Labor & Employment Law Daily Wrap Up, FEDERAL REGULATIONS—Labor Department revises Section 503 regulations for federal contractors, (Aug 20, 2026)

By Brandi O. Brown, J.D.

The agency has removed disability self-identification and utilization goal requirements for federal contractors.

The U.S. Department of Labor has revised its implementing regulations for Section 503 of the Rehabilitation Act of 1973, as amended, seeking to “align the regulations with applicable law and recent executive orders, including Executive Order 14173, ‘Ending Illegal Discrimination and Restoring Merit-Based Opportunity,’ and Executive Order 14219, ‘Ensuring Lawful Governance and Implementing the President’s ‘Department of Government Efficiency’ Deregulatory Initiative.’”

Specifically, the revisions include eliminating disability self-identification requirements, disability utilization goals, and related data collection obligations for federal contractors while retaining core disability nondiscrimination protections.

Effective in 30 days. The final rule is scheduled for publication in the Federal Register on August 21, 2026. Most provisions will become effective 30 days after publication.

2013 requirements. Section 503 requires covered federal contractors to avoid discrimination against qualified individuals with disabilities and to take affirmative action to employ and advance those individuals. Since 2013, contractors have also been required to invite applicants and employees to voluntarily self-identify disability status through Form CC-305 and to evaluate workforce representation against a seven percent utilization goal for individuals with disabilities.

Disability inquiry requirements removed. The final rule removes those requirements. Specifically, the Labor Department rescinded regulations requiring contractors to ask applicants and employees whether they have a disability, eliminated related recordkeeping and data collection mandates, and removed utilization analyses and the seven percent utilization goal. The agency also discontinued the government-prescribed CC-305 disability self-identification form.

ADA conflict. The department said the changes are necessary because the disability inquiry requirements conflict with the Americans with Disabilities Act. According to the agency, the ADA generally prohibits employers from asking job applicants whether they have a disability before making a job offer and limits disability-related inquiries after employment begins unless they are job-related and consistent with business necessity.

Labor officials concluded that Section 503’s disability self-identification requirements effectively compelled contractors to make inquiries that the ADA restricts. The agency also contends that utilization analyses depended on collecting disability information that would no longer be required and had become difficult to administer after the revocation of Executive Order 11246.

Comments. The proposed rule generated 651 comments from employers, disability advocates, consultants, attorneys, researchers and other stakeholders. Many commenters urged the department to retain self-identification and utilization requirements, arguing that workforce data helps identify barriers to hiring and advancement. Others supported the proposal, citing privacy concerns, administrative burdens, and questions about the usefulness of the data collected.

In response, the Labor Department said federal contractors can continue pursuing disability inclusion through other means, including outreach efforts, recruitment partnerships, accessibility initiatives, and barrier analyses that do not rely on collecting disability status information from applicants and employees.

Discrimination still prohibited. The agency emphasized that key protections remain unchanged. Contractors are still prohibited from discriminating against qualified individuals with disabilities and must continue providing reasonable accommodations unless doing so would create an undue hardship. Outreach and affirmative action program requirements not tied to disability self-identification also remain in place.

In addition to other changes, the rule also updates contractor coverage thresholds to reflect inflation adjustments made under federal acquisition regulations in October 2025.

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