Understanding the Amended Executive Order 11246 Affirmative Action Reporting Requirements

"AAP" refers to Affirmative Action Program; and "OFCCP," to the Office of Federal Contract Compliance Programs (Department of Labor).

A. Introduction

1.The OFCCP is part of the U.S. Department of Labor's Employment Standards Administration. It has a national network of six regional offices, each with district and area offices in major metropolitan centers. OFFCP enforces, among other things, Executive Order 11246. Executive Order 11246 prohibits discrimination in hiring or employment decisions on the basis of race, color, gender, religion, and national origin. It applies to all nonexempt government contractors and subcontractors and Federally assisted construction contracts and subcontracts in excess of $10,000.

2.Under Executive Order 11246, contractors and subcontractors with a Federal contract of $50,000 or more and 50 or more employees are required to develop a written affirmative action program that sets forth specific and result-oriented procedures to which a contractor commits itself to apply every good faith effort.

3.On November 13, 2000, only a few days after the Presidential election, the OFCCP issued important amendments to the regulations implementing Executive Order 11246, 41 C.F.R. Parts 60-1 and 60-2, 65 Fed. Reg. 68022 (Nov. 13, 2000). The amendments will change the way AAPs are written.

4.The regulations became effective December 13, 2000, and AAPs written after that date will have to conform to these new regulations.

B. The Contents of AAPs

1.Organizational Display or Workforce Analysis. Under 41 C.F.R. §60-2.11 (2001), non-construction contractors must prepare an "organizational profile." This consists of either the new "organizational display" or the older workforce analysis, which existed under the old regulations.

  1. The purpose of the organizational profile, like the workforce analysis, is to provide a depiction of the contractor's workforce. However, the introduction of the organizational display, which eliminates the itemization of job titles and the reporting of gender, race, or salary information by job title, is intended to make this section of the AAP less burdensome for contractors to produce.
  2. The organizational display is essentially an organizational chart annotated with race and gender incumbency numbers. The regulations define an organizational display as a detailed graphical or tabular chart, text, spreadsheet, or similar presentation of the contractor's organization structure" that must:

    1. Identify each organizational unit in the establishment; and
    2. Show the relationship of each organizational unit to the other organizational units in the establishment. 41 C.F.R. §60-2.11(b).
  3. An organizational unit is any component that is part of the contractor's corporate structure.

    1. i.In a more traditional organization, an organizational unit might be a department, division, section, branch, group, or similar component.
    2. In a less traditional organization, an organizational unit might be a project team, job family, or similar component.
    3. The term includes an umbrella unit (such as a department) that contains a number of subordinate units, and it separately includes each of the subordinate units (such as sections or branches). 41 C.F.R. §60-2.11(b)(2).
  4. The organizational display must include:

    1. The name of the unit;
    2. The job title, gender, race, and ethnicity of the unit supervisor (if the unit has a supervisor);
    3. The total number of male and female incumbents; and
    4. The total number of male and female incumbents in each of the following groups: Blacks, Hispanics, Asians/Pacific Islanders, and American Indians/Alaskan Natives. 41 C.F.R. §60-2.11(b)(3).
  5. Alternatively, the contractor may use a "workforce analysis." 41 C.F.R. §60-2.11(c).

"(1)A workforce analysis is a listing of each job title as it appears in applicable collective bargaining agreements or payroll records ranked from the lowest paid to the highest paid within each department or other similar organizational unit including departmental or unit supervision.

(2)If there are separate work units or lines of progression within a department, a separate list must be provided for each such work unit, or line, including unit supervisors. For lines of progression there must be indicated the order of jobs in the line through which an employee could move to the top of the line.

(3)Where there are no formal progression lines or usual promotional sequences, job titles should be listed by department, job families, or disciplines, in order of wage rates or salary ranges.

(4)For each job title, the total number of incumbents, the total number of male and female incumbents, and the total number of male and female incumbents in each of the following groups must be given: Blacks, Hispanics, Asians/Pacific Islanders, and American Indians/Alaskan Natives. The wage rate or salary range for each job title must be given. All job titles, including all managerial job titles, must be listed."

2.Job Group Analysis. Under 41 C.F.R. §60-2.12 non-construction contractors must also prepare a "job group analysis" as a first step in the contractor's comparison of the representation of minorities and women in its workforce with the estimated availability of minorities and women qualified to be employed:

  1. In the job group analysis, jobs at the establishment with similar content, wage rates, and opportunities, must be combined to form job groups.

    1. Similarity of content refers to the duties and responsibilities of the job titles which make up the job group.
    2. Similarity of opportunities refers to training, transfers, promotions, pay, mobility, and other career enhancement opportunities offered by the jobs within the job group. 41 C.F.R. §60-2.12(b).
  2. The job group analysis must include a list of the job titles that comprise each job group. If, under sections 60-2.12(d) and (e) the job group analysis contains jobs that are located at another establishment, the job group analysis must be annotated to identify the actual location of those jobs. If the establishment at which the jobs actually are located maintains an affirmative action program, the job group analysis of that program must be annotated to identify the program in which the jobs are included. 41 C.F.R. §60-2.12(c).

    1. Although all jobs at each establishment must be included in the job group analysis under the new regulations, if a contractor has a total workforce of fewer than 150 employees, the contractor may prepare a job group analysis that uses EEO-1 categories as job groups. EEO-1 categories refers to the nine occupational groups used in the Standard Form 100, the Employer Information EEO-1 Survey: officials and managers, professionals, technicians, sales, office and clerical, craft workers (skilled), operatives (semiskilled), laborers (unskilled), and service workers. 41 C.F.R. §60-2.12(e).
    2. The contractor must separately state the percentage of minorities and the percentage of women it employs in each job group. 41 C.F.R. §60-2.13.

3.Availability Analysis. The new regulations still require contractors to determine the availability of minorities and women for jobs in their establishments, compare incumbency to availability, declare underutilization and establish goals to eliminate the underutilization.

  1. What is different is that instead of the unwieldy "8 factor analysis" formerly required, the new standard for availability includes only the consideration of:

    1. Those with requisite skills; and
    2. Those in the contractor workforce who are "promotable," "transferable," or "trainable."
  2. Specifically, the regulations only require a two-factor analysis:

    1. "The percentage of minorities and women with requisite skills in the reasonable recruitment area." 41 C.F.R. §60-2.14(c)(1); and
    2. "The percentage of minorities and women among those promotable, transferable and trainable within the contractor's organization." 41 C.F.R. §60-2.14(c)(2).
  3. The reasonable recruitment area is defined as the geographical area from which the contractor usually seeks or reasonably could seek workers to fill the positions in question. 41 C.F.R. §60-2.14(c)(1). The starting point is a zip code analysis of incumbents or applicants for each job title, which is a pretty good indicator of a reasonable recruitment area. This will normally show shorter distances for lower skills and broader scope for higher level positions. In urban locations, Standard Metropolitan Statistical Areas may be appropriate for lower level jobs. But executive-level jobs may be recruited nationwide.

    1. "The contractor may not draw its reasonable recruitment area in such a way as to have the effect of excluding minorities or women. For each job group, the reasonable recruitment area must be identified, with a brief explanation of the rationale for selection of that recruitment area." 41 C.F.R. §60-2.14(e).
    2. "The contractor may not define the pool of promotable, transferable, and trainable employees in such a way as to have the effect of excluding minorities or women. For each job group, the pool of promotable, transferable, and trainable employees must be identified with a brief explanation of the rationale for the selection of that pool." 41 C.F.R. §60-2.14(f).
    3. In general, historical promotional patterns will guide the promotable analysis.
  4. Then the contractors must determine availability of minorities and women for each job group using the most current and discrete statistical information available to derive availability figures. Examples of such information include census data, data from local job service offices, and data from colleges or other training institutions.
  5. But the most confusing requirement occurs when a job group is composed of job titles with different availability rates. Under these circumstances, the regulations demand that "a composite availability figure must be calculated." 41 C.F.R. §60-2.14(g). The composite availability figure represents a weighted average of the availability estimates for all the job titles in the job group. To compute the composite availability figure, the contractor must separately determine the availability for each job title within the job group and must determine the proportion of job group incumbents employed in each job title. The contractor must weigh the availability for each job title by the proportion of job group incumbents employed in that job group. The sum of the weighted availability estimates for all job titles in the job group equals the composite availability for the job group. This suggests that it may be better to limit groups to those with the same job titles.

4.Underutilization. Availability is then compared to incumbency and if the percentage of minorities or women is lower than the availability — "less than would reasonably be expected given their availability percentage in that particular job group" the contractor must establish a "placement goal" (41 C.F.R. §60-2.15), i.e., the contractor must set placement goals to correct the underutilization.

5.Placement goals are described in 41 C.F.R. §60.2-16 with a fanfare of exculpatory language:

  1. "Placement goals serve as objectives or targets reasonably attainable by means of applying every good faith effort to make all aspects of the entire affirmative action program work. Placement goals also are used to measure progress toward achieving equal employment opportunity." 41 C.F.R. §60.2-16(a).
  2. "A contractor's determination under section 60-2.15 that a placement goal is required constitutes neither a finding nor an admission of discrimination." 41 C.F.R. §60.2-16(b).
  3. "Placement goals may not be rigid and inflexible quotas, which must be met, nor are they to be considered as either a ceiling or a floor for the employment of particular groups. Quotas are expressly forbidden." 41 C.F.R. §60.2-16(e)(1).
  4. "In all employment decisions, the contractor must make selections in a nondiscriminatory manner. Placement goals do not provide the contractor with a justification to extend a preference to any individual, select an individual, or adversely affect an individual's employment status, on the basis of that person's race, color, religion, sex, or national origin." 41 C.F.R. §60.2-16(e)(2).
  5. "Placement goals do not create set-asides for specific groups, nor are they intended to achieve proportional representation or equal results." 41 C.F.R. §60.2-16(e)(3).
  6. "Placement goals may not be used to supersede merit selection principles. Affirmative action programs prescribed by the regulations in this part do not require a contractor to hire a person who lacks qualifications to perform the job successfully, or hire a less qualified person in preference to a more qualified one." 41 C.F.R. §60-2.16(e)(4)).
  7. "A contractor near an Indian Reservation can express an employment preference for American Indians living at or near an Indian Reservation." 41 C.F.R. §60-2.16(f).

6.Bottom Line: The placement goal must be set at an annual percentage rate equal to the availability figure for women or minorities. 41 C.F.R. §60-2.16(c). The regulations contemplate "a single goal for all minorities," but if there is a substantial disparity in the utilization of a particular minority group, the contractor may be required to establish separate goals for each group. 41 C.F.R. §60-2.16(d).

7.Other Required Contents for an AAP. Section 60-2.17 sets forth additional requirements that are only a little different than the old rules as follows:

  1.  Designation of responsibility. The contractor must provide for the implementation of equal employment opportunity and the affirmative action program by assigning responsibility and accountability to an official of the organization. Depending upon the size of the contractor, this may be the official's sole responsibility. He or she must have the authority, resources, support of and access to top management to ensure the effective implementation of the affirmative action program.
  2.  Identification of problem areas. The contractor must perform in-depth analyses of its total employment process to determine whether and where impediments to equal employment opportunity exist. At a minimum the contractor must evaluate:

    (1) The workforce by organizational unit and job group to determine whether there are problems of minority or female use (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);

    (2) Personnel activity (applicant flow, hires, terminations, promotions, and other personnel actions) to determine whether there are selection disparities;

    (3) Compensation systems to determine whether there are gender-, race-, ethnicity-based disparities;

    (4) Selection, recruitment, referral, and other personnel procedures to determine whether they result in disparities in the employment or advancement of minorities or women; and

    (5) Any other areas that might affect the success of the affirmative action program.

  3.  Action-Oriented Programs. The contractor must develop and execute action-oriented programs designed to correct any problem areas identified under section 60-2.17(b) and to attain established goals and objectives. For these action-oriented programs to be effective, the contractor must ensure that they consist of more than following the same procedures that have previously produced inadequate results. Furthermore, a contractor must demonstrate that it has made good faith efforts to remove identified barriers, expand employment opportunities, and produce measurable results.
  4.  Internal audit and reporting system. The contractor must develop and implement an auditing system that periodically measures the effectiveness of its total affirmative action program. The actions listed below are key to a successful affirmative action program:

    (1) Monitor records of all personnel activity, including referrals, placements, transfers, promotions, terminations, and compensation, at all levels to ensure the nondiscriminatory policy is carried out;

    (2) Require internal reporting on a scheduled basis as to the degree to which equal employment opportunity and organizational are attained;

    (3) Review report results with all levels of management; and

    (4) Advise top management of program effectiveness and submit recommendations to improve unsatisfactory performance.

8.These look similar to, but are less extensive than, the old requirements formerly contained in the regulations at 41 C.F.R. §60-2.20 et seq.

C. Equal Opportunity Survey

  1. The new regulations introduce the use of a new survey that the OFCCP has and will continue to send to selected contractors and require them to complete. 41 C.F.R. §60-2.18.
  2. The current survey asks for such information as the highest and lowest salaries for non-minority males, women, and minorities in major job groups. These results will undoubtedly be used to select contractors for more detailed audits.

D. Glass Ceiling Audit

  1. 41 C.F.R. §60-2.30 recognizes the practice of conducting "Corporate Management Compliance Evaluations" to identify and eliminate barriers to advancement into mid-level and senior-level positions.

E. Coming Soon — Annual Filing of Program Summaries

  1. 41 C.F.R. §60-2.31 mandates that AAPs be "summarized and updated" and submitted to OFCCP annually.
  2. The format will be prescribed in the Federal Register later.

F.How Many AAPs Must Be Developed?

  1. Under 41 C.F.R. §60-2.1(d), a covered contractor (generally one who has at least 50 employees and a contract of $50,000 or more) must prepare an AAP for each of its establishments.
  2. All employees of a covered contractor must be included in an AAP for the establishment at which they work except:

    (1) Employees who work at establishments other than that of the manager to whom they report, must be included in the affirmative action program of their manager.

    (2) Employees who work at an establishment where the contractor employs fewer than 50 employees may be included under any of the following three options: in an affirmative action program that covers just that establishment; In the affirmative action program that covers the location of the personnel function which supports the establishment; or In the affirmative action program that covers the location of the official to whom they report.

    (3) Employees for whom selection decisions are made at a higher level establishment within the organization must be included in the affirmative action program of the establishment where the selection decision is made.