the Compliance Assistance “By Law” Web page(http://www.dol.gov/ofccp/regs/compliance/ca_503.htm).


DOL Contacts

Office of Federal Contract Compliance Programs (OFCCP)(http://www.dol.gov/ofccp/)
E-mail: OFCCP-Public@dol.gov
Tel: 1-866-4USADOL (1-866-487-2365) or 1-800-397-6251; TTY: 1-877-889-5627

The Employment Law Guide is offered as a public resource. It does not create new legal obligations and it is not a substitute for the U.S. Code, Federal Register, and Code of Federal Regulations as the official sources of applicable law. Every effort has been made to ensure that the information provided is complete and accurate as of the time of publication, and this will continue. Later versions of this Guide will be offered at www.dol.gov/compliance or by calling our Toll-Free Help Line at 1-866-4-USA-DOL (1-866-487-2365) (1-866-487-2365).

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