Managing Federal Contractor Affirmative Action Programs

Oct 24, 2016
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Scope—This article outlines the process federal nonconstruction contractors and subcontractors that manage affirmative action programs must go through to ensure compliance with laws and regulations intended to aid employers in the recruiting, hiring, training and promoting of women, minorities, individuals with disabilities and veterans.

This article provides an overview of the federal laws requiring contractors to develop annual affirmative action plans and details on how contractors can successfully complete these plans.

Affirmative action guidelines for construction contractors are beyond the scope of this article. 

Overview

Affirmative action programs (AAPs) outline an organization's programs, policies and procedures for proactively recruiting, hiring, training and promoting women, minorities, people with disabilities and veterans to ensure that all individuals have equal opportunities in employment. The U.S. Department of Labor's Office of Federal Contract Compliance Programs (OFCCP) enforces compliance with the affirmative action requirements.  Proactive steps by contractors to comply with the OFCCP's regulations will ensure that organizations will continue to be eligible to receive future federal contracts and subcontracts and reduce the risk of a difficult audit and an OFCCP-imposed penalty or remedy.

Note that this document outlines the requirements of nonconstruction federal contractors and subcontractors (e.g., those focused on supply and service). Please be aware that construction contractors are subject to a separate set of guidelines, found at 41 C.F.R. §60-4.

Business Case

Business managers must be aware of their equal employment opportunity (EEO) duties and obligations to create AAPs when doing business with the U.S. federal government. Usually, this is apparent in the terms of a written contract; however, some organizations may be surprised to learn that something as simple as providing food or beverages to a federal agency or military base can bring them within the ambit of federal EEO or AAP compliance and subject to audit by the OFCCP.

If an organization has a federal contract, subcontract or federally assisted construction contract, it may be subject to some or all of the civil rights requirements enforced by the OFCCP. Generally speaking, any organization meeting one of the following will be subject to requirements under one or more of the laws enforced by the OFCCP:

  • Holds a single federal contract, subcontract or federally assisted construction contract in excess of $10,000.
  • Has federal contracts or subcontracts that combined total in excess of $10,000 in any 12-month period.
  • Holds government bills of lading, serves as a depository of federal funds or is an issuing and paying agent for U.S. savings bonds and notes in any amount.

The requirement to have a written AAP has higher thresholds, which are discussed in detail below. See 41 C.F.R. §60-1.5(a) and 41 C.F.R. §60-741.4.

HR's Role

The first task of HR professionals with respect to AAPs is to recognize when their organizations come within the threshold of OFCCP regulations. See When would my company need to have an affirmative action program?

Once the thresholds of federal AAP compliance are approaching and are about to be crossed, the responsible HR professional needs to make sure the organization is prepared to meet the legal obligations. This may mean hiring an outside consultant or reallocating internal resources to take on the administrative burdens of federal AAP compliance. Some requirements, such as posting notices internally, are fairly simple to achieve, whereas providing statistical analyses can be quite cumbersome.

HR must monitor its AAP compliance efforts on an ongoing basis to ensure that the internal or external resources devoted to the task are sufficient. In addition, HR must regularly communicate with operational managers to make sure that the administrative costs of dealing with the federal government are not overlooked.

There are several different types of AAPs (for women, minorities, veterans and individuals with disabilities), and employers may be obligated to implement some or all of these affirmative action requirements depending on the amount of the government contract and the number of employees. In addition to written AAPs, some affirmative action requirements stipulate taking various compliance measures, such as filing annual EEO-1 and/or VETS-4212 reports. The written AAP for women and minorities establishes specific and results-oriented EEO procedures that, coupled with a contractor's good-faith efforts, are designed to achieve the full representation of a diverse workforce. 

An AAP is designed to evaluate the contractor's initiatives and strategies to achieve equal employment opportunities and includes a statistical evaluation of the representation of women and minorities in the contractor's workforce, as compared with the general representation of individuals with similar skills in the relevant labor market. An AAP also provides a road map for management to correct problem areas and support recruitment goals. The AAP for veterans and people with disabilities does not contain a statistical analysis, though certain other requirements must be met.

Relationship Between Equal Employment Opportunity and Affirmative Action

There is often confusion about the relationship between diversity and inclusion practices and EEO and affirmative action. EEO refers to fairness and equality of treatment for specific, designated protected classes as defined by law. EEO means that the employer gives equal consideration for a job and terms and conditions of employment to all individuals and that the employer does not discriminate based on race, color, religion, age, marital status, national origin, disability or sex. See Managing Equal Employment Opportunity and Sample EEO Policy Statement.

Affirmative action requires government contractors to take affirmative steps to develop programs, policies and procedures for proactively recruiting, hiring, training and promoting women, minorities, people with disabilities and veterans to ensure that all individuals have equal opportunities in employment. Though EEO and affirmative action are primarily matters of legal compliance, they do help create a workplace that is more supportive and diverse. See What is the difference between EEO, affirmative action and diversity?

Federal Laws Requiring Affirmative Action

The laws governing a contractor's affirmative action requirements are enforced by the U.S. Department of Labor (DOL) through the OFCCP. A wealth of information and guidance about complying with this requirement is provided by the government. 

For additional guidance about whether a contractor is subject to affirmative action requirements, see Determining if You Are a Federal Contractor or Subcontractor Subject to the Laws Enforced by OFCCP.

A brief overview of the federal laws requiring contractors to take affirmative action and develop annual AAPs follows.

Executive Order 11246

Executive Order 11246 (E.O. 11246), as amended, prohibits race, religion, color, sex, sexual orientation, gender identity and national origin discrimination by federal contractors and subcontractors.

On December 2014, the OFCCP made changes to E.O. 11246 by adding two additional categories of prohibited discrimination for federal contractors: sexual orientation and gender identity. See E.O. 13672 Final Rule FAQs.

In addition, under E.O. 11246, contractors are required to engage in affirmative action to employ and advance minorities and women in the workforce. Regulations governing the general obligations of contractors and subcontractors are found at 41 C.F.R. §60-1 and 41 C.F.R. §60-2. 

Threshold coverage for E.O. 11246. Nonconstruction (supply and service) federal contractors and subcontractors that employ 50 or more employees are required to provide equal employment opportunities to women and minorities if they meet one of the following:

  • Have government contracts or subcontracts of $50,000 or more.
  • Have government bills of lading that in any 12-month period total or can reasonably be expected to total $50,000 or more.
  • Serve as a depository of government funds in any amount.
  • Are financial institutions that are issuing and paying agents for U.S. savings bonds and savings notes (41 C.F.R. §60-2.1).

Vietnam Era Veterans' Readjustment Assistance Act of 1974

The Vietnam Era Veterans' Readjustment Assistance Act of 1974 (VEVRAA), as amended, requires government contractors and subcontractors to take affirmative action to employ and advance in employment protected veterans.

On September 24, 2013, the OFCCP made changes to the regulations implementing the VEVRAA, as amended at 41 C.F.R. §60-300. VEVRAA prohibits federal contractors and subcontractors from discriminating in employment against protected veterans and requires these contractors to take affirmative action to recruit, hire, promote and retain veterans. See SHRM GovTech-OFCCP Announces New Regulations on Disability and Veterans Employment.

The new regulations rescind the outdated 41 C.F.R. §60-250 while providing veterans formerly protected under §60-250 protection from discrimination under the revised 41 C.F.R. §60-300. The new regulations also "require that contractors establish annual hiring benchmarks for protected veterans. Contractors must use one of two methods to establish their benchmarks. Contractors may choose to establish a benchmark equal to the national percentage of veterans in the civilian labor force, which is published in the Benchmark Database . . . and will be updated annually by OFCCP. Alternatively, contractors may establish their own benchmarks using certain data from the Bureau of Labor Statistics (BLS) and Veterans' Employment and Training Service/Employment and Training Administration (VETS/ETA) that is also published by OFCCP, as well other factors that reflect the contractor's unique hiring circumstances." See OFCCP's New Regulations to Improve Job Opportunities for Protected Veterans. 

For regulations implementing the basic and affirmative action requirements of VEVRAA, see DOL VEVRAA Fact Sheet and VEVRAA Frequently Asked Questions.

Threshold coverage under VEVRAA. The Veterans Rule applies to federal contractors and covered subcontractors with a contract of $100,000 or more. Contractors and covered subcontractors with a contract of $100,000 or more and 50 or more employees must comply with the AAP requirements and provide equal opportunity for the following four categories of veterans:

  • Veterans with disabilities.

  • Recently separated veterans (i.e., veterans who were discharged or released from active duty within the last three years).

  • Armed Forces service medal veterans (i.e., veterans who, while serving on active duty in the U.S. military, ground, naval or air service, participated in a U.S. military operation for which an Armed Forces service medal was awarded pursuant to Executive Order 12985).

  • Active duty wartime or campaign badge veteran (i.e., veterans who served on active duty in the U.S. military, ground, naval or air service during a war or in a campaign or expedition for which a campaign badge has been authorized under the laws administered by the U.S. Department of Defense). See 41 C.F.R. §60-300.40.

Section 503 of the Rehabilitation Act of 1973

Regulations implementing the basic and affirmative action requirements of Section 503 of the Rehabilitation Act of 1973 regarding individuals with disabilities are found at 41 C.F.R. §60-741See DOL Guidance on Affirmative Action for Individuals with Disabilities.

On September 24, 2013, the OFCCP published a Final Rule in the Federal Register that made changes to the regulations implementing Section 503 of the Rehabilitation Act of 1973, as amended at 41 C.F.R. §60-741. The OFCCP described the changes on its website:

Section 503 prohibits federal contractors and subcontractors from discriminating in employment against individuals with disabilities (IWDs), and requires these employers to take affirmative action to recruit, hire, promote, and retain these individuals. The new rule strengthens the affirmative action provisions of the regulations to aid contractors in their efforts to recruit and hire IWDs, and improve job opportunities for individuals with disabilities. The new rule also makes changes to the nondiscrimination provisions of the regulations to bring them into compliance with the ADA Amendments Act of 2008.

Threshold coverage for Section 503. Federal contractors and subcontractors with government contracts in excess of $10,000 are required to take affirmative action to employ and advance in employment qualified individuals with disabilities. But the requirement to have a written AAP applies to government contractors that have 50 or more employees and a contract of $50,000 or more. See 41 C.F.R §60-741.40.

Written Affirmative Action Program Requirements

E.O. 11246VEVRAA and Section 503 each impose written AAP obligations on covered contractors. Each law requires somewhat different elements to be included in its written AAPs; as a result, each category of AAPs is discussed separately below. 

Employers subject to all three laws have the option of creating three separate AAPs, one combined AAP or one AAP for E.O. 11246 and one combined AAP for VEVRAA and Section 503.

E.O. 11246 affirmative action plans

Written AAPs created pursuant to E.O. 11246 have the most detailed and comprehensive requirements and include both statistical and narrative components. The law governing the components of this type of plan is found at 41 C.F.R. §60-2. For additional step-by-step assistance and explanations, as well as sample graphics for the statistical and organizational data and sample language, the DOL's Technical Assistance Guide includes further explanations of each aspect of an AAP. Check out the linked regulations for more specifics on each step. An AAP must be created for each establishment. See Sample Affirmative Action Program for E.O. 11246 (PDF).

According to the E.O. 11246 regulations, the required elements of a nonconstruction AAP are the following:

  • Organizational display. A detailed graphic, chart, spreadsheet or other presentation of contractor's organizational structure. "The organizational display must identify each organizational unity in the establishment, and show the relationship of each organizational unity to the other organizational units in the establishment. . . . For each organizational unit, the organizational display must indicate the following: (i) The name of the unit; (ii) The job title, gender, race, and ethnicity of the unit supervisor (if the unit has a supervisor); (iii) The total number of male and female incumbents; and (iv) the total number of male and female incumbents in each of the following groups: Blacks, Hispanics, Asians/Pacific Islanders, and American Indians/Alaskan Natives" (41 C.F.R. §60-2.11(b).

  • Workforce analysis. "A workforce analysis is a listing of each job title as it appears in applicable collective bargaining agreements or payroll records ranked from the lowest paid to the highest paid within each department or other similar organizational unity including departmental or unit supervision" (41 C.FR. §60-2.11(c)).

  • Job group analysis. Contractors group jobs that have similar duties and responsibility, wage rates, and similar opportunities for training, transfer, promotions, pay, mobility and other career enhancement opportunities (41 C.F.R. §60-2.12).
  • Utilization analysis.
    • Placement of incumbents in job groups. "The contractor must separately state the percentage of minorities and the percentage of women it employs in each job group established" (41 C.F.R. §60-2.13).

    • Determining availability. Contractors must determine availability of minorities and women for each job group. According to the DOL's Technical Assistance Guide of 2009, "Availability is a percentage estimate of the women and minorities who have the skills required to perform the jobs within the job groups. To determine the availability percentages, contractors are required to consider two factors. These factors reflect availability outside the contractor's workforce (such as people in the immediate labor area or reasonable recruitment areas), and availability inside the contractor's own workforce (such as people who are qualified and available via transfer, promotion, or training)." Contractors often use government resources such as the U.S. Census Bureau's EEO Tabulation, the U.S. Bureau of Labor Statistics' (BLS) Current Population Survey and state employment service data to obtain estimated availability data. See 41 C.F.R §60-2.14.

    • Comparing availability to incumbency. "The contractor must compare the percentage of minorities and women in each job group with the availability for those job groups" (41 C.F.R. §60-2.15). This section will help determine which job groups employ too few females or minorities and need placement goals.

      More commonly this is where you determine "underutilization" of minorities and women by comparing the actual percentage of women and minorities in each job group (placement of incumbents in job groups) with the estimated percentage of available women and minorities (determining availability).

      Contractors can use a number of methods to determine underutilization, but the most commonly used is the "80 percent" rule also known as the "4/5ths rule." This rule means underutilization occurs when the actual percentage of females or minorities is less than 80 percent of the availability of that same demographic (female or minority). (Utilization formula where W = percentage of females currently employed within in job group, and A = percentage of females available would be (W/A)*100.) If that ratio of percentage of females employed to percentage available is less than 80 percent, then there is underutilization of females within the organization. If the ratio equals 80 percent or more, then, under the 80 percent rule, an appropriate percentage of females is employed within that job group. The same formula would be used for minorities in each job group. See 41 C.F.R. §60-2.15.
  • Placement goals. Contractors must develop objectives or targets that are reasonably attainable and are "used to measure progress toward achieving equal employment opportunity." A placement goal is a "percentage annual placement goal" at least equal to the availability figure derived for women or minorities, as appropriate, for that job group" (41 C.F.R. §60-2.16).
  • Designation of responsibility. Contractors must assign "responsibility and accountability to an official of the organization" (41 C.F.R. §60-2.17(a)). This designation must be included in the AAP narrative.
  • Identification of problem areas. Contractors must conduct "in-depth analysis of its total employment process to determine whether and where impediments to equal employment opportunity exist. At a minimum the contractor must evaluate:
      1. The workforce by organizational unit and job group to determine whether there are problems of minority or female utilization (i.e., employment in the unit or group), or of minority or female distribution (i.e., placement in the different jobs within the unit or group);
      2. Personnel activity (applicant flow, hires, terminations, promotions, and other personnel actions) to determine whether there are selection disparities;
      3. Compensation system(s) to determine whether there are gender-, race-, or ethnicity-based disparities;
      4. Selection, recruitment, referral, and other personnel procedures to determine whether they result in disparities in the employment or advancement of minorities or women; and
      5. Any other areas that might impact the success of the affirmative action program" 41 C.F.R. §60-2.17(b).
  • Action-oriented programs. Any identified problem areas need to have an action-oriented program. This would include removing any identified barriers, expanding employment opportunities and producing measureable results. Also, these programs go beyond previous procedures that have inadequately corrected the problem. In other words, contractors cannot prescribe the same action program for the same issue over and over, year after year. The contractor needs to take additional steps each year that the same problem continues to exist "to demonstrate good faith efforts to remove identified barriers" (41 C.F.R. §60-2.17(c)). Good-faith efforts include engaging in recruitment outreach.
  • Internal audit and reporting system. Contractors must periodically audit their AAP to measure its effectiveness. This includes reviewing personnel activity to ensure nondiscriminatory practices, including referrals, placements, transfers, promotions, terminations and compensation decisions at all levels. Regular internal reporting on progress or lack of progress toward EEO and organizational objectives are attained. These results should be reviewed with all levels of management. Top management should be advised of program effectiveness as well as recommendations provided to improve unsatisfactory performance. Employers should ensure internal reporting is conducted at least quarterly each plan year (41 C.F.R. §60-2.17(d)).
See also the section below on additional federal contractor compliance requirements and reporting.

 Employers subject to both VEVRAA and Section 503
  • Combined AAP. Because such significant similarities exist between the written AAP requirements of VEVRAA and Section 503, it is possible to develop a single written AAP to comply with both laws; however, there are some differences. As compared with VEVRAA, Section 503 has a less detailed and burdensome positive recruitment effort requirement.
  • Notice of availability. Also under both VEVRAA and Section 503, the full "affirmative action program, except for the data metrics . . . , shall be made available to any employee or applicant for employment for inspection upon request. The location and hours during which the program may be obtained shall be posted at each establishment" (41 C.F.R. §60-300.41). See also 41 C.F.R §60-741.41.

VEVRAA affirmative action plans

Written AAPs created pursuant to VEVRAA are not required to include the in-depth statistical analysis required by E.O. 11246. But in addition to the narrative AAP, they are obligated to list all employment openings (except executive and senior management openings, positions filled from within the contractor's organization, and positions lasting three days or less) with the appropriate state workforce agency job bank or the local employment service delivery system (ESDS) where the opening occurs. See 41 C.F.R. §300.5(a) and Sample Affirmative Action Program (AAP) for VEVRAA (PDF). 

VEVRAA AAPs comprise a narrative discussing the following issues:

  • The contractor's equal opportunity policy, including affirmative obligations and nonretaliation protections. See 41 C.F.R. §60-300.44(a).
  • Periodic review of the contractor's personnel processes. See 41 C.F.R. §60-300.44(b).
  • Periodic review of the contractor's physical and mental job qualifications. See 41 C.F.R. §60-300.44(c).
  • Reasonable accommodation efforts for physical and mental limitations. See 41 C.F.R. §60-300.44(d).
  • Anti-harassment procedures. See 41 C.F.R. §60-300.44(e).
  • Appropriate dissemination of policy, outreach and positive recruitment efforts, as outlined in detail in the regulations. See 41 C.F.R. §60-300.44(f).
  • Internal dissemination of affirmative action policies. This includes placing EEO policies in organizational handbooks, discussing it in orientation and relevant employee and management meetings and trainings, informing union officials of AAP policies and obtaining their cooperation, and including EEO policies in other company internal communications and publications. See 41 C.F.R. §60-300.44(g).
  • An audit and reporting system measuring the effectiveness of the AAP. See 41 C.F.R. §60-300.44(h).
  • Designation of responsibility for the implementation of the AAP to an official within the contractor's organization. See 41 C.F.R. §60-300.44(i).
  • Training for all personnel involved in recruitment, screening, selection, promotion, discipline and other related processes. See 41 C.F.R. §60-300.44(j).
  • Data collection analysis. "The contractor shall document the following computations or comparisons pertaining to applicants and hires on an annual basis and maintain them for a period of three (3) years:
      1. The number of applicants who self-identified as protected veterans pursuant to §60-300.42(a), or who are otherwise known as protected veterans;
      2. The total number of job openings and total number of jobs filled;
      3. The total number of applicants for all jobs;
      4. The number of protected veteran applicants hired; and
      5. The total number of applicants hired" (41 C.F.R. §60-300.44(k)).
  • Benchmarks for hiring. "The purpose of establishing benchmarks is to create a quantifiable method by which the contractor can measure its progress toward achieving equal employment opportunity for protected veterans." Contractors must set and document hiring benchmarks for employment of protected veterans annually using one of the following two methods:
    • Establish a benchmark equal to the national percentage of veterans in the civilian workforce, which OFCCP will update annually.
    • Establish a benchmark using several predetermined factors, some of which will rely on data to be made available on the OFCCP's website. Other data are collected from an organization's AAP data and efforts as well as from any other factors that would affect availability of qualified protected veterans. Employers using this method must document each factor considered and the "relative significance of each of these factors" (41 C.F.R. §60-300.45).
Additional federal contractor compliance requirements and reporting are listed below.

Note that the regulations found in 41 C.F.R. §60-300 apply to government contracts of $100,000 or more entered into or modified on or after December 1, 2003.

Section 503 affirmative action plans

Federal contractors or subcontractors with 50 or more employees and a government contract valued at $50,000 or more are required to develop a written Section 503 AAP for each of their establishments. See Sample Affirmative Action Program (AAP) for Individuals with Disabilities (IWD) (PDF).

The requirements for a written AAP created pursuant to Section 503 are set forth in 41 C.F.R. §60-741.44 and include the following:
  • The contractor's equal opportunity policy, including affirmative obligations and protections against retaliation. See 41 C.F.R. §60-741.44(a).
  • Periodic review of the contractor's personnel processes. See 41 C.F.R. §60-741.44(b).
  • Periodic review of the contractor's physical and mental job qualifications. See 41 C.F.R. §60-741.44(c).
  • Reasonable accommodation efforts for physical and mental limitations. See 41 C.F.R. §60-741.44(d).
  • Anti-harassment procedures. See 41 C.F.R. §60-741.44(e).
  • Appropriate external dissemination of policy, outreach and positive recruitment efforts, as outlined in detail in the regulations. See 41 C.F.R. §60-741.44(f).
  • Internal dissemination of affirmative action policies. See 41 C.F.R. §60-741.44(g).
  • An audit and reporting system, measuring the effectiveness of the AAP. See 41 C.F.R. §60-741.44(h).
  • Designation of responsibility for the implementation of the AAP to an official within the contractor's organization. See 41 C.F.R. §60-741.44(i).
  • Training for all personnel involved in recruitment, screening, selection, promotion, discipline and other related processes to ensure commitments in the AAP are implemented. See 41 C.F.R. §60-741.44(j).
  • Data collection analysis. "The contractor shall document the following computations or comparisons pertaining to applicants and hires on an annual basis and maintain them for a period of three (3) years:
      1. The number of applicants who self-identified as individuals with disabilities pursuant to §60-741.42(a), or who are otherwise known to be individuals with disabilities;
      2. The total number of job openings and total number of jobs filled;
      3. The total number of applicants for all jobs;
      4. The number of applicants with disabilities hired; and
      5. The total number of applicants hired" (41 C.F.R. §60-741.44(k)).
  •  Utilization goal. The new regulations established a nationwide 7 percent utilization goal for qualified individuals with a disability. Contractors apply the goal to each of their job groups, or for small employers (100 or fewer employees) the goal is applied to the entire workforce. Contractors must conduct an annual utilization analysis, assess problem areas and establish specific action-oriented programs to address any identified problems. See 41 C.F.R. §60-741.45.

Additional Federal Contractor Compliance Requirements and Reporting

Contract clauses

All three laws (E.O. 11246, VEVRAA and Section 503) have similar requirements for an equal opportunity clause to be placed in each of its contracts and subcontracts. Each law includes a detailed clause but allows the employer to incorporate the clause by reference rather than verbatim. Both VEVRAA and Section 503 provide more detail regarding the specific language and citation requirements, including that the clause reference in the contract must be in bold print.

According to the OFCCP, contractors are permitted to combine all of the equal opportunity clauses required by 41 C.F.R. §60-300.5(a), 41 C.F.R. §60-741.5(a), and 41 C.F.R. §60-1.4(a) (or for construction contractors, 41 C.F.R. §60-4.3(a)) into one consolidated clause.

For employers who are subject to all three laws, here is the model language provided by the OFCCP:

This contractor and subcontractor shall abide by the requirements of 41 CFR 60-1.4(a), 60-300.5(a) and 60-741.5(a). These regulations prohibit discrimination against qualified individuals based on their status as protected veterans or individuals with disabilities, and prohibit discrimination against all individuals based on their race, color, religion, sex, sexual orientation, gender identity or national origin. Moreover, these regulations require that covered prime contractors and subcontractors take affirmative action to employ and advance in employment individuals without regard to race, color, religion, sex, sexual orientation, gender identity, national origin, disability or veteran status.

EEO tagline in employment advertising

Job vacancy announcements and other employment advertisements must contain a disclaimer or tagline stating EEO.

A tag line cannot reference disability and protected veterans as just the abbreviations "D" and "V." According to the OFCCP, the tagline must at the minimum include "disability" and "vet."

A sample tagline may be the following:

We are an equal opportunity employer. All qualified applicants will receive consideration for employment without regard to race, color, religion, sex, sexual orientation, gender identity, national origin, disability or veteran status.

Invitation to self-identify

All three laws require employers to solicit demographic information from their applicants and new hires for affirmative action plan data purposes. These invitations to self-identify must be voluntary in nature, and the employer must maintain this information separately from the application form and any other hiring records accessible to the hiring manager.

E.O. 11246. AAPs require applicant tracking data. Therefore, employers must solicit gender and race/ethnicity from both applicants and new hires. Additionally, employers collect information on new hires and current employees for EEO-1 reporting. For assistance with this process, SHRM has created the following sample forms:

VEVRAA. The act established more specific rules on self-identification reporting. An applicant should be asked if he or she is a protected veteran, but only after a job offer can a new hire be asked to self-identify if he or she belongs to one or more specific categories of a protected veteran. Post-offer self-identification should be done after a job offer, but prior to beginning the new hire's duties. See 41 C.F.R §60-300.42 and the following samples:

Section 503. This section requires contractors to use the language and format prescribed by the OFCCP for self-identifying applicants (pre-offer), new hires (post-offer) and employees (periodically) as individuals with a disability (IWDs):

  • Pre-offer stage. Contractors should invite all applicants to provide disability information—and other demographic data such as race and gender—from all applicants at the time they apply for employment.
  • Post-offer stage. New hires should self-identify after accepting the job offer but prior to beginning their job duties.
  • Employee stage. "The contractor shall invite each of its employees to voluntarily inform the contractor whether the employee believes that he or she is an individual with a disability as defined in §60-741.2(g)(1)(i) or (ii). This invitation shall be extended the first year the contractor becomes subject to the requirements of this section and at five year intervals, thereafter, using the language and manner prescribed by the Director and published on the OFCCP Web site. At least once during the intervening years between these invitations, the contractor must remind their employees that they may voluntarily update their disability status" (41 C.F.R. §60-741.42).

See Voluntary Self-Identification of a Disability Form (OFCCP).

Postings

All three laws require contractors to post an EEO poster in conspicuous places (available to employees and applicants). See the relevant regulations below. The DOL makes available a comprehensive poster (PDF) to fulfill these explicit requirements. In addition, on May 20, 2010, the DOL issued a final regulation implementing Executive Order 13496, which President Obama signed on January 30, 2009. This order requires nonexempt federal contractors and subcontractors to post a notice informing their employees of their rights under the National Labor Relations Act (NLRA). E.O. 13496 does not apply to public-sector employers and employers covered by the Railway Labor Act. Effective June 21, 2010, all contractors with a contract in excess of $100,000 must post this notice in a conspicuous area. Employers with subcontracts of $10,000 or less are exempt from this requirement.

For posting requirements for E.O. 11246, see 41 C.F.R. §60-1.4(a)(1); for VEVRAA, see 41 C.F.R. §60-300.5(a)(9); and for Section 503, see 41 C.F.R. §60-741.5(a)(4).

Document retention 

Contractors should preserve all personnel and employment records (including applicant flow data) for a period of two years from the date of the making of the record or the personnel action involved, whichever occurs later. However, 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 should be one year. See 41 C.F.R §60-1.12(a), §60-300.80 and §60-741.80(a).

Employment records that contractors must retain include advertisements, job postings, applications, resumes, interview notes, requests for reasonable accommodations, tests and test results, personnel files, rates of pay and other compensation, selection for training or apprenticeship, and other information regarding hiring, transfers, promotions, layoffs and terminations. As part of their record retention obligations, federal contractors must retain records relating to all individuals who meet the criteria of "Internet applicant," along with other employment records.

A contractor subject to E.O. 11246's AAP requirements must maintain a copy of its AAP and all documentation of good-faith efforts for the current and preceding year. See 41 C.F.R. §60-1.12(b).

VEVRAA and Section 503 written AAPs have a longer retention requirement. Specifically, a three-year retention requirement is mandated for all documentation of:

  • Activities undertaken to comply with external dissemination of policy, outreach and positive recruitment. See §60-300.44(f)(4) and §60-741.44(f)(4).
  • Data collection analysis of the following computations and comparisons:
    1. The number of applicants who self-identified as protected veterans, or who are otherwise known as protected veterans.
    2. The total number of job openings and total number of jobs filled.
    3. The total number of applicants for all jobs.
    4. The number of protected veteran applicants hired.
    5. The total number of applicants hired. See §60-300.44(k) and §60-741.44(k).
  • Hiring benchmarks established each year under VEVRAA, each of the factors used to establish the hiring benchmark and relative significance of each of these factors. See §60-300.45(c). 

Related annual reporting requirements for federal contractors

Standard Form 100 (EEO-1). The Standard Form 100 (also known as Employer Information Report EEO-1) must be filed with the EEO-1 Joint Reporting Committee no later than March 31st following the reporting year. This report requests the employer's current workforce data for all full- and part-time employees, broken down by sex and by racial/ethnic identifications for each of the 10 EEO-1 occupational categories.

According to the EEOC, the following types of employers must file the EEO-1:

  • All federal contractors (private employers) that are not exempt as provided for by 41 C.F.R. §60-1.5, have 50 or more employees, are prime contractors or first-tier subcontractors, and have a contract, subcontract or purchase order amounting to $50,000 or more, or that serve as a depository of government funds in any amount, or that are financial institutions that are issuing and paying agents for U.S. savings bonds and notes.
  • All private employers that are subject to Title VII of the Civil Rights Act of 1964 (as amended by the Equal Employment Opportunity Act of 1972) and that have 100 or more employees, excluding state and local governments, primary and secondary school systems, institutions of higher education, Indian tribes, and tax-exempt private membership clubs other than labor organizations. 
  • All private employers that are subject to Title VII and that have fewer than 100 employees if the company is owned or affiliated with another company or if there is centralized ownership, control or management (such as central control of personnel policies and labor relations) so that the group legally constitutes a single enterprise and that the entire enterprise employs a total of 100 or more employees. 

VETS-4212 report (formerly VETS-100). Any contractor that entered into or modified a contract or subcontract on or after December 1, 2003, in the amount of $100,000 or more must annually file a VETS-4212 (PDF) report. The contractor must report the total number of employees and number of new employees hired in the previous 12 months who were "protected veterans." Contractors and subcontractors will select a 12-month period end date between July 1 and August 31 that also represents the end of a payroll period. Contractors must file the VETS-4212 annually no later than September 30. Contractors may ask the DOL help desk about this requirement by e-mailing VETS4212-customersupport@dol.gov or by calling (866) 237-0275. See Frequently Asked Questions.

Voluntary AAPs

In addition to these federal mandates regarding affirmative action, employers may elect to institute voluntary AAPs to remedy past discrimination without violating Title VII of the Civil Rights Act of 1964, if certain conditions are met. See EEOC: Circumstances Under Which Voluntary Affirmative Action Program Is Appropriate (29 C.F.R. §1608.3).

Functional AAPs

In some cases, organizations are allowed to develop a "functional" plan, which means that an employer has a single plan regardless of geographic location for all employees in discrete functional areas of work (rather than having separate AAPs for each location). See Functional Affirmative Action Plan (FAAP).

OFCCP Enforcement

The OFCCP monitors employer compliance with these EEO laws and their corresponding affirmative action requirements and takes a fairly aggressive enforcement posture. As a result, contractors are regularly subjected to compliance evaluation audits (during which a compliance officer examines the contractor's AAP and employment practices and conducts interviews with employees and company officials), desk audits, "glass ceiling" audits, investigation of complaints, and compensation analysis and reviews. The OFCCP also investigates complaints filed by individuals alleging discrimination by federal contractors and subcontractors on the basis of a protected characteristic. 

Penalties for Noncompliance

In the event of the contractor's noncompliance with the nondiscrimination clauses, or with any of the rules, regulations or orders enforcing E.O. 11246, VEVRAA or Section 503 of the Rehabilitation Act, the contractor and subcontractor may be subject to sanctions, penalties and liabilities. See 41 C.F.R. §60-2.2.

The potential consequences include the following:

  • The contractor may be debarred and declared ineligible for any future government contracts.
  • The contract may be canceled, terminated or suspended in whole or in part.
  • For subcontractors, liability may exist if debarment causes the prime contractor to be in breach of the prime contract.
  • In cases in which a violation is material, the U.S. Department of Justice (DOJ) may bring suit to enforce the regulations or enjoin noncompliance; the DOJ is also authorized to bring a criminal action for the furnishing of false information to the DOL.

The OFCCP generally seeks to enter into mediation, conciliation or settlement for any violations before a contract is canceled or terminated.

Preventive Practices for Employers

It is considered a good practice for employers to conduct their own internal "vulnerability audits" to identify potential problems with systemic discrimination before being subjected to an investigation by a federal agency. This will help ensure that applicant data tracking and related records are compliant prior to having a specific issue with the government; however, it is important to ensure that any self-audit is cloaked under and thereby protected by the attorney-client privilege. In addition to the potential upside of a company's self-audit, it may be useful to an organization in its preparations for the accelerated compliance audit schedule recently announced by the federal government.

In addition, it is considered best practice to conduct a validity study on pre-employment tests as well as on the interview processClarifying the definition of "applicant" is important so that it is not overly broad and is in compliance with the OFCCP's "Internet applicant rule." See U.S. DOL's Testing and Assessment: An Employer's Guide to Good Practices and the OFCCP's Internet Applicant Recordkeeping Rule.

Contractors should carefully consider how they track applicant data (both electronic and hard copy) and ensure that their third-party vendors are in compliance with applicable regulations as well.

Templates and Tools

Samples

Internal AAP Checklist

Sample Affirmative Action Program (AAP) for E.O. 11246 (PDF)

Sample Affirmative Action Program (AAP) for VEVRAA (PDF)

Sample Affirmative Action Program (AAP) for Individuals with Disabilities (IWD) (PDF)

Affirmative Action: Applicant Self Identify: Gender & Race (EO 11246)

EEO-1 Voluntary Employee Self-Identification Form  

Affirmative Action: Applicant Invitation to Self-Identify as Veteran (VEVRAA)

Affirmative Action: Post-Offer Invitation to Self-Identify as Veteran VETS-4212

Affirmative Action: Applicant Invitation to Self-Identify: Veteran, Gender & Race (VEVRAA & EO 11246)

Affirmative Action: Post-Offer Invitation to Self-Identify: Veteran, Gender and Race (VETS-4212 & EEO-1 reporting)

Voluntary Self-Identification of a Disability Form (OFCCP)

Applicant Tracking Spreadsheet (PDF)

Government agencies

U.S. Department of Labor

Office of Federal Contract Compliance Programs

U.S. Equal Employment Opportunity Commission

Compliance resources

OFCCP Compliance Resources

U.S. DOL Resources for Federal Contractors on Section 503 and VEVRAA

New Contractors' Guide (PDF)

Sources for EEO data and statistics

U.S. Bureau of Labor Statistics

U.S. Census Bureau including Census EEO Tabulation  

SHRMStore Resources

How to Write an Affirmative Action Plan

Secrets of Affirmative Action Compliance



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