New Year Calls for Remembering Basic OFCCP Obligations

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As we move into a new year, our tendency is to think about new projects and new possibilities. But the new year is also a good time to consider some of the things we should have been doing during the last year that have fallen off our radar screens. This article will cover some of these things that organizations subject to the federal affirmative action laws should ensure haven't fallen off the radar screen.

During 2017, the U.S. Department of Labor's Office of Federal Contract Compliance Programs (OFCCP) continued to be focused on several of the same subjects it has been focused on during the years of the Obama administration: compensation discrimination, outreach and recruitment for individuals with disabilities, and outreach and recruitment for protected veterans. For some federal contractors and subcontractors, that meant that these subjects received a significant level of attention. Other federal contractors and subcontractors spent much of their energy related to affirmative action on activities such as preparing availability analyses and finalizing affirmative action plans. While understanding OFCCP's priorities and preparing effective affirmative action plans are important, there are some basic actions that federal contractors and subcontractors need to take to be prepared for an OFCCP compliance review.

Surveying Pre-Offer Applicants

Federal contractors are required to provide pre-offer applicants with an opportunity to self-identify their race, ethnicity, sex, protected veteran status, and disability status. While there are a variety of specific rules associated with how and when this opportunity to self-identify must be provided, the simple fact is that applicants must be allowed an opportunity to provide this information.

Among the items that federal contractors and subcontractors must remember in regard to surveying applicants for demographic information are the following:
  • All "Internet applicants" must be provided with an opportunity to self-identify their race, ethnicity, sex, protected veteran status, and disability status. While OFCCP has specific provisions regarding who is to be considered an "Internet applicant," 1 Internet applicants are, in essence, viable candidates for open positions.

  • Regardless of whether OFCCP's Internet applicant rule should be used for a position, OFCCP expects that candidates other than just interviewees will be provided with an opportunity to self-identify their demographic information.

  • While federal contractors and subcontractors have significant discretion regarding the forms used to gather demographic data on race, ethnicity, and sex from applicants, there are certain specific requirements associated with forms used to gather data on protected veteran status.

  • The form OFCCP has developed MUST be used any time disability information is gathered from applicants. There are very limited modifications that can be made to this form, and the form generally must be presented in its entirety to applicants who are being asked to self-identify.
Issues regarding the surveying of applicants for demographic data can get very complicated when organizations routinely convert persons working for a temporary service to the regular payroll, or when organizations extensively use passive recruiting to find candidates who do not formally apply for positions. When hiring occurs, federal contractors and subcontractors must determine how they will provide self-identify forms to candidates, and which candidates must receive self-identification forms.

There is also one item that organizations NOT covered by the federal affirmative action regulations should remember in regard to demographic surveys of applicants. The prohibition in the Americans with Disabilities Act on gathering disability data from applicants generally remains in effect for organizations that are not federal contractors and subcontractors. Organizations should not provide disability surveys in applicant tracking systems nor change paper application forms to add questions about disability unless they are required to do so under OFCCP's regulations or some other governmental edict.

Surveying Post-Offer Applicants

Federal contractors are required to provide applicants with a second opportunity to self-identify their protected veteran status and disability status at the post-offer stage of a selection process. It is not sufficient for organizations to survey for protected veteran and disability status earlier in the selection process, and then carry over this information when a new employee is hired. Applicants who have been offered a position must be provided with a second opportunity to self-identify protected veteran and disability status.

There is no formal requirement in the federal affirmative action regulations under Executive Order 11246 to provide post-offer applicants with a second opportunity to self-identify race, ethnicity, or sex. However, these regulations (and regulations associated with the submission of the EEO-1 form) make it clear that employers subject to these regulations are not allowed to have employees of unknown race, ethnicity, or sex showing in data provided to OFCCP or EEOC. Thus, it makes sense to provide post-offer applicants with a second opportunity to self-identify their race, ethnicity, and sex.
As with surveys of pre-offer applicants, the form OFCCP has developed MUST be used any time disability information is gathered from post-offer applicants.
In regard to self-identification forms, federal contractors and subcontractors have significant discretion regarding the forms used to gather demographic data on race, ethnicity, and sex from post-offer applicants. There are specific requirements associated with forms used to gather data on protected veteran status, and organizations are allowed to gather information on each protected veteran classification or to ask more generally whether an individual falls into any of the protected veteran classifications. 2 As with surveys of pre-offer applicants, the form OFCCP has developed MUST be used any time disability information is gathered from post-offer applicants.

Listing Positions with an Employment Service Delivery System Office

Federal contractors and subcontractors that have a contract or subcontract of $150,000 or more must list their positions with the relevant state employment service office (now called the Employment Service Delivery System or ESDS offices by OFCCP). This requirement applies even when organizations do not have 50 or more employees. It is a requirement found in an early part of the protected veterans' regulations that applies to small contractors and subcontractors and other organizations that may not be preparing affirmative action plans.

There are a limited number of positions that do not need to be listed with the relevant ESDS office. Certain exceptions can be found in the federal affirmative action regulations. 3 There may also be situations where an individual is converted from temporary or contract status to a regular position when OFCCP will not require that the position be listed with an ESDS office. However, OFCCP does NOT make an exception for confidential searches, highly specialized positions, positions where candidates are found through job fairs or other targeted recruitment efforts, or positions where candidates are found through passive recruitment.

Federal contractors and subcontractors should also remember that they have an obligation to update their location and contact information with the relevant ESDS offices used to find candidates. This information is to be updated with the next job listing after there has been a change to facilities or to contact persons for the organization.

There continues to be some confusion as to whether federal contractors and subcontractors are required to "list" or "post" open positions. In many ways, this controversy misses the point of the relevant regulation. Organizations are required to take action to ensure that the relevant ESDS office can provide the requisite veterans preference to veterans who may be interested in open positions. Whether this requirement is met through e-mailing jobs to a local veterans' employment representative, through posting positions with the relevant state employment service website, or through some other means, the ultimate requirement is to ensure that veterans have an early opportunity to be made aware of open positions.

Reviewing Applicant and Hire Data for Disparities

Collecting data on pre- and post-offer applicants is an absolute requirement under the federal affirmative action regulations. There is also a requirement under the Executive Order regulations to determine whether there are selection disparities associated with this applicant and hire data. OFCCP has provided no formal instructions on how this analysis is to occur or how the results are to be reported either internally or to OFCCP. Thus, federal contractors and subcontractors again have significant discretion in determining how they will review applicant and hire data to determine if there are selection disparities involving race, ethnicity, or sex. However, we know the following from announcements OFCCP has made in various public forums:
  • OFCCP is very interested in situations where there are statistically significant disparities involving the selection process. Each year, the agency announces settlements where federal contractors and subcontractors pay hundreds of thousands or even millions of dollars to applicants to settle alleged discrimination claims arising from OFCCP compliance reviews.

  • It is not sufficient to look for hiring disparities that only involve females and total minorities. OFCCP has made it clear that any race, ethnicity, or sex may be the subject of a discrimination investigation.

  • Recent legal proceedings involving OFCCP have also made it clear that investigations involving race and ethnicity must compare specific race/ethnicity classes to each other. An analysis comparing whites to all minorities is not an appropriate comparison, just as an analysis comparing Asians to all other racial/ethnic groups is not an appropriate comparison.

  • OFCCP often begins its analyses of applicant/hire data by using numbers associated with affirmative action job groups. Federal contractors and subcontractors should also consider analyzing applicant and hire data by job title and by requisition to determine whether disparities exist within these more meaningful groupings.
Reviewing Compensation Data

OFCCP's regulations under the Executive Order state that federal contractors and subcontractors must annually evaluate "compensation system(s) to determine whether there are gender-, race-, or ethnicity-based disparities." OFCCP had provided some guidance regarding the types of annual reviews to be conducted in 2006, but this guidance was withdrawn in 2013. However, several things remain clear in regard to the type of annual compensation evaluations that are to be conducted.
  • These evaluations should be internal equity studies rather than a comparison of how employees are paid in relation to the general marketplace or the relevant industry. Federal contractors and subcontractors should be looking for disparities involving how their employees are paid in relation to each other.

  • Evaluations should involve the employee population in each affirmative action plan that is prepared. While OFCCP may ask questions about an organization's overall compensation philosophy and practices, the agency will ask for data on persons covered by the affirmative action plan that is under review.

  • Federal contractors and subcontractors are not required to conduct regression analyses or perform other sophisticated statistical testing on compensation-related data. However, whatever form an evaluation takes, if the results of the evaluation indicate there is some kind of unexplainable disparity involving race, ethnicity, or sex, there should be concrete action taken to deal with the disparity.

  • Organizations that chose to conduct regression analyses or perform other sophisticated statistical tests should consider having these analyses performed under the direction of an attorney in order to protect the results of these analyses. While OFCCP has the right to request whatever personnel-related data it believes is needed to complete an affirmative action compliance review, the agency has no right to request documents specifically protected under attorney-client privilege.
Updating Policies

When the protected veteran and disability regulations underwent extensive revision in 2013, many federal contractors and subcontractors were required to make changes to their equal employment opportunity/affirmative action (EEO/AA) policy statements. Additional changes may have been made to these policy statements when OFCCP's regulations regarding sexual orientation and gender identity came into effect in 2015. Since then, organizations may have done little to modify or update these policies.

The EEO/AA policy statement should be reviewed and updated on an annual basis, even when there have been no regulatory changes. It is not unusual for equal opportunity coordinators, chief executive officers, and even organizational names to change over the course of a few years. EEO/AA policy statements should be current and accurate reflections of an organization.

With sexual harassment so much in the news lately, federal contractors and subcontractors should also be updating policies regarding sexual harassment and other forms of harassment. Harassment policies should minimally prohibit harassment based on the classifications protected by federal and state law and should specifically prohibit harassment based on race, ethnicity, sex, religion, national origin, sexual orientation, gender identity, protected veteran status, or disability status. Organizations are well-served by having specific definitions as to what constitutes sexual harassment. Various other provisions should be included in harassment policies such as provisions regarding investigation of complaints, actions that will be taken against harassers, and prohibitions against retaliation.

Taking Action

There are a significant number of areas where organizations must take action to meet the federal affirmative action requirements in addition to annually preparing affirmative action plans. However, the subjects discussed above are areas that we know are of importance to OFCCP and are areas that can cause significant problems during compliance reviews when no action is taken.

An excellent way to look at the federal affirmative action requirements is to remember that OFCCP expects federal contractors and subcontractors will do more than produce thick books full of statistics that are put on a shelf and never opened. Affirmative action plans are only a starting point for compliance with OFCCP's regulations. An effective affirmative action program demands action on a regular basis and requires organizations to understand where they should focus their energy and attention in order to provide opportunities for all applicants and employees.

Please note: Nothing in this article is intended as legal advice or as a substitute for any professional advice about your organization's particular circumstances. All original materials copyright © HR Analytical Services Inc. 2018

1. OFCCP's regulations under Executive Order 11246 state that "Internet Applicant means any individual as to whom the following four criteria are satisfied:
(i) The individual submits an expression of interest in employment through the Internet or related electronic data technologies;
(ii) The contractor considers the individual for employment in a particular position;
(iii) The individual's expression of interest indicates the individual possesses the basic qualifications for the position; and,
(iv) The individual at no point in the contractor's selection process prior to receiving an offer of employment from the contractor, removes himself or herself from further consideration or otherwise indicates that he or she is no longer interested in the position."

2. The four classes of veterans protected under OFCCP's regulations are as follows: disabled veteran, recently separated veteran, active duty wartime or campaign badge veteran, or Armed Forces service medal veteran.
3. The regulations state that "All employment openings includes all positions except executive and senior management, those positions that will be filled from within the contractor's organization, and positions lasting three days or less."