What you need to know about Section 503 of the Rehabilitation Act of 1973

As federal contractors and subcontractors, along with a federal government contract for work comes a set of hiring and employment regulations upheld by the U.S. Department of Labor’s Office of Federal Contract Compliance Programs (OFCCP). One of those is Section 503 of the Rehabilitation Act of 1973. Here’s what you need to know about the law and ways to stay in compliance.

Understanding these regulations is imperative for federal contractors and subcontractors, as failure to comply can result in financial penalties, cancellation of current contracts, ongoing reporting to the OFCCP, and reputation damage that could negatively impact future contracts and your organization’s brand.

What is Section 503 of the Rehabilitation Act?

The intention of Section 503 is to reduce the unemployment rate for individuals with disabilities by encouraging federal contractors and subcontractors to recruit, hire, and retain those with disabilities.

Section 503 of the Rehabilitation Act of 1973 “prohibits federal contractors and subcontractors from discriminating in employment against individuals with disabilities.” Contractors are required to recruit, hire, promote, and retain those with disabilities by creating affirmative action plans and adopting such practices. Section 503 also indicates that a contractor should provide reasonable accommodations for qualified individuals who request an accommodation.

Section 503 also has a “Utilization Goal” of 7%.  This means the OFCCP wants to see all individuals within your organization, by job group, to have self-identified as an individual with a disability.

Who does Section 503 apply to?

  • Organizations (Supply & Service and Construction) with a federal contract or subcontract in excess of $15,000

  • Those organizations (Supply & Service and Construction) with 50 or more employees and a qualifying contract of $50,000 or more, must also  have an affirmative action plan (AAP) in place for  individuals with disabilities

For more on jurisdictional thresholds and inflationary adjustments for Section 503, visit here

Contractors must annually update their records and keep records of their employment activities for three years. This information should include but is not limited to:

  • The total number of applicants who have a self-identified as having a disability

  • Amount of job openings and the number of qualified individuals hired

  • Record of accommodation requests and the outcomes

  • Internal and external policy distribution regarding outreach to individuals with disabilities and reasonable accommodations

  • Documented outreach to organizations that support individuals with disabilities

  • Annual review of mental and physical job qualifications.

  • Advancement and tracking of the 7% utilization goal

 Tips to maintain Section 503 compliance

  • Aim for a 7% utilization goal.

  • Offer voluntary self-identification opportunities for individuals with a disability – this is permitted during the application process (pre-offer), at the time of an offer, and needs to be extended to current employees at least once every five years of employment.

  • Collect data to track how many self-identify as having a disability across applicants, new hires, and current employees retaining data for at least three years.

  • Partner with disability organizations and rehabilitation centers to meet outreach recruitment goals – records of which must also be retained for at least three years.

 Some compliance best practices to also keep in mind include:

  • Implement policies that are uniform and easy to understand

  • Be proactive about understanding and meeting Section 503 requirements

  • Review and update compliance strategies so they are compatible for electronic review and distribution

  • Note: The new OFCCP Contractor Portal is now available and will be required to certify their affirmative action programs (AAP) by June 30, 2022.

Consider setting up a Section 503 checklist

Compliance can be challenging to navigate with so many factors that go into meeting regulations. With an increase in OFCCP audits on a yearly basis, a checklist can help make sure you hit every detail and avoid the risk of violating Section 503.

The OFCCP is continuously updating regulatory policies and it is imperative for contractors to keep up with them. By doing so, contractors will be able to reduce their risk of audits, fines, penalties, and the conduction of a compliance review.

If you are a federal contractor or subcontractor, looking for a robust compliance solution, JobTarget’s OFCCP offerings can automate much of the compliance process and provide integral support during an audit. Click below to contact us to learn more.

DisclaimerThis is not intended to offer legal advice. Secure legal counsel when ensuring government compliance. 


Get in touch today.

Contact Us

or contact your Relationship Manager.

More from Hire Insights

What is the Vietnam Era Veterans’ Readjustment Assistance Act (VEVRAA)?

Providing equal employment opportunities is critical, especially to federal contractors and subcontractors who are held to hiring and employment standards as defined by the Office of Federal Contract Compliance Programs (OFCCP). The Vietnam Era Veterans’ Readjustment Assistance Act (VEVRAA) is one of those regulations – learn about the law and the need-to-know details on maintaining compliance in recruiting, hiring, and employment practices.

Understanding and Calculating Cost-Per-Hire

Calculate how much your cost-per-hire is by collecting the right data. Here are some insights into how to calculate cost-per-hire and what should be factored in when hiring a candidate.

Connect with us on social media

© 2022 JobTarget ®