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 and 60-742)

Who is Covered

Section 503 of the Rehabilitation Act of 1973, as amended, 29 U.S.C. 793, ("Section 503") is administered by the Office of Federal Contract Compliance Programs ("OFCCP"). Section 503 requires employers with Federal contracts or subcontracts that exceed $15,000¹, and contracts or subcontracts for indefinite quantities (unless the contracting agency 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 take 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. and for which employment activity decisions were made outside the U.S.; and
• Those with state or local governments, except for the specific government entity that participates in work on or under the contract.

The Director of OFCCP 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, or for groups or categories of contracts where it is in the national interest; where it is found impracticable to act upon each request individually; and where such waiver will substantially contribute to convenience in administration of the act;
• 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; and
• 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.

Definitions

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), as these definitions are consistent with Title 1 of the Americans with Disabilities Act of 1990 (ADA), as amended.

Basic Provisions/Requirements

Under Section 503 and its implementing regulations, covered employers with Federal contracts or subcontracts ("contractors") 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 must also take steps to employ and advance in employment qualified individuals with disabilities. All covered contractors must also include the clause at 41 CFR 60-741.5 in each of their nonexempt contracts and subcontracts.

Under the regulations implementing Section 503, certain contractors and subcontractors are required to have a written program for employing and advancing in employment individuals with disabilities. Specifically, each contractor or subcontractor that (1) has a Federal contract or subcontract of $50,000 or more and (2) 50 or more employees must prepare, implement, and maintain a written program for each of its establishments. The contractor must review and update the program annually and must make it available for inspection to any employee or applicant for employment, as well as to OFCCP.

Employees of and applicants for employment with a covered Federal 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 webpage.

Complaints

By statute, Section 503 provides for a prompt investigation of employment discrimination complaints based on disability status. See 29 U.S.C. § 793(b). Employees and applicants of covered contractors, third parties, and authorized representatives (e.g., a family member, personal representative, or union representative) may file a complaint on behalf of an individual or group. Complaints may be submitted via fax, mail, or online.

Recordkeeping, Notices and Posters

Notices and Posters

Contractors are required to display the "Know Your Rights" poster. The poster must be displayed in conspicuous places available to employees and applicants for employment such as the personnel office, work-out facility, lunchroom, or company bulletin board. The contractor must ensure that applicants or employees with disabilities are provided the notice in a form that is accessible and understandable to the individual applicant or employee (e.g., providing Braille or large print versions of the notice or posting a copy of the notice at a lower height for easy viewing by a person using a wheelchair). With respect to employees who do not work at a physical location of the contractor, a contractor will satisfy its posting obligations by posting such notices in an electronic format, provided that the contractor provides computers that can access the electronic posting to such employees, or the contractor has actual knowledge that such employees otherwise are able to access the electronically posted notices.

The "Know Your Rights" poster is available in multiple languages. There is no requirement to display the poster in languages other than English. There is no particular size requirement.

Contractors must also notify the representatives of each labor union with which the contractor has a collective bargaining agreement of their Section 503 obligations.

Contractors that have the obligation to develop a written Section 503 program must post a notice at each establishment providing the location and hours it may be viewed. Additionally, the policy statement required by the Section 503 regulations must be displayed on company bulletin boards, and made available in accessible format, if necessary (e.g., providing Braille or large print versions of the notice, or posting a copy of the notice at a lower height for easy viewing by a person using a wheelchair) so that applicants and employes with disabilities are informed of the contents of the policy statement.

Recordkeeping

Personnel records. Federal contractors are required to maintain any personnel or employment records made or kept by the contractor. 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
• Written employment policies and procedures
• Personnel files

Federal contractors and subcontractors with fewer than 150 employees or a contract of less than $150,000 must keep records for one year from the date of the making of the personnel record or personnel action, whichever occurs later.

Federal contractors and subcontractors with 150 or more employees or who have a government contract of $150,000 or more must keep employment records for two years from the date of the making of the personnel record or personnel action, whichever occurs later.

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, the utilization goals, and data analysis, for a period of three years from the date of the making of the record.

There are no reporting requirements under Section 503.

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

Penalties/Sanctions

OFCCP conducts compliance evaluations and complaint investigations assessing whether Federal contractors and subcontractors are in compliance with Section 503. If a violation of Section 503 is found during compliance evaluations or complaint investigations, OFCCP will 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 actions 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 refer the matter to the Solicitor of Labor with a recommendation for the institution of enforcement proceedings to enjoin the violations, to seek appropriate relief, and to impose appropriate sanctions, or any combination of these outcomes.

If OFCCP files an administrative complaint, the matter will be referred to an Administrative Law Judge ("ALJ"), who hears the case and recommends a decision to the Department of Labor’s Administrative Review Board (“Board”). If the contractor, subcontractor, or OFCCP is dissatisfied with the ALJ's decision, they may appeal the decision to the Board. In both situations, the Board will then issue a final agency decision. Thereafter, either party may file a petition with the Board for further review by the Secretary. If a majority of the Board determines that the petition presents a question of law that is of exceptional importance and warrants review by the Secretary, the Board will refer the case to the Secretary. Where the Secretary accepts review, the Board’s decision does not become final unless and until the Secretary completes the review. If the Secretary does not accept review, the Board’s decision becomes final. The Secretary may also exercise discretion to direct the Board to refer the case.

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 district courts.

Relation to State, Local, and Other Federal Laws

Section 107(b) of the 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) 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.

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 resources available are:

• Office of Federal Contract Compliance Programs (OFCCP)
• Office of Disability Employment Policy (ODEP) Federal Contractor Compliance Requirements
• Job Accommodation Network (JAN)

DOL Contacts

Office of Federal Contract Compliance Programs (OFCCP)

Tel: 1-866-4USADOL (1-866-487-2365) or 1-800-397-6251. If you are deaf, hard of hearing, or have a speech disability, please dial 7-1-1 to access telecommunications relay services.

Table of Contents