Court Upholds OFCCP’s New Disabilities Rule
Revised regulations addressing affirmative action obligations of federal contractors in the employment of individuals with disabilities (IWDs) took effect on March 24 as scheduled, following a failed legal challenge by the Associated Builders and Contractors (ABC). On March 21, the U.S. District Court for the District of Columbia denied ABC’s request to enjoin the new rule, rejecting each of the associations many arguments.
The rule, issued by the U.S. Department of Labor’s Office of Federal Contract Compliance Programs (OFCCP) imposes three major requirements: (1) a data collection mandate extending pre-existing obligations to invite new employees to self-identify as an IWD to job applicants; (2) a data analysis mandate related to the number of applicants and new hires who so self-identify, the number of job openings, job applicants, and jobs filled; and (3) a 7% utilization goal for the employment of IWDs. Due in part to considerable efforts by The Associated General Contractors of America (AGC) to educate OFCCP and advocate for contractors’ interests, the final rule is significantly less burdensome than the rule originally proposed by the agency.
ABC’s arguments fell under three primary claims. First, ABC claimed that OFCCP exceeded its statutory authority under Section 503 of the Rehabilitation Act in promulgating the rule. The court disagreed, finding that both the text and legislative history of the Rehabilitation Act permit OFCCP’s actions. The court also rejected ABC’s argument that the data collection mandate violates the Americans with Disabilities Act.
Second, ABC claimed that the rule is arbitrary and capricious. The court reviewed the justifications OFCCP espoused for each of the three requirements in the rule. It found that the agency provided a rational basis for each requirement. This includes a sufficient justification for refusing to exempt the construction industry, as requested by AGC, ABC, and others during the rulemaking process. “The fact that a certain disability might prevent someone from taking a certain job in the construction industry does not mean that the industry is significantly less suited to employing individuals with disabilities,” said the court.
Third, ABC claimed that the rule violates the Regulatory Flexibility Act. That statute requires agencies to analyze the impact of their regulations on small businesses. The court held that the OFCCP’s certification that the rule will not impose a significant economic burden was reasonable. In particular, the court found reasonable the OFCCP’s assumption that construction contractors would not need to create costly new systems to comply with the new rule because they are already subject to parallel requirements under regulations for the employment of women and minorities.
AGC was invited to join in the lawsuit but declined based on an assessment of the likelihood of success and a decision to focus resources on working with OFCCP to ensure fair enforcement of the rule and to prevent burdensome revisions to other regulations under review. In furtherance of such goals, AGC met with OFCCP Director Pat Shiu and her staff on March 27 to discuss the agency’s plans for revising the regulations related to the employment of women and minorities and how AGC might be able to help the agency understand the application of those regulations in the construction industry. As previously reported, the latest Semiannual Regulatory Agenda showed an April 2014 estimated date for publication of a proposed rule. However, Director Shiu stated during the March 27 meeting that the proposed rule is not ready and that a new estimated publication date will be listed in the next regulatory agenda.
It is unknown at this time whether ABC plans to appeal the decision. AGC will monitor the case and report on significant developments.
Associated Bldrs. & Contractors, Inc. v. Shiu, Case No. 13-1806 (D. DC, 3/21/14).
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