Department of Labor changes disability hiring rules for federal contractors

The Department of Labor (DOL) is upending progress for disabled Americans in the workforce.

The DOL revised certain regulations for federal contractors related to affirmative action for disabled workers under Section 503 of the Rehabilitation Act of 1973. As part of the rule, which will take effect on Sept. 21, federal contractors will no longer ask job applicants and employees about their disability status. It will also end a 7% disability representation goal issued during the Obama administration.

The changes are aligned with two executive orders President Trump signed in early 2025 as part of his efforts to end so-called illegal DEI.

The DOL claimed that the representation goal was akin to a quota and was concerned that it violated the Americans with Disabilities Act. It also called asking about disability status “burdensome” to employers and “unlawful,” something the Equal Employment Opportunity Commission also asserted in its proposal to rescind EEO-1 reporting. Disability experts disagree.

“Our commitment to empowering those with disabilities to be productive members of the American workforce does not change with the Office of Federal Contract Compliance Programs’ new rule,” a DOL staffer told HR Brew in an email. “We continue to actively enforce Section 503 through the complaint process. What changes is a streamlining of data collections and unnecessary requirements that were costing federal contractors over $80 million per year. This is a win for American workers and taxpayers.”

The new rules do not affect other Section 503 mandates requiring federal contractors to take steps to hire “qualified individuals with disabilities,” provide reasonable accommodations, and refrain from discrimination, according to SHRM.

“By removing the regulatory tools that expose inequality, the administration is ensuring that existing disparities in the employment of disabled people, women, and people of color remain invisible,” Jess Davidson, senior director of communications at the American Association of People with Disabilities (AAPD), said in a statement. “If you can’t track it, you cannot prove that it is insufficient or identify pain points. If you cannot identify the problem, you certainly cannot improve it.”

“This new final rule is another very concerning sign that our community and all the progress that we had accomplished over the past four decades is under threat, and that people with disabilities will once again pay the cost, and have even less employment opportunities,” Charles-Edouard Catherine, VP of corporate and government relations at National Organization on Disability (NOD), told Disability Scoop.

Kendra Davenport, president CEO of the disability community services organization Easterseals, echoed similar concerns in a conversation with HR Brew.

“This is another brick in a wall between people with disabilities and their ability to live independently in communities and work independently in communities. I mean,” she said. “We know statistically businesses that employ people with disabilities that are diverse in terms of the composition of their workforce: they generate more revenue. They generate greater profits. They have increased employee jobs satisfaction and heightened retention of employees.”

Several disability advocates, along with the AAPD and NOD, have echoed Davenport’s concerns about the Trump administration’s actions impacting disabled Americans. The DOL, for example, abandoned a plan to end the subminimum wage, which allows some employers to pay employees with disabilities less than the minimum wage.

Still, Davenport hopes that employers will continue their progress towards disability inclusion, even with the new mandates.

“I just really wish more companies would think about what they can do to make their employee base, their workforce, more reflective of society, which would be…25% of their employees having a disability,” she said. “Disability is not something that impacts other people; it impacts all of us, and any one of us can become disabled at any time.”