Rehabilitation Act of 1973, Section 503

Apr 11, 2014
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Section 503 of the Rehabilitation Act of 1973, as amended, requires employers with federal contracts or subcontracts that exceed $10,000, and contracts or subcontracts for indefinite quantities (unless the purchaser has reason to believe that the cost in any one year will not exceed $10,000), to take affirmative steps to hire, retain, and promote qualified individuals with disabilities. The regulations implementing Section 503 make clear that this obligation to take affirmative steps includes the duty to refrain from discrimination in employment against qualified individuals with disabilities.

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

  • Those not exceeding $10,000;
  • Those for work that is performed 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 Deputy Assistant Secretary 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; 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 Executive Order or the regulations with respect to the process of awarding the contract is essential to national security.

On September 24, 2013, the U.S. Department of Labor’s Office of Federal Contract Compliance Programs published a Final Rule in the Federal Register that makes changes to the regulations implementing Section 503 of the Rehabilitation Act of 1973, as amended (Section 503) at 41 CFR Part 60-741. Section 503 prohibits federal contractors and subcontractors from discriminating in employment against individuals with disabilities (IWDs), and requires these employers to take affirmative action to recruit, hire, promote, and retain these individuals. The new rule strengthens the affirmative action provisions of the regulations to aid contractors in their efforts to recruit and hire IWDs, and improve job opportunities for individuals with disabilities. The new rule also makes changes to the nondiscrimination provisions of the regulations to bring them into compliance with the ADA Amendments Act of 2008.

The new Section 503 regulations became effective on March 24, 2014. However, contractors with a written affirmative action program (AAP) already in place on the effective date have additional time to come into compliance with the AAP requirements. This compliance structure seeks to provide contractors the opportunity to maintain their current AAP cycle.

Highlights of the New Regulations:

  • Utilization goal: The new regulations establish a nationwide 7% utilization goal for qualified IWDs. Contractors apply the goal to each of their job groups, or to their entire workforce if the contractor has 100 or fewer employees. Contractors must conduct an annual utilization analysis and assessment of problem areas, and establish specific action-oriented programs to address any identified problems.
  • Data collection: The new regulations require that contractors document and update annually several quantitative comparisons for the number of IWDs who apply for jobs and the number of IWDs they hire. Having this data will assist contractors in measuring the effectiveness of their outreach and recruitment efforts. The data must be maintained for three years to be used to spot trends.
  • Invitation to Self-Identify: The new regulations require that contractors invite applicants to self-identify as IWDs at both the pre-offer and post-offer phases of the application process, using language prescribed by OFCCP. The new regulations also require that contractors invite their employees to self-identify as IWDs every five years, using the prescribed language.
  • Incorporation of the EO Clause: The new regulations require that specific language be used when incorporating the equal opportunity clause into a subcontract by reference. The mandated language, though brief, will alert subcontractors to their responsibilities as Federal contractors.
  • Records Access: The new regulations clarify that contractors must allow OFCCP to review documents related to a compliance check or focused review, either on-site or off-site, at OFCCP’s option. In addition, the new regulations require contractors, upon request, to inform OFCCP of all formats in which it maintains its records and provide them to OFCCP in whichever of those formats OFCCP requests.
  • ADAAA: The new regulations implement changes necessitated by the passage of the ADA Amendments Act (ADAAA) of 2008 by revising the definition of "disability" and certain nondiscrimination provisions.

Basic Provisions/Requirements

Under Section 503 and its implementing regulations, covered employers with federal contracts or subcontracts must take affirmative steps to employ qualified individuals with disabilities. This obligation covers the full range of employment and personnel practices, such as recruitment, hiring, rates of pay, upgrading, and selection for training. All covered contractors and subcontractors must also include a specific equal opportunity clause in each of their nonexempt contacts and subcontracts. The regulations provide the required language for this clause.

In addition, Section 503 and its regulations require covered federal contractors and subcontractors to make reasonable accommodations for the known physical or mental limitations of qualified individuals with disabilities, unless providing an accommodation would create an undue hardship. Furthermore, covered contractors and subcontractors are required to take all necessary actions to ensure that no one attempts to intimidate or discriminate against any individual for filing a complaint or participating in a proceeding under Section 503.

Under Section 503, each employer that has both (1) a federal contract or subcontract of $50,000 or more, and (2) 50 or more employees, must prepare, implement, and maintain a written affirmative action program 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 Office of Federal Contract Compliance Programs (OFCCP) within the Department of Labor’s Employment Standards Administration. 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. The main telephone numbers for OFCCP's national offices are 202-693-0101 and 202-693-1308 (TTY). Additional telephone numbers are located on OFCCP’s Office Contact Web page.


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 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 contractor or subcontractor has 20 days to request a review by an Administrative Law Judge (ALJ), who hears the case and recommends a decision. If the contractor or subcontractor is dissatisfied with the ALJ'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, and 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 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.

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) 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.

[Editor's Note: On August 27, the Office of Federal Contract Compliance Programs (OFCCP) announced new rules outlining how federal contractors should handle their affirmative action and nondiscrimination obligations for protected veterans and for individuals with disabilities. These rules, in large part, mirror each other and fundamentally alter the rules for compliance with Section 503 of the Rehabilitation Act of 1973 covering persons with disabilities.

  • Applying the “internet applicant” rule to the new rules so that electronic applications and inquiries will be handled the same way they are handled for other groups covered by affirmative action (race, color, religion, sex or national origin);
  • Changing the proposed rules’ 5-year record-keeping requirement to 3-years;
  • Removing the requirement in the disabilities rule to review all physical and mental job qualification standards on an annual basis and replacing it with a requirement for contractors to establish their own schedule for reviewing job qualifications.

Although some aspects of the rules were made less onerous, the final versions of both rules include significant requirements for employers. Under each rule, the OFCCP requires employers to achieve specific numeric goals to document compliance. For example, the final disabilities rule still requires that 7 percent of all persons in each of the organization’s job groups be individuals with disabilities. It also requires that contractors compare the number of individuals with disabilities (IWD) who apply to the number of IWD that are hired, and keep those records for three years for audit purposes.]

Click here to download full text of the statutes.

Source: US Department of Labor

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