Some Federal Contractors Balking at New Employment Rules

Published October 14, 2013

When it comes to hiring the right person for the job, Tom Roeser prefers to do it his way over that of the government telling him how to do it.

“People will hire a trainable person” on their own, said Roeser, president and chief operating officer of OTTO Engineering in Carpentersville, Ill., an internationally known designer and maker of electronic control switches and communication equipment accessories for aerospace, medical, and industrial uses. He opposes new rules by the U.S. Department of Labor requiring most companies with federal contracts to hire more military veterans and disabled persons.

“The root of all these mandates is the belief that businesses wouldn’t do it on their own.  At some point we have to trust our society. One more government mandate is what we don’t need,” Roeser said. 

Many Vets, Disabled Persons

The many veterans returning from overseas, and a high unemployment rate for disabled workers, are the reasons for the two new rules that have been added to the affirmative action and nondiscrimination regulations of federal contractors, according to the Labor Department’s Office of Federal Contract Compliance Programs (OFCCP), which will enforce the new laws.

Labor Secretary Thomas Perez announced the rules in late August. One rule will require companies, including subcontractors, to adopt what’s referred to as a 7 percent utilization goal for qualified individuals with disabilities. Contractors will have to apply the goal to each of their job groups, or to their entire workforce if the contractor has 100 or fewer employees.

The other rule requires federal contractors to adopt an annual hiring benchmark for the number of veterans to employ. Numbers will be based either on the national percentage of veterans in the civilian labor force, which currently stands at 8 percent, or their own benchmark based on the best available data. The data will be published and updated annually by the OFCCP.

“Strengthening these regulations is an important step toward reducing barriers to real opportunities for veterans and individuals with disabilities,” Patricia A. Shiu, OFCCP director, said in a statement.

Specific Demands on Employers

Both rules also specify how contractors should reach the goals, such as measuring their success in recruiting and hiring, record keeping, training, and more.

“We will not be able to comply with this,” is what some companies are saying, including members of the HR Policy Association, which represents more than 350 large U.S. corporations.

“It is going to increase costs,” said Daniel Yager, the Association’s president and general counsel.

Yager said some companies have questioned whether it is worth continuing to seek federal contracts, after learning the rules apply even if those contracts constitute only a tiny portion of a company’s overall business.

Furthermore, employers will have to ask job applicants and employees if they have a physical or mental disability, which raises concerns over the culture of the workplace environment, Yager said. 

“We share the same goals here about getting more disabled and veterans in the workforce. Everyone is agreeing on that. They are already doing what they can in this arena. It’s a question as to how to do it. ‘We just don’t think you’re doing it right,’ is what companies are saying,” Yager said.

Depends on Applicant

For Roeser, it’s all about who can be trained to excel at OTTO. Applicants must take tests in English and mathematics. If a candidate for a job is hired simply to fill a “numeric slot,” Roeser said, this could fail both the company and the employee because the company might not have the best person for the job, and the employee might not reach his full potential.

“I may have the wrong type of business for a disabled person,” Roeser said. As an example, he said a person with one leg may be well-suited to work alongside a manufacturing line like his, but a person with one arm might not be.

Like the HR Policy Association, the Associated General Contractors of America are mulling taking legal action. The AGC says the rules clash with federal laws that discourage employers from asking about disability status, and with data that indicate no need for the new measures.

Already Meeting Objectives

“The administration’s decision to finalize two new oppressive employment regulations for federal contractors forces us to object to measures whose goals we support and objectives our members already meet. That is because these rules will force federal contractors to spend an estimated $6 billion a year to produce reams of new paperwork proving they are doing what the federal government already knows they are doing,” Stephen Sandherr, chief executive officer of the AGC of America, said in a statement.

Government is impugning businesses, according to Roeser.

“I know if I only hire men, the women in my town would hate my business.…

I surely wouldn’t discriminate. My father is a veteran,” he said of Jack Roeser, who founded Otto Engineering in 1961. The company has approximately 500 employees. 

Carolyn Rusin ([email protected]) writes from Chicago.