NEW DEVELOPMENTS IN AFFIRMATIVE ACTION
March 1, 2001
NEW DEVELOPMENTS IN AFFIRMATIVE ACTION Table of Contents Page I.
BACKGROUND OF NEW AFFIRMATIVE ACTION REGULATIONS ........................1 A. Background ..............................................................................................................1 B. Impact on Contractors..............................................................................................1
II.
THE SCOPE OF COVERAGE OF EXECUTIVE ORDER 11246, SECTION 503 OF THE REHABILITATION ACT, AND THE VIETNAM ERA READJUSTMENT ASSISTANCE ACT ............................................................................1
III.
THE ESSENTIAL ELEMENTS OF A WRITTEN AAP....................................................2 A. Overview..................................................................................................................2 1. The AAP Must Be Tailored to the Contractor .............................................2 2. Outreach and Recruitment ...........................................................................2 3. Tracking Applicants:....................................................................................2 a. The Applicant Flow Log..................................................................2 b. The Definition of “Applicant” .........................................................3 4. Updated Annually ........................................................................................3 B. Assignment of Responsibility ..................................................................................3 1. Responsibility ..............................................................................................3 2. Duties ...........................................................................................................3 C. Statistical Analysis of the Workforce ......................................................................4 1. Organizational Profile..................................................................................4 a. Corporate Initiative Generally .........................................................4 b. Example of Corporate Initiative.......................................................4 2. Job Group Analysis......................................................................................4 3. Availability Analysis ...................................................................................5 4. Comparing Incumbency to Availability.......................................................5 5. Placement Goals...........................................................................................5 a. Placement Goals Are Not Quotas ....................................................5 b. Adarand Constructors, Inc. v. Pena.................................................6 D. Implementing Affirmative Action ...........................................................................6 1. Reporting and Identification of Possible Problem Areas.............................6 2. Placement Goal Achievement ....................................................................6 3. Review and Training ..................................................................................7 4. Other Affirmative Action Efforts.................................................................7 a. Purchase Order Forms......................................................................7 b. Supplier and Subcontractor Certification.........................................7 c. Advertisements ................................................................................7
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IV.
OFCCP’S NEW REGULATIONS ......................................................................................7 A. Elimination of Certain Requirements ......................................................................7 B. Additional Requirements .........................................................................................8 1. EO Survey....................................................................................................8 2. Compensation Analysis ...............................................................................8 3. Glass Ceiling Audits ....................................................................................8 4. Combining Different Locations Into a Single AAP.....................................9 5. Recordkeeping Requirements ......................................................................9 a. Standard Recordkeeping Requirements...........................................9 b. Maintenance of Prior Year’s AAP.................................................10 c. New Regulations............................................................................10
V.
OFCCP AUDITING PROCEDURES ...............................................................................10 A. Background ............................................................................................................10 B. Compliance Evaluations ........................................................................................10 1. Compliance Review ...................................................................................10 a. Desk Audit .....................................................................................11 b. On-Site Review..............................................................................11 2. Off-site Review of Records .......................................................................11 3. Compliance Check .....................................................................................11 4. Focused Reviews .......................................................................................11
VI.
KEY ISSUES AND PRACTICAL STEPS TO ACHIEVE COMPLIANCE WITH AFFIRMATIVE ACTION REQUIREMENTS.................................................................12 A. General Focus ........................................................................................................12 B. Important Issues .....................................................................................................12 C. Practical Steps to Achieve Compliance with Affirmative Action Requirements .........................................................................................................13
41 C.F.R. Parts 60-1, 60-2 (effective December 13, 2000) ...........................................EXHIBIT A Sample Equal Opportunity Survey of Federal Contractor Establishments....................EXHIBIT B Sample Notice of Compliance Review ..........................................................................EXHIBIT C Sample Notice of Compliance Check ............................................................................EXHIBIT D
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NEW DEVELOPMENTS IN AFFIRMATIVE ACTION I.
II.
BACKGROUND OF NEW AFFIRMATIVE ACTION REGULATIONS A.
Background: The U.S. Department of Labor’s Office of Federal Contract Compliance Programs (“OFCCP”) issued new regulations concerning a federal contractor’s obligations to develop affirmative action programs (“AAPs”). These regulations became effective December 13, 2000. In some respects, these new regulations simplify the AAPs by eliminating certain requirements. However, the regulations also include two new significant requirements: a comprehensive compensation analysis for each AAP and the completion of a bi-annual Equal Opportunity Survey (“EO Survey”). A copy of the new OFCCP regulations is attached at Exhibit A.
B.
Impact on Contractors: As a result of these new regulations, contractors should revise their existing AAPs, develop any necessary recordkeeping systems, and prepare to respond to EO Surveys that the OFCCP will use to select contractors for auditing purposes. The impact of the new regulations is discussed in more detail below.
THE SCOPE OF COVERAGE OF EXECUTIVE ORDER 11246, SECTION 503 OF THE REHABILITATION ACT, AND THE VIETNAM ERA READJUSTMENT ASSISTANCE ACT A.
Employers with contracts or subcontracts with executive agencies of the Federal government in excess of $10,000 in a 12-month period must comply with the nondiscrimination provisions of Executive Order 11246.
B.
A company with 50 or more employees and which (1) has entered into a government supply or service contract (or subcontract) for $50,000 or more; or (2) has government bills of lading which are expected to total $50,000 or more over a 12-month period; or (3) serves as a depository of government funds; or (4) is a financial institution which is an issuing and paying agent for U.S. savings bonds and savings notes, must develop a written affirmative action compliance program in accord with detailed requirements set forth in 41 C.F.R. § 60-2. An AAP must be established within 120 days from the commencement of a covered contract. 41 C.F.R. § 60-2.1(c).
C.
Construction contractors must comply with the affirmative action requirements set forth in 41 C.F.R. § 60-4.
D.
Government contractors with contracts or sub-contracts in excess of $10,000 must comply with the non-discrimination requirements for handicapped and veterans that are set forth in 41 C.F.R. § 60-741 and 41 C.F.R. § 60-250 respectively. Contractors with contracts or sub-contracts in excess of $50,000 must comply
with affirmative action requirements for handicapped and veterans as set forth in 41 C.F.R. § 60-741.40 et seq. and 41 C.F.R. § 60-250.40 et seq. respectively.
III.
E.
The OFCCP has taken the position that the requirement for written AAPs extends to each establishment of a covered contractor regardless of whether contract work is performed at the establishment.
F.
The OFCCP has also taken the position that subsidiaries and parents of covered contractors are required to develop written AAPs if there is a substantial degree of control of employee relations exercised by the parent corporation over the subsidiary.
THE ESSENTIAL ELEMENTS OF A WRITTEN AAP A.
Overview 1.
The AAP Must Be Tailored to the Contractor: The following is a general overview of the essential technical elements of an AAP. Different contractors, however, have different employment circumstances and corporate structures. As a result, a contractor’s AAP must be tailored for each contractor’s work environment.
2.
Outreach and Recruitment: The cornerstone of affirmative action is a contractor’s commitment to the recruitment of minorities and females. To this end, each contractor must establish linkages with minority and female recruitment sources (as well as veteran and disabled recruitment sources) and notify applicants, employees, and persons in the community that it is an affirmative action employer. For every job opening for which it seeks external candidates, the contractor must post the job with the Massachusetts Division of Employment and Training (or other state equivalent) and with its minority and female recruitment sources. The AAP should record and document these recruitment efforts.
3.
Tracking Applicants: a.
The Applicant Flow Log: As described in greater detail below, a covered contractor is required to prepare statistical analyses and reports on the composition of its workforce and its applicants, hires, promotions, and terminations. Given the OFCCP’s focus on recruitment and hiring, an important component of an AAP is an applicant flow log to track all applicants. The log should include an applicant’s name, date of application, race, sex, disability, veteran’s status, and all relevant application actions (whether the applicant was selected for an interview and offered a job, and whether the applicant accepted the job). Contractors should use voluntary self-identification forms (pre-offer and post-offer) and 2
visual identification to determine an applicant’s background information. b.
4.
B.
The Definition of “Applicant”: The OFCCP continues to define the term “applicant” as follows: “The concept of an applicant is that of a person who has indicated an interest in being considered for hiring, promotion, or other employment opportunity. This interest might be expressed by completing an application form, or might be expressed orally, depending upon the employer’s practice.” Questions and Answers to Clarify and Provide a Common Interpretation of the Uniform Guidelines on Employee Selection Procedures, 44 Fed. Reg. 11996, 11998 (March 2, 1979); see also EO Survey (2001). Basically, this broad definition requires contractors to record as an applicant every person who indicates an interest in the job. The OFCCP, however, sometimes takes a more reasonable approach that accounts for the contractor’s recruitment methods and selection criteria. As a practical matter, the OFCCP may allow a contractor to adopt applicant procedures such as the requirements that all applications be (1) in writing, (2) in response to a specific job opening, and (3) timely. By consistently and uniformly enforcing these requirements, a contractor may be able to minimize the number of applicants by disregarding unsolicited resumes or resumes that do not target specific openings. In addition, every application policy must have a statement that sets forth the period or time that an application will be considered before it is discarded. A carefully drafted, uniformly applied application policy is an effective means of tracking applicants.
Updated Annually: The AAP must be updated annually. Each year, the contractor basically takes a statistical “snapshot” of its total workforce, by race and sex. From that snapshot, the contractor performs extensive statistical analyses and tracks its progress toward its affirmative action objectives.
Assignment of Responsibility 1.
Responsibility: The contractor must establish responsibility for the implementation of the AAP. This responsibility emanates down from the Chief Executive Officer through the Human Resources Director and the Affirmative Action Compliance Officer to individual managers and supervisors who will be held accountable for implementing the program. 41 C.F.R. § 60-2.17(a).
2.
Duties: The Affirmative Action Compliance Officer should be involved in developing policy statements, identifying problem areas, designing 3
audit and reporting systems, and providing training programs for managers and supervisors. 41 C.F.R. § 60-2.17(a). C.
Statistical Analysis of the Workforce 1.
2.
Organizational Profile: The new regulations provide that a contractor may prepare a traditional Workforce Analysis or an Organizational Display. A Workforce Analysis consists of a listing of job titles ranked from the lowest paid to the highest paid within each department or organizational unit of the establishment. For each job title, the contractor must list the total number of incumbents, and the total number of male and female incumbents broken out among the following groups: Blacks, Hispanics, Asian/Pacific Islanders, and American Indians/Alaskan Natives. For each job title, a salary range or wage rate must be supplied (in coded form). The job titles should be arrayed to show formal or informal career paths or promotional patterns. 41 C.F.R. § 60-2.11(c). An Organizational Display is an organizational chart showing the company’s structure, with the relevant race, ethnicity, and gender information included. 41 C.F.R. § 60-2.11(b). a.
Corporate Initiative Generally: Multi-establishment contractors must include in the Organizational Profile for their headquarters’ AAP those positions located at remote establishments which are filled based on selection decisions made at the headquarters level or which report to a manager at headquarters. 41 C.F.R. § 602.1(d)(1), (3). The new regulations require the contractor to identify specifically these “corporate initiative” employees and their locations in the Organizational Profile and Job Group Analysis. 41 C.F.R. § 60.2.1(e).
b.
Example of Corporate Initiative: For example, a contractor based in Boston that has regional sales offices in Chicago and San Francisco should include the Regional Sales Manager positions from Chicago and San Francisco in the headquarters’ AAP if the Regional Sales Managers are hired by, or report to, the National Sales Manager based in Boston. The remote establishment must also include these positions in its Organizational Profile, in order that the complete work force structure of the establishment under review is readily apparent. Consequently, the positions in question will appear in the Organizational Profiles of both the headquarters’ AAP and remote establishment’s AAP.
Job Group Analysis: Each AAP must include a Job Group Analysis that clusters jobs having similar content (duties and responsibilities), wage rates, and opportunities. Similarity of opportunities refers to training, transfers, promotions, pay, mobility, and other career enhancement 4
opportunities. The Job Group Analysis must include a list of the job titles that comprise each job group. To account for “corporate initiative” employees, the Job Group Analysis should include employees at other locations who are hired at the establishment at issue or who report to a manager at the establishment at issue, and exclude employees who were hired at another location or who report to a manager at another location. 41 C.F.R. § 60-2.12. 3.
Availability Analysis: Each AAP must conduct an Availability Analysis for each job group. An Availability Analysis is an estimate of the percentage of qualified women and minorities available to fill the contractor’s positions in the job group. The new regulations reduce the number of factors used to determine availability from eight to two. To estimate the availability of minorities and women, the contractor must consider (1) the percentage of minorities and women in the reasonable recruitment area (the geographic area from which the contractor usually seeks or reasonably could seek workers to fill the positions in question), and (2) the percentage of minorities and women in the contractor’s organization who are promotable, transferable, and trainable. 41 C.F.R. § 60-2.14.
4.
Comparing Incumbency to Availability: Each AAP must compare the percentage of the minorities and women actually employed by the contractor for each job group with the percentage of minorities and women that are estimated to be available to fill positions within the job group (as determined by the Availability Analysis). As part of this comparison, the contractor should identify those job groups in which the percentage of minorities or women employed in a particular job group is less than would reasonably be expected given the availability percentage in that particular job group. 41 C.F.R. § 60-2.15
5.
Placement Goals: The contractor must establish placement goals for those job groups in which the percentage of minorities and women employed is less than reasonably expected given the availability figure. The placement goal should be stated in terms of an annual percentage of minorities or women that the employer will attempt to hire or promote to fill new opportunities in the job group. The annual placement goal should always equal the availability percentage for that particular job group, as determined by the Availability Analysis. 41 C.F.R. § 60-2.16. a.
Placement Goals Are Not Quotas: The OFCCP regulations provide that “[p]lacement goals may not be rigid and inflexible quotas, which must be met, nor are they to be considered as either a ceiling or a floor for the employment of particular groups. Quotas are expressly forbidden.” 41 C.F.R. § 60-2.16(e)(1). 5
b.
D.
Adarand Constructors, Inc. v. Pena, 515 U.S. 200 (1995). In Adarand, the United States Supreme Court considered a Department of Transportation (“DOT”) program that included racial preferences. Under that program, the DOT compensated persons who received prime government contracts if they hired subcontractors controlled by “socially and disadvantaged individuals,” which included racial and ethnic groups. The Court concluded that this racial preference program was constitutional only if it (1) served a “compelling interest” (i.e., to remedy past, identifiable discrimination), and (2) was “narrowly tailored” to serve that interest. Although the DOT program at issue in Adarand was unrelated to any affirmative action program under Executive Order 11246, this case addresses the more fundamental issue of the federal government’s use of racial preferences and quotas. In response to Adarand, the OFCCP clearly stated that affirmative action placement goals are not racial preferences or quotas. Placement goals, therefore, should be attained through good faith efforts such as increased recruitment – not by the use of quotas or preferences.
Implementing Affirmative Action 1.
Reporting and Identification of Possible Problem Areas: The contractor must design systems to report progress in meeting affirmative action goals and identify problem areas. At a minimum, the contractor should develop reports that compare the number of applicants by job group with the estimate of availability figure. If the percentage of minority or women applicants is less than the availability figure, the contractor should consider expanding its recruiting efforts. Also, the contractor should examine its job groups and organizational units to determine if there are utilization issues or distribution problems (placement of minorities and women within the job group or organizational unit). Finally, the contractor should conduct an adverse impact analysis for hires. For example, the contractor should compare the hire rates (the number of hires divided by the number of applicants) for minorities versus non-minorities, and females versus males. The contractor must also conduct similar adverse impact analyses for promotions and terminations. 41 C.F.R. § 60-2.17(b), (d).
2.
Placement Goal Achievement: The contractor must analyze placement goal achievement and identify problem areas. If accurate reports exist of applicants, offers, hires, entries into job groups, and exits from job groups, the contractor can determine whether it is meeting its goals. If the goals 6
are not met, possible causes of the deficiency should be identified and corrective measures can be taken. 41 C.F.R. § 60-2.16.
IV.
3.
Review and Training: The contractor should review job descriptions for artificial barriers to employment, monitor the selection, promotion and termination processes, and expand recruiting efforts. The contractor should consider training and counseling programs to try to develop minority and women employees for advancement. 41 C.F.R. § 2.17(b), (d).
4.
Other Affirmative Action Efforts: a.
Purchase Order Forms: The contractor’s purchase order forms should include language incorporating the applicable federal laws regarding affirmative action. 41 C.F.R. § 60-1.4(c).
b.
Supplier and Subcontractor Certification: Contractors must use vendors (suppliers, contractors, and subcontractors) that comply with the affirmative action laws and regulations. Consequently, the contractor should annually send a certification form to each vendor to whom it pays at least $10,000 annually. 41 C.F.R. § 601.4(c).
c.
Advertisements: The contractor should clearly state on all print advertisements that it is an Equal Opportunity/Affirmative Action Employer. 41 C.F.R. § 60-20.2.
OFCCP’S NEW REGULATIONS A.
Elimination of Certain Requirements: The new regulations have eliminated the following required elements of an AAP: (1) reaffirmation of the contractor’s EEO policy in all personnel materials; (2) formal internal and external dissemination of the contractor’s EEO policy; (3) establishment of goals and objectives by organizational units, including timetables for completion; (4) active support of local and national community action programs and community service programs; and (5) consideration of minorities and women not currently in the workforce (i.e., establishing programs such as part-time employment, flex-time, and dependent care benefits to facilitate the employment of minorities and women). 41 C.F.R. § 2.13(a), (b), (e), (i), (j) (1999). Although the OFCCP has officially eliminated these requires, it has noted that the remaining AAP requirements “capture the essence of effective affirmative, including subsuming many aspects” of the former requirements. Consequently, the OFCCP will likely consider at least some of these once-required elements in any comprehensive audit.
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B.
Additional Requirements 1.
EO Survey: The EO Survey requires contractors to prepare and submit to the OFCCP information concerning (1) whether the establishment has AAPs addressing (a) race, color, religion, sex, and ethnicity; (b) disabilities; and (c) Vietnam Era veterans, special disabled veterans, and other protected veterans; (2) personnel activity by EEO-1 job group (including applicant flow information, hires, promotions, terminations, and general compositions, all of which must be broken down by race/ethnicity and sex); and (3) compensation data by EEO-1 job group (compensation and tenure, broken down by race/ethnicity and sex). 41 C.F.R. § 60-2.18. The OFCCP will use the EO Survey to identify potential compliance problems and select contractors for audit. A sample survey is attached at Exhibit B. The OFCCP has indicated that it will send the EO Survey to half of all non-construction contractors each year. Given the frequency and scope of the EO Survey, the OFCCP will likely use the EO Survey as one of its principal investigatory mechanisms. Consequently, it is imperative that contractors that receive the EO Survey complete the survey accurately and with careful consideration of the potential problem areas.
2.
Compensation Analysis: The OFCCP now requires the contractor to analyze its compensation practices to determine whether there are any gender, race, or ethnicity-based disparities. 41 C.F.R. § 60-2.17(b)(3). For the purpose of this compensation analysis, compensation generally includes salary, commissions, and bonuses. To perform a compensation analysis, the contractor should conduct a compensation self-assessment to determine what factors are used to establish compensation levels for each job (i.e., length of time at Company, length of time in position, grade or pay level, “market value” of the position, performance evaluation ratings, educational degrees or certification, related experience). Next, the contractor should analyze compensation for each pay grade (using a median analysis), by breaking each pay grade down by minority, nonminority, female, and male. Finally, the contractor should explain any disparities in the compensation of minorities/non-minorities and females/males. If a problem area exists, the contractor must develop and execute action-oriented programs to correct the problem.
3.
Glass Ceiling Audits: The OFCCP has the authority to investigate whether “individuals are encountering artificial barriers to advancement into mid-level and senior corporate management, i.e., ‘glass ceiling.’” 41 C.F.R. § 60-2.30. In the course of these investigations, the OFCCP will give “special attention” to those components of the employment process that affect advancement into mid- and senior-level positions. If such 8
investigations reveal problems at establishments outside of corporate headquarters, the OFCCP may direct its attention to and request data from any area within the corporation. For example, the OFCCP may analyze “feeder pools” at lower-level establishments from which selections for management positions at headquarters are made. Basically, this new regulation provides that the OFCCP may expand the scope of any glass ceiling audit. 4.
Combining Different Locations Into a Single AAP: For the first time, the regulations address the issue of combining different locations into a single AAP. If an establishment has less than 50 employees, the contractor may include that establishment in the AAP which covers the location of the personnel function that supports the establishment or in the AAP which covers the location of the official to whom they report. 41 C.F.R. § 60-2.1(d)(2). If a contractor wishes to establish an AAP that incorporates two or more establishments based on functional or business units, the contractor may reach an agreement with the OFCCP. 41 C.F.R. § 60-2.1(d)(4). In considering whether combining locations into a single AAP on the basis of functional or business units is permissible, the OFCCP traditionally weighs the following factors: whether the facilities are in the same labor market or receiving area; the existence of a central authority for employment and personnel decisions; whether the locations are “functionally related;” proximity of the locations; and the size of the locations. See OFCCP v. Coldwell, Banker & Co., 78-OFCCP-12 (1987). Although the OFCCP has, in the past, afforded contractors flexibility in combining locations into a single AAP, the new regulations may signal a change in the OFCCP’s approach.
5.
Recordkeeping Requirements a.
Standard Recordkeeping Requirements: In most respects, the recordkeeping requirements for contractors are the same under the new regulations. Contractors must keep all personnel and employment records for two years from the date of making the record or the personnel action involved. If the contractor has fewer than 150 employees or does not have a government contract of at least $150,000, the minimum record retention period is one year. Records include documents related to hiring (including all applications), promotion, transfer, termination, compensation, interview notes, and requests for reasonable accommodation. In the event of an involuntary termination, the personnel records of the individual terminated must be kept for two years from the date of termination (except that contractors with fewer than 150 employees or that do not have a government contract of at least $150,000 are required to keep such records for one year). Finally, 9
the employer must preserve all records related to any employment discrimination complaint until the final disposition of the complaint. 41 C.F.R. § 60-1.12(a).
V.
b.
Maintenance of Prior Year’s AAP: The contractor must maintain its AAP and documentation of good faith efforts for the immediately preceeding AAP year. 41 C.F.R. § 60-1.12(b). Documentation of good faith efforts include evidence of linkages with minority/female/veterans/disabled recruitment sources, letters to unemployment agencies, and other outreach efforts. In addition, the contractor must maintain applications and other source data underlying the AAP. As a practical matter, the OFCCP generally requests a copy of the prior year’s AAP and supporting documentation in connection with an audit.
c.
New Regulations: For any record the contractor maintains under the affirmative action requirements, the contractor must be able to identify the gender, race, and ethnicity of each employee and applicant, where possible. To this end, the contractor must make every reasonable effort to identify the gender, race, and ethnicity of all applicants. Self-identification by the use of a “tear off sheet” or other alternatives is acceptable. Visual identification is also acceptable. The contractor must supply this information (race, gender, ethnicity of each employee and applicant) to the OFCCP upon request. 41 C.F.R. § 60-1.12(c).
OFCCP AUDITING PROCEDURES A.
Background: The OFCCP has a wide variety of investigatory tools to determine whether a contractor has prepared a detailed AAP and otherwise complied with the regulations. The investigatory tools include compliance evaluations, off-site reviews, compliance checks and focused reviews. These procedures are described below.
B.
Compliance Evaluations: The OFCCP may conduct compliance evaluations to determine if the contractor has an AAP in place and is taking affirmative action generally. 41 C.F.R. § 60-1.20(a). A compliance evaluation is any one of the following investigative procedures: 1.
Compliance Review: The compliance review begins with a Notice of Desk Audit issued by the OFCCP. The Notice of Desk Audit states that the contractor must provide the OFCCP with a copy of its AAP, and other requested data, within thirty days of receipt of the Notice. The Compliance Review may consist of any one of the following procedures:
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a.
Desk Audit: The OFCCP reviews the AAP and requested data “to determine whether all elements required by the regulations in this part are included, whether the AAP meets agency standards of reasonableness, and whether the AAP and supporting documentation satisfy agency standards of acceptability.” 41 C.F.R. § 60-1.20(a)(1)(i). A sample notice of desk audit is attached at Exhibit C.
b.
On-Site Review: If the OFCCP identifies problem areas in the AAP and supporting documentation, the OFCCP may conduct an on-site review at the contractor’s establishment. The on-site review normally involves an examination of the contractor’s employment policies, inspection of documents related to employment actions, and interviews with employees, supervisors, managers, and hiring officials. 41 C.F.R. § 60-1.20(a)(1)(ii).
2.
Off-site Review of Records: The off-site review is “an analysis and evaluation of the AAP . . . and supporting documentation, and other documents related to the contractor’s employment policies and employment actions that may be relevant to a determination of whether the contractor has complied with the requirements of the Executive Order and regulations.” 41 C.F.R. § 60-1.20(a)(2).
3.
Compliance Check: The OFCCP typically notifies the contractor by a Notice of Compliance Check Letter or by telephone. The contractor generally has at least three days notice before the compliance check. The OFCCP visits the establishment to determine if the data and other information are complete and whether the contractor has developed an AAP. The OFCCP specifically requests that the contractor make available a report of results under the prior year’s AAP; examples of job advertisements, including listings with state employment services; and examples of accommodations made for persons with disabilities. 41 C.F.R. § 60-1.20(a)(3). A sample notice of Compliance Check letter is attached at Exhibit D.
4.
Focused Reviews: The focused review is an on-site review “restricted to one or more components of the contractor’s organization or one or more aspects of the contractor’s employment practices.” 41 C.F.R. § 601.20(a)(4). The purpose of a focused review is to target a particular division or employment issue (i.e., terminations, promotions, hirings). If the OFCCP determines that a problem area exists based on an EO Survey, it will typically notice the contractor for a Focused Review. The OFCCP generally provides at least seven days notice before the conference with the contractor.
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VI.
KEY ISSUES AND PRACTICAL STEPS TO ACHIEVE COMPLIANCE WITH AFFIRMATIVE ACTION REQUIREMENTS A.
General Focus: The OFCCP is more concerned with the affirmative action process and employment discrimination than with mandating an increase in the number of women and minorities that a contractor employs. The OFCCP is very clear that its “goals” are not “quotas,” but “flexible targets” to be achieved through “good faith efforts.” The regulations prohibit an employer from making an employment decision on the basis of race, sex, religion or national origin. In fact, the new regulations reaffirm that affirmative action does not require an employer to do anything other than select the person “best qualified” for the position.
B.
Important Issues: Experience suggests that the following issues are particularly important to the OFCCP’s auditors: 1.
The existence of applicant flow data from which a contractor conducts adverse impact analysis.
2.
The presence of audit and reporting systems that demonstrate contractor awareness of and attention to goal attainment.
3.
The existence of unexplained wage disparities between male and female employees or between white employees and minority employees in the same job title.
4.
Individual complaints by minority or women employees, whose files will be reviewed or who will be interviewed as part of the audit process.
5.
Evidence of supervisory awareness (or ignorance) of the AAP.
6.
Attention to the elimination of artificial barriers and physical barriers to the employment of the handicapped.
7.
Inclusion of offsite managers in headquarters’ plans and programs (i.e., corporate initiative).
8.
Identification of problem areas and the establishment of placement goals equal to availability.
9.
Documentation of the steps taken to calculate availability of minorities and women in each job group.
10.
Promotion, retention, and termination policies.
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C.
Practical Steps to Achieve Compliance with Affirmative Action Requirements: The most common flaw with a contractor’s AAP is that it is only a written plan and not a program. Many employers adhere to the text of the affirmative action regulations and write down promises that are never kept. Affirmative Action Compliance Officers often become enmeshed in troubleshooting problems with individual employees and overlook technical affirmative action issues until the notice of audit is received. Few contractors master the technical requirements of determining availability, comparing incumbency with availability and setting placement goals. The following common sense rules should be followed to achieve compliance with the affirmative action regulations: 1.
Read the regulations but only put in your plan the actual affirmative action steps that you will take. Don’t overpromise.
2.
Develop a reasonable, common sense definition of what an “applicant” is for your Company and then institute a recordkeeping system that will work to track applicants.
3.
Establish an affirmative action information system that is reliable and will generate reports (including compensation reports) that will monitor progress.
4.
Train your managers and supervisors in affirmative action so that they understand the process and feel accountable for taking affirmative action.
5.
Document your affirmative action efforts by maintaining files and lists of actual outreach activities.
6.
Take the time to develop realistic job groups and availability estimates. Make sure that the people who do the actual hiring and recruiting are involved in the process. Seek expert assistance if you need it.
7.
Enlist top management support for your efforts.
8.
Prepare carefully for all audits. Meet with your managers and check your files. The “last minute” is better than “after the fact.”
9.
Don’t fight the small issues with your auditor. Many OFCCP employees are incredible nit-pickers.
10.
Keep an eye on auditors who focus on charges or complaints that other agencies are investigating. Press the OFCCP to stick to its role.
