Final regulations for federal contractors' and subcontractors' hiring of veterans and disabled workers are an improvement from the original U.S. Department of Labor proposals, but they still pose a burden for employers.

Under the final disability rule announced Aug. 27, federal contractors and subcontractors must set a goal of hiring people with disabilities to comprise 7% of each job group of their workforces. According to the Office of Federal Contract Compliance Programs, nearly one out of every four U.S. workers is employed by a company that is either a federal contractor or a subcontractor.

The rule details specific actions contractors must take in recruitment, training, record-keeping and policy dissemination for hiring disabled workers that are similar to those long required to promote workplace equality for minorities, the Labor Department said.

The contractor rule on hiring the disabled updates Section 503 of the Rehabilitation Act of 1973.

The rule on hiring veterans updates requirements under the Vietnam Era Veterans' Readjustment Assistance Act of 1974.

The Labor Department said the regulation provides a quantifiable metric to measure success in recruiting and employing veterans by requiring federal contractors to adopt a benchmark each year that is either based on the national percentage of veterans in the U.S. workforce, which is 8%, or their own benchmark based on the best available data.

“The rule strengthens accountability and record-keeping requirements, enabling contractors to assess the effectiveness of their recruitment efforts,” the Labor Department said in a statement. “It also clarifies job listing and subcontractor requirements to facilitate compliance.”

The rules take effect 180 days from their publication in the Federal Register; that is expected shortly.

Experts say failure to follow the rules could cost companies their status as federal contractors and potentially cost millions of dollars in settlements.

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“It's essential that every contractor move quickly to understand these (regulations) and what they must do to comply,” said Valerie J. Hoffman, a partner with law firm Seyfarth Shaw L.L.P. in Chicago. The OFCCP has been “extremely aggressive these days in reviewing compliance,” she said.

The rules are an improvement over the original proposals in 2011, experts say.

“I was very pleasantly surprised to see that the OFCCP kind of scaled back a little bit from the proposed rules,” said Cheryl L. Behymer, a partner with Fisher & Phillips L.L.P. in Columbia, S.C.

For instance, in the original proposal, in addition to having 7% of each job group being disabled, there also was a requirement that 2% of the disabled be severely disabled.

“They've completely dropped the 2% severely disabled (requirement), which was wonderful,” Ms. Behymer said.

For veterans, the original proposal was modified so that employers need to keep certain records for only three years rather than five years, said Cara Yates Crotty, a partner with Constangy, Brooks & Smith L.L.P. in Columbia, S.C.

Despite the improvements, the rules' implementation still will be challenging for federal contractor employers.

“Fortunately, there's a lot of overlap in the record-keeping and written affirmative action provisions of the veterans and the disabled rules, but the analysis which has to take place is completely different” for each, said Angelique Groza Lyons, a Port Lucie, Fla.-based partner at Constangy, Brooks & Smith L.L.P. “It's a whole new ballgame for contractors.”

“Contractors have a lot to do in the next six months to put in place all the tracking, programs and procedures, as well as outreach, that is required by these regulations,” Ms. Hoffman said. Fortunately, the final rules omit “a lot of the extra specificity” that had been proposed, “but the new regulations still mark a sea change from what was required under former regulations,” she said.

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Under the previous rules, the OFCCP was charged with ensuring that federal contractors take affirmative action in their employment practices, but no specific goals were set.

Ms. Behymer agreed that the final rules are better than those proposed in 2011.

“They're still pretty burdensome, and it's going to require a lot of effort and resources by the contractors to meet compliance,” she said.

For example, the rule on hiring the disabled “doesn't take into account any individualized factors that affect any particular contractor,” such as the availability of individuals with disabilities in the firm's recruitment area, or that a person's disability can affect their ability to do particular jobs, Ms. Lyons said.

Furthermore, the rule “now requires employees to seek information about disability status prior to job offers, which flies in the face of how employers say they have been trained under the Americans with Disabilities Act,” she said.

Asked about criticism of the rules, the Labor Department responded with a statement from OFCCP Director Patricia Shiu that said, in part, “The need for these rules could not be clearer — unemployment for veterans and persons with disabilities has been and continues to be disproportionately high. Furthermore, the rules will facilitate the success of companies that do business with the federal government by increasing their access to a large, diverse pool of qualified workers.”