# Affirmative Action and Nondiscrimination Obligations of Contractors and Subcontractors Regarding Individuals With Disabilities

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URL: https://www.frixlaw.com/law-library/documents/fr%3A96-9662

## Record

- **Collection:** Federal Register
- **Document type:** Rule
- **Published:** May 1, 1996
- **Citation:** 61 FR 19336

## Text

SUMMARY: The Office of Federal Contract Compliance Programs of the
Department of Labor (OFCCP) is revising the regulations implementing
section 503 of the Rehabilitation Act of 1973, as amended (section 503
or the act), which requires Government contractors and subcontractors
to take affirmative action to employ and advance in employment
qualified individuals with disabilities. The final rule makes three
general types of revisions to the section 503 regulations. First, the
regulations' nondiscrimination provisions generally are conformed to
the regulations published by the Equal Employment Opportunity
Commission (EEOC) implementing title I of the Americans with
Disabilities Act of 1990 (ADA). Second, the regulations incorporate
recent amendments to section 503. Third, the regulations are revised to
strengthen and clarify various existing provisions relating to
affirmative action, recordkeeping, enforcement and other issues. In
addition, the term ``Director'' that appears in the current regulations
and the previous proposal has been replaced throughout the final rule
with the term ``Deputy Assistant Secretary.''
The final rule partially withdraws a final rule published by the
Department of Labor on December 30, 1980 (which was subsequently
suspended) concerning section 503, Executive Order 11246 and the
Vietnam Era Veterans' Readjustment Assistance Act of 1974, as amended.
The withdrawal applies only to those provisions of the rule which
pertain to section 503.

EFFECTIVE DATE: These regulations will take effect on August 29, 1996.

FOR FURTHER INFORMATION CONTACT: Joe N. Kennedy, Deputy Director,
OFCCP, 202-219-9475 (voice), 1-800-326-2577 (TDD). Copies of this final
rule, including copies in alternative formats, may be obtained by
calling OFCCP at 202-219-9430 (voice) or 1-800-326-2577 (TDD). The
alternative formats available are: Large print, electronic file on
computer disk, and audio-tape.

SUPPLEMENTARY INFORMATION:

Current Regulations and Rulemaking History

This final rule revises the current regulations (41 CFR part 60-
741) implementing section 503 of the Rehabilitation Act of 1973, as
amended (29 U.S.C. 793) (section 503 or the act), which requires
parties holding a Government contract or subcontract in excess of
$10,000 to ``take affirmative action to employ and advance in
employment qualified individuals with disabilities.'' These regulations
establish specific affirmative action obligations for contractors
(e.g., contractors are required to use effective practices to recruit
qualified individuals with disabilities). The duty to undertake
affirmative action encompasses a duty to refrain from discriminating
against qualified individuals with disabilities.
On October 21, 1992, the Department of Labor's Office of Federal
Contract Compliance Programs (OFCCP) published a notice of proposed
rulemaking (NPRM or the proposal), 57 FR 48084, proposing to revise the
regulations implementing section 503. A notice correcting certain
technical errors in the NPRM was issued on October 30, 1992. 57 FR
49160. The comment period ended November 20, 1992. Thirty-seven
comments were received. A number of comments were submitted on behalf
of several organizations and represented the views of various groups,
employers, or individuals with disabilities. The comments have been
analyzed and considered in the development of this final rule.

Regulatory Revisions

1. Conformance With Americans With Disabilities Act Standards

The final rule was precipitated, in part, by the passage of the
Americans with Disabilities Act of 1990, 42 U.S.C. 12101 et seq. The
Americans with Disabilities Act provides comprehensive civil rights
protections to individuals with disabilities in the areas of
employment, public accommodations, State and local governmental
services, and telecommunications. Title I of the Americans with
Disabilities Act (ADA), which is enforced by the Equal Employment
Opportunity Commission (EEOC), prohibits private and State and local
governmental employers from discriminating against qualified
individuals with disabilities in all aspects of employment. The EEOC
published regulations implementing the ADA on July 26, 1991 (29 CFR
part 1630). The ADA regulations establish comprehensive, detailed
prohibitions regarding disability discrimination but do not address
issues regarding affirmative action. The ADA and its implementing
regulations became effective on July 26, 1992, with respect to
employers with 25 or more employees; on July 26, 1994, this coverage
was extended to employers with 15 or more employees.
This final rule conforms OFCCP's section 503 regulations to the
EEOC's ADA regulations. This action ensures that OFCCP and EEOC will
avoid the imposition of inconsistent legal standards when processing
complaints of discrimination that fall within the overlapping
jurisdiction of both section 503 and title I of the ADA, as is required
by section 107(b) of the ADA and by a recent amendment to section 503.
Section 107(b) of the ADA requires that OFCCP and EEOC establish
procedures to ensure that administrative complaints filed under both
laws are ``dealt with in a manner that avoids duplication of effort and
prevents imposition of inconsistent or conflicting standards.'' 1
Section 505(c) of the Rehabilitation Act Amendments of 1992 (Pub. L.
102-569, 106 Stat. 4344) (the 1992 amendments or the 1992 legislation)
amended section 503 by adding a new paragraph (e) which expressly
obligates the Secretary of Labor to develop these same procedures.
Also, the 1992 amendments added a new paragraph (d) to section 503,
which provides that ``The standards used to determine whether [section
503] has been violated in a complaint alleging nonaffirmative action
employment discrimination under [section 503] shall be the standards
applied under title I of the Americans with Disabilities Act of 1990.''
In conforming the section 503 regulations to the EEOC's ADA
regulations, this rule effectively implements these requirements.
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\1\ Pursuant to that section, OFCCP and EEOC published joint
regulations which set forth procedures governing the processing of
complaints that fall within the overlapping jurisdiction of both
title I of the ADA and section 503. 41 CFR part 60-742 (OFCCP) and
29 CFR part 1641 (EEOC). The joint rule requires, among other
things, that OFCCP (acting as EEOC's agent) process and resolve
complaints of employment discrimination based on disability for
purposes of title I of the ADA (as well as for section 503) when
there is jurisdiction under both statutes. OFCCP is required by the
rule to apply legal standards that are consistent with the
substantive legal standards applied under the ADA.
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One of the comments submitted in response to the publication of the
NPRM expressed the view that OFCCP's post-ADA role should be to focus
its enforcement efforts on affirmative action matters, as distinguished
from discrimination issues. The commenter's view is based on the
assertion that

[[Page 19337]]

OFCCP's authority to engage in compliance activities under section 503
relating to issues of discrimination was limited by the passage of the
ADA, which, the commenter contends, effectively transferred much of
OFCCP's authority in this area to EEOC. OFCCP disagrees. OFCCP's role
in the enforcement of the nondiscrimination requirements of section 503
was reaffirmed by the provisions of the ADA and the 1992 amendments
requiring coordination of enforcement under the ADA and section 503 and
the application of ADA standards in section 503 discrimination cases.
Nondiscrimination requirements are discussed in more detail in this
final rule than in the current regulations, because the final rule
incorporates the more expansive discussion of these requirements
contained in the ADA regulations. However, OFCCP views the expanded
discussion as a clarification of the general nondiscrimination
requirements under the current regulations, rather than as a
significant alteration of those requirements. Accordingly, in general,
this final rule does not affect the applicability of case law
(administrative and judicial) developed under section 503. (Thus,
section 503 case law continues in effect unless inconsistent or in
conflict with this rule.)
Because this final rule generally conforms the section 503
nondiscrimination regulations to the EEOC's ADA regulations, the
Interpretative Guidance on Title I of the Americans with Disabilities
Act set out as an appendix to the title I regulations--which provides
guidance about key provisions of the regulations--is equally applicable
with respect to the interpretation of the parallel provisions of these
regulations. Similarly, the Technical Assistance Manual on the
Employment Provisions (Title I) of the Americans with Disabilities Act
issued by the EEOC may also be relied upon for guidance.
As is discussed later in this preamble, however, there are a number
of differences, primarily of an editorial or technical nature, between
this rule and EEOC's regulations. For instance, the rule uses the term
``contractor,'' which is specific to the section 503 program, rather
than the analogous terms used by the ADA--``covered entity'' and
``employer.'' This final rule also contains a few explanatory
footnotes, which are intended for clarity only. OFCCP wishes to
reemphasize that it intends to apply its regulations consistently with
parallel provisions of the ADA regulations.

2. Implementation of the 1992 Statutory Amendments

This rule also implements a number of recent legislative amendments
to section 503, including--with one exception discussed below--the
amendments set forth in the 1992 legislation. The 1992 legislation was
signed into law on October 29, 1992, eight days after the issuance of
the NPRM, and thus the amendments to section 503 contained in that
legislation were not reflected in the proposal. The amendments to the
current section 503 regulations that are necessitated by the 1992
legislation and are ministerial and technical in nature have been
incorporated into this rule without substantive change. Publication in
proposed form would serve no useful purpose and is unnecessary under
the Administrative Procedure Act (5 U.S.C. 553(b)(B)). OFCCP,
therefore, finds good cause to waive notice of proposed rulemaking with
respect to the implementation of these amendments. The revisions to the
regulations necessitated by the legislative amendments are described
below.
The 1992 legislation amended the act's general jurisdictional
provisions in two respects. First, section 505(a) of the 1992
legislation amended section 503(a) by raising the contract dollar
amount threshold for covering a contractor from ``in excess of $2500''
to ``in excess of $10,000.'' Accordingly, this rule replaces all
references to $2500 contained in the current regulations with
references to $10,000.
Second, section 505(a) of the 1992 legislation also removed a
provision in section 503 of the act limiting its coverage to the
contractor's positions that are engaged in work related to Government
contracts. Prior to this amendment, section 503(a) provided that
Government contracts and subcontracts ``shall contain a provision
requiring that, in employing persons to carry out such contract, the
party contracting with the United States shall take affirmative action
to employ and advance in employment qualified individuals with
handicaps.'' The 1992 legislation struck out the phrase ``in employing
persons to carry out such contract.'' The effect of this amendment is
to apply the requirements of section 503 to all of a covered
contractor's or subcontractor's work force at all of its facilities.
In response to the coverage amendment, the few references to the
``carry out the contract'' language contained in the NPRM are omitted
from this final rule. Further, in order to reflect this amendment,
proposed Sec. 60-741.4(a)(2)--which expressly limited application of
the regulations to positions that are engaged in carrying out a
contract--has been revised in the final rule to clarify that such
limitation applies only to the contractor's employment decisions and
practices occurring before the amendment (see discussion in the
section-by-section analysis below).
Moreover, section 505(b) of the 1992 legislation codified the
``separate facility'' waiver provision contained in the current
regulations (Sec. 60-741.3(a)(5)) by expressly incorporating it (with
minor editorial changes) into section 503. The provision permits the
contractor to seek a waiver from the requirements of the regulations
for facilities that are not connected to a Government contract. (The
amendment added a new subsection (c)(2) to section 503 of the act; it
supplemented existing subsection (c), which the amendment redesignated
as subsection (c)(1), authorizing the granting of regulatory waivers in
the national interest.) The legislative history of the waiver amendment
indicates that it was included in the legislation in order to reaffirm
the long-standing ``separate facility'' waiver policy codified in the
regulations. S. Rep. 357, 102nd Cong., 2d Sess. 72 (1992).
This rule implements the waiver amendment by retaining the current
regulations' separate facility waiver provision (without change); the
final rule sets out the provision at Sec. 60-741.4(b)(3). As is
discussed above, the NPRM had replaced the current waiver provision
with proposed Sec. 60-741.4(a)(2), which is retained in this final rule
with modifications (see discussion below).2
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\2\ Section 505(b) of the 1992 amendments also requires OFCCP to
promulgate regulations that set forth the standards used for
granting separate facility waivers. This final rule does not
implement this requirement. OFCCP issued a separate proposed rule
setting out proposed regulatory standards for granting separate
facility waivers on February 14, 1996 (60 FR 5902).
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Also, the 1992 legislation (Sec. 102(f)(4)) clarified that
homosexuality and bisexuality are not disabilities under section 503,
and excluded from protection under section 503 certain conditions
(e.g., transvestism, transsexualism, pedophilia and compulsive
gambling) in order to conform the types of conditions protected from
discrimination under section 503 and the ADA. These provisions are
incorporated by the final rule in Secs. 60-741.3(d) and (e), and are
discussed in the section-by-section analysis below.

[[Page 19338]]

Finally, the 1992 legislation substituted the term ``disability''
for the term ``handicap'' throughout the Rehabilitation Act, including
section 503 (see, e.g., Sec. 102(f)(2) of the 1992 legislation). This
amendment, which did not affect the meaning or application of the term,
conforms the terminology used by the Rehabilitation Act to that used in
the ADA. The NPRM proposed a similar substitution in language
throughout the section 503 regulations, which is carried forward in
this final rule. (The proposed definition of ``individual with a
disability'' clarified, at Sec. 60-741.2(n)(2), that the regulations
refer to that term rather than to the term ``individual with
handicaps,'' which was then used in the Rehabilitation Act. This
statement is omitted from this final rule.)

3. Partial Withdrawal of the 1980 Final Rule

This final rule also partially withdraws a final rule published by
OFCCP on December 30, 1980 (45 FR 86215; corrected at 46 FR 7332,
January 23, 1981), and deferred indefinitely on August 25, 1981 (46 FR
42865). That 1980 rule would have revised the regulations at 41 CFR
chapter 60 implementing section 503 of the Rehabilitation Act as well
as two other laws enforced by OFCCP--Executive Order 11246 (30 FR
12319, September 28, 1965), as amended (the Executive Order), and the
affirmative action provisions of the Vietnam Era Veterans' Readjustment
Assistance Act of 1974, as amended (38 U.S.C. 4212) (section 4212). The
Executive Order requires Government contractors and subcontractors to
assure equal employment opportunity without regard to race, color,
religion, sex and national origin. Section 4212 mandates similar
requirements with regard to the employment of certain disabled veterans
and veterans of the Vietnam era.
The December 30, 1980, rule was to take effect on January 29, 1981.
On January 28, 1981, the Department of Labor published a notice (at 46
FR 9084) delaying the effective date of the final rule until April 29,
1981, to allow the Department time to review the regulation fully. The
Department published three subsequent deferrals of the rule in 1981 in
order to fully review the regulations in accordance with Executive
Order 12291, to permit consultation with interested groups, and to
comply with intergovernmental review and coordination procedures. The
Department again postponed the rule's effective date on August 25,
1981, until action could be taken on a proposed rule published on the
same date (46 FR 42968). The August 25, 1981, proposal would have
revised a number of provisions contained in the December 30, 1980,
final rule as well as a number of provisions in 41 CFR chapter 60 which
were not amended by that final rule. Final action has not been taken
with respect to the proposed regulations issued on August 25, 1981, or,
consequently, with respect to the 1980 final rule.
The substance of a number of the provisions contained in the 1980
final rule pertaining to the current section 503 regulations was
incorporated into the NPRM and is carried forward by this final rule.
However, as explained in the NPRM, OFCCP has determined not to go
forward with some of the other revisions to the regulations. In order
to avoid conflict with the 1980 final rule, this final rule withdraws
all provisions of the 1980 rule that pertain to section 503.

4. Impact on the 1980 Proposed Rule

On December 30, 1980, OFCCP published a proposed rule (45 FR
86206), the primary purpose of which was to conform the regulations
implementing section 503 and section 4212 (which were patterned after
those implementing section 503) to the employment provisions of the
Department of Labor's regulations implementing section 504 of the
Rehabilitation Act, which appear at 29 CFR part 32. Because this final
rule conforms the section 503 regulations to those implementing title I
of the ADA, it supersedes the 1980 proposal insofar as the 1980
proposal would conform section 503's regulations to those implementing
section 504.

Overview of Final Rule

This final rule consists of five subparts. Subpart A, ``Preliminary
Matters, Equal Opportunity Clause,'' explains the purpose, application
and construction of the regulations in general and contains an
extensive definitions section. The definitions section incorporates the
definitions contained in the EEOC regulations implementing title I of
the ADA which are relevant to the enforcement of section 503 and
contains a number of revisions to the current definitions as well.
Subpart A also contains provisions relating to coverage under section
503, and coverage exemptions and waivers, as well as the equal
opportunity clause, which delineates a covered contractor's general
duties under the act. Subpart B is a new subpart, which specifies the
employment actions that will be deemed to constitute prohibited
discrimination under section 503. In general, this subpart is identical
to the parallel provisions in the EEOC regulations. Some deletions and
modifications have been made with respect to the EEOC regulations to
conform to section 503 policies and procedures. Subpart C, which
governs the applicability of the affirmative action program
requirement, reorganizes, clarifies and strengthens the affirmative
action provisions in the current regulations. This subpart is not
paralleled in the ADA regulations, which mandate nondiscrimination
requirements only. As stated in Sec. 60-741.40(a) and discussed below,
the requirements of subpart C apply only to Government contractors with
50 or more employees and a contract of $50,000 or more. All other
subparts of the regulation are applicable to all contractors covered by
section 503.3 Subpart D covers general enforcement and complaint
procedures. To help ensure an enforcement approach consistent with that
used under the Executive Order, this subpart incorporates a number of
provisions from the regulations implementing the Executive Order.
Further, subpart D's provisions regarding complaint procedures are
conformed to the counterpart provisions contained in procedural
regulations applicable to the ADA. Subpart E, Ancillary Matters,
incorporates revised provisions on recordkeeping (e.g., it extends the
current one-year record retention period to two years for larger
contractors and conforms the scope of the retention obligation to that
applied by the EEOC under the ADA) and makes other revisions.
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\3\ The NPRM specifically requested public input on the topic of
affirmative action under section 503, including comment on the
appropriateness of the affirmative action obligations contained in
the proposal and suggestions regarding other obligations that might
be imposed. The public input on these issues was quite limited.
OFCCP is continuing to explore these issues and will consider
whether further revisions to the regulations' affirmative action
provisions would be appropriate.
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Finally, the rule contains two new appendices. One of the new
appendices sets out guidance on positions engaged in carrying out a
Government contract. This is an important concept in determining which
of the contractor's positions are subject to part 60-741 with respect
to its employment decisions and practices occurring before October 29,
1992. (As noted above, on that date, section 503, which had applied
only insofar as the contractor was employing persons to carry out a
contract, was amended to extend coverage thereunder to all of the
contractor's positions--irrespective of their relation to the
contract.) The second new appendix

[[Page 19339]]

sets out guidance on the duty to provide reasonable accommodation under
the act. The appendix is consistent with the discussion of this issue
contained in the Interpretative Guidance on Title I of the Americans
with Disabilities Act which is set out as an appendix to the EEOC's ADA
regulations.
A discussion of significant comments and an explanation of the
changes made from the NPRM to this final rule (other than those
discussed above) follows.

Section-by-Section Analysis of Comments and Revisions

Section 60-741.1 Purpose, Applicability and Construction

Section 60-741.1(b) Applicability

Proposed paragraph (b) stated in part that the regulations apply to
Government contracts which are performed within the United States. Upon
reconsideration, OFCCP believes that this statement is unnecessary in
this context, inasmuch as a similar clarification is made in Sec. 60-
741.4(a)(4) (which, as discussed below, has been revised for clarity).
Therefore, the statement is omitted in the final rule.

Section 60-741.2 Definitions

Section 60-741.2(a) Act

The citation of authority contained in the proposed definition has
been revised to make reference to the Rehabilitation Act Amendments of
1992.

Section 60-741.2(d) Deputy Assistant Secretary

The current regulation defines the term ``Director.'' The Director
has been given the new title of ``Deputy Assistant Secretary for
Federal Contract Compliance''; the final rule has been revised
accordingly.

Section 60-741.2(f) United States

The current regulation defines the United States as including the
Panama Canal Zone. The proposal deleted the Panama Canal Zone, which by
treaty is no longer part of the United States, and added the Northern
Mariana Islands. The final rule further updates the definition by
listing Wake Island and deleting the Trust Territory of the Pacific
Islands.

Section 60-741.2(i) Government Contract

Four commenters objected to the clarification set forth in the
definition of the term ``Government contract''--that contracts covered
under section 503 include those under which the Government is a seller
of goods or services as well as those under which it is a purchaser. In
relevant part, the definition provides that a ``Government contract''
is ``any agreement or modification thereof between any contracting
agency and any person for the purchase, sale or use of personal
property or nonpersonal services (including construction).'' The NPRM
proposed substitution of a reference to contracts for the ``purchase,
sale or use'' of goods or services for the existing reference (Sec. 60-
741.2) to the ``furnishing'' of goods or services. (The existing
regulation also states that the term ``services,'' as used in the
definition, applies irrespective of whether the Government is a
purchaser or seller. This statement is unnecessary in light of the
proposed revision, and thus was not carried forward in the NPRM.) The
commenters contended that this interpretation is inconsistent with
section 503(a), because the statute expressly or implicitly limits
coverage to those contracts in which the Federal Government is
procuring property or nonpersonal services, rather than those in which
it is the supplier. For the reasons discussed below, OFCCP believes
that the definition as proposed in the NPRM is consistent with the
statute, and thus declines to modify it.
In relevant part, section 503(a) provides that coverage under the
act applies to ``Any contract * * * entered into by any Federal
department or agency for the procurement of personal property and
nonpersonal services (including construction).'' OFCCP has long
interpreted the statute to cover both contracts in which the Government
is the seller of goods or services and those in which it is the
purchaser. This interpretation is supported by the statute's use of the
term ``any contract'' and by its broad remedial purpose. OFCCP believes
that the statute's use of the term ``procurement'' simply refers to the
subject matter of the contract, and does not restrict its application
to situations in which the Government, rather than the contractor, is
procuring goods or services. Further direct support is found in the
act's legislative history--which describes section 503 as applying to
``any contract * * * entered into by any Federal department or agency
for personal property or services'' (S. Rep. No. 318, 93rd Cong., 1st
Sess., reprinted in 1973 U.S. Code Cong. & Ad. News 2142 (emphasis
added)), and as ``a provision to ensure [that] any qualified
handicapped individual shall be given full and fair consideration for
employment by any contractor who seeks to contract with the Federal
Government'' (id., reprinted in 1973 U.S. Code Cong. & Ad. News 2123
(emphasis added)). There is nothing in this legislative history
suggesting that Congress intended to limit coverage under the act to
contracts in which the Government is a purchaser.
Moreover, at least one court has upheld a similar interpretation
under the Executive Order. Crown Central Petroleum Corp. v. Kleppe, 424
F. Supp. 744 (D. Md. 1976). In relevant part, the Executive Order (at
section 202) provides that (with the exception of certain specified
types of contracts), a provision obligating the contractor to comply
with the Order shall be included in ``every Government contract.'' In
Kleppe, the court held that the Executive Order is applicable to the
Government's lease to Crown Central of rights to mine on Federal lands.
The court ruled that the application of the Executive Order to this
situation is consistent with the Order's literal language, and that an
interpretation limiting the Order's application to only suppliers of
goods or services would be inconsistent with the national policy of
eliminating racial and other discrimination embodied in the Executive
Order. 424 F. Supp. at 427-28. An analogous rationale applies to
section 503 in view of Congress' clear intent that the contract
coverage provisions of section 503 parallel those of the Executive
Order. See S. Rep. No. 1297, 93rd Cong., 2d Sess., reprinted in 1974
U.S. Code Cong. & Ad. News 6427.
One commenter objected to the subdefinition of ``personal
property'' (Sec. 60-741.2(i)(6)) as inconsistent with OFCCP's statutory
authority. The definition states that the term, as used in connection
with the terms ``Government contract'' and ``subcontract'' (Sec. 60-
741.2(l)), ``includes supplies and contracts for the use of real
property (such as lease arrangements), unless the contract for the use
of real property itself constitutes real property (such as
easements).'' The commenter asserted that neither a plain reading of
section 503 itself--which states that the act applies to contracts
concerning personal property and nonpersonal services--nor its
legislative history supports an interpretation that leasehold interests
in real property are covered by the act.
The current definition of ``Government contract'' (at Sec. 60-
741.2) provides, in relevant part, that the term includes agreements
``for the furnishing of supplies or services or for the use of real or
personal property including lease arrangements.'' As stated in the
NPRM's preamble, the revision to the regulation was intended ``to make
clear, consistent with the language of the act, that only contracts
regarding personal property

[[Page 19340]]

(including those for the use of real property where such use
constitutes personal property) and `nonpersonal' services are
covered.'' The subdefinition of ``personal property'' simply recognizes
that real property leases constitute personal property under the common
law, and applies that principle in defining the scope of coverage under
section 503. See, e.g., In re Wolverton Associates, Inc. v. Official
Creditors' Committee, 909 F.2d 1286 (9th Cir. 1990); United States v.
Dally, 165 F. Supp. 194 (S.D.N.Y. 1958); First National Bank of Kansas
City v. Nee, 85 F. Supp. 840 (W.D. Mo. 1949), aff'd, 190 F.2d 61 (8th
Cir. 1951). The subdefinition is retained in the final regulation
without modification.
Several commenters representing credit unions raised objections to
OFCCP's position, as stated in the NPRM's preamble, that Federal
deposit and share insurance constitutes a Government contract within
the meaning of section 503, and thus subjects financial institutions
with such insurance to coverage under the act. The statement in the
NPRM's preamble regarding coverage of Federal deposit and share
insurance as a Government contract did not reflect any change in the
regulations implementing section 503--indeed, the NPRM did not propose
any regulatory provisions regarding this issue. Rather, the preamble
discussion merely restated and clarified the agency's long-standing
position; it was noted that OFCCP stated this position in the purpose
and application section (Sec. 60-741.1) of its 1980 final rule.
(Similar opposition had been raised in response to the proposal
preceding the 1980 final rule.) The preamble also stated that OFCCP
continues to hold this view, and that OFCCP declined to incorporate
into the proposal a similar statement regarding coverage of Federal
deposit and share insurance, because OFCCP believed it is unnecessary
to single out this contractual relationship from any other covered by
the regulations. This statement, then, was merely intended to explain
why the proposal differed from the 1980 final rule, and simply echoed
OFCCP's long-standing policy on the issue. Nevertheless, OFCCP
conducted a careful and detailed reevaluation of its position in light
of changes in some of the statutes affecting the financial industry.
Based upon that review, OFCCP continues to believe in the soundness of
its position and does not modify it.
Additionally, these commenters asserted that coverage of Federal
deposit and share insurance under section 503 would improperly
interfere with the authority of the regulatory agencies of financial
institutions to regulate credit unions. Also, some commenters asserted
that such a position is invalid because to date OFCCP has failed to
issue a rule codifying it; relatedly, some commenters requested that
OFCCP seek public comment on the coverage issue, and others requested
that the comment period for the NPRM be extended to permit additional
public input on the issue. OFCCP believes that it need not expressly
incorporate its policy into a regulatory provision or seek public
comment, inasmuch as the policy merely reflects an interpretation of an
existing regulatory provision (i.e., the definition of ``Government
contract''); thus, it is exempt from the notice and comment procedures
of the Administrative Procedure Act. See 5 U.S.C. 553(b)(A).
OFCCP also wishes to reemphasize that it will continue to maintain
its long-standing policy of imposing sanctions other than debarment of
financial institutions from future deposit or share insurance, or
cancellation, termination or suspension of a financial institution's
deposit or share insurance for violations of section 503 (see Sec. 60-
741.66 Sanctions and penalties).

Section 60-741.2(l) ``Subcontract''

The final rule was revised slightly to correct a clerical error.
The proposed definition of ``subcontract'' had inadvertently omitted
the parenthetical phrase ``(including construction)''. The proposed and
final definitions of the term ``Government contract'' (Sec. 60-
741.2(i)(5)) confirm that the parenthetical phrase was intended to be
included in the definition of ``subcontract'' the same as it is
included in the definition of the term ``Government contract'' so that
the definitions are parallel.

Section 60-741.2(q) ``Substantially limits''

The final rule was revised slightly to mirror the corresponding
definition in the ADA regulations. The proposed rule had used the
phrase ``within the normal range of abilities of persons in the general
population'' in place of the ADA rule's reference to the ``average
person in the general population.'' The proposal stated that the
difference in language was intended for clarity only and that OFCCP
intended to apply the definition and subdefinition in the same manner
as they are applied under the ADA. However, in order to prevent any
misunderstanding regarding OFCCP's intent, the final rule repeats the
ADA language verbatim and includes a footnote further describing the
definition.
Additionally, the subdefinition relating to substantial limitation
in the major life activity of working has been revised slightly to
conform to the corresponding ADA provision at 29 CFR 1630.2(j)(3). As
revised, it refers to the average person in the general population
having comparable training, skills, and abilities.

Section 60-741.2(v) ``Reasonable accommodation''

The final rule incorporates a definition identical to the ADA
definition at 29 CFR 1630.2(o) (see appendix discussion related to
Sec. 1630.2(o)); the current section 503 regulations do not contain a
definition of the term. The definition states that a reasonable
accommodation is any change in the work environment or the way job
duties are customarily performed that enables individuals with
disabilities to perform the essential functions of the job in issue, or
that ensures equal opportunity for individuals with disabilities with
respect to the application process or the enjoyment of benefits and
privileges of employment.
The proposal had contained a slight modification of the ADA
definition. Paragraph (v)(1)(i) of the OFCCP proposal referred to
modifications to the job application process that enable ``an
applicant'' with a disability to be considered for a position, while
the ADA definition uses the term ``qualified applicant'' in this
context. However, the final rule repeats the ADA regulation verbatim,
in order to clarify that the interpretation is meant to be the same.
OFCCP now explains in a footnote that contractors should not draw the
erroneous inference that their duty to provide a reasonable
accommodation with respect to applicants with disabilities is limited
to those who ultimately can demonstrate that they are qualified to
perform the job in issue. Applicants with disabilities must be provided
a reasonable accommodation if they are qualified with respect to the
application process (e.g., if they present themselves at the correct
location and time to fill out an application). This is the same
approach used under the ADA's definition.
The proposal contained a similar departure from the ADA regulation
in paragraph (v)(3), which referenced an informal, interactive process
with ``the individual with a disability.'' To clarify that the
regulations are meant to be interpreted consistently, the final rule
mirrors the ADA regulation and refers to a ``qualified'' individual.
OFCCP now

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explains in a footnote that contractors must engage in such an
interactive process with individuals with disabilities because, until
they have done so, they may be unable to determine whether a reasonable
accommodation is available that will result in the person being
qualified.

Section 60-741.2(y) Direct Threat

Two disability rights groups objected to the reference to the
health or safety of the individual with a disability in the definition
of ``direct threat.'' One group expressed the concern that the
reference to the risk to the individual might result in direct threat
determinations that are based on paternalistic or stereotypical views
concerning persons with disabilities. The other group asserted that
contractors might exempt themselves from the requirements of section
503 simply by invoking this rationale with little or no evidence of an
actual threat. OFCCP believes that such concerns are unwarranted. The
definition is identical to the parallel definition contained in EEOC's
ADA regulations (Sec. 1630.2(r)), which, in turn, is based on the case
law interpreting the Rehabilitation Act. As noted in EEOC's
interpretative guidance, the employer's assessment of whether there is
a risk to the individual with a disability, like its assessment of risk
to others, must be based strictly on valid medical analyses or other
objective evidence. The assessment must be made on a case-by-case basis
relying on the factors set out in the definition, rather than on
subjective perceptions, irrational fears, patronizing attitudes or
stereotypes. See Mantolete v. Bolger, 767 F.2d 1416 (9th Cir. 1985);
Bentivegna v. U.S. Department of Labor, 694 F.2d 619 (9th Cir. 1982);
E.E. Black, Ltd. v. Marshall, 497 F.Supp. 1088 (D. Hi. 1980). OFCCP
intends to ensure that contractors comply with this requirement. The
final rule adopts the definition without change.

Section 60-741.3 Exceptions to the Definitions of ``Individual With a
Disability'' and ``Qualified Individual with a Disability''

Section 60-741.3(a)(4) Construction

Paragraph (a)(4)(ii) clarifies that an individual is not
necessarily protected by section 503 simply because he or she is a
recovered or recovering drug abuser or is erroneously regarded as a
current drug user. Such an individual must still satisfy the
requirements for protection as a ``qualified individual with a
disability.'' An individual erroneously regarded as illegally using
drugs, for example, would have to show that he or she was regarded as a
drug addict in order to demonstrate that he or she meets the definition
of a ``qualified individual with a disability.''

Section 60-741.3(a)(5) Current Illegal Use of Drugs--Drug Testing

One commenter expressed a concern that this provision conflicts
with the policy of the National Labor Relations Board (NLRB) relating
to an employer's obligation to engage in collective bargaining with its
employees' representatives regarding the imposition of a workplace drug
testing policy. Paragraph (a)(5) provides that a contractor may seek
reasonable assurances, through drug testing and other means, that a
recovered or recovering drug user is no longer engaging in the illegal
use of drugs. This paragraph merely clarifies that such drug testing
does not conflict with the regulations implementing section 503. It
does not require an employer to implement drug testing, and therefore
does not conflict with the above NLRB policy.

Section 60-741.3(d) Homosexuality and Bisexuality

This paragraph of the final rule, which clarifies that
homosexuality and bisexuality do not constitute disabilities under
section 503, incorporates (with minor editorial changes) an amendment
contained in the 1992 legislation (Sec. 102(f)(4)). (The amendment
added a new paragraph (E) to the definition of ``individual with a
disability'' set out at 29 U.S.C. 706(8).) The amendment parallels a
provision contained in the ADA (42 U.S.C. 12211(a)), which is
implemented in the EEOC's regulations at Sec. 1630.3(e). The amendment
was intended to facilitate the consistent application of section 503
and the ADA.

Section 60-741.3(e) Other Conditions

This paragraph, which specifies that section 503 does not apply to
certain specified conditions--for instance, transvestism,
transsexualism, pedophilia and compulsive gambling--incorporates (with
minor editorial changes) an amendment contained in the 1992 legislation
(Sec. 102(f)(4)). (The amendment added a new paragraph (F) to the
statutory definition of ``individual with a disability.'') The
paragraph parallels a provision contained in the EEOC's regulations
(Sec. 1630.3(d)). The amendment was intended to conform the types of
conditions excluded from protection under section 503 to those excluded
from protection under the ADA (see 42 U.S.C. 12211(b)). (Paragraph (d)
of the NPRM provided that the terms ``individual with a disability''
and ``disability'' do not apply to an individual solely because the
individual is a transvestite. That clarification is subsumed within
this paragraph of the final rule.)

Section 60-741.4 Coverage and Waivers

Section 60-741.4(a)(2) Coverage--Positions Engaged in Carrying out a
Contract

The NPRM, among other things, provided (at paragraph (a)(2)(i))
that the regulations cover only positions of the contractor that are
engaged in carrying out a Government contract, and (in paragraphs
(a)(2)(i) (A) and (B)) set forth standards defining the circumstances
under which a position shall be deemed to be engaged in carrying out a
contract. Further, the proposal (in paragraphs (a)(2)(iii) (A) and (B))
required the contractor to make a determination as to which of its
positions are covered by the regulations as well and a record of its
determination, and (in paragraph (a)(2)(iii)(C)) provided that if a
contractor fails to make this determination, it must extend the
protections of the act and the regulations to all of its positions
until such time as it makes the coverage determination for a particular
position. The final rule revises these provisions consistent with the
1992 amendment to section 503 extending coverage under the act to the
contractor's entire work force.
As stated in the preamble to the NPRM, the purpose of the provision
limiting application of the regulations to positions that are engaged
in carrying out a contract was to more closely conform the regulations
to the jurisdictional limitation then-contained in section 503(a) as
interpreted by the court in Washington Metropolitan Area Transit
Authority v. DeArment, 55 EPD para.40,507 (D.D.C. 1991). The 1992
legislation, by striking this jurisdictional limitation from section
503, amended the act to apply to all of a covered contractor's or
subcontractor's work force. This amendment had prospective effect only.
In order to reflect this statutory amendment, the coverage
limitation set forth in paragraph (a)(2)(i) of the NPRM has been
revised in the final rule to provide that the limitation applies only
to the contractor's employment decisions and practices occurring before
the amendment's effective date--October 29, 1992. The proposed
standards governing the determination whether a position is engaged in
carrying out a contract have been carried forward in the final rule
without

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substantive change. (Stylistic revisions reflecting the jurisdictional
limitation's retroactive application have been incorporated throughout
paragraph (a)(2) as well as in appendix D, which sets out guidance
regarding positions engaged in carrying out a contract.) Thus, for
instance, in investigating whether a contractor covered by section 503
has discriminated against an individual with a disability in violation
of the act, the issue whether the discriminatee was employed in, or was
an applicant for, a position engaged in carrying out a Government
contract will be relevant only if the alleged discrimination occurred
before October 29, 1992. This section still has practical utility
because there are a number of pending section 503 complaints involving
alleged violations of the act which occurred before the amendment.
Moreover, the requirement contained in the NPRM that the contractor
determine which of its positions carry out contracts (and thus are
covered) and make a record of that determination has been eliminated in
the final rule. As explained in the preamble to the NPRM, this
determination was necessary in order to define the scope of the
contractor's affirmative action and nondiscrimination obligations under
the regulations. This determination, which was intended to be applied
prospectively only, is no longer needed inasmuch as the act has been
amended to extend those obligations to the contractor's entire work
force.
Three commenters objected to ``prong A'' of the coverage test
(paragraph (a)(2)(i)(A))--which provides that a position is engaged in
carrying out a contract if its duties include work that fulfills a
contractual obligation, or work that is necessary to, or that
facilitates, performance of the contract or a provision of the
contract. The commenters asserted that this provision is inconsistent
with the jurisdictional limitation that was contained in the statute in
that it would result in the coverage of positions with a tenuous
connection to the contract. Further, these commenters stated that the
regulation fails to provide sufficient guidance as to which positions
are engaged in carrying out a contract. Two of these commenters also
objected to the paperwork burdens associated with the coverage
determination requirement.
OFCCP disagrees with the assertion that prong A is inconsistent
with the jurisdictional limitation. As stated in the preamble to the
proposed rule, prong A reflects the practical reality that performance
of a contract generally requires the cooperation of a variety of
individuals engaged in auxiliary and related functions beyond direct
production of the goods or provision of the services that are the
object of the contract. Therefore, OFCCP believes it reasonable to
construe positions ``engaged in carrying out'' a contract as including
those which perform work that is necessary to, or that facilitates,
performance of the contract--even if the work is not directly required
by an express contractual term. OFCCP also disagrees that the
regulation fails to provide sufficient guidance on the application of
prong A; OFCCP has attempted to provide contractors with as much
guidance as possible on this issue in appendix D to the regulations.
Finally, the commenters' concerns regarding increased burdens have been
rendered moot in that the coverage determination requirement has been
omitted in the final rule.

Section 60-741.4(a)(3) Contracts and Subcontracts for Indefinite
Quantities

One commenter raised a concern that paragraph (a)(3) of this
section will result in undue burdens on contractors in that it would
require the incorporation of the equal opportunity clause (see Sec. 60-
741.5) into existing indefinite quantity contracts whenever an
individual order under such contracts meets the jurisdictional amount
for coverage. This concern is unwarranted. This provision does not
require that an existing contract be revised or reissued to incorporate
the clause physically in the contract in such a situation; it simply
provides that the requirements of the clause shall apply to the
contract (irrespective of whether the clause is physically incorporated
into the contract).

Section 60-741.4(a)(4) Work Within the United States (Proposed)

Proposed Sec. 60-741.4(a)(4) stated that the regulations apply only
to ``employment within the United States.'' (For the sake of clarity,
the final rule revises this section to substitute the phrase
``employment activities within the United States'' for the above
language.)
Under current Sec. 60-741.4(a)(3), the regulations are made
applicable to work performed abroad by employees recruited within the
United States. The final rule narrows the scope of that coverage. As
discussed in the NPRM, the proposed narrowing was a response to the
Supreme Court's decision in EEOC v. Aramco, 111 S. Ct. 1227 (1991),
which held that title VII of the Civil Rights Act of 1964 (title VII)
does not apply to United States citizens employed abroad by United
States employers. OFCCP concluded that a similar coverage limitation
applies to section 503. Upon reconsideration, OFCCP believes that
proposal failed to clearly reflect OFCCP's policy with respect to the
coverage of employment decisions made within the United States
affecting employment opportunities abroad (issues which were not
addressed by the Aramco decision). Accordingly, the final rule revises
this section to clarify that the regulations cover decisions of the
contractor made within the United States, pertaining to the
contractor's applicants and employees who are within the United States,
regarding employment opportunities abroad. OFCCP's established policy
is to treat these particular employment decisions as covered by section
503.
In the Civil Rights Act of 1991, Congress amended title VII and the
ADA to provide expressly for extraterritorial application of those
laws. We considered whether it is possible to apply a similar rule
under section 503, and concluded that it is not. Although the Civil
Rights Act of 1991 reversed the result of Aramco with respect to title
VII and the ADA, it did not erase the longstanding legal principle
repeated in that case that, absent contrary intent, legislation applies
only within the borders of the United States. We are unaware of any
such expressed intent regarding section 503.

Section 60-741.5 Equal Opportunity Clause

Section 60-741.5(a) Government Contracts

Proposed paragraph 4 of this section (one of the provisions of the
equal opportunity clause, which must be included in all covered
contracts and subcontracts) stated that the contractor agrees to post,
in a form to be prescribed by the Director (now the Deputy Assistant
Secretary for Federal Contract Compliance Programs), a notice regarding
the rights of applicants and employees under section 503. The final
rule revises this section to require the contractor to ensure that
applicants and employees with disabilities are informed of the contents
of the notice. In part, this revision responds to a suggestion by a
disability rights group that the regulations be revised to require that
the posting mandated by proposed Sec. 60-741.80 (the contractor's equal
opportunity policy statement) be accessible to persons with vision
impairments. (As discussed below, this posting requirement has been
transferred to Sec. 60-741.44(a).) OFCCP believes that such an
accessibility requirement should apply both to this

[[Page 19343]]

posting and the posting mandated by Sec. 60-741.5(a) (paragraph 4);
therefore, the final rule makes the requirement applicable to both
notices. OFCCP concludes that the contractor must ensure that these
notices are accessible to applicants and employees with disabilities to
satisfy its duty to provide a reasonable accommodation. A contractor
may make these notices accessible, for example, by having the notice
read to a visually disabled individual or by lowering the posted notice
so that it may be read by a person in a wheelchair.

Section 60-741.5(f) Duties of Contracting Agencies

The proposal provided in part that contracting agencies are
required to cooperate with the Director (now Deputy Assistant Secretary
for Federal Contract Compliance Programs) in the performance of his or
her responsibilities under the act, including taking such actions for
noncompliance as set forth in Sec. 60-741.66 (Sanctions and penalties)
as may be ordered by the Director (now Deputy Assistant Secretary). The
final rule revises this section by incorporating references to the
Secretary of Labor (in addition to the reference to the Deputy
Assistant Secretary for Federal Contract Compliance Programs); this
revision is intended to accurately reflect the role of the Secretary in
the enforcement of the act.

Section 60-741.21(g) Prohibitions

The text of this subsection has been altered slightly from the
proposal, to provide that exclusionary selection criteria that
``concern only marginal functions of the job,'' rather than those that
``do not concern an essential function of the job,'' would not be
consistent with business necessity. This subtle distinction allows for
the possibility that there may be selection criteria that do not relate
to either essential or marginal functions, which are consistent with
business necessity. Conforming changes have been made to Secs. 60-
741.44(c)(1) and (2).

Section 741.21(h) Administration of Tests

In the proposed rule this paragraph contained broader language than
the comparable ADA provision. The NPRM specified that contractors must
administer employment tests in an appropriate format to individuals
with impaired ``sensory, manual, speaking, mobility or other skills.''
The ADA rule does not reference ``mobility and other skills.'' Our
stated intent in including the additional language was to clarify that
individuals with disabilities may not be excluded from a job that they
can actually perform merely because they are hampered in the ability to
complete or succeed on a test as a result of their impaired skills
(resulting from their disability)--no matter what the impaired skills
may be. Upon further consideration, we have decided to track more
strictly the wording of the EEOC regulation, which in turn strictly
tracks the wording of the ADA. We have added to appendix A on
reasonable accommodation additional guidance on the administration of
tests that is consistent with our proposed rule.

Section 741.23 Medical Examinations and Inquiries

Section 60-741.23(b) Permitted Medical Examinations and Inquiries

One commenter suggested that the regulations clarify that OFCCP
will follow EEOC's interpretative guidance (relating to Sec. 1630.14(a)
of the ADA regulations) which provides that physical agility tests are
not medical examinations, and thus may be given at any point in the
application or employment process. OFCCP does indeed intend to follow
this interpretation. As stated earlier, the EEOC's interpretative
guidance is equally applicable with respect to the counterpart
provisions of this rule, and it may be relied upon for guidance. See
Sec. 60-741.1(c)(1). Further, a phrase was deleted from the final rule
as redundant.

Section 60-741.23(c) Invitation to Self-Identify

This paragraph of the NPRM stated that the contractor may invite
applicants and employees to self-identify as individuals with
disabilities as specified in Sec. 60-741.42. This paragraph has been
revised to reflect changes made by the final rule to Sec. 60-741.42
(see discussion below).

Section 60-741.23(d) Confidentiality and Use of Medical Information

One commenter raised the concern that the requirement contained in
proposed Sec. 60-741.23(d), that information regarding the medical
condition or history of an applicant or employee be treated as a
confidential record, conflicts with an employer's obligation under the
Railway Labor Act to provide such information to bargaining
representatives under specified circumstances. OFCCP has not yet taken
a position on this issue. The EEOC will be addressing similar issues
under the ADA in future Compliance Manual sections and policy guidance.
OFCCP intends to coordinate its policy under section 503 relating to
this issue with the EEOC at an appropriate time in the future.
Further, to ensure greater confidentiality OFCCP has narrowed the
scope of the requirement that confidential medical information be made
available to Government officials. As revised, the rule provides access
to Government officials enforcing the laws administered by OFCCP (i.e.,
section 503, Executive Order 11246, and the affirmative action
provisions of the Vietnam Era Veterans' Readjustment Assistance Act (38
U.S.C. Sec. 4212)), and those enforcing the ADA. A corresponding
revision has been made in appendix B, which contains a sample
invitation to self identify.

Section 60-741.25 Health Insurance, Life Insurance and Other Benefit
Plans

One commenter recommended that the regulations provide additional
clarification regarding permissible coverage restrictions under benefit
plans. OFCCP intends to develop future guidance on this and related
issues in coordination with EEOC.
Subsection (a) has been slightly revised to refer to ``[a]n insurer
* * *, or any agent or entity that administers benefit plans * * *.''
The proposal had erroneously deviated from the corresponding ADA
provision, using the word ``contractor'' rather than ``entity.''

Subpart C--Affirmative Action Program

Several commenters made observations concerning this subpart as a
whole. One, for example, recommended that the final rule clarify that
nondiscrimination and affirmative action are separate and distinct
concepts, and that affirmative action does not mean that an employer is
required to grant a preference. Affirmative action and
nondiscrimination are separate, but related, concepts. The duty to
undertake affirmative action subsumes the duty to refrain from
discrimination. Thus, for example, a contractor that is discriminating
is not fulfilling its affirmative action obligations to identify,
prevent and remedy discrimination. OFCCP also wishes to clarify that
section 503 and these implementing regulations do not require employers
to grant a preference to individuals with disabilities.
Subpart C requires covered contractors to institute a system of
proactive measures designed to ensure equal employment opportunity for
individuals with disabilities. For example, contractors are required to
ensure that their personnel processes provide for careful consideration
of the

[[Page 19344]]

job qualifications of known disabled individuals (Sec. 60-741.44(b));
periodically review job qualification standards to ensure that, to the
extent they tend to screen out qualified persons with disabilities,
such requirements are consistent with business necessity (Sec. 60-
741.44(c)); and take appropriate efforts to effectively recruit workers
with disabilities (Sec. 60-741.44(f)). These measures do not require
the contractor to extend a preference for individuals with
disabilities; rather, they are designed to create a working environment
that actively welcomes qualified persons with disabilities at all
levels in the contractor's work force.

Section 60-741.40 Applicability of the Affirmative Action Program
Requirement

The NPRM contained a proposal (in paragraph (a)) to raise the
threshold for the application of the written affirmative action program
(AAP) requirement from the current (Sec. 60-741.5(a)) 50 or more
employees and a Government contract of $50,000 or more, to 150 or more
employees and a contract of $150,000 or more. Several commenters
expressed approval of the NPRM proposal, one expressed disapproval, and
two favored a higher threshold--250 employees and a Federal contract of
$250,000 or more.
Upon further consideration, OFCCP believes it is in the public
interest to maintain the threshold requirements imposed at current
Sec. 60-741.5(a). Raising the threshold as proposed would remove nearly
two million workers from the protection of a Section 503 affirmative
action program. Further, since a large proportion of new jobs are
created in companies with fewer than 150 employees, relieving such
companies from the affirmative action program requirement would have a
significant impact on the employment opportunities of individuals with
disabilities. Finally, OFCCP wishes to maintain consistency in its
affirmative action program threshold among its three programs, and that
threshold under both its Executive Order 11246 program (Secs. 60-
1.40(a), 60-2.1(a)) and 38 U.S.C. 4212 program (Sec. 60-250.5(a)) is 50
or more employees and a Government contract of $50,000 or more.
Accordingly, the corresponding threshold in the current Section 503
regulations is carried forward in this final rule without change.
A number of commenters expressed concern regarding proposed
paragraph (b) insofar as it requires contractors to prepare and
maintain an AAP at each establishment. These commenters asserted that
it would be overly burdensome to comply with this requirement at
establishments which employ very few people. Although this paragraph,
which is virtually identical to current Sec. 60-741.5(a), does not
define ``establishment,'' OFCCP has applied that term flexibly in order
to accommodate small establishment issues. The Secretary of Labor's
decision in OFCCP v. Coldwell, Banker and Co., 78-OFCCP-12 (August 14,
1987), an Executive Order 11246 case, recognized that the term
``establishment'' generally means a physically distinct place of
business or location. However, he also recognized that there may be
circumstances where it is appropriate for OFCCP to approve the grouping
of separate facilities for AAP purposes. Factors that may be relevant
include whether there is centralized authority for personnel decisions,
whether the facilities are in the same labor market or recruiting area,
and the number of employees at the facilities. Contractors may request
that OFCCP approve the grouping of particular facilities for AAP
purposes.

Section 60-741.42 Invitation to Self-Identify

This section addresses a contractor's obligation to invite
applicants and employees with disabilities to self-identify in order to
benefit from the contractor's affirmative action program. Under the
current regulations (41 CFR 60-741.5(c)(1)) contractors are required to
invite employees and applicants to self-identify. Under paragraph (a)
of the NPRM contractors would be permitted, but not required, to invite
self-identification. The final rule differs from the proposed version,
and is similar to the current rule, in that it makes the obligation to
extend the invitation mandatory. The final rule takes a different
approach from the current rule, however, in that it specifies that
except in limited circumstances the invitation is to be extended after
an employment offer has been made and before the applicant begins work.
OFCCP had explained in the preamble to the NPRM that it believed
the invitation to self-identify should be permissive, rather than
mandatory, in light of other proposed provisions (Secs. 60-741.44(b)
and (d)) which provide comparable protections. However, upon
reconsideration, OFCCP believes that these provisions (which are
carried forward in the final rule) do not provide protections
comparable to a mandatory invitation to self-identify. Sections 60-
741.44(b) and (d) are intended to ensure that the contractor will
afford individuals with a known disability proper consideration for
employment opportunities and reasonable accommodations. In contrast,
the mandatory invitation to self-identify is designed to afford persons
whose disabilities may not be known to the contractor a full
opportunity to come forward to request an accommodation. Further, the
mandatory invitation ensures that notice is provided of the
contractor's obligations with respect to individuals with disabilities.
Accordingly, the final rule carries forward the mandatory requirement
from the current regulations.
Further, the proposed permissive invitation provision was based in
part on the concern that a mandatory requirement might result in
inadvertent violations of the ADA regulatory prohibitions regarding
medical inquiries by employers subject to both laws. Those regulations
generally prohibit inquiries (such as those required by Sec. 60-741.42)
whether an applicant or employee is an individual with a disability or
as to the nature or severity of the disability but specify that such
inquiries are permitted if required to satisfy the affirmative action
requirements of section 503 (see Sec. 1630.13 of the ADA regulations
and the interpretative guidance relating to Sec. 1630.14). At the time
the NPRM was published, OFCCP was concerned that a contractor might
inadvertently extend the invitation to workers who are not covered by
section 503--and thus, such an invitation arguably would not fall
within this exception to the medical inquiries prohibition. (As is
discussed above, prior to the act's amendment by the 1992 legislation
only employees who were employed in, or applicants for, positions that
are engaged in carrying out a Government contract were covered.) OFCCP
believed that a permissive invitation would permit the contractor to
avoid extending the invitation where an applicant's or employee's
coverage under section 503 was unclear. In view of the amendment
extending coverage under the act to all of the contractor's positions,
this issue no longer presents a significant concern.
The revised provision is intended to comport with EEOC regulations
and guidance on pre-employment inquiries. Paragraph (a) of the rule
requires the contractor to issue the invitation after making an offer
of employment and before the applicant begins his or her employment
duties. This approach is consistent with Sec. 1630.14(b) of the EEOC's
regulations, which provides that an employer may require a medical
inquiry after making an offer of employment to a job applicant and

[[Page 19345]]

before the applicant begins his or her job duties, if all entering
employees in the same job category are subjected to such an inquiry
regardless of disability. Inviting an applicant to self-identify before
an offer of employment has been made is permitted only in two limited
circumstances: If the invitation is made when the contractor actually
is undertaking affirmative action at the pre-offer stage; and if the
invitation is made pursuant to a Federal, state or local law requiring
affirmative action for individuals with disabilities. EEOC's October
10, 1995, ``ADA Enforcement Guidance: Preemployment Disability-Related
Questions and Medical Examinations'' authorizes pre-employment
inquiries in these circumstances. Furthermore, in order to ensure
consistency between the requirements of section 503 and the Vietnam Era
Veterans' Readjustment Assistance Act (VEVRAA), OFCCP plans to issue an
Interim Final Rule conforming the invitation to self-identify provision
of VEVRAA with that in this rule.
Further, the rule has been revised (paragraph (b) of the final
rule; paragraph (a) of the proposal) to require that the invitation
inform the individual that the request to benefit under the
contractor's affirmative action program may be made immediately or at
any time in the future. This revision is intended to help ensure that
the individual is aware that he or she is not precluded from making the
request at any time in the future merely because an initial request was
made or because he or she failed to make the request immediately in
response to the invitation. For example, an individual with a
disability simply may not choose to self-identify before beginning
work, but may wish to do so later; after beginning work an individual
may develop a disability; or a pre-existing minor disability may become
more severe. Proposed paragraph (b), which set forth a similar
clarification--but did not require that it be included in the
invitation itself--has been omitted in the final rule.

Section 60-741.44 Required Contents of Affirmative Action Programs

Section 60-741.44(a) Policy Statement

Paragraph (a) of the proposal, which provided that the contractor
shall include its equal opportunity policy statement in its affirmative
action program, has been revised for clarity. As revised, this section
states that the contractor shall post the policy statement on company
bulletin boards, and specifies the type of information that should be
included in the policy statement--both suggested (relevant information
about the contractor's policy) and required (notification that the
contractor is obligated, as specified in Sec. 60-741.69, to refrain
from harassment or intimidation). In this part, OFCCP uses the term
``shall'' when material is mandatory and ``should'' when the material
is encouraged but not required. This revision largely conforms the
provision to the counterpart Executive Order regulation (41 CFR 60-
2.20(a)). The notice posting requirement was set out in proposed
subpart E (Ancillary Matters) at Sec. 60-741.80; that section also
provided that the posting shall include a notification regarding the
contractor's obligation to refrain from harassment or intimidation. For
the sake of clarity, the substance of these provisions has been
transferred to Sec. 60-741.44(a). (Proposed Secs. 60-741.81 through 60-
741.85 have been redesignated as Secs. 60-741.80 through 60-741.84,
respectively.) OFCCP believes that the revisions establishing suggested
guidance on the contents of equal opportunity notices, will simplify
the process of preparing such notices. Additionally, as discussed in
connection with Sec. 60-741.5(a), the final rule revises this section
to require the contractor to ensure that applicants and employees with
disabilities are informed of the contents of the policy statement.

Section 60-741.44(d) Reasonable Accommodation to Physical and Mental
Limitations

A few commenters objected to paragraph (d) of the proposal insofar
as it provides that where an employee with a known disability is having
difficulty performing his or her job, the contractor shall
confidentially inquire whether the employee is in need of a reasonable
accommodation. The preamble to the proposal stated that the contractor
is required to make the inquiry only in situations where it is
reasonable to conclude that a performance problem may be related to a
disability. These commenters asserted that it may be difficult to
determine with certainty whether the employee's performance problem is
the result of a disability. Consequently, the commenters argued, the
requirement may compel some contractors to make potentially offensive
inquiries regarding needed accommodations (i.e., inquiries based on
unfounded and stereotypical assumptions).
In order to address this concern, paragraph (d) has been revised in
the final rule to require the contractor to make an initial inquiry as
to whether the performance problem has any connection to the employee's
disability, and that a second inquiry about needed accommodations only
be made where the individual indicates that the problem does have such
a connection. Moreover, paragraph (d) has been revised to require the
contractor to make the initial inquiry only where the employee is
having significant difficulty performing the job and it is reasonable
to conclude that the performance problem may be related to the known
disability.
The revision requiring the contractor to make the initial inquiry
only where the employee is having a significant job performance problem
is intended to minimize the burden placed on the contractor while also
helping to ensure that the accommodation issue is fully explored by
both the employee and the contractor before the employee may be subject
to adverse action.
One commenter suggested that, rather than imposing a requirement on
contractors to inquire about the need for a reasonable accommodation
where an individual with a known disability is having a job performance
problem, OFCCP should encourage contractors to ensure that individuals
with disabilities are aware of their rights under section 503,
including their right to request a reasonable accommodation. The
difficulty with this approach is that, notwithstanding a contractor's
efforts to disseminate this information, some individuals with
disabilities may remain unaware of their right to request a reasonable
accommodation. Moreover, many individuals with disabilities may not
perceive the need for an accommodation (for instance, a person with
narcolepsy might fail to recognize the fact that his or her disability
is so severe as to interfere with the performance of the job).

Section 60-741.44(f) External Dissemination of Policy, Outreach and
Positive Recruitment

Some commenters viewed paragraph (f) as imposing too many
burdensome requirements. OFCCP disagrees. Proposed paragraph (f), which
is generally consistent with current Sec. 60-741.6(f), does not impose
any new appreciable obligations. It simply specifies that a contractor
is required to engage in such outreach and recruitment activities--as
appropriate to its circumstances (such as size, resources, and the
adequacy of current procedures)--that are reasonably designed to
effectively recruit qualified individuals with disabilities. The
methods for doing so that are specified in paragraphs (f)(1) through
(f)(7) are

[[Page 19346]]

suggested, rather than mandatory. This provision is carried forward in
the final rule without change.

Section 60-741.60 Compliance Reviews

OFCCP did not receive any comments during the comment period
regarding the proposed provision relating to compliance reviews.
However, questions subsequently have arisen regarding whether this
provision gives OFCCP new authority to conduct reviews or simply
clarifies existing authority under section 503 and the present
regulations. This provision simply reaffirms more clearly OFCCP's
existing authority under the act and the regulations (see current
Sec. 60-741.25) to conduct compliance reviews to evaluate contractors'
compliance with the law.

Section 60-741.61 Complaint Procedures

Section 60-741.61(b) Place and Time of Filing

OFCCP's paragraph (b) proposal to extend the current 180 day
complaint filing period to 300 days is adopted in this final rule. The
final rule provides a uniform national standard which will not be
shorter than the complaint filing period under the ADA. Section 107(a)
of the ADA, which incorporates the procedural requirements of section
706 of title VII, requires the EEOC to defer for 60 days to State or
local agency processing of an ADA complaint if a State or local law
prohibits the employment practice alleged to be unlawful, and the
agency is authorized to grant or seek relief. In such jurisdictions, an
ADA complaint may be filed with the EEOC within 30 days of the
conclusion of the State or local agency processing or within 300 days
of the date of the alleged violation, whichever occurs earlier.
However, where there is no deferral (no State or local law prohibits
the employment practice at issue, or no State or local agency is
authorized to grant or seek relief), an ADA complaint must be filed
with the EEOC within 180 days of the alleged violation.
The proposed 300 day filing period under section 503 thus ensured
that in deferral jurisdictions a complaint covered by both section 503
and the ADA would be timely under both statutes. As discussed in the
preamble to the NPRM, however, the 300 day section 503 period also
would mean that in nondeferral jurisdictions complaints covered by both
statutes and filed between 181 and 300 days of the alleged violation
would be timely under section 503 but not under ADA. In such cases, the
complainant would lose rights unique to ADA (such as the private right
to file a law suit).
Some commenters objected to a blanket 300 day period because
witnesses may not still be available, and if available, may no longer
have a fresh recollection of pertinent events--particularly in the
construction industry, where many projects are completed within 300
days. However, inasmuch as the ADA 300 day filing period in deferral
jurisdictions is a statutory requirement (as it has been under title
VII), contractors would encounter any such problem under the ADA
irrespective of the time period adopted under section 503.
Another commenter objected to the proposal because, in its view,
the 300 day period was developed for the convenience of the states
rather than the Federal enforcement agencies, and thus it offers no
support for extension of the filing period under section 503. However,
OFCCP does not rely on the ADA filing period as legal support for
extending the section 503 period to 300 days. Rather, OFCCP's decision
to extend the period is based upon a desire to establish a uniform
national standard which will be at least as long as the complaint
filing period under the ADA. Because no frequently updated list of
deferral jurisdictions is published and readily available, complainants
and contractors may not know whether they are in a deferral
jurisdiction. Therefore, a uniform national standard will result in
ease of administration and public certainty regarding the filing
deadline.

Section 60-741.61(c)(2) Contents of Complaints--Third Party Complaints

Five commenters objected to this paragraph, which provides in part
that a complaint filed by an authorized representative need not
identify by name the person on whose behalf the complaint is filed. The
purpose of this provision, which is derived from the analogous ADA
regulation (29 CFR 1601.7(a)), is to help prevent retaliation against
persons seeking to exercise their rights under the act. The commenters
asserted that in some cases contractors would have difficulty
responding to the allegations of a complaint without knowing the
identity of the person on whose behalf it is filed. OFCCP wishes to
emphasize that in many cases it would not be necessary to disclose the
individual's identity to enable the contractor to respond effectively.
For example, where the complaint alleges a broad contractor policy or
practice (such as the rejection of all applicants who have had a back
injury or the use of an application form that requests pre-offer
medical information), the contractor will be able to respond fully
without knowing the name of the person(s) on whose behalf the complaint
was filed. However, OFCCP acknowledges that where the complaint
involves practices with limited applicability (such as a failure to
provide reasonable accommodation for a specific disability in a
specific job), it may not be possible to protect the individual's
confidentiality. Therefore, the final rule reflects that
confidentiality will be protected where possible, given the facts and
circumstances in the complaint.
Additionally, the proposal stated that ``during the investigation''
of a third-party complaint OFCCP shall verify the authorization of the
complaint by the person on whose behalf the complaint is made. The
phrase ``during the investigation'' is omitted in the final rule. This
revision is intended to permit OFCCP to verify the complaint's
authorization at an earlier stage of its processing of the complaint--
that is, before the contractor is provided notice that the complaint
has been filed.

Section 60-741.61(f) Resolution of Matters

Paragraph (f)(1) has been revised to clarify that the notification
required thereunder shall be provided to the contractor as well as to
the complainant. This reflects current OFCCP practice.

Section 60-741.66 Sanctions and Penalties

Section 60-741.66(c) Debarment

The proposed paragraph authorizes OFCCP to impose fixed-term
debarments. A few commenters objected to the fixed-term debarment
concept. These commenters were concerned that fixed-term debarment is
too harsh a measure, especially if it is used in response to what the
commenters termed ``paper'' violations, that is, violations of
recordkeeping or affirmative action requirements which do not involve
discrimination. OFCCP does not view fixed-term debarments as too harsh
a measure, and OFCCP does not intend to seek a fixed term debarment for
minor, technical violations of the law. Explicit regulatory authority
to impose debarment for a minimum fixed-term is necessary to ensure the
continued future compliance of some contractors.
OFCCP believes the fixed-term debarment sanction will be
particularly effective in encouraging compliance among the recalcitrant
contractors who repeatedly break their promises of future compliance
with respect to affirmative action and recordkeeping

[[Page 19347]]

requirements. OFCCP views affirmative action and recordkeeping
requirements as fundamental to section 503 compliance. These
requirements provide the foundation for the contractor's affirmative
action efforts and provide the basis for monitoring the contractor's
compliance by both the contractor and OFCCP.
The current regulations (at Sec. 60-741.50) require a showing that
a debarred contractor will carry out employment policies and practices
in compliance with section 503 and its regulations as one of the
conditions of reinstatement. OFCCP has traditionally accepted a
contractor's promise of future compliance as sufficient to meet this
requirement. Unfortunately, OFCCP has found that, for some contractors,
a promise is not enough. The sanction of debarment for a fixed-term of
not less than six months but no more than three years establishes a
minimum trial period during which a contractor can demonstrate its
commitment and ability to establish personnel practices that will
ensure continuing compliance with its section 503 obligations. See,
e.g., OFCCP v. Disposable Safety Wear, 92-OFC-11 (Decision and Final
Administrative Order of the Secretary of Labor, September 29, 1992).
The express recognition of fixed-term debarment in the regulations is
designed to put contractors on notice that an empty promise of future
compliance will not be a sufficient premise for continued contracting
with the Federal Government. Express regulatory recognition of the
sanction of fixed-term debarment will strengthen the section 503
enforcement scheme by deterring contractors from engaging in violations
``based on a cold weighing of the costs and benefits of
noncompliance.'' Janik Paving & Construction v. Brock, 828 F.2d 84 (2d
Cir. 1987).
Accordingly, OFCCP has determined to retain in this final rule the
authority to impose fixed-term debarments. However, after further
consideration, OFCCP has decided to remove reference to willful or
aggravated from the fixed-term debarment provision. Although a few
commenters expressed concern that the proposal would fail to provide
sufficient guidance as to the types of violations that would trigger
the sanction, OFCCP believes that it is neither practicable nor
necessary to precisely define the types of violations for which it
would impose a fixed-term debarment, and declines to do so. Rather,
OFCCP will retain discretion to make determinations on a case-by-case
basis. In making such determinations, OFCCP will consider, among other
factors, the severity of the violation, whether the violation can be
fully remedied in the absence of a fixed-term debarment and the
contractor's compliance history.

Section 60-741.69 Intimidation and Interference

One commenter objected to the references to state and local laws in
paragraph (a) as exceeding OFCCP's jurisdiction. The objective of this
provision is not, as the commenter suggests, to enforce a state or
local law, but to proscribe activities which interfere with a person's
exercise of his or her rights under a state or local law. OFCCP may
seek the same range of sanctions for a violation of this provision
(such as debarment and/or back pay) as it does for other violations of
section 503.

Section 60-741.80 Posting of Notices (Proposed)

As discussed in connection with Sec. 60-741.44(a), proposed
Sec. 60-741.80 is not carried forward in the final rule. Subsequent
sections have been redesignated accordingly.

Section 60-741.80 Recordkeeping

Section 60-741.80(a) General Requirements

A number of commenters raised concerns regarding paragraph (a) of
this section. This paragraph revises the current record retention
obligation--which at Sec. 60-741.52(a) provides that contractors are
required to maintain for one year records relating to complaints
against the contractor--by making it applicable to any personnel or
employment record made or kept by the contractor. This revision
conforms the obligation to the analogous requirement under EEOC's
recordkeeping regulations (29 CFR 1602.14(a)) issued pursuant to title
VII and the ADA. Paragraph (a) also specifies that when a contractor
has been notified that a complaint has been filed, that a compliance
review has been initiated or that an enforcement action has commenced,
the contractor shall preserve all relevant personnel records until the
final disposition of the action. Again, this requirement parallels the
corresponding EEOC regulation issued pursuant to title VII and the ADA.
Paragraph (a) of the final rule varies slightly from the
corresponding provision contained in the NPRM. The final rule does not
carry forward the reference to records regarding coverage
determinations contained in the provision's listing of examples of the
types of records that must be preserved, inasmuch as contractors are no
longer required to make such coverage determinations (see discussion
regarding Sec. 60-741.4(a)(2)). Further, the recordkeeping obligation
in the final rule remains at one year for smaller contractors, instead
of being increased to two years for all contractors as had been
proposed. In order to provide regulatory relief for smaller
contractors, only contractors that have 150 or more employees and a
Government contract of $150,000 or more are required to maintain
records for two years.
One commenter was concerned that paragraph (a) unjustifiably
expands the types of records that must be kept beyond those required by
EEOC. This concern is misplaced and was apparently based on the fact
that the listing in paragraph (a) of examples of the types of personnel
records that must be maintained varies somewhat from the corresponding
listing contained in the EEOC regulation. OFCCP intends that this
requirement apply to the same records as does the EEOC regulation--that
is, to any personnel or employment record made or kept by the employer.
A number of commenters objected to the extension of the retention
period on the grounds that it is inconsistent with the one-year
retention period under EEOC's regulations applicable to title VII and
the ADA. Some commenters objected that it would impose unreasonable
record storage burdens on large companies that have many thousands of
applicants and employees, and others stated that it would burden small
and medium size contractors that have fewer personnel department
resources, including small construction firms that have a fluid
workforce and high turnover. With respect to the first concern, the
longer retention period is justified by differences between the
enforcement activities of OFCCP and EEOC. As explained in the proposal,
a two year retention period provides greater assurance that relevant
records will be available during OFCCP compliance reviews (during which
the agency generally reviews employment practices and activity going
back two years). In contrast, EEOC's enforcement of title VII and the
ADA is triggered exclusively by charges--which must be filed within 180
days (or, in deferral jurisdictions, 300 days) of an alleged violation.
Thus, EEOC's one-year retention period is adequate to ensure that
relevant records are not discarded before the expiration of the filing
period.
Turning to the second concern, OFCCP believes that overall there
will be only a minimal increase in burden imposed on the larger
contractors as a result of the extended record retention period. (EEOC
reached a similar conclusion in 1991 (see 56 FR 35753

[[Page 19348]]

(July 26, 1991)) when it doubled its existing six-month retention
period under title VII to one year--an obligation that applies to a
significantly larger universe of employers than does the obligation
under section 503, which applies only to contractors that have 150 or
more employees and a Government contract of $150,000 or more.) Many
large employers, and some small employers as well, are increasingly
maintaining electronic records. Where this is the case, compliance with
the requirement will impose little or no additional burden. Moreover,
the decision to reduce the record retention period for small
contractors to one year--the same period required by EEOC--will provide
relief to small companies that are less likely to maintain electronic
records.

Section 60-741.80(b) Failure to Preserve Records

Proposed paragraph (b) provided in part that where a contractor has
destroyed or failed to preserve the records that it is required to
preserve under paragraph (a), there shall be a presumption that such
records would have been unfavorable to the contractor. However,
proposed paragraph (b) contained a proviso which stated that the
presumption shall not apply where the contractor shows that the
destruction or failure to preserve records results from circumstances
that are outside of its control. A number of commenters objected to
this adverse inference provision on the grounds that it would deny due
process and would be unduly harsh, especially, they asserted, because
records are frequently misplaced or destroyed inadvertently through
clerical error. One commenter requested that OFCCP clarify that the
failure to preserve records must be willful.
OFCCP believes that this requirement is necessary to prevent
OFCCP's compliance monitoring and enforcement efforts from being
frustrated by the destruction or failure to preserve records. OFCCP
intends to invoke the presumption selectively where the facts warrant
(and reserves the right to do so, when warranted, even in cases where
the contractor claims but cannot substantiate that the destruction or
failure to preserve records was inadvertent). In recognition of this
discretionary approach, the final rule revises this section to state
that the presumption ``may'' be invoked. Contractors will have a full
opportunity to submit evidence to rebut the inference.

Section 60-741.80(c)

The final rule changes the effective date of this section from the
proposed 30 days after the date of publication to 120 days after the
date of publication. This change in the effective date is due to
amendments that altered the requirements of the Paperwork Reduction Act
after OFCCP published the NPRM. OFCCP anticipates obtaining and
publishing an OMB control number during the 120 day period.

Section 60-741.82 Labor Organizations and Recruiting and Training
Agencies

One commenter expressed concern that this section may authorize
OFCCP to compel the parties to a collective bargaining agreement to
make modifications to the agreement. The commenter contended that such
a position may be inconsistent with that of the EEOC under its
regulations implementing the ADA. Section 60-741.82 does not make any
substantive changes to the section 503 regulation that it replaces, and
that regulation has been in effect since the first section 503
regulations were promulgated in 1976. Moreover, the regulation
parallels an Executive Order 11246 regulation (Sec. 60-1.9) that has
been in effect since 1968. Section 60-741.82 does not on its face
require such modifications to collective bargaining agreements, and
OFCCP normally does not have jurisdiction over the union.
The EEOC will be addressing various issues under the ADA related to
collective bargaining agreements in future Compliance Manual sections
and policy guidance. OFCCP, to the extent possible, intends to
coordinate its policy under section 503 relating to collective
bargaining agreements with the EEOC at an appropriate time in the
future.

Section 60-741.84 Effective Date

The final rule was modified slightly to clarify that contractors
presently holding Government contracts are required to update their
affirmative action programs within 120 days of the effective date of
these regulations only as required to comply with the changes made by
the final rule. A complete annual updating of the programs is not
required within 120 days. The proposal also had stated that the
effective date would be 30 days after publication. However, OFCCP must
display a valid OMB control number before the recordkeeping provisions
in the final rule can become effective. Therefore, the effective date
of the rule will be when OFCCP publishes the OMB control number in the
Federal Register, which OFCCP anticipates will be between 90 and 120
days after publication of this final rule.

Appendix D to Part 60-741--Guidelines Regarding Positions Engaged in
Carrying Out a Contract (Proposed as Appendix A)

Proposed appendix A was included in the NPRM to provide guidance on
the application of proposed Sec. 60-741.4(a)(2)(i)(A)--prong A of the
regulatory test for determining which of the contractor's positions are
engaged in ``carrying out'' a Government contract--and to assist
contractors in making the coverage determinations required under
proposed Sec. 60-741.4(a)(2)(iii) (see discussion regarding Sec. 60-
741.4(a)(2) above). As noted above, as a result of an amendment to
section 503, the issue whether the contractor's positions were engaged
in carrying out a Government contract is relevant only with respect to
the contractor's employment decisions and practices which occurred
before October 29, 1992. On that date, the act, which had applied only
insofar as the contractor was employing persons to carry out a
contract, was amended to extend coverage thereunder to all of the
contractor's positions--irrespective of their relation to the contract.
Consequently, the proposed coverage determination requirement, which
was intended to be applied prospectively to define the scope of the
contractor's obligations under section 503, is omitted from the final
rule as unnecessary. OFCCP has nevertheless determined to retain the
appendix in the final rule to provide guidance on its policy relating
to coverage with respect to the contractor's employment decisions and
practices occurring before the act's amendment, and has revised the
appendix to make this clarification.
This appendix still has practical utility because, as noted above,
there are a number of pending section 503 complaints involving alleged
violations of the act which occurred before the amendment. Moreover, it
is OFCCP's general practice during its compliance reviews to examine
the contractor's employment practices dating back two years immediately
preceding the compliance review and, as applicable, to assess liability
for violations occurring during that period. Once all matters involving
employment practices and decisions occurring before October 29, 1992,
are finally resolved, OFCCP will withdraw this appendix. In order to
preserve the continuity of the letter designations for the appendices
to the regulations at the time of the withdrawal, proposed appendix A
has been redesignated as appendix D, and

[[Page 19349]]

proposed appendices B, C, and D have been redesignated as appendices A,
B and C, respectively.
Proposed appendix A stated that a contract is not deemed covered
unless, among other things, it is performed within the United States.
This statement is omitted from the final rule to reflect the revision
to Sec. 60-741.1(b) (see discussion above). Also, the paragraphs of the
appendix have been numbered for ease of reference.

Appendix A to Part 60-741--Guidelines on a Contractor's Duty To Provide
Reasonable Accommodation (Proposed as Appendix B)

The discussions of Secs. 60-741.42 and 741.44(d) contained in
paragraph 2 of proposed appendix B have been revised to reflect the
revisions to those sections in the final rule (see discussion above
regarding those sections). Additionally, the appendix has been renamed,
and a paragraph of introductory text has been added, to clarify the
differences between reasonable accommodation and affirmative action
under section 503. As discussed above, this final rule redesignates
this appendix as appendix A.

Appendix B to Part 60-741--Invitation to Self-Identify (Proposed as
Appendix C)

Paragraph 1 has been revised to incorporate a clarification that
the individual may make a request--immediately in response to the
invitation or at any time in the future--to benefit under the
contractor's affirmative action program (see discussion above regarding
Sec. 60-741.42). As discussed above, this final rule redesignates this
appendix as appendix B. The appendix is renamed to clarify that it is a
``sample'' invitation. Finally, a note has been added at the beginning
of the appendix to state that when the invitation to self-identify is
being extended prior to an offer of employment, sample text relating to
identification of reasonable accommodations should be omitted. This
will avoid a conflict with the EEOC's ADA Guidance, which generally
precludes asking a job applicant (prior to a job offer being made)
about potential reasonable accommodations.

Appendix C to Part 60-741--Review of Personnel Processes (Proposed as
Appendix D)

As discussed above, this final rule redesignates this appendix as
appendix C.

Regulatory Procedures

Executive Order 12866

The Department is issuing this rule in conformance with Executive
Order 12866. This rule has been determined to be significant for
purposes of Executive Order 12866 and therefore has been reviewed by
OMB. This rule does not meet the criteria of section 3(f)(1) of
Executive Order 12866 and therefore the information enumerated in
section 6(a)(3)(C) of that Order is not required.

Regulatory Flexibility Act

The final rule clarifies existing requirements for Federal
contractors. In view of this fact and because the final rule does not
substantively change existing obligations for Federal contractors, the
rule will not have a significant economic impact on a substantial
number of small business entities. The Secretary has certified to the
Chief Counsel for Advocacy of the Small Business Administration to this
effect. Therefore, a regulatory flexibility analysis under the
Regulatory Flexibility Act is not required.

Unfunded Mandates Reform Act

This final rule does not include any Federal mandate that may
result in the expenditure by state, local and tribal governments in the
aggregate, or by the private sector, of $100,000,000 or more in any one
year.

Paperwork Reduction Act

This final rule establishes new recordkeeping provisions that did
not previously exist. The rule extends the current one-year record
retention period to two years for those larger contractors that have
150 or more employees and a Government contract of $150,000 or more,
and it makes this retention obligation applicable to a broader range of
records. It requires that, for purposes of confidentiality, information
obtained by contractors regarding the medical condition or history of
any applicant or employee be collected and maintained on separate forms
and in separate medical files. Lastly, it requires contractors to
maintain a separate file regarding applicants who have identified
themselves as individuals with disabilities.
The NPRM projected an increase of 1.1 million paperwork burden
hours associated with contractors determining which positions carry out
Government contracts. As discussed above, the 1992 legislation, by
striking this jurisdictional limitation from Section 503, eliminates
the need for contractors to determine which positions are covered.
Therefore, contractors will not need to incur the estimated 1.1 million
paperwork burden hours mentioned in the proposal. As stated in the
NPRM, OFCCP does not believe the other recordkeeping requirements
created by this rule will result in a net increase in burden hours as
compared to the current regulation.
These recordkeeping requirements have been submitted to the Office
of Management and Budget for clearance under the Paperwork Reduction
Act (44 U.S.C. 3501 et seq.). OFCCP solicits comments concerning these
recordkeeping requirements to: (i) evaluate whether the proposed
collection of information is necessary for the proper performance of
the functions of the agency, including whether the information will
have practical utility; (ii) evaluate the accuracy of the agency's
estimate of the burden of the proposed collection of information,
including the validity of the methodology and assumptions used; (iii)
enhance the quality, utility, and clarity of the information to be
collected; and (iv) minimize the burden of the collection of
information on those who are to respond, including through the use of
appropriate automated, electronic, mechanical, or other technological
collection techniques or other forms of information technology, e.g.,
permitting electronic submission of responses.
Written comments on the recordkeeping requirements should be sent
to Joe N. Kennedy, Deputy Director, OFCCP, Room C-3325, 200
Constitution Ave., N.W., Washington, D.C. 20210. To be assured of
consideration, comments must be in writing and must be received on or
before July 1, 1996. As a convenience to commenters, OFCCP will accept
public comments transmitted by facsimile (FAX) machine. The telephone
number of the FAX receiver is (202) 219-6195. To assure access to the
FAX equipment, only public comments of six or fewer pages will be
accepted via FAX transmittal. Receipts of FAX transmittals will not be
acknowledged, except that the sender may request confirmation of
receipt by calling OFCCP at (202) 219-9430 (voice), 1(800) 326-2577
(TDD).
These new recordkeeping requirements are not effective until OFCCP
displays a currently valid OMB control number. Upon receipt of that
number, which OFCCP anticipates will take between 90 and 120 days,
OFCCP will publish a document in the Federal Register.

List of Subjects in 41 CFR Part 60-741

Administrative practice and procedure, Civil rights, Employment,
Equal employment opportunity,

[[Page 19350]]

Government contracts, Government procurement, Individuals with
disabilities, Investigations, Reporting and recordkeeping requirements.

Signed at Washington, D.C., this 12th day of April, 1996.
Robert B. Reich,
Secretary of Labor.
Bernard E. Anderson,
Assistant Secretary for Employment Standards.
Shirley J. Wilcher,
Deputy Assistant Secretary for Federal Contract Compliance.
Accordingly, with respect to the rule amending 41 CFR chapter 60
published on December 30, 1980 (45 FR 86216), which was suspended
indefinitely at 46 FR 42865, the revision of part 60-741 is withdrawn,
and in parts 60-1 and 60-30, all references to section 503 of the
Rehabilitation Act are withdrawn; with respect to title 41 of the Code
of Federal Regulations, chapter 60 is amended as set forth below.
Part 60-741 is revised to read as follows:

PART 60-741--AFFIRMATIVE ACTION AND NONDISCRIMINATION OBLIGATIONS
OF CONTRACTORS AND SUBCONTRACTORS REGARDING INDIVIDUALS WITH
DISABILITIES

Subpart A--Preliminary Matters, Equal Opportunity Clause

Sec.
60-741.1 Purpose, applicability and construction.
60-741.2 Definitions.
60-741.3 Exceptions to the definitions of ``individual with a
disability'' and ``qualified individual with a disability.''
60-741.4 Coverage and waivers.
60-741.5 Equal opportunity clause.

Subpart B--Discrimination Prohibited

60-741.20 Covered employment activities.
60-741.21 Prohibitions.
60-741.22 Direct threat defense.
60-741.23 Medical examinations and inquiries.
60-741.24 Drugs and alcohol.
60-741.25 Health insurance, life insurance and other benefit plans.

Subpart C--Affirmative Action Program

60-741.40 Applicability of the affirmative action program
requirement.
60-741.41 Availability of affirmative action program.
60-741.42 Invitation to self-identify.
60-741.43 Affirmative action policy.
60-741.44 Required contents of affirmative action programs.
60-741.45 Sheltered workshops.

Subpart D--General Enforcement and Complaint Procedures

60-741.60 Compliance reviews.
60-741.61 Complaint procedures.
60-741.62 Conciliation agreements and letters of commitment.
60-741.63 Violation of conciliation agreements and letters of
commitment.
60-741.64 Show cause notices.
60-741.65 Enforcement proceedings.
60-741.66 Sanctions and penalties.
60-741.67 Notification of agencies.
60-741.68 Reinstatement of ineligible contractors.
60-741.69 Intimidation and interference.
60-741.70 Disputed matters related to compliance with the act.

Subpart E--Ancillary Matters

60-741.80 Recordkeeping.
60-741.81 Access to records.
60-741.82 Labor organizations and recruiting and training agencies.
60-741.83 Rulings and interpretations.
60-741.84 Effective date.
Appendix A To Part 60-741--Guidelines on a Contractor's Duty To
Provide Reasonable Accommodation
Appendix B To Part 60-741--Sample Invitation to Self-Identify
Appendix C To Part 60-741--Review of Personnel Processes
Appendix D To Part 60-741--Guidelines Regarding Positions Engaged in
Carrying Out a Contract

Authority: 29 U.S.C. 706 and 793; and E.O. 11758 (3 CFR, 1971-
1975 Comp., p. 841).

Subpart A--Preliminary Matters, Equal Opportunity Clause

Sec. 60-741.1 Purpose, applicability, and construction.

(a) Purpose. The purpose of this part is to set forth the standards
for compliance with section 503 of the Rehabilitation Act of 1973, as
amended (29 U.S.C. 793), which requires Government contractors and
subcontractors to take affirmative action to employ and advance in
employment qualified individuals with disabilities.
(b) Applicability. This part applies to all Government contracts
and subcontracts in excess of $10,000 for the purchase, sale or use of
personal property or nonpersonal services (including construction):
Provided, That subpart C of this part applies only as described in
Sec. 60-741.40(a). Compliance by the contractor with the provisions of
this part will not necessarily determine its compliance with other
statutes, and compliance with other statutes will not necessarily
determine its compliance with this part: Provided, That compliance
shall also satisfy the employment provisions of the Department of
Labor's regulations implementing section 504 of the Rehabilitation Act
of 1973 (see 29 CFR 32.2(b)) when the contractor is also subject to
those requirements.
(c) Construction--(1) In general. Except as otherwise provided in
this part, this part does not apply a lesser standard than the
standards applied under title I of the Americans with Disabilities Act
of 1990 (42 U.S.C. 12101 et seq.), or the regulations issued by the
Equal Employment Opportunity Commission pursuant to that title (29 CFR
part 1630). The Interpretive Guidance on Title I of the Americans with
Disabilities Act set out as an appendix to 29 CFR part 1630 issued
pursuant to that title may be relied upon for guidance in interpreting
the parallel provisions of this part.
(2) Relationship to other laws. This part does not invalidate or
limit the remedies, rights, and procedures under any Federal law or the
law of any State or political subdivision that provides greater or
equal protection for the rights of individuals with disabilities as
compared to the protection afforded by this part. It may be a defense
to a charge of violation of this part that a challenged action is
required or necessitated by another Federal law or regulation, or that
another Federal law or regulation prohibits an action (including the
provision of a particular reasonable accommodation) that would
otherwise be required by this part.

Sec. 60-741.2 Definitions.

(a) Act means the Rehabilitation Act of 1973, Pub. L. 93-112 (29
U.S.C 706 and 793), as amended by sec. 111, Pub. L. 93-516; sec.
103(d)(2)(B), Pub. L. 99-506; sec. 9, Pub. L. 100-259; sec. 512, Pub.
L. 101-336 ; and secs. 102 and 505, Pub. L. 102-569.
(b) Equal opportunity clause means the contract provisions set
forth in Sec. 60-741.5, ``Equal opportunity clause.''
(c) Secretary means the Secretary of Labor, United States
Department of Labor, or his or her designee.
(d) Deputy Assistant Secretary means the Deputy Assistant Secretary
for Federal Contract Compliance of the United States Department of
Labor, or his or her designee.
(e) Government means the Government of the United States of
America.
(f) United States, as used herein, shall include the several
States, the District of Columbia, the Virgin Islands, the Commonwealth
of Puerto Rico, Guam, American Samoa, the Commonwealth of the Northern
Mariana Islands, and Wake Island.
(g) Recruiting and training agency means any person who refers
workers to any contractor, or who provides or supervises apprenticeship
or training for employment by any contractor.
(h) Contract means any Government contract or subcontract.
(i) Government contract means any agreement or modification thereof

[[Page 19351]]

between any contracting agency and any person for the purchase, sale or
use of personal property or nonpersonal services (including
construction). The term Government contract does not include agreements
in which the parties stand in the relationship of employer and
employee, and federally assisted contracts.
(1) Modification means any alteration in the terms and conditions
of a contract, including supplemental agreements, amendments and
extensions.
(2) Contracting agency means any department, agency, establishment
or instrumentality of the United States, including any wholly owned
Government corporation, which enters into contracts.
(3) Person, as used in paragraphs (i) and (l) of this section,
means any natural person, corporation, partnership or joint venture,
unincorporated association, State or local government, and any agency,
instrumentality, or subdivision of such a government.
(4) Nonpersonal services, as used in paragraphs (i) and (l) of this
section, includes, but is not limited to, the following: Utility,
construction, transportation, research, insurance, and fund depository.
(5) Construction, as used in paragraphs (i) and (l) of this
section, means the construction, rehabilitation, alteration,
conversion, extension, demolition, or repair of buildings, highways, or
other changes or improvements to real property, including facilities
providing utility services. The term also includes the supervision,
inspection, and other on-site functions incidental to the actual
construction.
(6) Personal property, as used in paragraphs (i) and (l) of this
section, includes supplies and contracts for the use of real property
(such as lease arrangements), unless the contract for the use of real
property itself constitutes real property (such as easements).
(j) Contractor means, unless otherwise indicated, a prime
contractor or subcontractor holding a contract in excess of $10,000.
(k) Prime contractor means any person holding a contract in excess
of $10,000, and, for the purposes of subpart D of this part, ``General
Enforcement and Complaint Procedures,'' includes any person who has
held a contract subject to the act.
(l) Subcontract means any agreement or arrangement between a
contractor and any person (in which the parties do not stand in the
relationship of an employer and an employee):
(1) For the purchase, sale or use of personal property or
nonpersonal services (including construction) which, in whole or in
part, is necessary to the performance of any one or more contracts; or
(2) Under which any portion of the contractor's obligation under
any one or more contracts is performed, undertaken, or assumed.
(m) Subcontractor means any person holding a subcontract in excess
of $10,000 and, for the purposes of subpart D of this part, ``General
Enforcement and Complaint Procedures,'' any person who has held a
subcontract subject to the act.
(n)(1) Individual with a disability means any person who:
(i) Has a physical or mental impairment which substantially limits
one or more of such person's major life activities;
(ii) Has a record of such an impairment; or
(iii) Is regarded as having such an impairment.
(2) See Sec. 60-741.3 for exceptions to the definition in paragraph
(n)(1) of this section.
(o) Physical or mental impairment means:
(1) Any physiological disorder, or condition, cosmetic
disfigurement, or anatomical loss affecting one or more of the
following body systems: neurological, musculoskeletal, special sense
organs, respiratory (including speech organs), cardiovascular,
reproductive, digestive, genito-urinary, hemic and lymphatic, skin, and
endocrine; or
(2) Any mental or psychological disorder, such as mental
retardation, organic brain syndrome, emotional or mental illness, and
specific learning disabilities.
(p) Major life activities means functions such as caring for
oneself, performing manual tasks, walking, seeing, hearing, speaking,
breathing, learning, and working.
(q) Substantially limits--(1) The term substantially limits means:
(i) Unable to perform a major life activity that the average person
in the general population can perform; \1\ or
---------------------------------------------------------------------------

\1\ People have a range of abilities with regard to many major
life activities such as walking, lifting, and bending, and a range
of such abilities may be considered average. Thus, the term
``average'' person in the general population does not indicate a
need to determine a precise average ability, but rather reflects
that a range of abilities may be considered average.
---------------------------------------------------------------------------

(ii) Significantly restricted as to the condition, manner or
duration under which an individual can perform a particular major life
activity as compared to the condition, manner, or duration under which
the average person in the general population can perform that same
major life activity.
(2) The following factors should be considered in determining
whether an individual is substantially limited in a major life
activity:
(i) The nature and severity of the impairment;
(ii) The duration or expected duration of the impairment; and
(iii) The permanent or long term impact, or the expected permanent
or long term impact of or resulting from the impairment.
(3) With respect to the major life activity of working--
(i) The term substantially limits means significantly restricted in
the ability to perform either a class of jobs or a broad range of jobs
in various classes as compared to the average person having comparable
training, skills, and abilities. The inability to perform a single,
particular job does not constitute a substantial limitation in the
major life activity of working.
(ii) In addition to the factors listed in paragraph (q)(2) of this
section, the following factors may be considered in determining whether
an individual is substantially limited in the major life activity of
working:
(A) The geographic area to which the individual has reasonable
access;
(B) The job from which the individual has been disqualified because
of an impairment, and the number and types of jobs utilizing similar
training, knowledge, skills or abilities, within that geographic area,
from which the individual is also disqualified because of the
impairment (class of jobs); and/or
(C) The job from which the individual has been disqualified because
of an impairment, and the number and types of other jobs not utilizing
similar training, knowledge, skills or abilities, within that
geographic area, from which the individual is also disqualified because
of the impairment (broad range of jobs in various classes).
(r) Has a record of such impairment means has a history of, or has
been misclassified as having, a mental or physical impairment that
substantially limits one or more major life activities.
(s) Is regarded as having such an impairment means:
(1) Has a physical or mental impairment that does not substantially
limit major life activities but is treated by the contractor as
constituting such limitation;
(2) Has a physical or mental impairment that substantially limits
major life activities only as a result of

[[Page 19352]]

the attitudes of others toward such impairment; or
(3) Has none of the impairments defined in paragraph (o)(1) or (2)
of this section, but is treated by the contractor as having a
substantially limiting impairment.
(t) Qualified individual with a disability means an individual with
a disability who satisfies the requisite skill, experience, education
and other job-related requirements of the employment position such
individual holds or desires, and who, with or without reasonable
accommodation, can perform the essential functions of such position.
(See Sec. 60-741.3 for exceptions to this definition.)
(u) Essential functions--(1) In general. The term essential
functions means fundamental job duties of the employment position the
individual with a disability holds or desires. The term essential
functions does not include the marginal functions of the position.
(2) A job function may be considered essential for any of several
reasons, including but not limited to the following:
(i) The function may be essential because the reason the position
exists is to perform that function;
(ii) The function may be essential because of the limited number of
employees available among whom the performance of that job function can
be distributed; and/or
(iii) The function may be highly specialized so that the incumbent
in the position is hired for his or her expertise or ability to perform
the particular function.
(3) Evidence of whether a particular function is essential
includes, but is not limited to:
(i) The contractor's judgment as to which functions are essential;
(ii) Written job descriptions prepared before advertising or
interviewing applicants for the job;
(iii) The amount of time spent on the job performing the function;
(iv) The consequences of not requiring the incumbent to perform the
function;
(v) The terms of a collective bargaining agreement;
(vi) The work experience of past incumbents in the job; and/or
(vii) The current work experience of incumbents in similar jobs.
(v) Reasonable accommodation--(1) The term reasonable accommodation
means:
(i) Modifications or adjustments to a job application process that
enable a qualified applicant with a disability to be considered for the
position such applicant desires; \2\ or
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\2\ A contractor's duty to provide a reasonable accommodation
with respect to applicants with disabilities is not limited to those
who ultimately demonstrate that they are qualified to perform the
job in issue. Applicants with disabilities must be provided a
reasonable accommodation with respect to the application process if
they are qualified with respect to that process (e.g., if they
present themselves at the correct location and time to fill out an
application).
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(ii) Modifications or adjustments to the work environment, or to
the manner or circumstances under which the position held or desired is
customarily performed, that enable a qualified individual with a
disability to perform the essential functions of that position; or
(iii) Modifications or adjustments that enable the contractor's
employee with a disability to enjoy equal benefits and privileges of
employment as are enjoyed by the contractor's other similarly situated
employees without disabilities.
(2) Reasonable accomm

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/fr%3A96-9662. Public record. Not legal advice.