What the Final Rule Changes

In 2013, the DOL amended the regulations implementing Section 503 at 41 CFR Part 60-741, Subpart C to introduce the following requirements for covered federal contractors:

• a 7% utilization goal (at the job-group level) for individuals with disabilities;
• an expanded disability inquiry requirement, requiring contractors to invite applicants to self-identify as individuals with disabilities (at the pre-offer stage and post-offer) and employees to self-identify (every 5 years, with a reminder that disability status can be voluntarily updated during the intervening years); and
• additional data collection requirements.

Effective September 21, 2026, the final rule eliminates these requirements, as it (i) rescinds the 7% utilization goal (as well as the annual utilization analysis and corrective action-oriented programs); (ii) eliminates mandatory disability self-identification; and (iii) eliminates related data collection requirements (and the requirement to consider quantitative disability data when evaluating the effectiveness of outreach or affirmative action programs (“AAPs”)).

In explaining the decision to end the requirement to invite self-identification, the DOL argues that the requirement conflicts with the Americans with Disabilities Act (“ADA”), which prohibits inquiries of whether a job applicant has a disability as well as disability-related inquiries of employees that are not job-related or consistent with business necessity.

The DOL also argued that the 7% utilization goal was unworkable following the rescission of the disability inquiry requirement, that the utilization analysis depended on job groups established under Executive Order 11246 (which was revoked by Executive Order 14173 on January 21, 2025), and that the goal may have induced the use of prohibited quotas.

What the Final Rule Does Not Change

The final rule does not alter contractors’ underlying obligations to refrain from disability discrimination or to take affirmative action to employ and advance qualified individuals with disabilities under Section 503.

• ensure nondiscrimination in all employment practices;
• develop and maintain an AAP that includes an equal opportunity policy statement and an audit and reporting system to measure AAP effectiveness;
• conduct outreach and recruitment efforts targeting individuals with disabilities;
• make reasonable accommodations for known physical or mental limitations;
• review personnel processes and physical/mental qualification standards; and
• preserve all relevant personnel records if a complaint of discrimination is filed.

Potential Conflicts with State Affirmative Action Requirements

While the final rule rescinds obligations at the federal level, it does not impact state-level disability affirmative action requirements that may independently require or encourage disability data collection by contractors operating across multiple jurisdictions.

States may have their own disability-related affirmative action requirements for state contractors. For instance, Minnesota requires covered contractors to prepare and maintain an AAP to employ and advance qualified disabled persons and to invite applicants and employees who wish to benefit under the AAP to identify themselves.

Practical Implications and Recommended Actions

Contractors should immediately take steps to assess compliance in advance of the September 21, 2026 deadline.

1. discontinue use of Form CC-305 for Section 503 purposes;
2. remove the 7% utilization goal, annual utilization analyses, and related disability data collection computations from AAP documentation;
3. review and update internal Section 503 compliance policies, training materials, and standard operating procedures;
4. shift from evaluations hinging on quantitative data to evaluating disability-related initiatives based on qualitative measures; and
5. retain existing disability data in accordance with applicable record-retention requirements.

King & Spalding’s Labor and Employment team is monitoring these and related developments closely and is available to assist federal contractors and subcontractors.