Scrutiny increases on affirmative action compliance

The U.S. Department of Labor’s Office of Federal Contract Compliance Programs (OFCCP) recently increased its audit activity of non-construction federal contractors/subcontractors. Is your company ready to respond?

For many employers, the answer, unfortunately, will be no — either because they are under a misimpression that they are not subject to OFCCP oversight or because they have not maintained a compliant affirmative plan and other required documentation.

Is your company is a federal contractor/subcontractor? This question is often not easily answered. Companies must take the time to analyze the size of their workforce, their sales/service contracts and customers to identify any arguable U.S. “government” business.

Employers with 50 or more employees that receive $50,000 or more in government contract funds must develop and implement a written affirmative action program with respect to women and minorities and annually file an EEO-1 Report.

Employers of any size that receive $25,000 or more in government contract funds must annually file a VETS-100.

If your company has a contract, subcontract or purchase order with the federal government, or serves as depository of federal funds, is a financial institution that is an issuing/paying agent for U.S. savings bonds and savings notes, your company receives government contract funds that subject you to OFCCP compliance.

When calculating the value of your company’s federal funds, it is important not to forget sales and services agreements that might not be obvious “government contracts.” For example, your company may purchase pre-owned government equipment or pre-owned government vehicles.

Contact by the OFCCP will come to the CEO of your company in the form of a scheduling letter. The letter will ask that copies of various documentation be sent to the OFCCP and will generally provide you with 30 days to do so.

Employers are encouraged to respond comprehensively to this initial request from the OFCCP and to avoid responding with incomplete or inaccurate information. If documentation or analysis is not readily available, take the time to generate the appropriate data that is responsive to the OFCCP’s request.

If the data provided is consistent with the OFCCP’s non-discrimination and affirmative action expectations, doing so may limit further review by the OFCCP. Beyond this “desk audit,” further review can take the form of an on-site review, which often includes employee interviews, in-depth payroll analysis, policy and procedure review and other inquiries.

The procedures governing federal contracts are unique, and differ from those employed in the private sector. Should the OFCCP determine that a contractor is not compliant, the contractor may be temporarily suspended from doing business with the federal government or have its current contract canceled. In extreme cases, the contractor may be declared ineligible from receiving future federal contracts.

If you still have questions, you should resolve any lingering doubts about whether your company is a government contractor subject to OFCCP regulation. This can be done either by consulting with legal counsel, the local, district or regional OFCCP office or by visiting the OFCCP Web site and using its online self-analysis tool, which can be found at dol.gov/elaws/esa/ofccp/using.asp.

If you are a government contractor, ask yourself the following questions:

• Do we have current and complete Form I-9 information for all employees?

• Are all required state and federal employment law postings current and displayed in a visible location at all of our company locations?

• Do our vendor contracts and purchase order forms display or reference our EEO policy clause?

• Do we have copies of our filed VETS-100 and EEO-1 reports for at least the last three years?

• Do we have a written affirmative action plan? Is it current? Is it complete?

• Are we prepared to provide the OFCCP with data for our applicant flow, transfers, promotions and separations for our entire workforce over the past three years?

• What is our practice regarding self-identification?

• Do we have an up-to-date employee manual outlining our policies and procedures, harassment policy, EEO policy and the like?

Now is the time, before you are contacted by the OFCCP, to review your company’s compliance via a self-audit. Take the steps necessary to address areas of deficiency and concern so that your company will be in the best position to demonstrate its good faith compliance.

Dana Scott, human resources and benefits consultant at the Concord law firm of Gallagher, Callahan & Gartrell, regularly assists clients with affirmative action plan development and compliance with OFCCP requirements. For more information, e-mail scott@gcglaw.com or call 800-528-1181 ext. 236.