New Rule for Disability Hiring Could Negatively Impact Businesses

The concern surrounds how the Labor Department will interpret the goal of having persons with disabilities constitute 7% of the federal government contractor workforce.

September 05, 2013

WASHINGTON, D.C. – Businesses agree that the U.S. Department of Labor’s goal to have more people with disabilities in the workforce is an admirable and worthy objective. However, what concerns companies is how the government will follow a new goal of having 7% of the federal government contractor workforce be comprised of people with disabilities, the Plain Dealer reports.

That’s more than the current 5.7% of people with disabilities employed now. The agency announced the rule on August 27. The regulation also could alter the way workers inform—or choose not to tell--employers about their disabilities, which can be physical, mental or mobile.

Also of concern is how far the rule could reach beyond government contractors and subcontractors, which already cover around one in five jobs. The 7% disability regulation only applies to businesses with 50 or more employees and a federal government contract of at least $50,000. The agency could interpret the rule as applying to non-contracting subsidiaries, which could mean General Electric, with its Department of Defense contract for jet engines, might have to have 7% disabled employees in its consumer appliances division, too.

Attorney David Fortney, who has a refinery client that sells jet fuel to the Navy and also runs a string of convenience stores, said the rule has a farther reaching impact than one would think. Under the rule, the refinery’s convenience stores would have to try to have 7% of its workforce as people with disabilities.

“Both of these examples [General Electric and the refinery with convenience stores] are about prime contractors, so it is correct that all divisions of a prime contractor would fall under the rule,” confirmed Laura McGinnis, a spokeswoman for the Department of Labor.

However, she clarified that the agency will not demand a strict 7% but that the percentage is an “aspirational utilization goal” to “give contractors a yardstick against which they can measure the success of their efforts in outreach to and recruitment of individuals with disabilities.”

The Labor Department hasn’t published the rule in the Federal Register, which makes the date of implementation likely to be sometime in February 2014. The agency also said so far no fines or penalties will be assessed to any company found not in compliance with the new rule.

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