Keeping Up with OFCCP Compliance Changes

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mendezIf you are a federal contractor or subcontractor — who is required to abide by affirmative action regulations under the jurisdiction of the U.S. Department of Labor’s Office of Federal Contract Compliance Programs (OFCCP) — you need to be aware of the many changes that have recently occurred, as well as those that are expected to take place in the near future. Not only have revised regulations under Section 503 of the Rehabilitation Act and the Vietnam Era Veterans Readjustment Assistance Act (VEVRAA) come into effect, but Executive Order (EO) 11246 has also been amended to include other protections.

This fiscal year, the OFCCP continues to focus its attention during compliance evaluations on outreach and recruitment efforts by contractors. However, it is also carefully reviewing compensation practices and employment decisions made by organizations to determine if practices and policies are leading to adverse effects or inequitable pay.

OFCCP Enforcement
As of April 26, 2016, the OFCCP reported 770 closed evaluations so far for fiscal year 2016. Of these evaluations, 599 ended with a notice of compliance, 155 with the signing of a conciliation agreement, 15 in a financial agreement, and one in a consent decree. Of those that resulted in a financial agreement, the size of the facility under review varied from 85 employees to 1,053. Nine of the financial settlements were due to salary violations, seven were systemic discrimination cases, 12 were hiring violations, and one was a termination violation.

Sixty-one OFCCP investigations have closed so far this fiscal period. Of those, 17 complaints were in regard to EO 11246, 19 were Section 503 of the Rehabilitation Act, and 22 were VEVRAA. Fifty-three of these complaints were filed by individuals, and the remaining eight were class action. Six of the class-action complaints were in regard to EO 11246, and one was a VEVRAA complaint.

Revisions to Section 503 of the Rehabilitation Act and VEVRAA regulatory changes that affect affirmative action programs (AAPs) for individuals with disabilities and protected veterans took effect March 24, 2014. However, contractors with AAPs dated prior to March 24, 2014, were allowed an additional plan cycle to comply with requirements under subpart C of both sets of regulations. This means that all contractors who meet the established thresholds should now be compliant with the revised regulations.

Federal contractors and subcontractors with contracts in excess of $10,000 must take affirmative action to employ and advance employment-qualified individuals with disabilities. Contractors who have 50 or more employees and $50,000 or more in federal contracts or subcontracts must annually prepare a written affirmative action plan for individuals with disabilities.

Federal contractors and subcontractors with contracts worth $100,000 or more must take affirmative action to employ and advance employment-qualified, protected veterans. The threshold for preparing a written affirmative action plan for veterans is $100,000 or more in contracts and 50 or more employees.

Major changes to these regulations include the spelling out of “veteran” and “disabled” in equal employment opportunity (EEO) taglines in job advertisements, national utilization goals for Section 503 AAPs and hiring benchmarks for VEVRAA AAPs, invitations to self-identify veteran and disability status at the applicant stage, and the collection of applicant and hiring data for protected veterans and individuals with disabilities.

Revisions to EO 11246
EO 13672 amended EO 11246 and took effect April 8, 2015. Changes require federal contractors and subcontractors to treat applicants and employees without regard to their sexual orientation or gender identity. Contractors are required to list “sexual orientation” and “gender identity” any time protected classifications are referenced, as listed under EO 11246, as in the case of a company EO policy statement. Contractors are also required to post the “EEO is the Law” poster supplement, along with the “EEO is the Law” poster, until the OFCCP and the Equal Employment Opportunity Commission (EEOC) update the language.

Effective January 11, 2016, contractors must comply with EO 13665 (pay transparency final rule), which amended the equal opportunity clause (41 CFR 60-1.4) to add reference to the new prohibition regarding compensation. It also adds 41 CFR 60-1.35, which refers to obligations and defenses for contractors and covers a new nondiscrimination provision by contractors. Contractors must incorporate new verbiage in covered contracts and purchase orders, as well as post the prescribed language within employer manuals and handbooks and on all company websites, if applications for employment are accepted online.

Regulatory Awareness
Since the OFCCP is focusing much of its time during evaluations on whether contractors are in compliance with regulatory changes under Section 503 of the Rehabilitation Act, VEVRAA, and EO 11246, contractors should concentrate on being well-versed on all of the regulatory changes that have taken place and proactively work to maintain proper records; they should also perform timely analyses to determine if there are any areas of concern with regard to recruiting and outreach practices, hiring, terminations, promotions, and compensation decisions.

In addition, the OFCCP is currently working on updating sex discrimination guidelines, and the EEOC announced the proposal of a new EEO-1 report, which would require covered contractors to submit compensation information as part of their annual EEO-1 report.●

Julia Méndez, SHRM-CP, PHR, CDP, CAAP, CELS, is the director of workforce compliance and diversity solutions for PeopleFluent, a human capital management company. She is also a member of the INSIGHT Into Diversity Editorial Board.