Analysis of the OFCCP's Recent Regulatory Revisions to the Affirmative Action Regulations at 41 CFR Parts 60-1 and 60-2
February 1, 2001
Peter M. Stein and Nancy L. Merwin
On November 13, 2000, the Department of Labor's Office of Federal Contract Compliance Programs (the "OFCCP") issued significant amendments to 41 C.F.R. Part 60-2, the regulations that establish the requirements for affirmative action programs ("AAPs"), and related sections in Part 60-1 (the "Revised Regulations").1 The Revised Regulations, which are effective as of December 13, 2000, will have a significant impact on government contractors and subcontractors who are required to develop and maintain AAPs. In general, the Revised Regulations significantly reduce the number of required elements in AAPs and generally simplify the AAP preparation process. Some of the more significant changes in contractors' affirmative action obligations include:
- The Equal Opportunity Survey
The Revised Regulations introduce the use of the Equal Opportunity Survey ("EO Survey").2 The EO Survey is a tool utilized by the OFCCP to gather information from contractors regarding their affirmative action efforts, personnel activity and compensation. In addition to aiding contractors in assessing their pay and other personnel practices, the use of the EO survey is intended to increase the efficiency and effectiveness of the OFCCP's compliance monitoring.3
- Two Availability Factors
The Revised Regulations reduce the number of availability factors from the current eight, to two factors.4
- The Organizational Profile
The Revised Regulations provide for a simpler, more concise organizational profile as an alternative to the existing workforce analysis.5
- EEO-1 Categories as Job Groups
Under the Revised Regulations, employers with 50 to 150 employees will be permitted to use EEO-1 categories for their job groups.6
In addition to providing a brief overview of the recent regulatory changes issued by the OFCCP, this paper will provide a section-by-section analysis of Parts 60-1 and 60-2 of the Revised Regulations.
B. OVERVIEW OF CHANGES
The OFCCP regulations implementing Executive Order 11246 (The "Order") have remained essentially unchanged since they were first promulgated in 1970. However, criticism over the years from various groups involved in the AAP process, including contractors and OFCCP field staff, resulted in a review of the regulations. Several years ago, a regulatory team was appointed pursuant to the authority of Executive Order 12866 and the Clinton Administration's "Reinventing Government Initiative," to review the Part 60-2 regulations, which govern the contents of AAPs.7
The regulatory team set out with the following objectives:
- eliminate unnecessary, duplicative provisions;
- eliminate compliance burdens by reducing paperwork and increasing consistency between contractors' standard business practices and ability to comply with the regulations;
- overall improvement of contractors' affirmative action efforts, including an increased rate of voluntary compliance;
- simplify the regulations to make them more comprehensible; and
- increase the OFCCP's ability to monitor compliance efficiently and effectively. 8
On August 19, 1997, the OFCCP published revisions to the regulations at 41 C.F.R. Part 60-1 to improve agency efficiency and enforcement effectiveness, and to reduce burdens on contractors. These revisions included, among other things, the elimination of a certification requirement, the clarification of its sanction authority and the streamlining of the compliance evaluation process.9
On May 4, 2000, the OFCCP issued proposed revisions to the regulations at 41 CFR Part 60-2 (the "Proposed Regulations"). The Proposed Regulations also contained corresponding revisions to Section 60-1.12, which governs record retention, and Section 60-1.40, which governs who must develop and maintain an AAP.10
The Proposed Regulations were issued with the following principles and goals in mind:
- To shift the OFCCP's regulatory emphasis to performance based standards rather than focus on highly technical and detailed standards of the written AAP. The Revised Regulations place more importance on the actual nondiscrimination and affirmative action activities undertaken by contractors.
- To give contractors greater flexibility to design their AAPs around their unique business needs.
- To attain the Department of Labor's goal of pay equity.
- To increase contractor awareness of performance, and compliance presence by the OFCCP, in an effort to dramatically improve the overall level of compliance.
- To achieve more effective enforcement of the Order by receiving detailed up-to-date data about a contractor's affirmative action performance. 11
After issuing the Proposed Regulations in May 2000, the OFCCP received comments before issuing the final version of the Revised Regulations on November 13, 2000. The Revised Regulations remained largely unchanged from the Proposed Regulations, with exception of a few minor changes that will be discussed in detail below.
A contractor that prepared an AAP under the old regulations may maintain that AAP without penalty for the duration of the AAP year. However, any AAP developed after December 13, 2000, must comply with the Revised Regulations.12
C. SECTION-BY-SECTION ANALYSIS
PART 60-2 — AFFIRMATIVE ACTION PROGRAMS
SUBPART A — GENERAL
Sec. 60-2.1. Scope and Application
Former section 60-2.1 provided a general overview of the regulations contained in Part 60-2, which governs the content of AAPs, and set forth the standards for who is required to develop and maintain an AAP. Consistent with the goal of simplifying the regulations, revised section 60-2.1 is limited to a brief description of the scope of the regulations in Part 60-2. Redundant and outdated language is deleted. For example, the historical reference to "Revised Order No. 4," is deleted from the Revised Regulations. The Revised Regulations do not alter the thresholds for who must develop AAPs; specifically, a nonconstruction contractor must develop and maintain a written AAP for each of its establishments if it has 50 or more employees and:
- has a contract of $50,000 or more;
- has Government bills of lading which in any 12-month period, total or can reasonably be expected to total $50,000 or more;
- serves as a depository of Government funds in any amount; or
- is a financial institution that is an issuing and paying agent for U.S. savings bonds and savings notes in any amount.
There are also several significant additions to section 60-2.1. First, language from Part 60-1, specifying that AAPs must be developed by the contractor within 120 days from the commencement of the contract and updated annually, is now included in this section.
In addition, subsection (d) is added to section 60-2.1, which describes who is included in affirmative action programs. This subsection clearly states that contractors who are required to develop AAPs are required to develop and maintain an AAP for each of their establishments Furthermore, each employee in the contractor's workforce must be included in an affirmative action program. 13
Subsection (d) also clarifies the placement of employees in AAPs for organizations with multiple locations. Generally, employees must be included in the AAP of the establishment at which he or she works. However, subsection (d) sets forth four exceptions to this rule:
1. Establishment where Manager is Located.
If an employee performs his or her normal customary duties at a location other than that of the manager to whom he or she reports, he or she must be included in the AAP that includes their manager.
2. Establishment with Fewer than 50 employees.
If an employee works at an establishment where the contractor employs fewer than 50 employees, that employee may be included in one of the following three AAPs:
(i) an AAP that only covers the establishment where the employee works;
(ii) an AAP that covers the personnel function that supports that establishment; or
(iii) an AAP that covers the official to whom they report.
3. Establishment where Selection Decisions are Made.
If selection decisions for an employee are made at a higher level establishment, then the employee must be included in the AAP where the selection decisions are made.
4. Functional AAPs
Finally, the OFCCP decided to grant several requests received during the comment period that contractors be permitted to develop their AAPs based on how their businesses actually are organized.14 Therefore, the Revised Regulations provide for the use of the "functional AAP", whereby contractors may reach an agreement with the OFCCP on the development and use of AAPs based on functional or business units, without regard to the geographic location of the establishments and employees. The agreement to use functional AAPs must be approved by the Deputy Assistant Secretary. Furthermore, even if a contractor has permission to use a functional AAP, the OFCCP may still conduct evaluations at a single geographic location. The OFCCP planned to have procedures for handling requests for functional AAPs in place before the effective date of the regulations. However, the OFCCP has not yet established procedures for the use of functional AAPs.
Finally, subsection (e) is added to Revised Section 60-2.1. This subsection specifically explains how to identify employees in an AAP, who, pursuant to subsection (d) above, are included in an AAP of an establishment other than where they are actually located. In these cases, the job group analysis and the organizational profile (both discussed below) of the AAP in which such employees are included must be annotated to identify the actual location of such employees. Correspondingly, if the establishment where the employee is actually located also maintains an AAP, that AAP must be similarly annotated to identify the actual AAP in which such employees are included.
Section 60-2.2. Agency Action
No substantive changes were made to this section. However, consistent with the Revised Regulation's goal of clarity, stylistic revisions are included in this section. In addition, a few technical changes, including the substitution of Deputy Assistant Secretary for Director are included as well.
SUBPART B — PURPOSE AND CONTENTS
OF AFFIRMATIVE ACTION
Section 60-2.10 General Purpose and Contents of Affirmative Action Programs
Formerly, this section set forth the purpose of the AAP; namely to achieve equal employment opportunity through the use of specific and result-oriented procedures to which a contractor commits itself to apply every good faith effort. This section also gave a brief description of the contents of AAPs.15
Revised section 60-2.10 contains significant revisions. It is completely rewritten to convey the OFCCP's philosophy that "affirmative action is not to be a mere paperwork exercise but rather a dynamic part of the contractor's management approach." 16
Rather than a "set of specific and result-oriented procedures,"17 revised subsection (a) describes an AAP as a management tool designed to ensure equal employment opportunity. It sets forth the central premise underlying affirmative action that, absent discrimination, over time a contractor's workforce will generally reflect the gender, racial and ethnic profile of the labor pools from which the contractor hires. It gives a brief description of the tools used to identify underutilization, and the action-oriented efforts to address such underutilization. Furthermore, this subsection describes how an AAP institutionalizes the contractor's commitment to equal employment opportunity since a contractor, as part of its AAP, "monitors and examines its employment decisions and compensation systems to evaluate the impact of those systems on women and minorities."18 In sum, affirmative action is presented not as a paperwork exercise, but rather as a way a contractor regularly conducts its business. It is the OFCCP's belief that "when an [AAP] is approached from this perspective, as a powerful management tool, there is a positive correlation between the presence of affirmative action and the absence of discrimination."19
Revised subsection (b) lists the required contents of an affirmative action program as follows:
- Organizational profile;
- Job group analysis;
- Placement of incumbents in job groups;
- Determining availability;
- Comparing incumbency to availability;
- Placement goals;
- Designation of responsibility for implementation;
- Identification of problem areas;
- Action-oriented programs; and
- Periodic internal audits;
Finally, subsection (c) is added to require that contractors maintain documentation of their compliance with Sections 60-2.11 through 60-2.17 available to the OFCCP.
Section 60-2.11. Organizational Profile
Section 60-2.11 was formerly entitled "Required Utilization Analysis." The Former Regulation first identified the EEO categories in which minorities and women were likely to be underutilized, and then set forth in detail the core components of the AAP; namely, the workforce analysis and the job group analysis.20 Under the Revised Regulations, section 2.11 only covers the workforce analysis, which is now referred to as an "organizational profile." Former paragraph (b), which discussed the job group analysis, was revised and moved to Section 60-2.12.
Contractors have long criticized the workforce analysis for being too burdensome, and for failing to capture the structural characteristics of today's workforces. By requiring a rigid reporting structure, the workforce analysis requirement often caused contractors to create special reports solely for the purposes of developing an AAP. In response to these problems, and in an effort to adhere to the central function of the workforce analysis, that is, to provide a picture of a contractor's organizational structure, the OFCCP proposed to replace the workforce analysis with a shorter, simpler format, referred to as the Organizational Profile.21
The Organizational Profile contained in the Proposed Regulations focused only on organizational units, eliminating the itemization of individual job titles, and the reporting of the gender, race or salary information by job title.22 This change was intended to reduce the volume of the Organizational Profile as compared to the workforce analysis, which is often one of the largest sections of the AAP. The proposed Organizational Profile also gave contractors substantial latitude to present their organizational units as they actually exist, only requiring that information be presented in the form of an organizational chart, or similar graphical presentation of the contractor's workforce. The proposed Organizational Profile also conformed the designation of minorities to those used in the EEO-1 report; that is, Blacks, Hispanics, Asians / Pacific Islanders, and American Indians / Alaskan Natives. In sum, the proposed Organizational Profile was intended to provide a simpler, more concise format that would be easier for contractors to produce, and which would more accurately reflect the contractor's organization. The flexibility given to contractors to present information in the way that best suits their organization reflected the OFCCP's recognition that not all companies are organized by traditional units such as by department or branch. By allowing contractors to report their actual organizational units, the Organizational Profile was intended to be less burdensome for the contractor to produce, and to be more accurate and reliable as an analytical tool.23
However, during the comment period, some contractors indicated that it would actually be more burdensome to create an Organizational Profile. 24 In addition, some contractors objected to the Organizational Profile being presented as a graphical representation, reasoning that this requirement would be burdensome for contractors without the software or systems to develop such representations. In response to these comments, and in line with the OFCCP's goal to give contractors greater flexibility to design their AAPs around their unique business needs, the Revised Regulations allow contractors to elect the method that is most meaningful for the particular contractor.25
Therefore, under the Revised Regulations, contractors may use either an organizational display (graphical or otherwise) or a workforce analysis (which is the same as required under the Former Regulations) as their Organizational Profile. The requirements for the organizational display and the workforce analysis are set forth in revised Section 60-2.11 as follows:
1) The Organizational Display
An organizational display is a "detailed graphical or tabular chart, text, spreadsheet, or similar presentation of the contractor's organizational structure."26 It must identify each organizational unit in the establishment and show the relationship of each unit to the other units in the establishment. An organizational unit is defined as any component that is part of the contractors' corporate structure. The Revised Regulations provide examples of traditional units such as a department, division, section, branch, or group; and less traditional units such as project teams or job families. For each organizational unit, the organizational display must indicate the following:
- The name of the unit;
- The job title, gender, race and ethnicity of the unit supervisor;
- The total number of male and female incumbents; and
- The total number of male and female incumbents in each of the following groups: Blacks, Hispanics, Asian / Pacific Islanders, and American Indians / Alaskan Natives.
2) The Workforce Analysis
The workforce analysis set forth in the Revised Regulations is substantively unchanged from the workforce analysis set forth in the Former Regulations. As part of its workforce analysis, an employer surveys its workforce to determine its racial, ethnic, and gender composition. The employer first lists every job title within each organizational unit, in accordance with how it is listed in the applicable collective bargaining agreements or payroll records. Job titles must be ranked in order of wage rates or salary ranges from lowest to highest according to pay.
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 line. If there are no formal progression lines or usual promotional sequences, job titles should be listed by job families or disciplines.
In addition, for each of the job titles listed, the contractor must list the wage rate, total number of male and female incumbents; and the total number of males and female incumbents in each of the following groups must be given: Blacks, Hispanics, American Indians / Alaskan Natives, and Asians / Pacific Islanders.
Section 60-2.12. Job Group Analysis
Under the Former Regulations, after completing the workforce analysis, contractors were required to create a job group analysis. Job groups consisted of a group of jobs having "similar content, wage rates and opportunities."27 In addition, similarly to the workforce analysis, for each of the job titles listed, the contractor was required to list the wage rate and the total number of male and female incumbents broken down by minority group and sex. The Revised Regulations do not alter these requirements; nor do they change the traditional approach to job group analysis that requires jobs with "similar content, wage rates and opportunities" to be combined to form job groups.28
However, the Revised Regulations incorporate a few changes in response to criticism that the job group analysis received over the years. For example, the job group analysis was criticized for not providing enough guidance to contractors given the task of dividing their workforce into job groups.29 In response, the Revised Regulations provides some guidance on how to formulate job groups. Specifically, the Revised Regulations state "similarity of job content refers to the duties and responsibilities of the job titles which make up the job group." 30 Furthermore, it states "similarity of opportunities refers to training, transfers, promotions, pay mobility and other career enhancement opportunities offered by the jobs within the job group."31
The Revised Regulations also require that once a contractor determines appropriate job groups, it must prepare a list of all the job titles that comprise each job group. This section also reiterates the provisions of section 60-2.1(d) and (e) relating to jobs located at another establishment; specifically, if the job group contains job titles that are located at another establishment, the job group analysis must be annotated to identify the actual location of those jobs. Similarly, if the establishment where the job groups are actually located maintains an AAP, the job group analysis of that AAP must be similarly annotated to identify the AAP in which such jobs are included.
Finally, with respect to smaller contractors, the job group analysis was criticized for producing job groups that are too small for meaningful analysis. In response to this criticism, the Revised Regulations provide that contractors with fewer than 150 employees may form their job groups on the basis of the standard EEO-1 occupational groupings; namely, officials and managers, professionals, technicians, sales, office and clerical, craft workers, operatives, laborers and service workers.
Section 60-2.13. Placement of Incumbents in Job Groups
This section requires contractors to record separately the percentage of minorities and the percentage of women they employ within each job group. Although this procedure seems obvious, it was not expressly included in the Former Regulations. The OFCCP included it in the Revised Regulations in an effort to make the regulations more comprehensible to "first-time and infrequent users of the regulations and to casual readers."32
Section 60-2.14. Determining Availability
The purpose of the availability analysis is to determine the percentage of minorities and women that are qualified, or readily qualifiable, for jobs within each job group in the contractor's workforce. Availability is "the yardstick against which the actual utilization of minorities or women in the contractor's job group is measured."33
The Former Regulations set forth eight specific factors to be separately considered when determining the availability of women and minorities for each job group. The availability of minorities for each job group is determined by examining and quantifying (the factors are similar, but not identical for women):34
- The minority population of the labor area surrounding the facility;
- The size of the minority unemployment force in the area in which the facility is located;
- The percentage of the minority work force as compared with the total work force in the immediate labor area;
- The availability of minorities possessing the requisite skills in the immediate labor areas;
- The availability of minorities possessing the requisite skills in an area in which the contractor can reasonably recruit;
- The availability of promotable and transferable minorities within the contractor's organization;
- The existence of training institutions capable of training persons in the requisite skills; and
- The degree of training which the contractor is reasonably able to undertake as a means of making all job classes accessible to minorities.35
The eight-factor analysis was one of the most criticized elements of the Former Regulations. The predominant criticism was that the availability factors were unnecessarily complex and not sufficiently focused on the availability of individuals who might actually be able to fill positions within the contractor's workforce.36 For example, factor 1, which took into account the percentage of minorities in the population in the immediate labor area, does not focus on the requisite skills needed for a contractor's workforce. Furthermore, even if a job does not require particular skills, this factor was overly broad in that it did not narrow the minority population to those actually in the workforce. For example, by considering the minority population of the labor area surrounding the facility, this factor commingled those who are able to work with those who are not, e.g. under 16, over 65, disabled or otherwise unavailable. Similarly, factor 7, which considered the existence of training institutions capable of training persons in the requisite skills, was criticized for focusing on those individuals who may be available to work in the future but who were not currently available.37
In response to these criticisms, and the recommendations of several contractors, the Revised Regulations limit the number of factors to the ones that are most commonly used by contractors to compute availability estimates. The Revised Regulations simplify the availability computation by reducing the number of factors from eight to two. Contractors must separately determine the availability of minorities and women for each group by considering at least the following two factors:
1. The percentage of minorities or women with the requisite skills in the reasonable recruitment area. This is factor 5 under the current regulations. The reasonable recruitment area refers to the geographical area from which a contractor usually seeks or reasonably could seek workers to fill the positions in question. A contractor may not define its reasonable recruitment area in such a way that has the effect of excluding minorities or women. A contractor must develop a brief, written rationale supporting its selection of the reasonable recruitment area.
2. The percentage of minorities or women among those promotable, transferable, and trainable within the contractor's organization. This is a combination of factors 6 and 8 in the current regulations. Trainable refers to employees who could, with appropriate training, which the contractor is reasonably able to provide, become promotable or transferable within the AAP year. In the Proposed Regulations, the definition of "trainable" did not include the reasonableness standard. However, in response to comments from contractors that the calculation of availability would be rendered impractical without such limitation, the OFCCP included the reasonableness standard in the Revised Regulations.38
A contractor may not define its pool of promotable, transferable and trainable employees in such a way that has the effect of excluding minorities or women. A contractor must develop a brief, written rationale supporting its selection of such a pool.
Furthermore, the Revised Regulations require contractors to use the most "current and discrete statistical data"39 to conduct their availability analyses, e.g., United States census data or data from local job service offices.
Finally, the Revised Regulations require that contractors compute a composite availability estimate when a job group is composed of job titles with different availability rates. The composite availability figure would represent a weighted average of the availability estimates for all the job titles in the job group.
The OFCCP solicited comments on the issue of whether the regulation requiring contractors to determine the percentage of minorities within each job group should be changed to require contractors to report availability by individual minority subgroups, e.g. Blacks, Hispanics, etc. However, after receiving comments, the OFCCP decided not to change the current methodology and contractors may continue to determine the availability for minorities within each job group as a composite group, rather than determining availability for each minority subgroup.40
Section 60-2.15. Comparing Incumbency to Availability
Under the Former Regulations, after conducting the availability analysis, the contractor was required to make a utilization determination as to whether women or minorities are underutilized in any of the job groups in the contractor's workforce.41 Underutilization existed if any of the job groups contained fewer minorities or women than would "reasonably be expected" considering their availability. Although the requirements are substantively the same, the Revised Regulations contain a new section specifically dealing with underutilization; namely, section 60-2.15. Furthermore, the Revised Regulations delete the word "major" from the requirement that an AAP shall contain an underutilization analysis for all "major job groups." Therefore, under the Revised Regulations, it is expressly clear that contractors must compare incumbency to availability for all job groups.
In addition, in the OFCCP's Notice of Proposed Rulemaking, the OFCCP expressly recognized four methods of determining whether underutilization exists. These four methods are: (1) the "any difference" rule, i.e., whether any difference exists between availability and incumbency; (2) the "one person" rule, i.e., whether the difference between availability and incumbency equals one person or more; (3) the "80 percent " rule, i.e., whether incumbency is less than 80 percent of availability; and (4) the "two standard deviations" analysis, i.e., whether the difference between availability and incumbency exceeds the two standard deviations test of statistical significance.42
During the comment period, the OFCCP received comments regarding its decision to give contractors flexibility to choose one of four approaches for determining underutilization. Some commentators criticized the accuracy of the particular methods, while others thought that by offering contractors a choice of methods, the OFCCP was introducing inconsistency into the process. However, despite these comments, in the preamble to the Revised Regulations, the OFCCP reaffirmed their policy to permit these various methods for determining availability.43
Section 60-2.16. Placement Goals
Although a goals requirement has been incorporated into the regulations since 1970, the Revised Regulations provide additional clarity on how to set goals and guidance regarding the use of goals.44 The Former Regulations refer to "goals and timetables" to which a contractor's "good faith efforts" must be directed to remedy any underutilization; however, they only provide general guidance regarding the establishment of such goals.45
The Revised Regulations set forth the purpose of the placement goals 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." 46This general description of placement goals is similar to the one in the Former Regulations which in part state "goals may not be rigid and inflexible quotas which must be met, but must be targets reasonably attainable by means of applying every good faith effort to make all aspects of the entire [AAP] work."47
However, the Revised Regulations make clear that a contractor's determination that it must establish a placement goal is not a finding or admission of discrimination.
In addition, the Revised Regulations provide that a contractor must establish a "percentage annual placement goal at least equal to the availability figure derived for women or minorities, as appropriate for that job group"; thus, eliminating the concept of timetables, which existed under the Former Regulations. The OFCCP believes that the use of timetables incorrectly placed emphasis on meeting ultimate goals, rather than on annual planning. However, in its Notice of Proposed Rulemaking, the OFCCP was careful to point out that this focus on annual planning should not be misunderstood to mean that a contractor must fully resolve any underutilization within the current AAP year. Rather, compliance is measured by good faith effort, not by the attainment of numerical goals.48
Furthermore, the Revised Regulations now expressly state that the placement goal must equal at least the applicable availability figure. Although this is a new requirement, it reflects the OFCCP's current practice and does not impose any additional burdens on contractors.49
In addition, the Revised Regulations retain the provision from the Former Regulations that when there is a substantial disparity in the utilization of a particular minority group, or men and women of a particular minority group, a contractor may be required to establish separate goals for those groups. However, unlike the Former Regulations, the Revised Regulations make it clear that setting a single goal for all minorities is expected to continue to be the standard procedure for most contractors.
Finally, although the OFCCP has always been careful to distinguish between quotas and goals, the Revised Regulations reinforce the language from the Former Regulations distinguishing goals from quotas and set forth the principles that govern the establishment and use of placement goals as follows:
- "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."
- "In all employment decisions, the contractor must make selections in a nondiscriminatory manner. Placement goals do not provide the contractor with justification to extend a preference to any individual, select any individual, or adversely affect an individual's employment status, on the basis of that person's race, color, religion, sex, or national origin."50
- "Placement goals do not create set-asides for specific group, nor are they intended to achieve proportional representation or equal results."
- "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."
Section 60-2.17. Additional Required Elements of Affirmative Action Programs
This section deals with the action-oriented programs and procedures that a contractor can utilize to remedy equal employment opportunity problems that are disclosed by the diagnostic component of the AAP. The analogous section in the Former Regulations is similarly entitled "Additional Required Ingredients of Affirmative Action Programs."51
In furthering its belief that AAPs are not a "rote, follow-the-numbers"52 exercise, the OFCCP eliminated many of the specific requirements contained in this portion of the Former Regulations. Rather than imposing strict "ministerial" burdens on contractors, the revised approach allows contractors to develop action-oriented programs tailored to their specific situations. This shift in the OFCCP's approach to affirmative action reflects its belief that effective affirmative action is intensely situation-specific. This new approach requires contractors to assess their individual circumstances and develop programs to remedy their individual problems or deficiencies. Specifically, the Revised Regulations delete the following requirements:
- Reaffirmation of the contractor's EEO policy in all personnel matters;
- Formal internal and external dissemination of the contractor's EEO policy;
- Establishment of goals and objectives by organizational units and job groups, including timetables for completion;
- Active support of local and national community action programs and community service programs; and
- Consideration of minorities and women not currently in the workforce having requisite skills.
The contractor may, of course, voluntarily choose to retain these elements. Furthermore, the OFCCP believes that the remaining items subsume many of the aspects of the specific elements that were deleted. The Revised Regulations retain the following required elements:
- Designation of responsibility. The contractor must assign responsibility and accountability for implementation of equal opportunity and affirmative action program to an official of the organization. The designated official, who may solely be responsible for such implementation, must be given the authority, resources, support of and access to top management necessary to ensure effective implementation of the affirmative action program.
- Identification of problem areas. The contractor must perform in-depth analyses of its total employment process to determine whether any barrier to equal employment opportunity exist by evaluating, at a minimum (1) the workforce by organizational unit and job group to determine whether there are problems of minority or female utilization or distribution; (2) personnel activity (applicant flow, hires, termination, promotions, and other personnel actions) to determine whether there are selection disparities; (3) compensation system(s) to determine whether there are gender, race, or 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 impact the success of the affirmative action program.
- Action-oriented programs. Once a contractor identifies problem areas, the contractor must develop and execute action-oriented programs designed to eliminate such problems and to attain established goals and objectives. These action-oriented programs must consist of more than the procedures that 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.
- Internal audit and reporting system. The contractor must design and implement an internal audit and reporting systems to measure effectiveness of its affirmative action program, which includes the following actions: (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 an a scheduled basis as to the degree to which equal employment opportunity and organizational objectives 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.
Section 60-2.18 Equal Opportunity Survey
The Revised Regulations codify the EO Survey that has been in use since March 2000.53The EO Survey is a tool for the OFCCP to collect information from selected nonconstruction contractors about personnel activities, compensation and tenure data, as well as specific information about contractors' affirmative action programs.
The EO Survey is designed to achieve several objectives. First, the EO survey is intended to enhance the efficiency and effectiveness of the OFCCP's compliance monitoring by enabling the OFCCP to deploy its resources towards establishments most likely to be out of compliance. Second, the EO survey is intended to streamline the compliance evaluation process by enabling the OFCCP to obtain compliance information earlier in the process. Finally, the EO survey is expected to improve contractor self-awareness and encourage self-evaluations. Together, the OFCCP's increased compliance presence, coupled with contractors' heightened awareness of performance, is expected to improve the overall level of compliance.54
The OFCCP received numerous comments about the EO Survey during the comment period; in fact, virtually every one of the 200 comments received on the Proposed Regulations addressed the EO Survey.55 In its final rule, the OFCCP made some changes from the initially proposed EO Survey. First, the initially Proposed Regulations provided that the EO Survey "may" include data elements such as applicants, hires, promotions, terminations, compensation and tenure by race and gender. In the Revised Regulations, this provision is made mandatory.
Second, in response to several requests to permit reporting EO Survey data by job group rather than by EEO-1 category, and in the interest of flexibility, the OFCCP decided to allow contractors the option of submitting personnel activity and compensation data either by job group or by EEO-1 category. However, a contractor may only report such data by job group in the following circumstances:
- Contractors must submit both personnel activity and compensation data by job groups.
- Contractors may submit EO Survey data by job groups only if the data is submitted via the Internet.
- Contractors must identity the EEO-1 category to which each job group belongs.
- Contractors may not submit a job group that crosses EEO-1 category lines.
The OFCCP also received many comments from contractors regarding their concern about the confidentiality of compensation information provided in the EO Survey. The Revised Regulations state that the OFCCP will treat information in the EO Survey as confidential to the maximum extent the information is exempt from public disclosure under the Freedom of Information Act, 5 U.S.C. 552. Furthermore, the Revised Regulations reaffirm the OFCCP's policy not to release data that is determined to be confidential or has the potential to subject a contractor to commercial loss if disclosed. The OFCCP addressed the concerns regarding confidentiality in the preamble to the final Revised Regulations. It stated that throughout its history, the OFCCP has routinely collected compensation information during the course of compliance evaluations, and furthermore, they were not aware of any instance in which compensation data was released without the consent of the contractor. In sum, the OFCCP found the confidentiality provisions in the Revised Regulation to be adequate.
Finally, in the OFCCP's Notice of Proposed Rulemaking, the OFCCP expressed its expectation that the EO Survey would be sent to no less than 50% of nonconstruction contractors each year.56 Therefore, contractors would be submitting biennially, with approximately one-half of all establishments submitting each year. The OFCCP also stated that it was considering whether to codify this one-half floor as part of the final rule. The Revised Regulations provide that the "OFCCP will designate a substantial portion of all nonconstruction contractor establishments to prepare and file an [EO] survey." Although the OFCCP did not explicitly codify the one-half floor, in the preamble to the Revised Regulations, the OFCCP expressed its position that it interprets "substantial portion" to mean one-half of all nonconstruction contractor establishments.57
SUBPART C — MISCELLANEOUS
Subpart C of the Former Regulations suggested methods for contractors to implement the required components of AAPs.58 Although these suggestions were intended to be advisory only, they were often confused as being mandatory. Therefore, in an effort not to present affirmative action as a prescriptive, cookie-cutter, paperwork exercise, the Revised Regulations delete former Subpart C. However, the suggestions contained in Subpart C will be incorporated into a technical assistance manual for contractors. In the Revised Regulations, Subpart C is now comprised of the following miscellaneous items:
Section 60-2.30. Corporate Management Compliance Evaluations
This section sets forth the purpose of corporate management compliance evaluations, commonly known as "glass ceiling" audits; that is, to ascertain whether employees are encountering artificial barriers to advancement into midlevel and senior corporate management.
In addition, this section specifically provides that the OFCCP may expand a glass ceiling review beyond corporate headquarters to any and all areas within the corporation to ensure compliance. In the preamble to the Revised Regulations, the OFCCP addressed contractors' concerns that this provision would give the OFCCP unlimited authority to expand the scope of corporate management evaluations beyond corporate headquarters to any and all facilities within the corporation. In response to this concern, the OFCCP affirmed that it is not its policy or practice to routinely expand corporate management compliance evaluations into broad-ranging reviews of subordinate facilities, or to audit for issues outside the scope of the glass ceiling. However, they reserved their right to do so, if in the course of pursuing a corporate management evaluation they learn of practices or conditions in violation of the Order.59
Section 60-2.31. Program Summary
This section requires that AAPs be summarized and updated annually for submission to the OFCCP on the anniversary date of the AAP. The program summary must be prepared in a format that will be prescribed by the Deputy Assistant Secretary and published in the Federal Register before becoming effective.60 This requirement also existed in the Former Regulations, along with the caveat that a prescribed format was forthcoming.61 However, the OFCCP has never published such a format. Therefore, until the OFCCP prescribes a format for the program summary, this requirement has little practical effect on contractors. Furthermore, the importance of the program summary was further minimized by the introduction of the EO survey. In the preamble to the Revised Regulations, the OFCCP stated that the EO Survey might eventually replace the program summary requirement if it is found to be duplicative.
Section 60-2.32. Affirmative Action Records
This section requires contractors to make their affirmative action records available to the OFCCP upon request. Although the Former Regulations did not set forth this requirement in a separate section, they did contain a similar provision.62
Section 60-2.33. Preemption
This section, which is substantively the same as the preemption provision in the Former Regulations,63 states that Executive Order 11246, as amended, preempts state or local laws to the extent that they are conflicting.
Section 60-2.34. Supersedure
This section states that Part 60-2 supersedes all orders, instructions, regulations and memorandums of the Secretary of Labor, other officials of the Department of Labor and contracting agencies, to the extent that they are inconsistent with Part 60-2. This section also existed in the Former Regulations; however, outdated and unnecessary language was deleted.64
Section 60-2.35. Compliance Status
This section expands upon and restructures the analogous provision from the Former Regulations dealing with compliance status.65 Similarly to the Former Regulations, this revised section makes clear that a contractor's compliance status will not be judged solely by whether a contractor reaches its goals. In addition, this section deletes the concept of "timetables" which existed under the Former Regulations and reaffirms that the composition of the contractor's workforce alone will not serve as a basis to impose sanctions. The remainder of this section sets forth how a contractor's compliance with affirmative action and nondiscrimination obligations will be determined. Similarly to the Former Regulations, this section states that a contractor's affirmative action obligations will be determined by "reviewing the nature and extent of the contractor's good faith affirmative action activities."66 In addition, this revised section adds a provision about compliance with nondiscrimination obligations that states "a contractor's compliance status will be determined by analysis of statistical data and other-nonstatistical information that would indicate whether employees and applicants are being treated without regard to their race, color, religion, sex or national origin."67 The NPRM cites the following as examples of nonstatistical information for the purposes of this section: collective bargaining agreements, company policy statements, and training notices.68
PART 60-1 — OBLIGATIONS OF CONTRACTORS
In addition to the above changes to Part 60-2, the Revised Regulations also contain corresponding revisions to Part 60-1 to harmonize them with the changes to Part 60-2. Specifically, the following revisions were made to Section 60-1.12, which governs record retention, and to Section 60-1.40, which governs who must develop and maintain an AAP.69
Section 60-1.12. Record Retention
This section was revised and now codifies the longstanding regulatory obligation of contractors to identify the gender, race, and ethnicity of each employee, and where possible, the gender, race, and ethnicity of each applicant in any records the contractor maintains pursuant to this section. During the comment period, some contractors requested that the definition of applicant be more narrowly defined, arguing that the requirement to keep records on all prospective employees, even unsolicited or unqualified applicants, created an undue burden.70 The OFCCP refused to change the longstanding requirement that contractors collect demographic information about applicants. However, in the preamble to the Revised Regulations, the OFCCP noted that the inclusion of the term "where possible" reflects the OFCCP's understanding that some applicants refuse to divulge demographic information to identify themselves.71
Section 60-1.40. Affirmative Action Programs
Although there were no substantive revisions to the requirements set forth in former section 60-1.40, this section was simplified and modified for clarity, and the portions of this section which related to the contents of AAPs were updated and appropriately incorporated into Part 60-2, which governs the content of AAPs. Therefore this section now simply sets forth which contractors are required to develop affirmative action programs, and refers contractors to the applicable regulations for specific affirmative actions requirements.
While not perfect, the Revised Regulations are a major step in streamlining the process of developing and maintaining AAPs. The simplification of the process, along with increased compliance presence by the OFCCP, and heightened self-awareness by contractors, should significantly improve overall compliance with the affirmative obligations created under the Order.
1 The previous version of the regulations is hereinafter referred to as the "Former Regulations."
2 See Revised Regulations at § 60-2.18.
3 On March 29, 2000, the OMB approved the first mailing of the EO Survey to approximately 7,000 contractors. A second mailing was recently sent to approximately 50,000 contractors.
4 See Revised Regulations at § 60-2.14.
5 Id. at § 60- 2.11.
6 Id. at § 60- 2.12.
7 See Government Contractors, Affirmative Action Requirements, 65 Fed. Reg 26,088 (proposed May 4, 2000) (to be codified at 41 C.F.R. Parts 60-1 and 60-2) ("NPRM").
11 Id. at 26,089-90.
12 See Preamble to Revised Regulations, Government Contractors, Affirmative Action Requirements, 165 Fed. Reg. 68022, (November 13, 2000) (to be codified at 41 C.F.R. Parts 60-1 and 60-2) ("Preamble to Revised Regulations").
13 Although the Revised Regulations do not make reference to particular categories of employees, in the preamble to the Final Rule, the OFCCP reiterated its belief that the term "employees" is broad enough to include part-time, temporary and full-time employees.
14 See Preamble to Revised Regulations
15 See Former Regulations at § 60- 2.10.
16 See NPRM.
18 See Revised Regulations at § 60-2.10.
19 See NPRM
20 See Former Regulations at § 60- 2.11.
21 See NPRM.
24 See Final Rule.
26 See Revised Regulations at § 60- 2.11.
27 See Former Regulations at § 60- 2.11(b).
28 See Revised Regulations at 60- 2.12(b).
29 See NPRM.
30 See Revised Regulations at § 60-2.12(b).
32 See NPRM
34 See Former Regulations at § 60-2.11.
36 See NPRM.
38 See Preamble to Revised Regulations.
39 See Revised Regulations at § 60-2.14(d).
40 Although as a general rule the Revised Regulations do not require contractors to determine the percentage of minorities for each minority subgroup, contractors may be required to establish separate placement goals for each minority subgroup when there is a substantial disparity in the utilization of a particular minority group. See Revised Regulations at § 60-2.16(d).
41 See Former Regulations at § 60-2.11(b).
42 See NPRM.
43 See Preamble to Revised Regulations.
44 See NPRM.
46 See Revised Regulations at § 60- 2.16.
47 See Former Regulations at § 60-2.12(e).
48 See NPRM.
50 See Revised Regulations at § 60-2.16.
51 See Former Regulations at § 60- 2.13.
52 See NPRM.
53 On March 29, 2000, the approved the first mailing of the EO Survey to approximately 7,000 contractors. A second mailing was recently sent to approximately 50,000 contractors.
54 See NPRM.
55 See Preamble to Revised Regulations.
56 See NPRM.
57 See Preamble to Revised Regulations.
58 See Former Regulations at § 60- 2.20 et. seq.
59 See Preamble to Revised Regulations.
60 As of the date of this paper, no such format has been published.
61 See Former Regulations at § 60- 2.14.
62 Id. at § 60-1.40 (c).
63 Id. at § 60- 2.31.
64 Id. at § 60- 2.32.
65 Id. at § 60- 2.15.
66 See Revised Regulations at § 60- 2.35.
67 Id. at § 60-2.35.
68 See NPRM.
70 See Preamble to Revised Regulations.
Please feel free to contact Peter M. Stein or Nancy L. Merwin at (203) 348-3737 in the firm's Stamford office if you have any questions or comments. Mr.Stein's e-mail address is firstname.lastname@example.org and Ms. Merwin's e-mail address is email@example.com.
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