- 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 Guideof 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.
- 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:
- 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);
- Personnel activity (applicant flow, hires, terminations, promotions, and other personnel actions) to determine whether there are selection disparities;
- Compensation system(s) to determine whether there are gender-, race-, or ethnicity-based disparities;
- Selection, recruitment, referral, and other personnel procedures to determine whether they result in disparities in the employment or advancement of minorities or women; and
- Any other areas that might impact the success of the affirmative action program" 41 C.F.R. §60-2.17(b).
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.
- Periodic review of the contractor's personnel processes.
- Periodic review of the contractor's physical and mental job qualifications.
- Reasonable accommodation efforts for physical and mental limitations.
- Anti-harassment procedures.
- Appropriate dissemination of policy, outreach and positive recruitment efforts, as outlined in detail in the regulations.
- 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.
- An audit and reporting system measuring the effectiveness of the AAP.
- Designation of responsibility for the implementation of the AAP to an official within the contractor's organization.
- Training for all personnel involved in recruitment, screening, selection, promotion, discipline and other related processes.
- 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:
- The number of applicants who self-identified as protected veterans pursuant to §60-300.42(a), or who are otherwise known as protected veterans;
- The total number of job openings and total number of jobs filled;
- The total number of applicants for all jobs;
- The number of protected veteran applicants hired; and
- The total number of applicants hired."
See41 C.F.R. §60-300.44.
- 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.
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.
- Periodic review of the contractor's personnel processes.
- Periodic review of the contractor's physical and mental job qualifications.
- Reasonable accommodation efforts for physical and mental limitations.
- Anti-harassment procedures.
- Appropriate external dissemination of policy, outreach and positive recruitment efforts, as outlined in detail in the regulations.
- Internal dissemination of affirmative action policies.
- An audit and reporting system, measuring the effectiveness of the AAP.
- Designation of responsibility for the implementation of the AAP to an official within the contractor's organization.
- Training for all personnel involved in recruitment, screening, selection, promotion, discipline and other related processes to ensure commitments in the AAP are implemented.
- 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:
- 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;
- The total number of job openings and total number of jobs filled;
- The total number of applicants for all jobs;
- The number of applicants with disabilities hired; and
- The total number of applicants hired."
- 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.
Functional Plans
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).
VOLUNTARY Plans
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 Circumstances Under Which Voluntary Affirmative Action Program Is Appropriate.
Additional Compliance Requirements and Reporting
In addition to maintaining a written AAP, contractors have numerous other obligations under the various laws.
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:
- Affirmative Action: Applicant Self Identify: Gender and Race (EO 11246)
- EEO-1 Voluntary Self-Identification Form
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.
- Affirmative Action: Applicant Invitation to Self-Identify as a Veteran (VEVRAA)
- Affirmative Action: Post-Offer Invitation to Self-Identify as Veteran VETS 4212
- Affirmative Action: Applicant Invitation to Self-Identify: Veteran, Gender and Race (VETS-4212 & EEO-1 reporting)
- Affirmative Action: Post-Offer Invitation to Self-Identify: Veteran, Gender and race (VETS 4212 & EEO-1 reporting)
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).
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, Executive Order 13496 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. All contractors with a contract in excess of $150,000 must post this notice in a conspicuous area. Employers with subcontracts of $10,000 or less are exempt from this requirement.
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.
- Data collection analysis of the following computations and comparisons:
- The number of applicants who self-identified as protected veterans, or who are otherwise known as protected veterans; those who self-identify as individuals with disabilities or who are otherwise known to be individuals with disabilities.
- The total number of job openings and total number of jobs filled.
- The total number of applicants for all jobs.
- The number of protected veteran applicants hired.
- The total number of applicants hired.
Annual reporting requirements
Online Contractor Portal. Covered federal contractors and subcontractors must use the OFCCP's online contractor portal to certify, on an annual basis, whether they have developed and maintained an affirmative action program for each establishment and/or functional unit, as applicable.
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 31 st 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 in the amount of $150,000 or more must annually file a VETS-4212 report between August 1 and September 30. 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. Alternatively, a contractor that has approval from the Equal Employment Opportunity Commission to use December 31 as the ending date for the EEO-1 Report may also use December 31 as the ending date for the payroll period selected for the VETS-4212 Reports.
Contractors must file the VETS-4212 annually no later than September 30.
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.
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 process. Clarifying the definition of "applicant" is important so that it is not overly broad and is compliant 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.
