EEO - Affirmative Action: Federal
Author: James Cowan, Jr., LeClairRyan
- Federal affirmative action requirements apply to all aspects of employment for federal contractors, which is more broadly defined than many employers believe. Federal contractors must observe affirmative action requirements regarding: hiring, advancement, promotion and training opportunities, compensation, and termination. See Defining Affirmative Action.
- Covered federal contractors must comply with Executive Order No. 11246, 30 FR 12319 (1965), Executive Order No. 13496, 74 FR 6107 (2009), Section 503 of the Rehabilitation Act of 1973, +29 U.S.C. § 793 (1992) and the Vietnam Era Veterans' Readjustment Assistance Act (VEVRAA) of 1974, +38 U.S.C. § 4212 (2002), as outlined below. See Determining Federal Contractor Status and Compliance with OFCCP.
- These Executive Orders and Acts require covered federal contractors to develop affirmative action plans, keep detailed records, and develop procedures to ensure adequate opportunities for females and minorities in the workplace as compared with males and non-minorities. See Managing Affirmative Action Within the Workplace and Key Principles of Affirmative Action Plans.
- Covered contractors will be subject to audits from the Office of Federal Contract Compliance Programs (OFCCP) to ensure their compliance and can take certain preemptive steps to avoid the enforcement and disciplinary actions by the OFCCP. See Managing Affirmative Action Within the Workplace and Key Principles of Affirmative Action Plans.
Defining Affirmative Action
Affirmative action refers generally to actions, policies, and procedures implemented by an employer that are designed to achieve equal employment opportunity in the workplace.
Affirmative action involves:
- Thorough, systematic efforts to prevent discrimination from occurring or to detect it and eliminate it as promptly as possible; and
- Recruitment and outreach measures to increase the representation of women and minorities in the applicant pool and workforce.
While some employers undertake voluntary affirmative action programs, most do so to meet their obligations as a federal contractor and/or subcontractor under a series of Executive Orders and Department of Labor (DOL) Regulations.
History and Rationale behind Affirmative Action
Current affirmative action obligations and programs are largely an outgrowth of the civil rights movement, and are designed to complement antidiscrimination statutes and help to remedy the effects of the historical exclusion of women and minorities from many segments of the workforce.
Diversity versus Affirmative Action
While often confused, diversity and affirmative action refer to different concepts. Affirmative action is generally accepted to refer to the term as used in Executive Order No. 10925, 26 F.R. 1977 (1961), by President Kennedy in 1961, which required federal contractors to "take affirmative action to ensure that applicants are employed, and that employees are treated during employment, without regard to their race, creed, color, or national origin." Executive Order No. 10925 was expanded in 1967 by President Johnson to include women.
On the other hand, diversity refers to a broader and more inclusive concept of valuing people of different races, religions, national origins, genders, sexual orientation, economic status and other differentiators in the workplace. It is premised on the idea that organizations and companies are most effective when they leverage and include the views and abilities of employees of all backgrounds. The goal was to foster a culture of mutual respect, leading to a more productive workforce and one that better reflected the diversity of customers and global markets. See Employee Management > EEO - Discrimination.
|Legal Drivers||Exec Order 11246||Title VII Risk Management|
|Applicability||Covered Contractors||Optional/Best Practices|
Determining Federal Contractor Status and Compliance with OFCCP
The classification of an employer as a federal contractor is much broader than one would expect. If a business or organization has a federal contract, subcontract, or federally assisted construction contract, it may be subject to federal affirmative action requirements. Generally speaking, any business or organization will be subject to the requirements under one or more of the laws enforced by the OFCCP if that business or organization:
- Holds a single federal contract, subcontract, or federally assisted construction contract in excess of $10,000.00;
- Has a federal contract or subcontracts with a combined total in excess of $10,000.00 in any 12-month period; or
- Holds government bills of lading, serves as a depository of federal funds, or is an issuing and paying agency for U.S. savings bonds and notes in any amount.
A federal subcontract is defined as: "Any agreement or arrangement between a contractor and any person":
- For the furnishing of supplies or services or for the use of real or personal property, including lease arrangements, which in whole or in part, is necessary to the performance of any one or more government contracts; or
- Under which any portion of the contractor's obligation under one or more government contracts is performed, undertaken or assumed.
This definition can also include a subcontractor of a subcontractor.
For purposes of affirmative action law, a contracting federal agency is any department, agency, establishment or instrumentality of the United States, including any wholly-owned government corporation which enters into contracts. See Recruiting and Hiring > Affirmative Action Planning.
Coverage Is Not Dependent on Notice of Coverage
While government contracting agencies are required to determine whether the federal affirmative action requirements apply to a particular contract and to include appropriate affirmative action clauses where they do apply, the absence of such a clause in a contract or sub-contract is not conclusive of federal contractor coverage. Rather, by operation of law, the applicable affirmative action clauses as set forth below are deemed to be a part of every contract and subcontract that is required to include them.
Accordingly, the basic rule is that if the work performed by a company "fulfilled, was necessary to, or facilitated a contract" with the government, it is a covered subcontract (if it meets the dollar thresholds). In making this determination, the OFCCP casts a very broad net. See Recruiting and Hiring > Affirmative Action Planning.
Affirmative action requirements are administered by the OFCCP. The OFCCP is involved in the following enforcement procedures:
- Offering technical assistance to federal contractors and subcontractors to help them understand regulatory requirements.
- Conducting compliance evaluations and complaint investigations of federal contractors' and subcontractors' personnel policies and procedures.
- Obtaining Conciliation Agreements from contractors and subcontractors who are found to be in violation of regulatory requirements. Under a conciliation agreement, a contractor promises to undertake the remedial action necessary to correct violations or deficiencies.
Additional Information on Coverage
The Code of Federal Regulations, specifically, 41 C.F.R. § 60-741, Appendix D, Guidelines Regarding Positions Engaged in Carrying Out a Contract, provides an exhaustive account, complete with numerous examples, of the types of behavior that will cause an entity to be classified as a federal contractor for affirmative action purposes. Employers are advised to determine their federal contracting status and should refer to the C.F.R. and seek the advice of counsel if unsure of their standing.
Affirmative Action Obligations Apply to All Facets of Employment
Covered contractors must undertake affirmative action with respect to all employment decisions, including: hiring, advance, promotion and training opportunities, compensation and termination. This is accomplished through the affirmative action plan. An affirmative action plan is a document that illustrates the inclusion of women and minorities in the workplace, the level achieved by such workers in the workplace and the compensation levels obtained by them. The affirmative action plan compares minority and female workers to the expected range of workers found in the local census area to determine if there is an under-representation, and if so, what can be done to remedy such under-representation. See Recruiting and Hiring > Affirmative Action Planning.
Managing Affirmative Action within the Workplace
Hiring a Diverse Workforce
One of the keys to a successful affirmative action program is to maintain a hiring process that yields a diverse group of applications, and over time, a more diverse workplace. Much of the focus of the OFCCP in evaluating affirmative action efforts focuses on what action-oriented practical steps an employer has taken to increase the representation of women and minorities in the applicant pool. This pool is then compared to what the census data for the employer's recruiting area shows as the number of women and minorities that are qualified to perform the respective role in the employer's organization. See Recruiting and Hiring > Affirmative Action Planning.
Advancement and Promotion
While much of the diversity in an employer's workforce will be driven by the results of hiring decisions, the OFCCP also looks at whether women and minorities are being promoted within the organization at a rate equal to their male and non-minority counterparts. Where challenges to advancement are identified, employers should work to eliminate them, and to provide the training and opportunities necessary to allow for the internal advancement of all employees. See Employee Management > Promotions.
In the last few years, the OFCCP has targeted pay-equity issues as a significant focus in its compliance evaluation program and has been able to obtain large settlements when it has demonstrated pay disparities. The OFCCP often obtains summary-compensation data from contractors at the desk-audit stage of a compliance evaluation. (Individualized compensation data is normally provided during the on-site phase of the review.) In many cases, the most significant financial exposure in an OFCCP audit is the cost of addressing pay-equity issues. See Employee Management > EEO - Discrimination.
To prepare for and avoid paying such pay-equity claims contractors should:
- Follow their articulated pay policies;
- Not misclassify employees by grouping dissimilar jobs in the same classification and/or pay grade;
- Avoid articulating an illegal factor as a reason for the pay decision (i.e., leave of absence due to pregnancy or impact of disability accommodations) and
- Avoid using inconsistent explanations to explain a pay differential.
New Policies and Procedures from the OFCCP
In 2013, the OFCCP adopted new policies and procedures that will make it easier for its compliance officers to uncover pay discrimination among federal contractors.
The new directive rescinds prior guidance, which had applied a "cookie cutter" approach to investigations, "severely limiting OFCCP's ability to enforce the ban of pay discrimination."
The new protocol mirrors Title VII principles and standards and provides the OFCCP broad discretion to investigate and evaluate instances of compensation discrimination against individuals and groups. Review of compensation structures will be on a case-by-case basis depending on the specific facts. The OFCCP will focus less on statistical analysis and more on non-statistical and anecdotal evidence to identify job titles with differences in pay because of protected class status, and then to make sure that the employer has a legitimate and nondiscriminatory reason for any wage differentials.
The following employment practices may lead to an investigation of compensation practices and potential wage discrimination claims:
- Differences in salary or hourly rates of pay;
- Differences in job assignment or placement;
- Differences in training or advancement opportunities;
- Differences in earning opportunities; and
- Differences in access to increases and add-ons (such as bonuses or raises).
In 2014, President Obama signed two executive measures enforcing equal pay laws and combating wage discrimination for federal contractors. Specifically, an Executive Order prohibits a federal contractor from firing or discriminating against employees or job applicants who have inquired about, discussed or disclosed their own or a coworker's compensation information.
In a Presidential Memorandum - Advancing Pay Equality Through Compensation Data Collection - the Department of Labor (DOL) is directed to issue regulations by August 6, 2014 requiring federal contractors to submit information about the compensation paid to employees, including data by race and sex. The DOL is to use the data to encourage them to comply with equal pay laws and identify and analyze industry trends while focusing on federal contractors with pay discrepancies.
In September 2015, the OFCCP published the final rule regarding pay transparency prohibiting pay secrecy and allowing employees and applicants to discuss pay information without fearing discrimination and retaliation. The new rule goes into effect January 11, 2016 and applies to companies with over $10,000 in federal contracts or subcontracts entered into or modified after January 11, 2016.
Under the new rule employers are banned from maintaining policies preventing workers from discussing compensation including salary, wages, overtime, bonuses, commissions, vacation pay, holiday pay, insurance and stock options. An employer also may not terminate, discipline or discrimination against employees for discussing their pay or inquiring about the pay of other employees. Employers should update their policies and employee handbooks to include nondiscrimination provisions with respect to pay transparency and make sure all employees and applicants receive a copy. Employers should also revise the equal opportunity clause in federal contract and subcontracts to ban discrimination against employees and applicants who discuss their pay. The rule does not require an employer to provide employees with information regarding the pay of other employees. Employers should ensure that their policies and practices as well as training for supervisors and employees complies with the new rule.
Further, the rule allows an employer two defenses with regard to discrimination based on discussing pay. First, an employer general may implement a general workplace rule regarding adverse action that is consistently applied and does not prohibit the discussion of compensation information. Second an employer may take adverse action against employees who disclose pay information that the employees learned in the course of their fundamental job duties.
Key Principles of Affirmative Action Plans
Key elements of an affirmative action plan (AAP) include:
- An organizational profile;
- A job group analysis based on job duties of workers in an organization;
- The placement of incumbent employees in the job groups;
- A determination of the availability of qualified women and minorities in the relevant labor market;
- An analysis comparing employee incumbency to availability, and
- Placement goals for any underutilized minority groups.
Location-Based Versus a Functional Affirmative Action Plan
Most AAP's are based on geographical areas where the contractor conducts business and hires employees. Accordingly, the utilization of employees in the workplace is based on the availability within a region. For example, in trades such as plumbing, there may be very few female plumbers such that the expected utilization levels are very low.
Another type of AAP is called a functional AAP (FAAP) where an entire business function or line of business, (without regard to the geographic locations of the establishment) is used. A functional or business unit refers to a component within an organization that operates autonomously in the ordinary course of the organization's business. It must include at least 50 employees, have its own managing official and have the ability to track and maintain its own personnel activity.
Technology companies started the trend toward this type of reporting - which also fits many project teams, flat organizational structures and those with multiple work locations. A contractor must first obtain approval from the OFCCP if it wants to adopt a functional AAP or line of business type of reporting structure. The regulations also provide that an agreement allowing a functional AAP "...cannot be construed to limit or restrict how the OFCCP structures its compliance evaluations." Therefore, the OFCCP may still conduct compliance reviews by an individual facility, if it so chooses.
In 2016, the OFCCP issued a revised directive with respect to Functional Affirmative Action Plans (FAAPs) that clarifies obligations applying to contractors with approved FAAP Agreements Under the revised directive, contractors are not required to provide the OFFCCP with a copy of a qualifying federal contract, but instead must only provide specific information about contract coverage, including the contract number from a qualifying contract and that contract's dollar amount, contract period, and the name of the prime contractor (if applicable).
The revised directive incorporates new regulations regarding expansion of opportunities for individuals with disabilities under Section 503 of the Rehabilitation Act as well as protected veterans under the Vietnam Era Veterans' Readjustment Assistance Act (VEVRAA). FAAP participants to provide information to the OFCCP regarding the format in which the contractor maintains records and documents. If information is kept in multiple formats, the OFCCP can choose the production format. Contractors are only required to provide information related to the subsidiaries that will be included in the FAAP. The revised directive also specifies that any contractor with a FAAP will undergo at least one mandatory compliance evaluation during the term of the FAAP Agreement. Under the revised directive, a contactor may apply for a FAAP if a compliance evaluation is ongoing or if the contractor has been notified that one was going to be conducted.
Every three years, a contractor must certify that there have been no changed circumstances in the business that impact the FAAP Agreement. The re-certification process must be started at least 120 days prior to the expiration of their existing FAAP Agreement. If there have been changes in the functional units, A contractor will be required to explain any changes in the functional unit in writing to the OFCCP which will then determine whether the changes impact the contractors qualification to participate in the FAAP process.
All Employees Must Be In an AAP
The regulations make clear that each employee in the employer's workforce must be included in an AAP. Many companies assume that employees at facilities with less than 50 employees, or those employees who work offsite, do not have to be included in an AAP. But this is incorrect. Instead, the regulations provide that employees should generally be included in the AAP for the business establishment where they work. There are, however, some exceptions. For example, if an employee works at a different establishment than his or her manager, he or she should be included in the same AAP as the manager.
If there are less than 50 employees at an establishment, the employer has three options:
- The establishment, though small, can have its own AAP;
- The employees can be placed in the AAP where their human resources function is handled; or
- Employees can be placed in the AAP where their manager is located.
If the employer chooses option 2 or 3, the AAP should indicate the work site location of the employee as well.
Race and Gender Records
OFCCP regulations require contractors to maintain records of the race, gender, and ethnicity of each employee and where possible of each applicant. Unfortunately, the regulations do not define exactly what where possible means, except to acknowledge that many applicants refuse to provide this information. In the agency's guidance statements, the OFCCP places the burden on the employer to demonstrate that every reasonable effort has been made to identify the gender, race, and ethnicity of each applicant.
The guidance suggests several ways of collecting such information, including the following:
- Self-identification through electronic or hard-copy;
- Tear off sheets;
- Post card identification;
- Visual observation.
Narrative Section of the AAP
The Narrative Section of the AAP sets out what practical steps the employer has undertaken that can reasonably be expected to increase female and minority applicant flow in problems areas, i.e., areas of underutilization. The regulations state that contractors must create action-oriented programs that produce "adequate results" and that the contractor-employer must demonstrate its good-faith efforts to remove identified barriers, expand employment opportunities and produce measurable results.
While employers should treat an AAP's statistical data as a trade secret and confidential piece of business information, it may be discoverable in employment discrimination litigation.
Required Narrative Elements
Required narrative elements include:
- Designation of responsibility. The OFCCP recommends that an executive be named as the director of equal opportunity programs.
- Identification of problem areas. This sets out the areas within the workforce where an under-utilization of female or minority workers has been shown by statistical comparisons to the expected levels in the local geographical area.
- Action-oriented programs. The key here is to show actual efforts in the employer's community to increase applicant flow of qualified women and minorities and to create internal opportunities.
- Internal audit by the contractor.
- The Organizational Profile. This is a profile that shows each organizational unit (departments, sections, branches, etc.) and its relationship to other organizational units.
- Job Group Analysis. This section groups different jobs together, regardless of which department they are in, by job duties as opposed to title.
- Availability Analysis. This section determines the availability of minority and female employees in the employer's area and in job types. Thus, each specific job availability analysis will be different by location because the expected levels of minorities and females will be different in each specific geographical area.
- Utilization Analysis. Lastly, the utilization analysis determines the level of under-utilization of available minority and female employees by comparing the actual percentages found in the workplace by the expected numbers or percentages. Where there is an over-representation of females and minorities there are no goals required, but where there is an under-utilization, a contractor must set placement goals for increasing the levels of female or minorities (in the job groups showing under-utilization.
OFCCP Procedures in Implementing Audits
The OFCCP maintains a Federal Contractor Selection System (FCSS) list. A contractor's establishment is selected by the OFCCP for a compliance evaluation from this list. The list additionally designates which investigative procedure will be followed. An establishment is a contractor's work site location for which an AAP has been prepared by the contractor. A contractor can have numerous locations for which AAPs have been prepared according to OFCCP guidelines. The compliance review is applicable only to the selected establishment. Additional compliance reviews can be conducted for the same contractor at different establishments, either at the same time or in subsequent years.
Scheduling an OFCCP Review or Evaluation
The OFCCP will mail a scheduling letter to the contractor's establishment. Additionally, the OFCCP will contact the EEOC and the state and/or local Fair Employment Practice Agency to learn the nature and resolution of any complaints that could have been made against the contractor's establishment. See State Requirements.
Evaluations and Reviews
Types of Reviews
The OFCCP uses a wide variety of reviews to determine if a contractor is in compliance with its regulations. These include:
- A compliance review that consists of a comprehensive analysis and evaluation of the hiring and employment practices of the contractor, the written AAP, and the results of the affirmative action efforts undertaken by the contractor. The compliance review can proceed in three stages: desk audit, onsite review and offsite analysis.
- An offsite review of records which is an OFCCP analysis and evaluation of the AAP and supporting documentation, and other documents related to the contractor's personnel policies and employment actions that could be relevant to a determination of whether the contractor has complied with affirmative action regulations.
- A compliance check which is a review of whether a contractor has maintained appropriate records.
- A focused review which is an onsite review that focuses on one or more components of the contractor's organization or one or more aspects of the contractor's employment practices.
- A full desk audit which is one of the most common and is the OFCCP's comprehensive review of the contractor's AAPs and all supporting documentation. The analyses include, but are not limited to, the statistical assessments underlying the conclusions reached in the AAP.
If a full desk audit indicates potential discrimination or violation of affirmative action regulations, an onsite review can be conducted. A compliance officer will visit the establishment to document the contractor's compliance with the indicators that prompted the onsite review, as well as Executive Order No. 13496, notification to employees of their rights under the NLRA), and all laws enforced by OFCCP. The compliance officer's review is not limited to the issues that prompted the visit. For example, a contractor may review wage and hour or I-9 violations.
Conclusion of Evaluation or Review
If no potential discrimination or unresolved, minor technical violations are found by the compliance officer, he or she will issue a Closure for No Apparent Violations or Technical Violations. At the conclusion of an investigation in which violations are found and are resolved, the compliance officer will issue a Closure Letter for Substantive Violations. If the contractor denies the OFCCP access or refuses to provide the requested information, the compliance officer will typically issue a show cause notice as to why the contractor should not be found in violation of the regulations.
Contractors should conduct self-audits to help ensure that they are in compliance with the OFCCP's enforcement scheme. For example, contractors can break down their employee roster into the appropriate groups and calculate the median and mean salary for females and males, and minorities and non-minorities, for each job or group. If there are disparities in compensation, the employer should determine whether they are based upon a failure to comply with the requisite procedures or if they are for nondiscriminatory reasons.
The employer should be prepared to articulate nondiscriminatory reasons to the OFCCP in the event of an audit. To the extent that the self-audit reveals possible or actual discriminatory processes, the contractor should be prepared to make adjustments or systemic changes to its pay systems or discriminatory policies.
Under the regulations implementing Executive Order No. 11246,contractors have recordkeeping obligations. For example, federal contractors are required to maintain any personnel or employment records made or kept by the contractor. Examples of records that must be maintained are:
- Job descriptions;
- Job postings and advertisements;
- Records of job offers;
- Applications and resumes;
- Interview notes;
- Tests and test results;
- Written employment policies and procedures; and
- Personnel files.
For each record an employer maintains, it must be able to identify the gender, race and ethnicity of each employee; and where possible, the gender, race and ethnicity of each applicant or internet applicant, whichever is applicable to the particular position. If an employer uses internet recruitment tools or service, the employer will also need to become familiar with the new internet applicant regulations which impose significant additional recordkeeping obligations if the employer uses electronic data technologies in its recruiting and hiring process. Records containing racial and ethnic information should be kept separately from employee personnel records which are reviewed by those making personnel decisions. See Recruiting and Hiring > Affirmative Action Planning.
Federal contractors and subcontractors with fewer than 150 employees or a contract of less than $150,000 have to keep records for one year from the date of the making of the personnel record or personnel action, whichever occurs later. Federal contractors and subcontractors with 150 or more employees or who have a government contract of $150,000 or more are required to keep employment records for two years from the date of the making of the personnel record or personnel action, whichever occurs later. However, those are minimum requirements, and OFCCP evaluations go back three years. The audited contractor will need appropriate records to produce in that event so best practices would seem to indicate record retention for that length of time.
The following chart provides additional information concerning recordkeeping and affirmative action:
|Document(s)*||Description||Recommended Retention Period|
|Affirmative Action Plan||Narrative Plan, statistical analysis and documentation of good faith efforts. Applications and other personnel records that support employment decisions (e.g. hires, promotions, terminations) are considered "support data" and must be maintained for the AAP.||
Current Year Plan and Prior Year must be provided upon request.
(**If there are less than 150 employees or contract is less than $150,000, the retention period is one year)
|Personnel files, including all information regarding application, hire, promotion, rate of pay, termination, etc. Applicant data for applicants not hired.||
2 year period from last decision affecting employee.
|Investigations/ Audits||All records related to investigation or audit.||Varies. Preserve all records for duration of OFCCP audit or investigation.|
Davis Bacon Act***
Service Contract Act***
Walsh-Healy Public Contracts Act***
(***Apply to federal contractors)
Records containing the following information for each employee:
Compensation records to include:
Three years from the end of the contract.
*Employers should keep in mind that they have additional record retention requirements relating to personnel records under other federal laws beyond the scope of this section.
EEO-1 and VETS 100 Reporting
Federal contractors are also required to maintain and analyze data on the sex, race and ethnicity of their applicants and employees. This data is compiled in a report called the Standard Form 100 Report, better known as the EEO-1 Report. All contractors with 50 or more employees and one or more contracts of $50,000 or more are required to submit an EEO-1 Report on or before March 31 of each year. The filing deadline for the 2018 EEO-1 Report will be March 31, 2019. Employers with 100 or more employees are also required to file an annual EEO-1 Report even if they do not have any federal contracts. Instructions for filing the EEO-1 Report are on the EEOC's website. See EEOC website - EEO-1 Report; Recruiting and Hiring > Affirmative Action Planning.
Federal contractors subject to VEVRAA must report their efforts toward hiring and employing veterans to the DOL'S Veteran's Employment and Training Service (VETS). If the contract was entered into before December 1, 2003, and exceeds $25,000, the contractor must report on its efforts to hire and employ veterans of the Vietnam era, special disabled veterans, other specified protected veterans and recently separated veterans.
If the contract was entered into after December 1, 2003, and exceeds $100,000, the contractor must report on its efforts to hire and employ disabled veterans, Armed Forces service medal veterans, recently separated veterans, and other veterans who served during a war, or in a campaign or expedition for which a campaign badge has been authorized. See VETS website; More information may be found at the VETS website. See DOL website - VETS; Recruiting and Hiring > Affirmative Action Planning.
Union-Related Postings for Governmental Contractors
Under Executive. Order No. 13496, government contractors and subcontractors must:
- Post specific language (the Employee Rights Notice) notifying employees of their rights to join a union and engage in organizing activity; and
- Include specific language in covered contracts and subcontracts notifying employees of these rights.
Failure to comply with Executive Order No.13496 is cause for enforcement proceedings, including penalties up to contract cancellation or possible debarment. The Employee Rights Notice requires contractors and subcontractors who hold government contracts that include the employee-notice clause (and are valued in excess of $100,000 for government contractors, $10,000 for subcontractors), to post the employee notice clause at their work sites.
Employers MUST use the exact notice as detailed by the DOL. No changes in color, content or size are permitted. See DOL website - Employee Rights Notice.
If a contractor posts employee notices online, certain rules apply. The rules for online posting are available at the link above. Commercially purchased versions of the notice are also acceptable.
Contractors must post the notice conspicuously and prominently both in and around their facilities. It should be easily seen by employees at each location where other notices to employees are posted, and where employees covered by the National Labor Relations Act (NLRA) perform activities relating to the performance of the government contract.
For additional information regarding unions and union posting, see Labor Relations > Union Organization and Labor Relations.
Posting in Spanish or Other Languages
If a contractor has translated or purchased other policies or notices in other languages for the significant portion of its workforce that speaks another language, it needs to offer the Employee Rights Notice in these applicable language(s).
Beyond the Employee Rights Notice, contractors are required to include the employee notice clause in all subcontracts valued over $10,000. The contract must either:
- Include the entire language found in Appendix A to the Final Regulation; or
- Incorporate the language with a specific referral to 29 C.F.R. § 471, Append ix A to Subpart A.
Any penalties for non-compliance are subject to review by the National Labor Relations Board (NLRB).
Executive Order No. 13496 is administered by the DOL'S OFCCP in the same manner as Executive Order No. 11246, as described above.
Vietnam Era Veterans Readjustment Assistance Act of 1974 (VEVRAA)
VEVRAA, has two contract value thresholds for requiring a written AAP depending upon the date of the government contract. The threshold for new contractors is one or more contracts of $100,000 or more. If the contract was entered into before December 2003, the threshold is $50,000. Under either threshold, the contractor must have a minimum of 50 employees, and the AAP must be prepared within 120 days after the contract takes effect. See +38 U.S.C. § 4212 (2002).
Basic Requirements and Compliance
This law prohibits supply and service and construction contractors (and their subcontractors) from discriminating in employment against veterans. Despite its name, this statute is no longer limited to veterans from the Vietnam Era. VEVRAA applies equally to:
- Disabled veterans;
- Armed Forces service medal veterans;
- Recently separated veterans; and
- Other protected veterans who served during a war or in a campaign or expedition for which a campaign badge has been authorized.
It also requires that these contractors take affirmative action to employ and advance veterans.
Key elements of VEVRAA and Section 503 of the Rehabilitation Act of 1973 AAPs include:
- Affirmative action policy statements;
- A description of actions the contractor will take to ensure equal opportunity;
- A schedule for the periodic review of job qualification standards to ensure they do not create unnecessary barriers to employment;
- A guarantee that the contractor will provide appropriate reasonable accommodations;
- Procedures to ensure against harassment; and
- An action plan for recruitment of and outreach to individuals with disabilities, disabled and other protected veterans.
These regulations are administered by the Labor Department's OFCCP in the same manner as Executive Order No. 11246, as described above.
OFCCP Disability and Veterans Hiring Rules
On March 24, 2014, new OFCCP regulations took effect that strengthen the affirmative action requirement for contractors under the Vietnam Era Veterans' Readjustment Assistance Act (VEVRAA) and Section 503 of the Rehabilitation Act.
Under these regulations, contactors that meet the requirements for developing an affirmative action plan must have an annual hiring benchmark for protected veterans and take other steps as well. Effective March 31, 2019, the OFCCP reduced its annual hiring benchmark for veterans under VEVRAA to 5.9 % from 6.4 %. This represents the fifth consecutive year that the hiring benchmark has declined.
VEVRAA provisions of which federal contractors must be aware include:
- Hiring benchmarks - Federal contractors and subcontractors will have to establish their annual hiring benchmarks using one of two methods: a benchmark based on the national percentage of veterans in the workforce, or a figure reflecting the contractor's particular hiring circumstances. These figures can be used to evaluate the effectiveness of hiring and outreach efforts for veterans.
- Data collection and records - Contractors must compile information regarding the number of veteran job applicants and hires. This information must be retained for at least three years. In addition, contractors must allow the OFCCP to review documents either on site or off site, at the OFCCP's option and in an available format that the agency requests.
- Invitation to self-identify - Contractors must invite applicants to self-identify at the pre-and post-offer phases of the hiring process.
- Required equal opportunity clause - When incorporating the equal opportunity (EO) clause into a subcontract by reference, contractors must use specific language.
The OFCCP also has developed new hiring regulations to aid the employment of qualified individuals with disabilities under Section 503 of the Rehabilitation Act. The goal is to create a larger, more diverse hiring pool for federal contractors and subcontractors.
The DC Circuit Court of Appeals enabled these regulations to take effect in rejecting a challenge which had sought to block their implementation. Associated Builders & Contractors, Inc. v. Shiu, 2014 U.S. Dist. LEXIS 37106 (DC Cir. March 21, 2014).
These provisions of the regulation governing Section 503 include:
- Utilization goals - Federal contractors must establish a 7% utilization goal for qualified individuals with disabilities in each job group of their workforce. If a contractor has fewer than 100 employees, the 7% goal should be applied to its entire workforce. In addition, contractors must conduct an annual utilization analysis and have a process to address any compliance problems.
- Self-identification - Contractors must invite job seekers to voluntarily self-identify as disabled at the pre-offer and post-offer phases of the hiring process using language specified by the OFCCP. This information also must be solicited within one year of a contractor being subject to the new requirements and on a five-year basis thereafter. This requirement is designed to help employers assess the effectiveness of their outreach and recruitment efforts.
- Data collection and records analysis - As with the VEVRAA rule, contractors must compile information regarding the number of applicants and hires with disabilities. Contractors must retain this information for at least three years. They also must allow the OFCCP to review documents either on site or off site, at the OFCCP's option and in a format that the agency requests.
- Revised definition of disability - this incorporates the necessary changes resulting from the ADA Amendments Act (ADAAA) of 2008, and alters certain nondiscrimination provisions of the regulations.
The OFCCP has resources to aid federal contractors and subcontractors, including ways to provide reasonable accommodations; available tax incentives and credits to employers hiring veterans and individuals with disabilities; and methods of recruiting, hiring and promoting self-identification for veterans or individuals with a disability.
Federal Contractor Discrimination Based on Gender Identity
On July 21, 2014, President Obama signed an Executive Order protecting lesbian, gay, bisexual and transgender (LGBT) individuals from discrimination and harassment. The Executive Order, commonly referred to as the ENDA Executive Order, covers federal contractors and federal agencies. Covered employers should review and revise their workplace policies and procedures to specifically prohibit sexual orientation and gender identity discrimination and to ensure that all individuals, regardless of sexual orientation or gender identity, receive equal opportunities in the workplace.
The Executive Order amends previous Executive Order 11478 by substituting "sexual orientation, gender identity" for "sexual orientation," and amends Executive Order 11246 by substituting "sex, sexual orientation, gender identity, or national origin" for "sex or national origin." The list of federally protected categories also includes race, color, religion, national origin, age and sex.
The Order was effective immediately and directed the Secretary of Labor to prepare implementing regulations within 90 days. The amendments to Executive Order 11246 apply to federal contracts entered into on or after the effective date of the regulations issued by the Secretary of Labor. The OFCCP issued the final rule implementing Present Obama's Executive Order 13672. The final rule was published in the Federal Register on December 9, 2014 and became effective on April 8, 2015. It applies to covered contracts entered into or modified on or after that date.
Under both the Executive Order and the Final Rule, federal contracting agencies are required to prohibit discrimination based on gender identity and sexual orientation in the Equal Opportunity Clause of the contract. The Final Rule does not require contractors to conduct any data analysis with respect to the sexual orientation or gender identity of their applicants or employees and it does not require them to collect any information about applicants' or employees' sexual orientation or gender identity. However, contractors are not prohibited from asking applicants and employees to voluntarily provide this information, unless doing so is unlawful under state or local law. Contractors may not use any information gathered to discriminate against an applicant or employee based on sexual orientation or gender identity.
In light of these developments, contractors should make sure that their policies and contracts are up to date and include the required language prohibiting discrimination based on sexual orientation and gender identity. Further, contractors should make sure that all supervisors and managers and those with hiring responsibilities are trained on these new requirements.
The OFCCP has updated its sex discrimination rule, significantly expanding protections regarding pregnancy, caregiver status, pay discrimination and gender identity in an effort to comply with recent interpretations of Title VII's prohibition against sex discrimination. The rule takes effect on August 15, 2016. +81 FR 39108. The final sex discrimination rule covers various topics such as pregnancy, gender identity, wage discrimination and caregivers. Federal contractors are prohibited from discriminating based on sex, pregnancy (inducing childbirth and related medical condition, gender identity, transgender status and sex stereotyping.
Pregnant women must be provided with the same accommodations based on pregnancy and related medical conditions as is provided to other individuals who are similarly able or unable to perform their job duties. Accommodations may include extra bathroom breaks, light duty assignments, job-guaranteed medical leave, modified duties or alternative job assignments. Pregnant women must also be treated the same for all employment-related purposes including receipt of fringe benefits and leave.
In accordance with President Obama's Executive Order, discrimination based on sexual orientation or gender identity is prohibited. Contractors providing health care benefits must provide available coverage for transition-related services and may not discriminate in providing health care benefits based on gender identity. Additionally, contractors are required to permit individuals to use the restroom, changing rooms, showers, or other facility that matches their gender identity. Employees must not be treated adversely because they have received, or are receiving or plan to undergo transition-related medical services.
Federal contractors are prohibited from engaging in pay discrimination between similarly situated employees. In determination whether employees are similarly situated, the following factors may be considered: skill, effort, and responsibility, working conditions, job difficulty, minimum qualifications and other objective factors. Employees can be similarly situated on some, but not all factors. Employees may recover lost wages for discriminatory pay any time a contractor pays compensation that violates the rule in accordance with the Lily Ledbetter Fair Pay Act as each discriminatory pay decision is considered a separate discriminatory act.
Equal Access to Jobs and Workforce Development
Federal contractors may not grant or deny compensation, job classification, work assignments, shifts, development and other opportunity for overtime work, training, apprenticeships, better pay or higher paying positions or opportunities that may lead to higher paying positions based on a worker's sex. A contractor is barred from setting requirements for jobs or training based on an individual's sex unless it can be demonstrated that such requirements are a bona fide occupational qualification.
Federal contractors may not implement facially natural policies and practices with a disparate impact on sex such as height, weight, and strength minimum job requirements that disproportionately exclude women, unless such policies are job-related and consistent with business necessity.
It is unlawful to engage in sexual harassment and harassment based on gender identity, sex stereotypes or pregnancy. Unlawful harassment occurs when an individual is subject to unwelcome sexual advances, requests for sexual favors, offensive remarks, or verbal or physical conduct that is sexual in nature. To be considered actionable, subjection to or rejection of the conduct must be a term or condition of employment or such conduct must unreasonably interfere with the workplace and create a hostile work environment.
Federal contractors are barred from discrimination based on sex in providing, medical, hospital, accident life insurance, retirement benefits, profit sharing bonus plans, leave and other terms and condition of employment even if it results in a greater cost to the employer.
Federal contractors may not make decision based on sex stereotypes such as an individual's failure to match gender expectation when it comes to dress or gender norms.
Women may not be steered or directed into lower paying or less desirable positions.
Federal contractors are barred from taking adverse action against an individuals based on care giving responsibilities. Job-guaranteed family leave or flexible work schedules must be provided for male employees on the same terms and conditions as provided to female employees.
Fair Pay and Safe Workplaces
On August 25, 2016, the Department of Labor published the Final Rule and guidance implementing President Obama's Fair Pay and Safe Workplaces Executive Order, also known as the blacklisting rule requiring requires federal contractors and subcontractors to disclose various labor-related violations to the government in order to be considered for a contract and permitting the government to use that information in determining whether or not to contract with a particular entity. The Final Rule was scheduled to take effect on October 25, 2016 but a federal district court in Texas blocked implementation and enforcement of various aspects of the Final Rule. However, the court did not block the paycheck transparency portion of the rule requiring covered contractors to provide employees with detailed wage statements.
The paycheck transparency requirements under the Fair Pay and Safe Workplaces Executive Order (E.O. 13673) take effect on January 1, 2017 and apply to all covered contractors and subcontractors. The paycheck transparency requirements apply to all prime contracts valued at more than $500,000, and to all subcontracts (excepting those for commercially available off-the-shelf items) valued at more than $500,000. Effective January 1, 2017, the paycheck transparency provision requires covered contractors and subcontractors to provide employees performing work on the contract/subcontract to:
- Provide certain required information (including hours worked and overtime hours by work week, rate of pay, gross pay, an itemized list of any additions or deductions taken from gross pay) on the pay stubs for workers performing work on covered contracts. This may be provided in electronically form and may be made available through a device provided by the employer;
- Provide written notice of exempt status to all exempt employees performing work on covered contracts. The statement for an FLSA-exempt employee does not need to include hours worked if the employee is notified in writing of his or her exempt status, either before the employee begins work on a covered contract or subcontract or in the first statement issued under the covered contract or subcontract;
- Provide written notice of independent contractor status to independent contractors performing work on covered contracts. The written notice must provide each individual with notice that he or she is considered an independent contractor. It must be a written standalone document and it must be provided at the time the independent contractor relationships is established. It cannot be included in an independent contractor agreement. The notice must be provide prior to an individual working on a covered contract and it must be provided for each covered contract the individual works on. If an employee becomes an independent contractor during the course of the contract the notice must be provided before the individual commences work on the contract as an independent contractor; and
- Incorporate language referencing the rule's requirements into all covered subcontracts.
Fair Pay and Safe Workplaces Revoked
On March 27, 2017, President Trump signed the Congressional Review Act (CRA) resolution (H.J. Res. 37), a joint resolution by both the House and the Senate, invalidating the regulations implementing President Obama's Fair Pay and Safe Workplaces Executive Order (EO 13673) and revoking EO13673, otherwise known as the "blacklisting rules". See +82 FR 15607. EO 13673 and the implementing regulations would have required federal contractors and subcontractors to report alleged, unproven violations of numerous labor and employment laws for consideration by government contracting officers in awarding federal contracts.
Given that the Fair Pay and Safe Workplaces Rule has now been revoked and permanently blocked, federal contractors and subcontractors will not have to reveal such violations.
Paid Sick Leave
On September 7, 2015, President Obama issued an Executive Order mandating paid sick leave for employees of federal contractors. Effective January 1, 2017, new contracts must provide for employees to earn at least one hour of paid sick leave for every 30 hours worked. Thus, private sector entities that enter into new federal contracts may be subject to the Executive Order.
Employees will be able to use paid sick leave for their own or a family member's physical or mental illness, injury or medical condition or need for diagnosis, care or preventive care from a health care provider, as well as for absences resulting from domestic violence, sexual assault or stalking (e.g., to obtain additional counseling, relocate, seek assistance from a victim services organization or take related legal action).
Eligible family members include:
- Domestic partners; and
- Any other individual related by blood or affinity whose close association with the employee is the equivalent of a family relationship.
Employee Notice Requirements
A request to use paid sick leave may be oral or written and must include the expected duration of the leave. The request must be made at least seven calendar days in advance if the need for leave is foreseeable, and as soon as is practicable if the need for leave is unforeseeable.
A contractor may require certification of the need for leave only in the case of absences of three or more consecutive workdays. The certification must be provided within 30 days of the first day of leave.
Employer Notice Requirements
A contractor must post notice of the paid sick leave requirements in a prominent and accessible place where it can be readily seen by employees. A contractor that customarily posts employee notices electronically may post the notice electronically.
A contractor is prohibited from conditioning the use of paid sick leave on an employee finding a replacement worker; interfering with or discriminating against an employee for taking or attempting to take paid sick leave or assisting another employee in taking leave.
See Other Leaves.
Privacy Training Requirements
Effective January 19, 2017, federal contractors will be required to make sure that employees receive initial training and subsequent annual privacy training if those employees:
- Handle personally identifiable information (PII);
- Have access to a system of records; or
- Design, develop, maintain or operate a system of records.
PII is defined as information that can be used to distinguish or trace an individual's identity, either alone or when combined with other information that is linked or linkable to a specific individual. Examples include an individual's name, Social Security number, biometric records, date and place of birth, and mother's maiden name.
Contractors can develop their own training or use training provided by another source. The training must be role-based and depends on the duties of the contractor employees and provide both foundational training and more advanced levels of training as well as measures to test employee knowledge.
At a minimum, the privacy training must cover the following:
- The provisions of the Privacy Act of 1974 (5 U.S.C. § 552a), including penalties for violations of the Act;
- The appropriate handling and safeguarding of PII;
- The authorized and official use of a system of records or any other PII;
- The restriction on the use of unauthorized equipment to create, collect, use, process, store, maintain, disseminate, disclose, dispose, or otherwise access PII;
- The prohibition against the unauthorized use of a system of records or unauthorized disclosure, access, handling, or use of PII; and
- Procedures to be followed in the event of a suspected or confirmed breach of a system of records or unauthorized disclosure, access, handling, or use of PII.
Contractors are also required to maintain documentation and records of employee privacy training and provide those records to the contracting agency upon request.
The new regulations apply to all contracts as well as subcontracts for which contractor employees will handle PII or have access to or design, develop, maintain or operate a system of records. This includes contracts at or below the simplified acquisition threshold and contracts for commercial items or commercially available off-the-shelf items.
There are no new developments to report at this time. Continue to check XpertHR regularly for the latest information on this and other topics.
The following states have additional requirements for this topic under applicable state law.
Your Preferred States
- Rhode Island
- New Jersey
- New Mexico
- District of Columbia
- New York
- North Carolina