The Arrival of the New Affirmative Action Regulations


On November 13, 2000, the Office of Federal Contract Compliance Programs (OFCCP) published new regulations implementing Executive Order 11246. This marked the first significant changes in over 30 years to the regulations governing how federal contractors and subcontractors must prepare written affirmative action plans (AAPs). According to the OFCCP, the changes streamline reporting requirements by "refocus[ing] the regulatory emphasis from the development of a written document that complies with highly prescriptive standards, to a performance-based standard that effectively implements an affirmative action program into the overall management plan of the contractor."

At the center of this effort by the OFCCP is a controversial Equal Opportunity Survey (EO survey). Although employers welcomed the effort to amend the regulations to ease the significant burdens of compliance, employers have been, generally speaking, disappointed with the final product. Following is a brief overview of some of the pertinent changes to the regulations.

Generally, Executive Order 11246 prohibits federal government contractors and subcontractors from discriminating in employment on the basis of race, color, religion, national origin or sex, and requires affirmative action with respect to minorities and females to ensure non-discrimination. Every non-construction employer who has 50 or more employees and has a federal contract or subcontract (or bills of lading) of $50,000 or more must develop a written AAP for each of its establishments. Financial institutions that issue savings bonds or act as federal depositories are also covered. Covered federal contractors and subcontractors must update their AAPs annually, and provide their AAPs to the OFCCP upon request.

The Equal Opportunity Survey

The EO survey contains information about personnel activities and compensation concerning minorities and women, and the contractor's affirmative action programs. In particular, this survey requires submission of applicant flow, hiring, promotion, termination, incumbency and compensation data. The OFCCP notes that contractors are already required to maintain information necessary for completing the survey, although they have not done so in the precise format called for by this document, which is an administrative concern of many employers. The OFCCP anticipates that covered establishments will submit the survey biannually.

The survey will be used by the OFCCP to pinpoint adverse impact and equal pay issues. Given the potential exposure created by the survey, employers must recognize the problematic definition of "applicant" in the material. Specifically, the instructions require employers to list as an "applicant" anyone "who has indicated an interest in being considered for hiring, promotion or other employment opportunities." It is likely that many employers do not maintain the data to comply with this expansive definition. If that is the case, employers should note the manner in which they determined the applicant flow to avoid a violation for failure to comply with this instruction.

If a contractor prefers to submit the requested data by group rather than EEO-1 category, it may do so if the contractor: (1) submits both personnel activity and compensation data by job groups; (2) submits survey data by job group only via the Internet; (3) identifies the EEO-1 category to which each job group belongs; and (4) does not submit a job group that covers EEO-1 category lines.

The OFCCP estimates that it will take contractors approximately 21 hours to complete the survey.

Workforce Analysis and Organizational Profiles

Pursuant to the prior regulations, covered employers were required to conduct a workforce analysis, which is defined to include a listing of job titles (not job groups) ranked from the lowest paid to highest paid within each department or similar organizational unit. The workforce analysis also must have shown the lines of progression or promotional sequence of jobs, if applicable. If no lines of progression or usual promotional sequences existed, then job titles were to be listed by departments, job families or disciplines, in order of wage rates or salary ranges. Moreover, for each job title, the workforce analysis must have reflected the wage rate or salary range and the number of incumbents by race, color, ethnicity and sex. Many contractors have long-established information systems designed to produce these reports.

The good news is that the workforce analysis is still a viable report under the new regulations. This was almost not the case as the proposed regulations issued earlier in the year attempted to "re-engineer" the workforce analysis into a shorter, simpler format that is entitled an "organizational profile." In basic terms, the organizational profile is an organizational chart for the establishment, showing each of the organizational units and the relationships to one another, and the gender, race and ethnic composition of each organizational unit. Unlike the workforce analysis, the profile would focus only on organizational units; it would not require the identification of individual job titles with the exception of the supervisor. Likewise, reporting of race, sex and salary information by job title would be eliminated.

The OFCCP proposed those changes because it wanted the profile to be presented in a visual, rather than a narrative, format. In most cases, the OFCCP anticipated that contractors would use their existing organizational charts as the core for these profiles. The organizational charts would need to be annotated with information concerning the supervisors, and with the gender, race and ethnic composition of each unit.

Although the OFCCP's intent may have been good, the problem is that many contractors simply do not maintain detailed organizational charts. Thus, rather than decreasing the administrative compliance burdens, the requirement in the proposed regulations that the workforce analysis was no longer acceptable and all contractors must, instead, prepare organizational profiles, would have had the opposite result.

In light of the foregoing, contractors were extremely pleased that the final regulations permitted the use of either the workforce analysis or the organizational profile.

Determining Availability

Under the old regulations, contractors were required to compute availability separately for minorities, for women, and for each job group. In determining availability, the contractor was also required to consider each of the eight factors listed in the regulations. Moreover, although the factors for minorities and women were similar, they were not identical.

Under the new regulations, the OFCCP reduces the number of factors from eight to two, and the two factors are the same for minorities and for women. Those two factors are as follows:

(i) the percentage of minorities or women with requisite skills and the reasonable recruitment area, where "reasonable recruitment area" refers to the geographical area from which the contractor usually seeks or reasonably could seek workers to fill the positions in question; and

(ii) the percentage of minorities or women among those promotable, transferable, and trainable within the contractor's organization, where "trainable" refers to employees who could, with appropriate training, become promotable or transferable within the affirmative action plan year.

All Employees Must be in an AAP

Putting to rest a common belief that a facility with less that 50 employees did not have to be included in an AAP, the final regulations expressly set forth that each employee in the contractor's workforce must be involved in an AAP. In those circumstances where a facility is comprised of less than 50 employees, the contractor has three options: (1) the facility can have its own AAP; (2) the employees can be placed in the AAP where their human resources function is located; and (3) an employee can be placed in the same AAP as his or her manager.

If employees are shown in an AAP other than where they work, the contractor must annotate the organizational profile/workforce analysis to identify the location of their workforce.

Placement Goals and Timetables

When there is a difference between the availability and incumbency of minorities or women in jobs as compared to what would be reasonably expected by the overall availability of women or minorities in a particular job group, the old regulations required contractors to establish goals which were supposed to be met within certain timetables. Under the new regulations, all references to timetables are removed, and the OFCCP emphasizes that "compliance is measured by good faith effort and not by the achievement of particular numerical result."

Corporate Management Compliance Evaluations

The OFCCP began corporate management, or "glass ceiling" compliance reviews, almost 10 years ago. Although it is a longstanding practice of the agency, the new regulations expressly set forth that it may expand the scope of a corporate management compliance evaluation beyond a company's headquarters establishment if, during the course of a compliance evaluation, it comes to the OFCCP's attention that compliance problems exist at other locations.

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This article was previously published in the Vol. 24, No. 3, Spring 2001, of the Labor and Employment Law Quarterly, a publication of the New Jersey State Bar Association, and is reprinted here with permission.