Seyfarth Synopsis: The U.S. Department of Labor (“DOL”) has issued a final rule substantially revising the regulations implementing Section 503 of the Rehabilitation Act. Most notably, the rule rescinds the longstanding 7% disability utilization goal under 41 C.F.R. § 60-741.45 and the disability-related data collection requirements under 41 C.F.R. § 60-741.44(k). The rule reflects the DOL’s opinion that the prior framework created tension with the Americans with Disabilities Act (“ADA”), particularly the ADA’s restrictions on disability-related inquiries during the hiring process. The DOL also expressed concern that some contractors may have treated the utilization goal as a quota, despite the regulation’s stated intent that it operate only as a benchmark.
On August 21, 2026, the Department of Labor (“DOL”) published its Final Rule rescinding certain regulations applicable to federal contractors regarding affirmative action for individuals with disabilities under Section 503 of the Rehabilitation Act (“Section 503”). Seyfarth summarized the DOL’s proposed rule rescinding these regulations in a prior management alert.
Key Changes
Federal contractors are no longer required to:
- Invite applicants and employees to self-identify as individuals with disabilities for Section 503 compliance purposes;
- Collect and maintain disability status data required by the former regulations; or
- Conduct utilization analyses measuring disability representation against the former 7% utilization goal.
We read the final rule as prohibiting employers from proactively inviting applicants and employees to self-identify as individuals with disabilities for Section 503 compliance purposes, absent a separate ADA-compliant business purpose for doing so. The final rule also updates Section 503’s basic coverage threshold from $15,000 to $20,000 to reflect recent inflationary adjustments.
Section 503 Non-Discrimination and Affirmative Action Obligations Remain in Effect
The final rule does not alter contractors’ underlying obligations to refrain from disability discrimination and to take affirmative action to employ and advance qualified individuals with disabilities under Section 503. According to the DOL, contractors may satisfy these obligations through compliance measures that do not require knowledge of an individual’s disability status. Examples identified by the Agency include:
- Conducting skills-based barrier analyses of job descriptions, qualification standards, and hiring processes;
- Engaging in structured outreach and recruitment efforts;
- Ensuring employment platforms are accessible to individuals using assistive technologies; and
- Providing clear information regarding reasonable accommodations and the process for requesting them.
Rescission of Regulations Implementing EO 11246 and Technical Updates to VEVRAA Regulations
In addition to publishing its final rule rescinding certain Section 503 obligations, the DOL also issued a Final Rule rescinding the implementing regulations under the revoked Executive Order 11246, including 41 C.F.R. Part 60-1, 60-2, 60-3, 60-4, 60-20, 60-40, 60-50, and 60-999.
Consistent with the rescission of the Executive Order 11246 regulations, the DOL also issued a Final Rule modifying the regulations implementing the Vietnam Era Veterans’ Readjustment Assistance Act (“VEVRAA”) to remove cross-references to Executive Order 11246 and its implementing regulations. The VEVRAA final rule also moves the administrative proceeding procedures (formerly in 41 C.F.R. Part 60-30) directly into the VEVRAA regulations and updates the VEVRAA jurisdictional thresholds from $150,000 to $200,000 to reflect recent inflationary adjustments. Contractors should continue to collect self-identification information from protected veterans as those requirements remain in place.
Practical Takeaways for Contractors
Federal contractors should review and update their Section 503 self-identification process and data collection practices in light of the final rule, which is effective September 21, 2026. Contractors should ensure that they discontinue collecting disability data from applicants and employees by the effective date, unless a separate ADA-compliant business purpose exists for continuing those practices. At the same time, contractors should continue to maintain robust non-discrimination, accessibility, outreach, and accommodation processes, as those core Section 503 obligations remain unchanged.
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