Five-Year Anniversary of Section 503

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The five-year anniversary of the revised Section 503 of the Rehabilitation Act (503) regulations is fast approaching. This anniversary will allow for profound reflection by contractors on their progress made to attract, select, advance and retain individuals with disabilities in the workplace. It is an opportune time for contractors to monitor progress, highlight effective outreach initiatives and programs, as well as begin preparation for the five-year invitation to collect voluntary employee disability status. This five-year interval requirement is specified under Subpart C and should be included as an action item for contractors to discuss and plan for in the upcoming year. However, this milestone year may also bring additional recognition, as well as scrutiny imposed by the OFCCP.

First, we are seeing interest from Craig Leen, Director of the OFCCP, to highlight companies that have demonstrated successful practices and strategies for individuals with disabilities. One such recognition initiative is the proposal of an Excellence in Disability Inclusion award. Public comment for this award ended in December 2018, so we are anticipating more information on this matter, hopefully this fiscal year. Alternatively, there is also an expected uptick in audits that will launch in Fiscal Year 2019, with an emphasis on Section 503 focused reviews. Contractors have been notified of these focused reviews through Directive (DIR) 2018-04, which means the OFCCP will designate a portion of audits to focus on Executive Order 11246 (E.O.), Section 503, or the Vietnam Era Veterans’ Readjustment Assistance Act of 1974 (VEVRAA). In this article, we will share reminders of Subpart C requirements, disability rate trends, as well as information on preparing for more audits, in particular Section 503 focused reviews.
 Keep in mind that employee self-identification is voluntary and all data collected should be maintained in a confidential manner and stored in a separate data file.
First, recall that Subpart C of the regulations include a requirement to invite employees to self-identify as individuals with a disability. There is also an annual obligation to set a 7% utilization goal for every job group in each location or functional unit (or by workforce if the company has fewer than 100 employees), analyze the self-identification disclosures in comparison to a 7% benchmark, and develop and execute action-oriented programs designed to correct any identified problem areas. Given we are entering a milestone anniversary of Section 503, contractors will begin triggering their obligation for the five-year interval invitation. This would be accomplished using the mandated form that can be found on the OFCCP website. Keep in mind that employee self-identification is voluntary and all data collected should be maintained in a confidential manner and stored in a separate data file.

The second noteworthy discussion point that ties into this data collection component is disability rate trends we track through public surveys and private research studies. DCI has an ongoing interest in monitoring progress that the contractor community is making for this protected group and sharing ways in which companies can evaluate and highlight achievements. To evaluate such achievements, we have come to rely on three disability rate calculations: (1) participation rate, which is the percent of employees that filled out the voluntary self-identification form (i.e., response of yes, no, or I don’t wish to answer); (2) response rate, which is the percent of individuals with disabilities of only the participating population; and (3) utilization rate which represents the percent of individuals with disabilities in comparison to the total employee population. This third factor is of most interest to the OFCCP because it is the required component of Subpart C, but the first two factors provide key insights into whether progress is being made. The number one question we ask is: did companies make progress for individuals with disabilities in the workplace?

DCI pursued this research question through an initial benchmark survey (Cohen, Hansell, and Wilson, 2015). To allow for more contractors to come into full compliance with Subpart C requirements, DCI completed a follow-up survey (Hansell & Wilson, 2016). A key note from those surveys is that how you measure self-disclosure data matters. We found that the most cause for concern was the difference in response and utilization rates. Recall that the self-identification form allows for declining self-identification. When this happens, it tends to decrease the utilization rates. DCI is currently preparing a 2019 study that assesses 2017-2018 disability participation (e.g., percent of employees that filled out the voluntary self-identification form), response (e.g., percent of individuals with disabilities of only the participating population), and utilization rates (e.g., percent of individuals with disabilities in comparison to the total employee population). Preliminary 2019 findings are listed in the following chart, but a final report will be released later this year by DCI. Although these results are aggregated company-wide rather than by job group within location or function, we do believe these results are telling. In particular, a successful trend to capitalize on is that participation in employees completing the self-identification form is increasing. There could be a lot of reasons for why this is occurring (e.g., awareness, trust in data privacy), but it aligns to the OFCCP goal for companies to create an atmosphere of inclusion so employees feel comfortable sharing this information. So to answer the question on all of our minds, yes, it appears that companies overall are making progress for individuals with disabilities in the workplace.
 
YEAR PARTICIPATION RATE RESPONSE RATE UTILIZATION RATE
2015 22.32% 9.89% 2.54%
2016 32.33% 6.69% 1.89%
2019 (PRELIMINARY) 41.76% 6.32% 2.45%
 
Noteworthy: the 2015 and 2016 results differ from the current study underway in that DCI relied on voluntarily disclosed figures from company representatives participating in a public survey. The preliminary 2019 figures are derived from DCI evaluations of raw company data.

The last topic we’d like to delve into is the Section 503 focused reviews. As mentioned, there will be a proportion of scheduling letters that will focus on Section 503 compliance. DCI expects to see a new scheduling letter to accomplish these focused reviews, recently approved by the Office of Management and Budget (OMB). As the contractor community waits for more information on these focused reviews, we continue to speculate what such an audit will entail. Only time will tell if OFCCP will have the time, budget, and personnel resources to fulfill comprehensive onsite visits with each focused review, as mentioned in Directive 2018-04. But, more glaring of a question is what to expect in a focused review. In a previous DCI blog (Sharrer, 2018), we shared that a concern is that OFCCP seeks to evaluate hiring and compensation data for individuals with disabilities. The OFCCP currently does not collect and analyze this type of data in audits. There are many concerns with the use of this data, one in particular being the undisclosed disability status. As shared from our studies, there is only a participation rate in the aggregate of 41.76% (an increase from 22.32% in 2015). Typically, OFCCP will not have any missing race/ethnicity and sex information in such compensation analyses because most contractors have this data through employee self-disclosure and will populate missing information with other employment records or through observer identification, in accordance with the EEO-1 reporting requirements.

In conclusion, what advice do we have for a path forward in this milestone year? Our advice is to be proactive by having a current affirmative action plan and prepare for upcoming focused reviews. Focus on identifying and highlighting successful initiatives, such as employee resource groups, communications, awards, training and development resources, as well as any other related activities that help retain individuals with disabilities in the workplace. To accomplish this, you can add a mid-year progress report or conduct a voluntary internal investigatory review process. This would allow your company to practice gathering required documents likely needed to submit in an audit, as well as prepare for a records review and mock interviews to occur during onsite visits by OFCCP. On a final note, since it is the five-year milestone of the regulations, be proactive and launch an action plan to invite employees to again disclose disability status.

 
References
Cohen, D., Hansell, B., & Wilson, K. (June 30, 2015). The Results Are In: How Do Your Disability Self-ID Rates Measure Up? [Blog post]. https://blog.dciconsult.com/blog/results-disability-self-id-rates-measure

Department of Labor (August 10, 2018). DIRECTIVE 2018-04. Retrieved from https://www.dol.gov/ofccp/regs/compliance/directives/dir2018_04.html

Hansell, B., & Wilson, K. (April 9, 2016). The 2016 Survey Results on Disability Self-Identification Rates [Blog post]. https://blog.dciconsult.com/blog/the-2016-survey-results-on-disability-self-identification-rates

Sharrer, D. (September 13, 2018). What To Expect In a Focused Section 503 or VEVRAA Review [Blog post]. https://blog.dciconsult.com/what-to-expect-in-a-focused-section-503-or-vevraa-review