The U.S. Department of Labor (“Department”) has issued a final rule significantly revising the regulations implementing Section 503 of the Rehabilitation Act. While the rule does not eliminate Section 503’s prohibition against disability discrimination or its general affirmative action obligations, it removes several compliance requirements adopted in 2013, including mandatory disability self-identification, the 7% workforce utilization goal, and related data collection mandates. Most provisions of the final rule take effect September 21, 2026.

Disability Self-Identification Is No Longer Required
Federal contractors will no longer be required to invite applicants and employees to identify voluntarily as individuals with disabilities. The Department of Labor is rescinding 41 C.F.R. § 60-741.42, which required contractors to:

• Invite applicants to self-identify as individuals with disabilities before an employment offer;
• Invite applicants to self-identify again after an offer was made;
• Invite employees to self-identify every five years; and
• Remind employees at least once during each five-year period that they could update their disability status.

The rule also discontinues Form CC-305, the prescribed form contractors used to collect disability information. The Department declined to retain the form as an optional form. The Department concluded that employer-initiated disability inquiries under the prior regulations conflicted with the Americans with Disabilities Act (ADA). In the Department’s view, describing the inquiry as voluntary did not change the fact that the employer was asking an applicant or employee to disclose disability information.

The 7% Utilization Goal Is Eliminated
The final rule rescinds 41 C.F.R. § 60-741.45, which established a goal that individuals with disabilities comprise at least 7% of each job group within a contractor’s workforce.

Contractors will no longer be required to:

• Compare the representation of individuals with disabilities in each job group against the 7% goal;
• Conduct an annual utilization analysis;
• Identify job groups falling below the utilization goal; or
• Develop action-oriented programs specifically in response to a failure to meet the goal.

According to the Department, the 7% utilization goal was not mandated by Section 503 itself and relied on disability data collected through a self-identification process the Department now views as inconsistent with the ADA.

Related Data Collection Requirements Are Eliminated
The final rule removes the data collection requirements in 41 C.F.R. § 60-741.44(k). Contractors will no longer be required to document and maintain the prescribed computations involving:

• The number of applicants who self-identified as individuals with disabilities;
• The total number of job openings and jobs filled;
• The total number of applicants;
• The number of applicants with disabilities hired; and
• The total number of applicants hired.

According to the Department, these changes eliminate the recordkeeping and disclosure burdens associated with administering Form CC-305 and preparing disability utilization analyses.

The Basic Coverage Threshold Is Updated
The final rule updates the basic Section 503 coverage threshold from contracts exceeding $15,000 to contracts exceeding $20,000, reflecting an inflation adjustment that became effective in October 2025.

The basic nondiscrimination and recordkeeping requirements therefore apply to contractors with a qualifying government contract exceeding $20,000. Contractors with at least 50 employees and a federal contract or subcontract of at least $50,000 remain required to develop and maintain a written affirmative action program for individuals with disabilities.

What Requirements Remain?
Although the final rule removes several affirmative action compliance and reporting requirements, federal contractors remain subject to Section 503’s core nondiscrimination, accommodation, and affirmative action obligations.

Covered contractors remain prohibited from discriminating against applicants or employees based on a disability. The final rule also does not change the obligation to provide reasonable accommodations to the known limitations of an otherwise qualified individual with a disability unless the contractor can establish undue hardship. Applicants and employees may continue to disclose disability information voluntarily when requesting an accommodation.

Contractors subject to the written affirmative action program requirements must also continue to:

• Develop and maintain a written Section 503 affirmative action program;
• Review personnel processes to ensure qualified individuals with disabilities receive appropriate consideration;
• Review job qualifications and remove requirements that are not job-related and consistent with business necessity;
• Engage in appropriate outreach and recruitment efforts;
• Provide applicants and employees with information about the availability of reasonable accommodations;
• Maintain an audit and reporting system to evaluate the implementation and effectiveness of the affirmative action program;
• Document the actions taken through that audit and reporting system;
• Notify subcontractors, vendors, and suppliers of the contractor’s affirmative action policy; and
• Preserve documentation of disability-related outreach and recruitment activities for three years.

The Department explained that contractors can evaluate the effectiveness of their affirmative action efforts without collecting individual disability status information. Examples include auditing workplace accessibility, reviewing the handling of reasonable accommodation requests, evaluating whether hiring systems are accessible, and examining job descriptions for unnecessary physical or mental requirements.

Notably, the final rule applies only to Section 503. It does not eliminate the separate veteran self-identification and affirmative action requirements under the Vietnam Era Veterans’ Readjustment Assistance Act (“VEVRAA”).

What Should Federal Contractors Do Now?
Federal contractors should prepare to make the following changes by September 21, 2026:

• Remove Form CC-305 from applicant tracking and onboarding systems. Contractors should coordinate with human resources personnel, payroll providers, applicant tracking system vendors, and affirmative action plan vendors to discontinue the disability self-identification process.
• Stop scheduled employee disability surveys. Contractors should cancel any five-year disability resurvey or interim reminder scheduled to occur on or after the effective date.
• Remove the 7% utilization analysis. Section 503 affirmative action plans prepared after the effective date should not include the utilization calculations previously required under 41 C.F.R. § 60-741.45.
• Revise written affirmative action plans. Contractors should remove references to Form CC-305, disability utilization calculations, and corrective action triggered solely by failure to meet the former 7% goal.
• Review disability inquiry practices carefully. The Department has taken the position that employer-initiated disability self-identification requests may conflict with the ADA. Contractors should not replace Form CC-305 with their own disability survey.
• Preserve established accommodation procedures. Contractors should not remove instructions advising applicants and employees how to request reasonable accommodations. Procedures governing the interactive process, medical documentation, confidentiality, and undue hardship remain important.
• Continue documenting affirmative action efforts. Outreach, recruitment, accessibility reviews, accommodation practices, and the operation of the contractor’s internal audit and reporting system should remain documented.
• Keep veteran compliance processes separate. Contractors should ensure that changes to the Section 503 process do not inadvertently eliminate veteran self-identification, data collection, or affirmative action requirements that remain applicable under VEVRAA.

Overall Takeaway
The final rule substantially reduces disability-related data collection and utilization analysis requirements for federal contractors. However, employers should not view these changes as eliminating their broader obligations under Section 503. Written affirmative action programs, reasonable accommodation processes, outreach efforts, and other core compliance measures remain in place.

For assistance evaluating how the final rule affects your organization, please contact Jennifer Craighead Carey or any attorney in  Barley Snyder’s Employment Practice Group.

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