The Department of Labor’s Office of Federal Contract Compliance Programs (OFCCP) has published proposed changes to regulations under the Vietnam Era Veterans Readjustment Assistance Act (VEVRAA) and Section 503 of the Rehabilitation Act (Section 503) and has published a notice of rescission of regulations implementing Executive Order (EO) 11246. These proposed changes implement EO 14173, which revoked EO 11246. While the proposals are mostly procedural and involve eliminating cross-references to EO 11246, the proposed modifications to the Section 503 regulations also eliminate the requirement that contractors invite applicants and employees to self-identify their disability status and eliminate the current regulation’s utilization goal requirements.
Background: Before January 21, 2025, the OFCCP enforced EO 11246, VEVRAA, and Section 503. EO 11246 prohibited employment discrimination by federal contractors and subcontractors based on race, color, religion, sex, sexual orientation, gender identity, and national origin and mandated affirmative action programs. VEVRAA is a federal statute that prohibits federal contractors from discriminating against applicants and employees because of their status as a protected veteran and requires contractors to take steps to employ and advance in employment protected veterans. VEVRAA regulations also require contractors with 50 or more employees and a single federal contract or subcontract of $150,000 or more to develop and maintain an affirmative action program. Section 503 prohibits federal contractors and subcontractors from discriminating against employees and applicants because of their disability status and requires contractors to take affirmative action to hire and advance in employment qualified individuals with disabilities. Section 503 regulations also require contractors with 50 or more employees and a single federal contract or subcontract of $50,000 or more to develop and maintain an affirmative action program.
As discussed in our January 31, 2025 Legal Alert, EO 14173 revoked EO 11246, but it did not impact federal contractors’ statutory obligations under VEVRAA and Section 503 and did not impact the OFCCP’s enforcement of VEVRAA and Section 503 regulations.
Proposed Modifications to VEVRAA Regulations. The proposed modifications to the VEVRAA regulations eliminate cross-references to administrative enforcement proceedings under EO 11246 (41 CFR Part 60-30) and add such proceedings to the VEVRAA regulations at 41 CFR Part 60-300.65. The proposed modifications also eliminate other references to EO 11246. Additionally, the proposed modifications clarify that the Uniform Guidelines on Employee Selection Procedures do not apply to 38 USC 4212 or its implementing regulations.
Proposed Modifications to Section 503 Regulations. Similarly, the proposed modifications to the regulations implementing Section 503 of the Rehabilitation Act eliminate cross-references to administrative enforcement proceedings under EO 11246 and add administrative enforcement proceedings directly to Section 503 regulations at 41 CFR 60.741.65.
- Elimination of Invitation to Self-Identify Disability Status. The OFCCP also proposes rescinding current Section 503 regulations that require contractors to invite applicants and employees to self-identify their disability status. The proposed regulations state that the self-identification requirement may be inconsistent with the Americans with Disabilities Act (ADA), which prohibits employers from inquiring about an applicant’s disability status prior to making an offer and prohibits such inquiries post-offer unless they are job-related and consistent with business necessity. The proposed regulations note that the ADA’s prohibition on pre-employment disability inquiries does not include an exception for making such inquiries as part of an affirmative action plan, regardless of whether the disclosure of disability status is voluntary.
- Elimination of Utilization Goal Requirement. The proposed modifications to the Section 503 regulations also eliminate the utilization goal requirements in the current regulations. This provision requires contractors to apply a 7 percent utilization goal for the employment of qualified individuals with disabilities to each of their job groups, or to their entire workforce if the contractor has 100 or fewer employees. See 41 CFR 60-741.45. Contractors are also required to conduct a utilization analysis to determine whether their employment of individuals with disabilities meets the 7 percent utilization goal. If a contractor does not meet the utilization goal, it must take steps to determine whether and where impediments to the employment of individuals with disabilities exist and ensure its outreach and recruitment efforts are effective. The proposed regulations note that Section 503 prohibits quotas, but contractors may, in practice, be induced to use quotas to meet the utilization goal. Additionally, the agency notes that inherent in utilization goals is the need for employees and applicants to self-identify their disability status, which may violate the ADA. Further, OFCCP proposes eliminating the utilization analysis because it is dependent on the same job groups utilized under EO 11246, which has been revoked. The agency notes that “these changes have created confusion and uncertainty for covered contractors and have made the current regulatory framework for the Section 503 utilization analysis unworkable.” The proposed regulations also state that the agency will not impose new requirements for conducting Section 503 analysis because doing so would be contrary to EO 14219, which directs federal agencies to implement deregulatory measures and reduce undue burden on businesses.
Proposed Rescission of EO 11246 Regulations. The OFCCP also proposes to rescind the regulations that implement EO 11246, which was revoked by EO 14173. The agency proposes first modifying the administrative enforcement proceeding procedures located at 41 CFR Part 60-30 to remove references to the EO 11246 components and retain the VEVRAA and Section 503 components. As discussed above, OFCCP has also proposed incorporating administrative enforcement proceeding procedures directly into the VEVRAA and Section 503 regulations. If these modifications are finalized, the agency will rescind the proceeding procedures regulations in their entirety. The OFCCP states that in addition to the impact of EO 14173, the agency is rescinding the EO 11246 regulations because “in light of recent course corrections in Federal civil rights law,” it has concerns that the affirmative action regulations are vulnerable to legal challenge as unlawful and should be rescinded. These concerns were also reflected in the OFCCP Director’s June 27 letter to federal contractors inviting them to provide information about their efforts to “wind down compliance with the EO 11246 regulatory scheme and ensure full compliance with the Nation’s non-discrimination laws.”
The Bottom Line
The proposed regulations were published in the Federal Register on July 1, 2025, and comments must be received by September 2, 2025. Until revised final regulations are published, covered federal contractors must continue to comply with the current regulations implementing VEVRAA and Section 503, although the OFCCP is not enforcing regulations relating to EO 11246. Additionally, federal contractors should note that their obligation to prepare affirmative action plans under VEVRAA and Section 503 has not been modified.
