EMPLOYMENT LAW / HUMAN RESOURCES
Affirmative Action Compliance Under Increased Scrutiny
August 2005
By Dana R. Scott, HR and Benefits Consultant*
The US Department of Labor's Office of Federal Contract Compliance Programs (OFCCP) has recently increased its audit activity of non-construction federal contractors/ subcontractors.1 Is your company ready to respond? For many employers, the answer unfortunately will be no, either because you are under a misimpression that you are not subject to OFCCP oversight and/or because you have not maintained a compliant affirmative plan and other required documentation.
Is My Company A Federal Contractor/Subcontractor?
This question is often not easily answered. Companies must take the time to analyze the size of their workforce, their sales/service contracts and customers to identify any arguable United States "government" business.
Employers with 50 or more employees and who receive $50,000 or more in government contract funds must develop and implement a written affirmative action program (AAP) with respect to women and minorities and annually file an EEO-1 Report.
Employers of any size who receive $25,000 or more in government contract funds must annually file a VETS-100.
How Do I Know If My Company Has Government Contract Funds?
If your company:
1) has a contract, subcontract or purchase order with the federal government, or
2) serves as depository of federal funds,
3) is a financial institution that is an issuing/paying agent for US Savings bonds and savings notes,
your company receives government contract funds that subject you to OFCCP compliance.
When calculating the value of your company's federal funds, it is important not to forget sales and services agreements that might not be obvious "government contracts." For example, perhaps your company purchases pre-owned government equipment or pre-owned government vehicles.
How Will The OFCCP Contact Me?
Contact by the OFCCP will come to the CEO of your company in the form of a Scheduling Letter. The letter will ask that copies of various documentation be sent to the OFCCP and will generally provide you with 30 days to do so.
Employers are encouraged to respond comprehensively to this initial request from the OFCCP and to avoid responding with incomplete or inaccurate information. If documentation or analysis is not readily available, take the time to generate the appropriate data that is responsive to the OFCCP's request.
If the data provided is consistent with the OFCCP's non-discrimination and affirmative action expectations, doing so may limit further review by the OFCCP. Beyond this "desk audit," further review can take the form of an on-site review, which often includes employee interviews; in- depth payroll analysis, policy and procedure review, and other inquiries.
Why Should My Company Worry About OFCCP Compliance?
The procedures governing federal contracts are unique, and differ from those utilized in the private sector. Should the OFCCP determine that a contractor is not compliant, the contractor may be temporarily suspended from doing business with the federal government or have their current contract cancelled. In extreme cases, the contractor may be declared ineligible from receiving future federal contracts.
What Should My Company Be Doing Now?
First, resolve any lingering doubts about whether your company is a government contractor subject to OFCCP regulation. This can be done either by consulting with legal counsel, the local, district or regional OFCCP office and/or by visiting the OFCCP website and using their on-line self-analysis tool which can be found at http://www.dol.gov/elaws/esa/ofccp/using.asp.
If you are a government contractor, ask yourself the following questions:
1) Do we have current and complete Form I-9 information for all employees?
2) Are all required state and federal employment law postings current and displayed in a visible location at all of our company locations?
3) Do our vendor contracts and purchase order forms display or reference our EEO policy clause?
4) Do we have copies of our filed VETS 100 and EEO-1 reports for at least the last three years?
5) Do we have a written Affirmative Action Plan? Is it current? Is it complete?
6) Are we prepared to provide the OFCCP with data for our applicant flow, transfers, promotions and separations for our entire workforce over the past three years?
7) What is our practice regarding self-identification?
8) Do we have an up-to-date employee manual outlining our policies and procedures, harassment policy, EEO policy and the like?
These are some of the typical areas of inquiry by the OFCCP should your company be identified for an audit. Now is the time, before you are contacted by the OFCCP, to review your company's compliance via a self-audit. Takes the steps necessary to address areas of deficiency and concern so that your company will be in the best position to demonstrate its good faith compliance.
* Dana Scott, HR and Benefits Consultant, Gallagher, Callahan & Gartrell, P.C., regularly assists firm clients with affirmative action plan development and compliance with OFCCP requirements. Dana also advises employers on responding to OFCCP audit requests. Dana can be reached by e-mail or at 800-528-1181 x.236.
Notes
1 Federal and federally-assisted construction contractors and subcontractors are also subject to OFCCP compliance rules. To learn more about these guidelines, you may download the "Technical Assistance Guide for Federal Construction Contractors" located at http://www.dol.gov/esa/ofccp/TAguides/ctaguide.htm.
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