Compliance with Section 503 and VEVRAA: Still Required

Recent changes in federal regulations regarding affirmative action have left many employers wondering what is going on with their other federal obligations. What regulations and reporting requirements does my organization still need to comply with? 

Section 503 of the Rehabilitation Act and the Vietnam Era Veterans' Readjustment Assistance Act (VEVRAA) are two laws that remain in effect and must be complied with if you meet the minimum thresholds. 

Despite the executive order "Ending Illegal Discrimination and Restoring Merit-Based Opportunity" issued on January 21, 2025, it's crucial to understand that compliance with Section 503 and VEVRAA remains mandatory for federal contractors. 

Section 503 and VEVRAA: Unaffected by Recent Changes 

The “Ending Illegal Discrimination and Restoring Merit-Based Opportunity” order primarily targets race and gender-based affirmative action programs under EO 11246. It explicitly does not apply to "lawful Federal or private-sector employment and contracting preferences for veterans of the U.S. armed forces". This means that the protections for individuals with disabilities under Section 503 and for protected veterans under VEVRAA remain intact. 

Key Compliance Requirements for Federal Contractors 

Federal contractors should continue doing what they were doing before for both Section 503 and VEVRAA. No changes in requirements have been announced for either law. Federal contractors must continue to: 

1. Maintain plans for individuals with disabilities and protected veterans. 
2. Set hiring benchmarks for protected veterans. 
3. Provide reasonable accommodations to individuals with disabilities. 
4. Avoid discrimination based on disability status or protected veteran status. 
5. List job openings with appropriate employment service delivery systems. 

Who Must Comply with Section 503 and VEVRAA 

If your organization meets one of the thresholds below, you are required to comply with the law and complete necessary outreach and reporting requirements. As of February 3, 2025, the following thresholds apply: 

• Section 503: Applies to contracts of $10,000 or more. 

• VEVRAA: Applies to contracts of $150,000 or more. 

Contractors who meet one or both of the above requirements and who have 50 or more employees must complete additional requirements. They include: 

• Collecting and maintaining data on applicants, hires, promotions, and employees. 

• Preparing anti-discrimination plans. 

Legal Compliance and Enforcement of These Laws 

While the Office of Federal Contract Compliance Programs (OFCCP) is currently influx pending further guidance, this does not mean contractors should stop complying. These obligations are statutory and remain in effect. 

If you do not comply with VEVRAA or Section 503 requirements, a contractor may have their contract terminated or suspended. The contractor could also be disbarred and declared ineligible for future federal contracts. 

Why Must Federal Contractors Comply? 

Compliance with Section 503 and VEVRAA remains essential for federal contractors for several key reasons: 

1. Legal Requirement: These laws are statutory obligations that remain in effect and enforceable, despite recent executive orders. 
2. Federal Obligations: Contractors must maintain plans for individuals with disabilities and protected veterans, including setting hiring benchmarks and workforce utilization goals. 
3. Non-discrimination Mandate: These laws prohibit discrimination based on disability status or protected veteran status in all employment practices. 
4. Reporting and Record-keeping: Contractors must document and annually update data on applicants and hires from protected groups, maintaining records for three years. 
5. Self-identification Procedures: Contractors are required to invite applicants and employees to self-identify as individuals with disabilities or protected veterans. 
6. Outreach and Recruitment: The laws mandate meaningful outreach efforts and self-analysis regarding established goals for hiring and retaining protected individuals. 
7. Potential Consequences: While OFCCP does not impose direct fines, non-compliance can result in violation findings, extended audits, and requirements for corrective actions. 
8. Strengthened Regulations: Recent updates to both Section 503 and VEVRAA have reinforced requirements to improve recruitment and hiring efforts for protected groups. 
9. Ongoing Enforcement: OFCCP continues to conduct compliance evaluations and audits, including for construction contractors. 
10. Broader Inclusivity Goals: These laws promote workplace diversity and equal opportunity, which can lead to improved company performance and innovation. 

What This Means for your Organization 

While the regulatory landscape is evolving, federal contractors must remain vigilant in their compliance with Section 503 and VEVRAA. These laws continue to play a crucial role in ensuring equal opportunities for individuals with disabilities and protected veterans in the workplace.  

As we await further guidance on the changes to EO 11246, maintaining robust compliance programs is not just a legal necessity but a commitment to fostering diverse and inclusive work environments. 

If you are looking for help in managing these requirements, OutSolve can help. We can help create your plans and ensure they are in compliance with each law. Reach out to us today and let us take the burden of this requirement off your shoulders.