DOL Proposes to Rescind EO 11246 Regulations, Amend Section 503 and VEVRAA Rules

On Tuesday, July 1, the Department of Labor (DOL) issued a proposal to rescind the Executive Order (EO) 11246 regulations – a widely expected action after President Trump signed EO 14173 in January, which directed the DOL to cease holding Federal contractors responsible for taking affirmative action under EO 11246. At the same time, the DOL proposed rules to revise – but not eliminate - the Veterans Readjustment Assistance Act (VEVRAA) and Section 503 of the Rehabilitation Act regulations, which require federal contractors to take affirmative action for individuals with disabilities and protected veterans.

In the proposed rule rescinding the EO 11246 regulations, the DOL provides additional reasons for the rescission, beyond EO 14173. They write that due to recent “course-corrections in Federal civil rights law”, there are concerns that the affirmative action regulations have become more vulnerable to legal challenges and should therefore be rescinded.

Additionally, the proposed rule goes into detail about the Administration’s concerns about the EO 11246 regulations, as well as how they were interpreted by contractors and enforced by the government. For example, they write that the regulations required employers to potentially take affirmative action toward women and minorities based on differences between an employer’s workforce and the available labor pool, and this is problematic because “the premise that the mere existence of statistical disparities is evidence of underutilization of women and minorities is based on the fundamentally flawed assumption that each and every federal contractor’s workforce may harbor discrimination if it does not mirror the available labor pool for women or minorities”. 

The proposed rule also includes the agency’s thoughts on how the setting of placement goals was carried out by contractors, as a result of the regulations and associated enforcement by the Office of Federal Contract Compliance Programs (OFCCP). They acknowledge that EO 11246 prohibited using placement goals as quotas but argue that in practice contractors might have made employment decisions based on race or gender to avoid audits and enforcement penalties. 

Additional proposed rules released at the same time propose changes to the parts of the VEVRAA and Section 503 that the OFCCP remains responsible for enforcing. The proposed changes would remove references to EO 11246 in both the VEVRAA and Section 503 regulations. Within the Section 503 regulations, DOL is also proposing that contractors no longer be required to invite applicants and employees to self-identify their disability status, as well as removing the utilization goal requirements. Justification for this includes concerns that contractors are using quotas to meet the utilization goal, and that these regulations are inconsistent with the Americans with Disabilities Act. 

These proposed rules come on the heels of the White House’s recent budget plan that would eliminate OFCCP and proposed moving OFCCP’s enforcement duties under Section 503 to the Equal Employment Opportunity Commission and move enforcement of the VEVRAA regulations to the DOL’s Veterans Employment and Training Service. 

All three proposed rules are accepting comments for 60 days from the date they are published in the Federal Register. Until final rules are finalized,  federal contractors remain responsible for complying with all parts of the Section 503 and VEVRAA regulations, including offering applicants and employees the opportunity to voluntarily self-identify their disability status and evaluating their employment of individuals with disabilities against the target of 7% employment of qualified individuals with disabilities within each of their job groups.

Berkshire will continue to monitor for further developments.