Federal contractors face more scrutiny — and fines — for the way they search for and hire veterans because of a final U.S. Department of Labor rule that went into effect in March.
The updated rule concerns contractors' obligations under the Vietnam Era Veterans' Readjustment Assistance Act of 1974. As of March 24, employers all federal contractors are required to adopt benchmarks that measure their success in recruiting and employing veterans against a national average.
For example, a company would need to ensure that 7.2% of its new hires were veterans, matching the national veteran percentage in the civilian labor force, according to the VEVRAA Benchmark Database, which is published by the Labor Department's Office of Federal Contract Compliance Programs.
A significant number of veterans looking for work have a service-connected disability (see box).
The rule amounts to a “sea change” in how the law is administered, said Mickey Silberman, Denver-based managing shareholder at law firm Jackson Lewis P.C.
“These are revolutionary — not evolutionary — changes, and employers need to think differently about how to comply with these obligations than under the previous rules, which existed for almost 40 years,” Mr. Silberman said. “There are critical new quantitative and qualitative measures that did not exist before.”
The rule gives the law more teeth by now requiring employers to gather data from both applicants and new hires.
Moreover, where federal contractors could once satisfy their obligations under the 1974 Vietnam veterans law just by disseminating job postings to various veteran recruitment sources, they now must measure what they “pull in” from those efforts, Mr. Silberman said.
“Before, outreach and recruitment was an end in and of itself,” he said. “Now, one of the most important regulations baked into these new regulations is that employers are required to do an annual written assessment of the effectiveness of their outreach and recruitment process.”
Companies doing business with the federal government need to be as mindful of the processes they employ as they are about the end result, said Alissa M. Raddatz, Minneapolis-based partner at Faegre Baker Daniels L.L.P.
“The new rules include a benchmark, not a quota, so I don't think employers should get too hung up on the exact number,” Ms. Raddatz said. “However, you will need to show that you took affirmative steps to recruit veterans and, if you are not successful, change those plans. So I think the bigger issue is the documentation.”
Ted Daywalt, Roswell, Georgia-based CEO and president of VetJobs Inc., agreed that the rules on record-keeping are especially onerous, noting that Labor Department fines in recent years have largely been imposed for paperwork and record-keeping errors, not instances of discrimination.
“There were a lot of things in the new rules that caught people by surprise,” Mr. Daywalt said. “One of them is the call for new metrics. Another is that auditors are now demanding screen shots of every job posting on every website.”
What's more, Mr. Daywalt said, even if contractors are meticulous in their practices and record-keeping, they may have difficulty adhering to the rules due a shortage of veterans to fill positions.
“If you took all the companies subject to OFCCP and all their potential positions and then multiplied that number by 7.2%, you would end up with approximately 14 million positions for veterans,” he said. “However, according to (the Bureau of Labor Statistics), there are only 10 million veterans in the workforce, so nationally we are 4 million vets short.”
Rosemarie Allan, McLean, Virginia-based global lead of diversity and inclusion at federal contractor Booz Allen Hamilton Inc., said the rules could present problems in certain geographic areas.
“One fear we have is ... there will be more competition and it will become tougher to recruit veterans,” she said. “There are just some jobs and locations where the numbers just won't be there.”
Mr. Daywalt agreed that contractors looking to fill positions in states with low unemployment rates will face a greater challenge.
“In states where the energy industry has boomed, such as Montana, North Dakota and South Dakota, there are many more jobs available than people to fill them,” he said. “There just aren't enough veterans to hit the 7.2% benchmark.”
Nonetheless, Ms. Allan said Booz Allen is ahead of the curve in meeting its obligation to hire veterans because it leveraged earlier work in its diversity programs for women and minorities.
“As we did our affirmative action plan for this year, for the first time we pulled the data on veterans and looked at our count,” she said. “Overall, 30% of our firm is veterans.”
Likewise, Teri Matzkin, Washington-based talent acquisition manager of military relations and strategic sourcing at Lockheed Martin Corp., said the aerospace contractor's hiring infrastructure is well-suited to meet its new obligations under the federal rules.
For example, it built a career website portal in 2006 for transitioning military job candidates and employs a dedicated, full-time team of military relations managers, also all veterans, to assist candidates in translating their military skills to Lockheed Martin's needs.
“The new VEVRAA regulations have not had a major impact on our hiring process for veterans. We have had an extremely robust veteran hiring program in place for many years and our percentage of veterans hired each year already far exceeds the new suggested targets,” Ms. Matzkin said.