Section 503

Office of Federal Contract Compliance Programs (OFCCP) Section 503 of the Rehabilitation Act of 1973, as amended

Employment under Federal contracts
Amount of contracts or subcontracts; provision for employment and advancement of qualified individuals with disabilities; regulations

Section 503 requires affirmative action for qualified individuals with disabilities for all federal contracts over $10,000. Section 503 also stipulates that contractors and subcontractors who hold contracts over $50,000 or who have 50 or more employees must develop and maintain a written Affirmative Action Program. Section 503 applies only to federal contracts, and not to federally-assisted ones.

Steps for Compliance

First, contractors and subcontractors must maintain a work environment free from harassment, intimidation, and coercion. To comply with this step, contractors and subcontractors must have a written sexual harassment policy with a clear complaint procedure, and the policy must be distributed to all employees. Contractors must adopt a comprehensive Equal Employment Opportunity (“EEO”) policy, and this policy should be posted in a common area at the main office and at all construction jobsites. To demonstrate compliance, contractors should have their employees sign their sexual harassment policy yearly, train their employees on their policies at least annually, and maintain all such training materials and a list of all individuals who attended the training. The OFCCP also encourages contractors to hold meetings to train supervisory personnel on their duty to maintain a workplace free of harassment.

Second, contractors and subcontractors must establish and maintain a current list of minority and female recruitment sources and must provide written notification to these recruitment sources when the contractor or its unions have employment opportunities available. To demonstrate compliance with this step, contractors must maintain a record of the responses received from these organizations (which might include Job Corps, Urban League, YWCA, National Association of Women in Construction, etc.). Contractors should keep copies of all letters sent to these organizations and any responses received. If there are telephone calls or other correspondence with these organizations, contractors should maintain a log documenting all such communications.

Third, contractors and subcontractors must maintain files containing the names, addresses, and telephone numbers of each minority or female off-the-street applicant and minority or female referral from a union, recruitment source, or community organization. Contractors and subcontractors must document what action was taken regarding each applicant. To comply with this step, contractors should develop an “applicant flow log,” which lists the name, addresses, phone numbers, and trades of each minority or female applicant or referral and which indicates the action taken with respect to each applicant. Unionized contractors must still comply with this obligation even though they hire their workers from the union hall: If the contractor receives a minority or female off-the-street applicant, the contractor is expected to refer the applicant to the union for a referral back to the contractor.

Fourth, contractors and subcontractors must notify the Deputy Assistant Secretary in writing if the contractor’s union has not referred a woman or minority individual back to the contractor. This step is necessary when the contractor feels that the union has impeded the company’s efforts to comply with its EEO obligations. If this occurs, the contractor should maintain copies of all correspondence and any meeting minutes in which this issue is discussed. The OFCCP is clear that a collective bargaining agreement does not excuse a contractor’s affirmative action obligations.

Fifth, contractors and subcontractors must develop on-the-job training opportunities or provide opportunities to participate in training programs that expressly include minorities and women. Contractors are expected to maintain records of employee participation in training programs.

Sixth, contractors have an obligation to disseminate their EEO polices internally. The EEO policy should be sent to unions, should be in all policy manuals and collective bargaining agreements, and should be publicized in any company newsletters. The EEO policy must also be posted at all jobsites and in a central location at the company’s main office. The government requires contractors to review the EEO policy with all management personnel and with all minority and female employees at least once a year.

Seventh, at least once a year, contractors and subcontractors must review EEO policies with all employees having any responsibility for hiring, assignment, layoff, termination, or other employment decisions. Contractors must maintain records that identify the time and place of these meetings, the persons who attended, and the topics covered.

Eighth, contractors must disseminate their EEO policies externally – for example, through advertising, which must include the EEO “tag line” (i.e., “this contractor is an equal opportunity employer”).

Ninth, contractors and subcontractors must direct recruitment efforts to minority and female community organizations, to schools with minority or female students, and to minority and female recruitment and training organizations. Contractors must maintain written records of contacts, which should specify the date of the contact, the person contacted, and the result. If a union is responsible for acceptance of individuals into training programs, contractors must obtain from the union a list of who was referred from the recruitment sources and who was accepted into the program. Notably, the OFCCP states that recruitment sources must be notified of training and apprenticeship opportunities one month before the company accepts applications for such programs.

Tenth, contractors and subcontractors must encourage current minority and female employees to recruit other minorities and females to work for the company. Contractors should maintain diaries or logs indicating these discussions with minority and female employees. Any audit by the OFCCP will involve an interview of the contractor’s minority and female employees to confirm compliance.

Eleventh, to the extent contractors or subcontractors use any tests or other selection criteria in their hiring procedures, these tests must not have a disparate impact on minorities and women.

Twelfth, at least once a year, contractors must inventory and evaluate all minority and female personnel for promotional opportunities. Contractors must keep written records of the promotional opportunities that are available and documents evidencing a review of women and minority candidate eligibility for these positions. Any internal announcements regarding promotional opportunities should state that women and minorities are encouraged to apply. Copies of all such announcements should be kept by the contractor.

Thirteenth, contractors must ensure that seniority practices, job classifications, work assignments, and other personnel practices do not have a disparate impact on minority or female employees.

Fourteenth, contractors must ensure all facilities are non-segregated, except for toilets and necessary changing facilities. All other company activities, such as parties, picnics, or trainings, should be open to and inclusive of all employees.

Fifteenth, contractors and subcontractors must maintain a record of all solicitations of offers for subcontracts from minority and female construction contractors and suppliers. To comply with this step, contractors must keep all correspondence to and from minority and female contractors. Contractors should keep a list of subcontracts they have awarded to minority and female contractors or suppliers, and the dollar amounts involved.

Finally, the sixteenth step requires contractors and subcontractors to conduct, at least once a year, a review of all supervisors’ compliance with and performance under the company’s EEO policies. Contractors should amend their performance evaluations to include a category that rates the supervisor’s performance and knowledge of the company’s EEO policy and affirmative action obligations.

Federal contractors must comply with all 16 steps and must document all affirmative action efforts and training. Because this article is only a summary, contractors and subcontractors are strongly encouraged to consult with legal counsel in addressing questions regarding affirmative action compliance, which if not properly followed can have significant adverse consequences, including penalties and sanctions.

For contracts entered into before December 1, 2003, the law applies to federal contracts valued at $25,000 or more.


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