The Office of Federal Contract Compliance Programs (“OFCCP”) recently posted a notice on its website informing federal contractors that they must begin to use the new 2006-2010 EEO Tabulation file as census data for all affirmative action plans commencing on or after January 1, 2014.  The United States Census Bureau released the new data file to the public on November 29, 2012, which contains information on 488 occupations.  This new data file replaces the Census 2000 Special EEO File that the OFCCP and covered contractors began using in January 2005.

OFCCP requires contractors, in determining availability estimates for their affirmative action plans, to “use the most current and discrete statistical information available.”  Therefore, contractors are required to use the new 2010 EEO Tabulation to evaluate the reasonableness of all affirmative action plans commencing on or after January 1, 2014.  Contractors may, however, immediately begin to use the 2010 EEO Tabulation in their affirmative action plans if they wish to do so.

The U.S. Department of Labor’s Office of Federal Contract Compliance Programs (“OFCCP”) issued a new Directive on January 29, 2013, consistent with the Equal Employment Opportunity Commission’s (“EEOC”) Enforcement Guidance on the Consideration of Arrest and Conviction Records in Employment Decisions Under Title VII of the Civil Rights Act of 1964.

The OFCCP’s Directive provides information to Federal contractors and subcontractors, Federally-assisted construction contractors and subcontractors, and to all OFCCP personnel about:  (1) the circumstances in which exclusions of applicants or employees based on their criminal records may violate existing non-discrimination obligations; (2) the Training and Employment Guidance Letter (TEGL) 31-11 issued on May 25, 2012 to the American Job Center network and other covered entities in the public workforce system by the Department of Labor’s Employment and Training Administration (“ETA”) and Civil Rights Center (“CRC”); and (3) the Enforcement Guidance issued by the EEOC on April 25, 2012.

According to the Directive, the number of Americans who have had contact with the criminal justice system has increased exponentially in recent years.  In light of the potential racial/ethnic disparities, contractors need to be mindful of Federal and State anti-discrimination laws if they rely on job applicants’ arrest and conviction records in employment decisions.

The Directive also addresses the new procedure under TEGL 31-11 affecting contractors that utilize Federally-assisted workforce systems.  The new TEGL procedures include:

• when employers register with a covered job bank entity, the job bank entity is required to send the employer a notice explaining that the entity must comply with Federal civil rights laws, which generally prohibit categorical exclusions of individuals based solely on an arrest or conviction history;
• covered job bank entities are required to use a system to identify vacancy announcements that include hiring restrictions based on arrest and/or conviction records;
• for job postings that exclude individuals based on arrest and/or conviction history, covered job banks are required to provide employers that have posted these vacancy announcements with a notice which gives the employer the opportunity to remove or edit the vacancy; and
• covered job bank entities are allowed to continue to post job announcements with language excluding candidates based on criminal history only when accompanied by a notice to job seekers explaining that the exclusions in the posting may have an adverse impact on protected groups and inform them that individuals with criminal history records are not prohibited from applying for the posted positions.

Finally, TEGL 31-11 also describes other Federal laws that may affect contractors’ employment practices regarding the use of criminal records in making hiring decisions.  The first is The Fair Credit Reporting Act, which imposes a number of obligations on employers that use criminal background checks to screen applicants.  The others are The Work Opportunity Tax Credit and the Federal Bonding Program, which are incentives to support employers’ hiring of individuals with conviction histories.

The OFCCP’s Directive is effective immediately.

The U.S. Department of Labor’s Office of Federal Contract Compliance Programs (“OFCCP”) has significantly increased its focus on employers’ compensation systems during scheduled affirmative action compliance audits.  In fiscal year 2011, OFCCP had 27 compliance evaluations with pay provisions for alleged compensation disparities, totaling $1.06 million in monetary benefits.  In 2010, OFCCP reached 10 settlements for alleged bias in compensation.  These are significant increases from 2009 and 2008; only two findings of alleged compensation discrimination were found in 2009 and zero in 2008.

Under Executive Order 11246, Federal contractors are required to conduct self-audits of their pay systems to identify potential gender or race based disparities.  If pay disparities are found, contractors are expected to correct the disparities prior to any potential government audit.  In light of the OFCCP’s increased scrutiny of compensation systems, contractors need to protect themselves by collecting and storing detailed data on factors affecting employees’ pay, such as years of prior job experience, time at the company, time in the position, education, performance ratings, pay grade or level, and additional compensation (commissions, bonuses, incentives, overtime, etc.).  Federal contractors should also be sure to preserve all salary records for employees, to allow for the creation of a salary history for individual employees.  In addition, contractors should have written compensation guidelines, as well as defined polices influencing compensation, such as the impact of performance evaluations on compensation.

It is expected that OFCCP’s heightened focus on compensation will continue to grow. To avoid significant back pay awards based on perceived pay disparities due to race or gender, employers must be proactive in self-auditing their compensation practices and making appropriate adjustments prior to any government review.

Federal contractors may want to start preparing for proposed changes to the regulations issued by the U.S. Department of Labor, Office of Federal Contract Compliance Programs ("OFCCP"), in connection with federal contractors' affirmative action obligations.  OFCCP expects to have new final regulations in place during 2012, which will increase federal contractors' obligations regarding veterans and disabled individuals, as well as modify the documentation required during compliance evaluations.

Proactive steps that covered employers should consider taking include:

1. Review outreach and recruitment efforts, particularly with agencies representing disabled individuals and veterans.  Documentation should be kept of all outreach efforts, as well as any responses.
2. Invite applicants to identify themselves as covered veterans.
3. Check whether all non-executive job openings are being posted with the appropriate state employment delivery service and maintain documentation of postings.
4. Review handbooks and employment policies regarding leaves of absence and reasonable accommodations.
5. Analyze current data collection systems to determine whether there are any issues with collecting the additional information in the OFCCP's proposed Scheduling Letter and Itemized Listing:  (a) employment activity will be required to be submitted by job group and job title; and (b) individual compensation data will need to be submitted for all employees, including such information as gender, race/ethnicity, job title, EEO-1 category, job group, date of hire, base salary, wage rate, hours worked, and other compensation, such as bonuses, incentives, commissions, merit increases, locality pay, and overtime.
6. Analyze compensation data to determine if adjustments need to be made to eliminate any potential problematic pay disparities.

The proposed Itemized Listing requires covered employers to provide the OFCCP with individualized compensation data for all employees, which will enable the OFCCP to run a variety of analyses.  Covered employers should keep in mind that the OFCCP may not have appropriate measures to safeguard this sensitive data from Freedom of Information Act requests.  Before submitting any compensation data, covered employers should take steps to protect such information.

The U.S. Department of Labor, Office of Federal Contract Compliance Programs ("OFCCP"), recently issued a proposal to revise the regulations applicable to Section 503 of the Rehabilitation Act of 1973, which requires Federal contractors to take affirmative action to hire, retain, and promote qualified individuals with disabilities.  The proposed changes, if implemented, will substantially increase the obligations imposed on Federal contractors with respect to individuals with disabilities.

The OFCCP proposal includes the following requirements:

1. Contractors will need to annually survey their employees, providing an opportunity for each employee who is, or subsequently becomes, an individual with a disability to voluntarily self-identify in an anonymous manner.  In addition, contractors will be required to invite applicants to self-identify as individuals with disabilities at both the pre- and post-offer stages, using OFCCP mandated language.
2. Contractors will be required to document and maintain data on ratio of jobs filled to openings, ratio of applicants with disabilities to all applicants, total number of applicants hired, and ratio of individuals with disabilities hired to all hires.
3. Contractors will be required to engage in mandatory outreach/recruitment efforts that involve listing all employment opportunities (with limited exceptions) with the local employment delivery service, similar to the current obligations under the Vietnam Era Veterans' Readjustment Assistance Act.  Additional required outreach efforts will also be required, including entering into a minimum of three linkage agreements with specific types of outreach sources.  In addition, an annual review and documentation of these recruitment efforts will be required to determine effectiveness in identifying and recruiting qualified individuals with disabilities.
4. Contractors will be required to establish a utilization goal for individuals with disabilities and set hiring goals for each Job Group in the workforce.  OFCCP proposed a utilization goal of 7%.  However, OFCCP is inviting public comments on the use of a 7% goal and appears willing to consider a goal ranging between 4% and 10%.
5. Contractors will be required to implement written reasonable accommodation procedures and include the written procedures in their Affirmative Action Plans.
6. Contractors will be required to annually review and document their personnel processes, as well as physical and mental job qualifications, instead of doing so periodically.
7. Contractors will be obligated to retain outreach documentation and data collection for five years.

Comments on the proposed rule from interested parties may be submitted to the OFCCP on or before February 7, 2012.  OFCCP anticipates a final rule will be published around Fall of 2012.

The U.S. Department of Labor, Office of Federal Contract Compliance Programs (“OFCCP”) recently issued a proposal to revise the Scheduling Letter and itemized listing of documents which federal contractors are required to submit during an affirmative action compliance audit.  The OFCCP’s current Scheduling Letter and itemized listing will expire on September 30, 2011.

The OFCCP is seeking to both add new requirements and make changes to existing data requests. The proposed modifications include:

1. Adding two new items which require submission of employment policies covering the FMLA, pregnancy leave, and accommodations for religious observances and practices and also submission of the last three years of contractors’ Veterans’ Employment Reports (VETS-100 and/or VETS-100A).
2. Clarification of information requested in connection with collective bargaining agreements and information on reporting requirements for the preceding year.
3. Changes to current employment activity requests to require submission of more detailed demographic information related to hires, applicants, promotions and terminations, as well as requiring data submissions by job group and job title, instead of by job group or job title. In addition, the proposals would require more detailed demographic information on compensation by submitting aggregate data as opposed to disaggregate data.
    

 

OFCCP ’s Director, Patricia Shiu, stated in a webchat held on July 12, 2011 that the OFCCP will review the “few comments received” and “will make a determination regarding the letter and the itemized listing in the very near future.” She further stated “our goal is to complete our consideration of the comments, any revisions needed, and return the document with any appropriate revisions to OMB by no later than the end of July.” Shiu added that the OFCCP will follow Office of Information and Regulatory Affairs protocol and will provide a second public comment period prior to issuing a final Scheduling Letter and itemized listing. Although the current Scheduling Letter and listing are set to expire September 30, 2011, Shiu stated “we do not anticipate that an emergency extension will be needed.”

The second comment period regarding the OFCCP’s proposed Scheduling Letter changes has not been announced. However, it appears fairly certain that Scheduling Letter changes will be enacted for audits conducted after September 30, 2011.
 

Federal contractors should be aware that the Office of Federal Contract Compliance Programs (OFCCP) recently issued a much anticipated directive impacting certain affirmative action programs. The new directive, which became effective on June 14, 2011, outlines the procedures for developing and maintaining a “Functional Affirmative Action Program” (FAAP).  The directive ends OFCCP’s year-long moratorium on processing contractor requests to develop or renew FAAP agreements.

FAAPs are affirmative action programs covering a particular business function or business unit rather than covering a particular establishment or worksite. For example, covered contractors may develop an FAAP for all marketing associates across multiple offices in different states, instead of having to create affirmative action programs for each individual establishment where those associates work. Unlike establishment-based programs, covered contractors cannot implement FAAPs without first obtaining OFCCP approval and then entering into an agreement with the Agency.
 

The new directive makes what OFCCP considers to be “significant changes” to the FAAP approval and agreement processes. Under the directive, a contractor must obtain prior written approval from OFCCP before developing an FAAP. This terminates OFCCP’s past practice of allowing for automatic approval if the Agency failed to act on a contractor’s FAAP request within 120 days.

The directive also sets forth contractor eligibility requirements. Each business function or unit must meet the following criteria to be considered eligible for an FAAP:

• Currently exist and operate autonomously;
• Have personnel practices or transactional activities (e.g., hires, promotions, terminations, compensation decisions) that are distinguishable from other parts of the contractor’s organization;
• Include at least 50 employees;
• Have its own managing official; and
• Have the ability to track and maintain its own personnel activity.

In addition, FAAP agreements will now expire after three years, rather than five, and contractors could face compliance audits if they fail to submit an annual FAAP update.

In terms of practical guidance, the directive outlines the elements that must be included in an FAAP, the basic principles of FAAP agreements, and the procedures for requesting, modifying, updating, renewing, or terminating such agreements. Attachments to the directive provide a checklist of documents that must be submitted during the approval process and examples of how contractors may develop either an establishment-based affirmative action program or the alternative FAAP. OFCCP has also published a list of Frequently Asked Questions regarding FAAPs on its website.

Employers considering the use of FAAPs should carefully review the obligations and requirements imposed by the new directive. At the same time, employers with existing FAAPs should review the directive for guidance on renewing, modifying, or terminating such agreements.
 

The Department of Labor’s Office of Federal Contract Compliance Programs (“OFCCP”), the Federal agency responsible for enforcing affirmative action mandates against Federal contractors and subcontractors, recently reported on its enforcement efforts for fiscal year 2009. OFCCP collected $9.31 million in back pay from 94 federal contractors through settlements of discrimination claims last year. It completed close to 4,000 compliance evaluations, resulting in conciliation agreements with nearly 700 employers. OFCCP issued this data in connection with its budget request for 2011, which anticipates continued growth and aggressive enforcement efforts. Federal contractors can anticipate that OFCCP’s enforcements efforts will likely increase this year. The Agency’s budget for fiscal year 2010 was increased significantly by the Obama administration in order to increase the number of compliance officers and to meet the agency’s goal of conducting more on-site compliance reviews.

As reported by BNA’s Daily Labor Report, in 2010, the agency also intends to change its focus by increasing its affirmative action compliance efforts and more closely scrutinizing Federal contractors’ affirmative action plans. Construction industry employers are among those who are likely to be targeted in the coming year.

OFCCP has also announced a renewed emphasis on affirmative action efforts for veterans and disabled workers, which includes plans to amend and strengthen regulations under the Vietnam Era Veterans’ Readjustment Assistance Act and Section 503 of the Rehabilitation Act. In light of OFCCP’s expressed intent to make affirmative action its enforcement priority, federal contractors should ensure that their Affirmative Action Plans, and related data on employment actions, are in place, up to date, and in full compliance with regulatory requirements.
 

As calendar year 2009 draws to a close, employers who do business with the federal government should examine whether they are required to have an annual affirmative action plan (“AAP”), and, if so, whether it is up to date. Executive Order 11246 (“EO 11246”) requires federal contractors and subcontractors who have 50 or more employees and at least one contract worth more than $50,000 to have an affirmative action plan, to update that plan annually, and to keep and analyze a wide variety of employment data during each plan year.  Section 503 of the Rehabilitation Act of 1973 and the Vietnam Era Veterans Readjustment Assistance Act of 1974 create additional affirmative action plan obligations related to veterans and individuals with disabilities. A covered contractor's failure to satisfy its AAP obligations is typically revealed through an audit by the Office of Federal Contract Compliance Programs (“OFCCP”).  OFCCP is part of the United States Department of Labor and is charged with enforcing EO 11246. OFCCP selects contractors for audit using its Federal Contractor Selection System, which utilizes a variety of neutral criteria. The ultimate sanction for failing to comply with AAP obligations is debarment from federal contracts.

What contracts are covered by EO 11246? In general, a covered contract is one whereby the contractor agrees to supply goods or services to a federal administrative agency or department. Special rules apply to banks and construction contractors. A subcontract is covered if the subcontractor furnishes supplies, services or property necessary for the performance of any one or more covered primary contracts, or if the subcontractor agrees to perform any portion of the covered contractor’s obligations to the government. Generally speaking, receipt of some form of federal financial assistance does not create a covered contract. However, employers should examine the terms of any federal agreements to ensure that the agreement itself does not require an affirmative action plan.

If you are required to have an affirmative action plan, the plan, or separate plans, must cover each of your establishments, even if only one establishment has the covered contract. OFCCP defines an establishment as a facility which produces goods or services such as a factory, office, store or mine. Although it is clear that all of a contractor’s establishments must have a plan even when only one has a federal contract, questions related to when a parent or subsidiary must have a plan simply because a related corporate entity has a covered contract can be more difficult to answer. Whether some or all of the entities must have an AAP turns on whether the corporate entities are truly separate, a question that is answered using a multifactor test. The most important factor is common control of labor and employee relations.