Section 503 of the Rehabilitation Act

Section 503 of the Rehabilitation Act of 1973 as amended in 1998 requires that any contract that the U.S. Federal Government enters into requires the contractor to take affirmative action to employ—and advance in employment—individuals with disabilities. The law applies to any prime contract or sub-contract over $10,000 in value. Enforcement is both active (with compliance audits) and reactive, based on complaints from individuals with disabilities. There are some narrow exceptions to the requirements but they are unlikely to apply to most modern contracting organizations.


Scope

Section 503 applies to any contract in excess of $10,000 entered into by any Federal department or agency for the procurement of goods or services. Section 503 automatically flows down to any sub-contract awarded by a prime contractor that is in excess of $10,000.

The vast majority of SSB BART Group’s clients have contract volumes that exceed these requirements. As such, SSB clients should assume that Section 503 applies to their organization.

Organizations should note that Section 503 is binding on an entire organization and is not specific to the portion of the organization involved in the U.S. Federal government work. The organization as a whole must comply with the 503 requirements and cannot comply in part. In other words, if any part of the organization receives any U.S. government contract or sub-contract over $10,000, then the entire organization must conform to the Section 503 requirements.

Section 503 is implemented based on executive orders and regulations issued by the U.S. Department of Labor’s OFCCP. These are updated from time-to-time as deemed appropriate by the current administration and the Department of Labor.


Enforcement

Enforcement activities for Section 503 are driven by complaints against contractors by individuals with disabilities and handled by the Department of Labor’s Office of Federal Contract Compliance Programs (OFCCP). The OFCCP also actively audits contractors and sub-contractors. In this fashion, enforcement activities for Section 503 are funded and compliance enforcement is far more aggressive than other portions of the Rehabilitation Act, such as Section 508, where enforcement activities are unfunded. In practice, this means that Section 503 has more teeth than other portions of the Rehabilitation Act and is closer to the Americans with Disabilities Act requirements in terms of non-compliance risk.

As part of the law, enforcement activities are required to be coordinated between the Department of Labor and Department of Justice to ensure the activities enforcing the Americans with Disabilities Act avoid any duplication of effort associated with implementing the Section 503 requirements.


Exceptions?

Yes, there are some exceptions. No, they will not apply.

The first exception is provided to allow the President to waive the requirements if a contract’s non-conformance is found to be in the national interest. When this happens, the reason for waiving the requirements must be provided in writing in line with the requirements of the guidelines. A highly unscientific search online uncovered no documented instances of waivers that were publicly available. So while some exceptions likely have been provided it seems clear they are few and far between.

The second exception can be provided via a waiver from the Secretary of Labor for portions of an organization when the contractor or subcontractor’s facilities are operationally separate and distinct from the activities of the contract. In practice, this means both physical and operational separation, so the people on the government contract would need to be in a separate building and not e-mail back and forth with people outside the contract. Needless to say, this tends to be impractical for almost all organizations. The Secretary of Labor has wide latitude in restriction issuance of these waivers if they find such a waiver would interfere with the effect of Section 503 as a whole. Finally, these waivers are only provided if they are requested—they are not actively provided.

So, short version: yes there are some exceptions, no they don’t apply to your organization.


Section 503 Updates

As part of the Department of Labor’s (DoL) Fall 2010 Regulatory Agenda the Office of Federal Contract Compliance Programs (OFCCP) has posted an Advance Notice of Proposed Rulemaking (ANPRM) relating to the implementation requirements of Section 503. The ANPRM is titled Affirmative Action and Nondiscrimination Obligations of Contractors and Subcontractors; Evaluation of Affirmative Action Provisions Under Section 503 of the Rehabilitation Act, as Amended. It provides a brief overview of the areas that the OFCCP is considering updating the Section 503 regulations to cover and a series of questions for public comment.

The comment period for the ANPRM was closed on September 21, 2010 and the list of public comments is available for review online. The OFCCP is now reviewing those comments and preparing for a more detailed Notice of Proposed Rulemaking (NPRM) to be issued. Currently, the NPRM is scheduled to be published in August 2011.

Why now?

The purpose of Section 503 is to promote equal employment opportunities for applicants and employees with disabilities with U.S. Federal government contractors. DoL statistics indicate that 77.5% of working age individuals with disabilities are not currently active in the labor force. This means that 4 out of 5 working-age people with a disability are currently not part of the labor force. This is nearly the inverse of people without disabilities, where about 4 out of 5 people are part of the labor force. Compounding the challenges, people with disabilities face a higher unemployment rate—13.9 percent—than individuals with no disabilities.

As it currently stands, no material updates have been made in the Section 503 regulations since 1996. In 2009 a DoL re-organization gave the OFCCP more independence, causing the department to report directly to the Secretary of Labor. As part of this re-organization the OFCCP implemented a full review of how Section 503 is implemented. The initial fruit of this review is ANPRM, which is the first step in the process of updating the standards.

Scope of Changes

The focus of the updates is ultimately to ensure that U.S. Federal Government contractors increase employment opportunities for qualified individuals with disabilities. These employment opportunities span all stages of the employment process, from recruiting and hiring to retaining and advancing people with disabilities. In this respect it is assumed that all an employer’s HR systems will likely come under the scope of the requirements, including both public-facing recruiting and application systems and internal-facing employee systems, such as intranets and applications used by individuals to complete their jobs.

The ANPRM also contains extensive notes on the need to improve the measurement and reporting requirements for contractors. These are focused on providing a method for measuring the efficacy of the affirmative action programs in place at the contract. As an example, under related Federal non-discrimination programs, organizations are required to compare the percentage of women in a given job against the availability of women to work in the job. If there is a systemic imbalance it can indicate a compliance issue that must be addressed. Currently no such measurement or reporting requirements are in place.

Impact

A variety of policy items are discussed in the ANPRM and SSB encourages interested parties to review the ANPRM on regulations.gov as time permits. The core item of interest to most SSB customers appears in Question 13 and relates to IT systems used at contractors:

13. What impact would result from requiring that Federal contractors and subcontractors make information and communication technology used by job applicants in the job application process, and by employees in connection with their employment fully accessible and usable by individuals with disabilities? What are the specific costs and/or benefits that might result from this requirement? For example, requiring that contractors ensure that application and testing kiosks are fully accessible and usable by individuals with disabilities, and that contractors strive to ensure that their Internet and Intranet Web sites satisfy the United States Access Board’s accessibility standards for technology used by the Federal Government and subject to section 508 of the Rehabilitation Act.

This question clearly indicates that the OFCCP is actively contemplating requiring that Federal Government contractors and sub-contractors make large portions of their IT stack accessible and usable to people with disabilities. The accessibility requirements would apply both to the public-facing recruiting and application systems and the internal systems used by employees within the organization. The enforcement of these requirements would be backed up by the OFCCP enforcement activities. In effect, this would create an accessibility compliance enforcement mechanism that is significantly more aggressive in its application to private U.S. Federal contractors and sub-contractors than that in place even for the Federal Government under Section 508.

These requirements are in line with similar guidance provided by the US DoJ relating to the application of the American’s with Disabilities Act. Recently the DoJ issued a similar ANPRM related to the application of the ADA to all internet sites and made clear that the DoJ assumes that the ADA already applies to covered entities’ web sites.

The comments provided on the ANPRM were overwhelmingly in favor of the guidelines as proposed and showed strong support for the broad application of Section 508 to contractor systems. Of 205 comments, well over 95 percent came from advocacy groups representing individuals with disabilities or directly from persons with disabilities. These comments strongly endorsed the requirement the federal contractors and sub-contractors be required to make their IT systems accessible. One comment from the US Chamber Commerce raised a concern about the cost of implementing the issues in item 13 in the context of embedded systems only. The same comment effectively endorsed the requirements for web-based systems. No comments were made by large Federal systems integrators, software or hardware manufacturers.

Summary

The ANPRM issued by the OFCCP indicates a strong increase in the strength of the regulations relating to Section 503 and their application to Federal contractors and suppliers. Question 13 of the ANPRM clearly indicates that the OFCCP is actively contemplating requiring that the Section 508 technical standards would apply to Federal Government contractors and sub-contractors IT systems. The Section 508 technical standards would apply to both the public facing recruiting and application systems and the internal systems used by employees within the organization. These requirements would be enforced by the OFCCP, which is a significantly more aggressive enforcement mechanism that that in pace for the Section 508 requirements applied directly to U.S. Federal agencies and in line with ADA enforcement norms. The public comments on the ANPRM overwhelming endorse such an application of accessibility requirements to contractor systems.

A conservative stance should assume that U.S. Federal contractors and sub-contractors will be required to make both applicant-facing systems and internal IT systems compliant or face the eventual loss of all public sector contracts.

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