Affirmative Action and OFCCP Regulations and Audits: When ... · Affirmative Action and OFCCP...
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Affirmative Action and OFCCP Regulations and Audits: When and How They Apply to Your Business June 25, 2013
Transcript of Affirmative Action and OFCCP Regulations and Audits: When ... · Affirmative Action and OFCCP...
Affirmative Action and OFCCP
Regulations and Audits: When and How
They Apply to Your Business
June 25, 2013
Presenters
Moderator
Anna Elento-Sneed, Stockholder/Director,
Alston Hunt Floyd & Ing, Honolulu, HI
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Speakers
Jenna M. Bedsole, Shareholder,
Baker Donelson Bearman, Caldwell &
Berkowitz, PC, Birmingham, AL
J. Bruce Cross, Director, Cross, Gunter,
Witherspoon & Galchus, P.C.
Little Rock, AR
3
Speakers
Kristine J. Dunne, Counsel, Arent Fox LLP,
Washington, DC
Tami A. Earnhart, Partner, Ice Miller LLP,
Indianapolis, IN
4
Speakers
Fiona W. Ong, Partner,
Shawe & Rosenthal, LLP, Baltimore, MD
5
WHO HAS TO COMPLY?
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Laws Enforced by the OFCCP
• The Office of Federal Contract
Compliance Programs enforces
three EEO laws that apply to federal
sub/contractors:
− Executive Order 11246
− The Vietnam Era Veterans’
Readjustment Assistance Act of 1974
− Section 503 of the Rehabilitation Act of
1973 7
Federal Contractors
• Divided into:
− Supply and service
− Construction
o Not discussed here
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Who Is a Government Contractor?
• Any person holding a “government
contract” - an agreement for the
purchase, sale or use of personal
property or non-personal services
• Personal property: supplies and
goods, and use of real property
• Non-personal services: e.g., utilities,
construction, research, insurance,
fund depository, transportation
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Contractors Subject to the Law
• Under EO 11246, any business or
organization that:
− Holds a single federal contract,
subcontract or federally assisted
construction contract in excess of
$10,000
− Has federal contracts or subcontracts
that have a combined total in excess
of $10,000 in any 12-month period
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Contractors Subject to the Law
• Cont’d
− Holds Government bills of lading,
serves as a depository of federal
funds, or is an issuing and paying
agent for U.S. savings bond and
notes
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Contractors Subject to the Law
• Under Section 503, any business or
organization that:
– Holds a single federal contract,
subcontract or federally assisted
construction contract in excess of
$10,000
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Contractors Subject to the Law
• Under VEVRAA, any business or
organization that:
– Holds a single federal contract,
subcontract or federally assisted
construction contract in excess of
$100,000 (or current contract in
excess of $25,000 if entered into
before 12/1/2003)
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Particular Types of Organizations
• Healthcare organizations
− Not reimbursement for Medicare
Parts A and B or FEHB
− Not Tricare participation
− Medical services under FEHB, or
pursuant to Medicare Part D or Part
C programs
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Particular Types of Organizations
• Banks covered by FDIC or NCUA
deposit insurance
• Universities with (typically research)
contracts
− Not grants
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Who Needs an AAP?
• Not all government sub/contractors
need an affirmative action program.
The EO 11246 AAP requirement
applies if you have 50 or more
employees and:
– You hold a non-exempt government
sub/contract of $50,000 or more; or
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Who Needs an AAP?
• Cont’d
− You hold government bills of lading
of (or expected to total) $50,000 or
more in a year; or
− You serve as a depository of federal
funds in any amount; or
− You are an issuing and paying agent
for U.S. savings bonds in any
amount 17
Who Needs an AAP?
• The Section 503 AAP requirement
applies if you have 50 or more
employees and:
− You hold a non-exempt government
sub/contract of $50,000 or more
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Who Needs an AAP?
• The VEVRAA AAP requirement
applies if you have 50 or more
employees and:
− You hold a non-exempt government
sub/contract of $100,000 or more
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How Many AAPs Are Required?
• Options:
− One for each law
− One for all the laws
− One for EO 11246 and one for
503/VEVRAA
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Parent/Sub or Affiliated Companies
• The AAP obligations of a company
may be extended to a related
company without government
contracts, if they are considered a
“single entity.”
- Common ownership
- Common directors/officers
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Parent/Sub or Affiliated Companies
• Cont’d
− De facto day-to-day control over
policies, management, or
supervision of operations
− Common or centralized source for
personnel policies
− Dependent operations
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PROPER DEVELOPMENT OF
THE AFFIRMATIVE ACTION PLAN
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“Acceptability”
• This term is not defined in the
regulations, so it hinges on the
OFCCP’s view of what the
ingredients ought to contain or what
the contractor and the auditor can
agree on.
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Covered Establishments
• A contractor must have a plan at
each one of its establishments.
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What Do Affirmative Action Plans
Require?
• Making affirmative action efforts on
behalf of minorities, women, persons
with a disability, and Vietnam-era
veterans.
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Specifically – A Covered Entity Must:
• Set up selection procedures that ensure
equal opportunity for consideration for
all qualified applicants
• Compare the percentages of
minorities/females in the company’s
workforce to census data percentages
of minorities/females qualified to
perform the company’s job.
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Specifically – A Covered Entity Must:
• Develop approaches to correct
disparities between workforce and
census data percentages.
• Analyze employment actions (e.g.,
hires, transfers, terminations, etc.)
annually to ensure that minorities/
females are not being treated
differently.
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Affirmative Action Plan for Women
and Minorities in Non-Construction
Contracts (Construction Plans Have
Some Different Elements)
REQUIRED INGREDIENTS
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First Division
• Narrative consisting of:
– Establishment of responsibilities for
implementation of the company’s
affirmative action program;
– A statement noting that the
company’s Equal Employment
Opportunity/Affirmative Action Policy
applies to all personnel actions.
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First Division
• (Cont’d):
– Formal internal and external
dissemination of the company’s
Equal Employment Opportunity/
Affirmative Action Policy;
– Active support of local and national
community action and service
programs designed to improve the
employment opportunities of
minorities and women. 31
Second Division
• A self-analysis conducted by the
company of its minority and female
workforce, consisting of:
− A work force analysis
− A job group analysis
− An availability analysis
− A utilization analysis
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Goals
Establish to correct areas of
statistical underutilization
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A Company’s Affirmative Action Plan
for Veterans and Persons with a
Disability
• Responsibility for implementation
• Policy statement
• Internal and external dissemination
• Internal auditing and monitoring
system
• Self-analysis
34
Likely to change should proposed
regs become final in terms of
potential
Goal Setting for Disabled
Employees and Veterans
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Top Reasons Contractors Have
Problems with the OFCCP
• Lack of commitment at the top
• Lack of EEO/AA accountability at the
top
• Failure to conduct self audits
• Absence of consistent personnel
policies
• Lack of pro-active recruitment efforts 36
Top Reasons Contractors Have
Problems with the OFCCP
• Flawed selection procedures
• Lack of protected group harassment
prevention programs
• Failure to develop or listen to internal
support groups
• Lack of neutral EEO “pre-decision-
maker” 37
COMPLIANCE REVIEWS
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How Are Contractors Selected for a
Compliance Review?
• Pre-bid review
• Federal contractor scheduling
system/corporate scheduling letters
• Complaint with OFCCP
• ARRA funding
• Industry targeting
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General Process/Active Case
Enforcement
• Desk Audit Letter
• Contractor response
• Off-site analysis
• Follow-up requests
• On-site/interviews
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Possible Outcomes of a Review
• Closure letter
• Notice of violation
– Conciliation agreement (corrections,
reporting, monetary payments)
– Referral for enforcement (potential
debarment)
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Common Issues (OFCCP Hot Buttons)
• Records
– Applicant flow logs/adverse impact
– Ethnic/racial and gender identification
– Identification of veterans/individuals
with disabilities
– Retention of applications
– Reasonable accommodations
– Policy dissemination/training
42
Common Issues (OFCCP Hot Buttons)
• Outreach
– More than letters
– Meaningful contact/relationships
– Focus on recruitment sources for
veterans and individuals with
disabilities
– Measuring effectiveness
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Common Issues (OFCCP Hot Buttons)
• Hiring practices
– Job postings/application process
– Reason for decisions/criteria used
– Testing
– Background checks
– Handling of referrals
– Non-competitive hiring 44
COMPENSATION
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Directive 307
• Announced February 28, 2013
• Addresses pay discrimination
• Demonstrates collaboration between
DOL, EEOC, DOJ, OPM and
OFCCP
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What It Does
• Addresses compensation
discrimination under Executive Order
11246
• Uses Title VII's flexible, fact-specific
approach
• Applies to reviews on or after
February 23, 2013
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Tools It Will Use
• Statistical analyses (multiple
regression)
• Use of comparators
• Anecdotal evidence
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The Audit
• Summary compensation data by
grouping based on:
• Pay ranges or
• Job groups
• Then move to individual employee
level data
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What Are They Looking for?
• The size of the overall pay
differences
• The size of the largest pay difference
within the AAP job groups (existing
salary band or pay grade system)
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What Are They Looking for?
• Number of job groups or grades
where average pay differences
exceed a certain threshold
• Number of employees affected by
the average pay differences within
the job groups or grades
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Questions They Will Evaluate
• Is there a measurable difference in
compensation based on sex, race, or
ethnicity?
• Is there a difference in compensation
between employees who are
comparable under the contractor's
wage system?
• Is there a legitimate, non-discriminatory
reason for the difference?
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In Addition to the Data
• Access to opportunities (higher
paying positions, overtime, work
assignments)
• Examining policies
• Observed differences in pay
• Description of its pay practices/
systems
53
Pay Analysis Groups –
Systemic Discrimination
• Single job or title
• Multiple distinct units
• Categories of workers
• May combine different jobs or
groups
• Job compensation v. job assignment
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Disparate Treatment –
Individual Discrimination
• Similarly situated
• Duties, skills, effort, level of working
conditions, responsibilities
• Job difficulty, minimum
qualifications, education
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Disparate Treatment –
Individual Discrimination
• Accurate?
• Consistently applied?
• Adverse impact?
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PROPOSED CHANGES TO
VETERAN AND DISABILITY
REGULATONS
57
Status of the Final Disability and
Veterans Regulations
• Proposed Veteran Regs:
April 26, 2011
• Proposed Disability Regs:
December 9, 2011
• Anticipated release date for both:
“April 2013”….
but we are still waiting 58
Proposed Disability Regs Include:
• Pre-offer invitation to self-identify
• Mandatory outreach
• Referral tracking, data collection
analysis
• 7% hiring goal by job group, possible
“sub-goals” for severe disabilities
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Proposed Disability Regs Include:
• Documentation of physical/mental job
qualification standards, accommodation
process
• Increased record retention requirements
(5 years)
• Use of information and communication
technology must be accessible to
employees and applicants with
disabilities
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Proposed Veterans Regs Include:
(similar to proposed disability regs)
• Changes to vets self-identification
• Mandatory outreach
• Hiring benchmarks, referral tracking,
data collection analysis
• Accessibility requirements, e.g.,
Braille, large print
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Proposed Veterans Regs Include:
(similar to proposed disability regs)
• Must explain non-selection of vets
• Must consider vets for all positions
for which qualified, not just positions
applied for
• Increased record retention
requirements (5 years for most)
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Proposed Data Collection Analysis
• Collection of data on referrals from
certain sources (local employment
service; through linkage agreements)
• Tracking of data on applicants who
self-identify as disabled or protected
veteran
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Proposed Data Collection Analysis
• Section 503 data analysis:
– Applicant ratio
– Hiring ratio
• VEVRAA data analysis:
– Referral ratio
– Applicant ratio
– Hiring ratio
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Cost Estimates for Compliance with
Proposed Regulations
• Industry estimate of compliance
cost: $ billions
• OFCCP’s cost estimates:
– $407/contractor for veterans regs
– $473/contractor for disability regs
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Expectations for Final Regs
• Timing for release?
– Expect after confirmation of Secretary of
Labor – not sure when
• Timing for implementation?
– Some period of time – not sure how much
• Content?
– Expect some deviation from proposed regs
o Disability goals
o Accommodation review process
requirements
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What Do We Do Right Now?
• Wait and see
• Increase outreach, documentation
now
• Be prepared for increased
compliance costs
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RECENT OFCCP DIRECTIVES
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Recent OFCCP Directives
• Directive No. 305 on Functional AAPs
(12/17/2012)
– Allows multi-establishment supply and
service contractors to ask to organize AAP
by functional/business unit instead of by
establishment.
o Requires OFCCP Director approval; report
of function changes within 60 days; and
agreement changes annually; submission of
personnel activity data; compliance
evaluations.
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Recent OFCCP Directives
• Directive No. 306 on use of criminal
records (1/29/2013)
– Consideration of criminal history should be
job-related and consistent with business
necessity, and should follow EEOC
guidance.
o Individualized assessment considering
nature/gravity/harm caused by the crime,
time since offense, nature of job
o Reminder that employer must comply with
Fair Credit Reporting Act (FCRA)
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OFCCPs Future Plans
• Estimate 4,000 compliance
evaluations in FY2013, 4,650 in
FY2014; plan to review company-
wide data
• Updated FCCM to be released
• New IT cloud-based system to cost
$23 million
• Increased compliance assistance
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