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Tag: Federal Contractor

Drafting an Affirmative Action Plan

Image of a sign that says "this must be the place" to demonstrate the importance of recruitment in drafting an affirmative action plan.
Photo by Tim Mossholder on Unsplash

What is an affirmative action plan? Do you need one? The answer is maybe. Certain federal contractors and subcontractors are required to maintain affirmative action plans. Affirmative action plans (AAP’s) are essentially a plan that allows companies to address workplace imbalances by proactively hiring and promoting disadvantaged groups in the workforce. The federal government also requires these contractors to maintain certain data regarding the composition of their workforce.

Why is this important? Short Answer: Not Complying Will Cost You

If you don’t yet have one, you will likely want to get one or the result could be some hefty fines. Over the last three years the Office of Federal Contract Compliance Programs (OFCCP, which is the agency that enforces the affirmative action plan requirements) collected $81 million dollars in fines which is the highest three-year period on record. In addition, the OFCCP audits for the three-year period covered 2.8 million workers.

Currently, the OFCCP is creating an online portal where federal contractors and subcontractors will submit their affirmative action plans, which will increase the ability of the OFCCP to audit and fine companies. Once this portal is completed, then companies should expect fines to increase and companies that may not have been audited before could be audited. Currently, contractors are not required to turn in their plans to the federal government, a reality that will likely change with the new portal. When and if it does, the OFCCP will be able to run checks on the data that companies are required to submit through the portal to see if there are any areas of concern. To be proactive, now is the time for companies to act and ensure that they are compliant and to get the procedures that they need in place.

What Does the Law Say?

The laws governing affirmative action plan requirements are: 1) Executive Order 11246; 2) Vietnam Era Veterans Readjustment Assistance Act (VEVRAA); and 3) Section 503 of the Rehabilitation Act of 1973.

Executive Order 11246 (the main requirements for Affirmative Action Plans are from this order)

Under Executive Order 11246, federal contractors and subcontractors with a federal contract for at least $50,000 and 50 or more employees must develop and keep a formal, written affirmative action plan.

There are several exemptions that the DOL lists for federal contractors that are subject to Executive Order 11246:

Contracts and subcontracts of less than $10,000 generally are exempt from coverage under Executive Order 11246, though some contracts under that amount are covered, e.g. bills of lading. The regulations implementing the Executive Order exempt certain contracts and categories of contracts. The regulations contain exemptions for contracts involving work performed outside the United States; certain contracts with State or local governments; contracts with religious corporations, associations, and educational institutions; and contracts involving work on or near an Indian reservation.

Section 503 (which involves requirements for the employment and recruitment of individuals with disabilities)

Under Section 503 federal contractors and subcontractors with government contracts in excess of $15,000 are required to take affirmative action to employ and advance in employment qualified individuals with disabilities. “If the company has at least 50 employees and a single contract of $50,000 or more, then it must also develop a Section 503 AAP” https://www.dol.gov/ofccp/taguides/jurisdiction.htm Section 503 applies to businesses that have federal construction contracts, but does not apply to any business that has a federally assisted construction contract.

Vietnam Era Veterans’ Readjustment Assistance Act  of 1975 (which details requirements for the employment and recruitment of veterans)

Under VEVRAA, federal contractors and covered subcontractors with contracts that total $150,000 or more and 50 or more employees must have a written AAP but need not have the in-depth statistical analyses required by E.O. 11246. VEVRAA also does not apply to federally assisted contracts. 

Required Demographic and Other Information

Companies need to gather the name, gender, race, job, worksite, job code, salary, zip code, city, state, employee identifier (id #), hire date, veteran status, disability status, and other information concerning the employees within a snapshot period (one day during the dates of the affirmative action plan). You should use the demographic information from the information that applicants have voluntarily disclosed through the application process. The current plan year always uses information from last year (the 2020 plan would use information from 2019).

As an example, the information used to build your 2020 plan may be from January 1, 2019 to December 31, 2019 (your plan may have different dates depending on when your federal contract began and the date that you initially chose for your plan). The information for the employee portion of the affirmative action plan will be drawn from December 31, 2019. You will gather the relevant data for all people that were employed by your company on that date. You will not use data for other employees that worked for you throughout the year.

Federal contractors also must maintain information on all hires for the relevant plan year including information about their name, gender, race, job, worksite, job code, salary, disability status, veteran status, and hire date.

Employers must also maintain the same information for the individuals that have applied to work at the company (including the positions that they have applied to), terminations at the company (including whether the termination was voluntary or involuntary and the termination date), and anyone that was promoted (including their new and old job titles and their promotion date). All of this information is used for the statistical analysis of the workforce. 

EEO-1 Categories and Affirmative Action Plans

To create an affirmative action plan, employees need to create a list of the number of employees (they also need demographic information about them) and categorize the employees into the appropriate EEO-1 categories. The categories are as follows:

  1. Executive/Senior Level Officials and Managers.
  2. First/Mid-Level Officials and Managers
  3. Professionals
  4. Technicians
  5. Sales
  6. Administrative
  7. Craft
  8. Operatives
  9. Laborers and Helpers
  10. Service Workers

If you need help classifying your workers, then you can review the information available on the EEOC website

Types of Reports that Must be Run under E.O. 11246

Companies that are federal contractors and subcontractors must run a number of statistical tests using the data described above. In general, the required elements of an AAP include an Organizational display, a Workforce analysis (comparison of each job title by pay with race and gender information), a Job group analysis (analysis of groups of workers with similar duties, responsibilities, pay, and opportunities to improve their career and pay), Utilization analysis (statistical determination of the percentage of minorities and women that are employed in each job group compared to their availability in the area), Availability determinations, Action-Orientated program (how the federal contractor will correct any disparities in hiring or promotions), and several other detailed provisions as required by the regulations.     

The statistical analyses to conduct an affirmative action plan results in a determination on whether the employer hires, terminates, and promotes enough employees in various protected groups.  It can almost be better expressed in whether the company fails to hire, more frequently terminates, and/or does not promote enough applicants or employees with a certain race, gender, veteran status, or disability status.

These reports typically examine the local area (by zip code(s)) and possibly the national area to determine whether a company has hired enough of different group members based on the available pool of applicants. 

Correcting Disparities in an Affirmative Action Plan

As part of the AAP requirements, federal contractors are required to create an action-oriented program to correct disparities. No plan will be perfect the first time, and businesses can and should learn from their data to improve their plans each year.

Companies are required to have an internal audit system to determine whether the AAP is effective in correcting any problem areas and how it can be adjusted to better do so. There are a number of ways that companies can correct disparities in a workforce. I will talk about this briefly below.

The first component of correcting disparities is to make sure that you are keeping the right data. If you are a federal contractor, then you need to keep data regarding hires, promotions, and terminations. However, it is not enough to merely keep that data, you need to make sure that you are keeping track of the data and making changes to your practices based on it. For example, if you have 200 applicants for 40 professional positions, half of them are men, and you have never hired any female candidates, then that is a problem. It looks suspicious and it calls into question whether there is some purposeful discrimination or if it is a disparate impact on applicants of a particular gender. In this case, you obviously need to determine whether there is some form of hiring bias in the organization and potentially find ways to recruit additional female candidates through targeted recruitment methods. This would hold true of any group that is underrepresented in a certain job group.

If you do not have veterans in your organization, then you should consider advertising that may attract more candidates that are veterans. Here are some places to post jobs to try to recruit veterans, but you can read more in my past article on veterans.

The most important thing is that the federal contractor takes actual steps to correct any disparities among groups. Companies should make sure that there are changes in the action-oriented program every year. A plan that has had the same action-oriented program every year is a bad plan. You need to review your plans, work with your recruitment team, and make changes yearly.

Conclusion

Affirmative action plans are something that all federal contractors and subcontractors need to carefully consider. They can be an excellent way for companies to review their promotions, recruitment, and termination statistics to determine where any disparities exist. Companies also benefit from understanding and reviewing what recruitment methods work to find the best candidates and new hires for their companies.

The information provided in this blog is for educational purposes only and is not legal advice. If you need legal advice, then you should speak with a lawyer about your specific issues. Every legal issue is unique. A lawyer can help you with your situation. Reading the blog, contacting me through the site, emailing me or commenting on a post does not create an attorney-client relationship between any reader and me.

The information provided is my own and does not reflect the opinion of my firm or anyone else.                                                                                                                                                                                    

Brett Holubeck (of Houston, Texas) is the attorney responsible for this site.