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Barry McVay's FEDERAL CONTRACTS DISPATCH

DATE: May 4, 2000

FROM: Barry McVay, CPCM

SUBJECT: Office of Federal Contract Compliance Programs; Government Contractor Affirmative Action Requirements

SOURCE: Federal Register, May 4, 2000, Vol. 65, No. 87, page 26087

AGENCIES: Department of Labor (DOL), Employment Standards Administration (ESA), Office of Federal Contract Compliance Programs (OFCCP)

ACTION: Notice of Proposed Rulemaking

SYNOPSIS: This proposed rule would rewrite and simplify OFCCP's regulations that implement Executive Order 11246, as amended, which requires government contractors and subcontractors to "take affirmative action to ensure that applicants are employed, and that employees are treated during employment, without regard to their race, color, religion, sex, or national origin." The proposed rule would change the emphasis of the regulations from the development of a written "affirmative action program" (AAP) that complies with highly prescriptive standards, to a performance-based standard that incorporates an AAP into the contractor's overall management plan. Also, the proposed rule would introduce a new tool to aid contractors in assessing their pay and other personnel practices -- the Equal Opportunity Survey, which contractors would be "encouraged" to submit electronically.

EDITOR'S NOTE: OFCCP's regulations are in Title 41 of the Code of Federal Regulations, Public Contracts and Property Administration; Chapter 60, Office of Federal Contract Compliance Programs, Equal Employment Opportunity, Department of Labor. Most of this proposed rule addresses Part 60-2, Affirmative Action Programs.

Compliance with OFCCP's affirmative action regulations by federal contractors is addressed in Federal Acquisition Regulation (FAR) Subpart 22.8, Equal Employment Opportunity.

DATES: Comments on the proposed rule must be received on or before July 3, 2000.

ADDRESSES: Send comments to James I. Melvin, Director, Division of Policy, Planning and Program Development, OFCCP, Room C-3325, 200 Constitution Avenue, NW, Washington, DC 20210, or by fax to 202-693-1304 (six or fewer pages only).

FOR FURTHER INFORMATION CONTACT: James I. Melvin, Director, Division of Policy, Planning and Program Development, OFCCP, Room C-3325, 200 Constitution Avenue, NW, Washington, DC 20210, 202-693-0102, TTY: 202-693-1308.

SUPPLEMENTAL INFORMATION: Executive Order 11246, which was issued September 24, 1965, requires federal contractors and subcontractors to take "affirmative action," which means that contractors must do more than "not discriminate" -- they must identify and eliminate impediments to equal employment opportunity. OFCCP's regulations implementing Executive Order 11246 (and the implementation of OFCCP's regulations in FAR Subpart 22.8) require government nonconstruction contractors and subcontractors with 50 or more employees and a contract of $50,000 or more to prepare and implement a written AAP for each of their establishments.

The written AAP must contain several elements. One element is a "workforce analysis," which is a snapshot of all employment at the establishment -- it includes all the job titles, arranged by department or other organizational unit, and the number of employees in each job by gender, race, and ethnicity. Another element is a "multi-step analysis," which identifies whether minorities or women are being employed at a rate that would be expected based on their availability for employment. Using census and other demographic data, the contractor conducts an "eight factor analysis" to calculate the number of qualified women and minorities that should be available in the labor market to work in each job group.

If these analyses show "underutilization" in certain job groups, the contractor must analyze its policies, practices, and procedures to determine possible causes, then take corrective actions designed to overcome the underutilization, such as establishing an outreach program or developing goals and organizational objectives. (EDITOR'S NOTE: The introductory material to this proposed rule states "The goals component of the AAP was not designed for, nor may it properly or lawfully be interpreted as, permitting or requiring unlawful preferential treatment or quotas with respect to persons of any race, color, religion, sex, or national origin. The regulations specifically prohibit employment discrimination based on these factors, and affirmative action goals may not be used to impose a quota or preference based on race, color, religion, sex, or national origin." Also see paragraph (e) of proposed Section 60-2.16, Placement Goals.)

OFCCP's regulations in Part 60-2, Affirmative Action Programs, were first published in 1970 and have remained essentially the same since then. Several years ago, a regulatory team was appointed to review Part 60-2 and propose the elimination of outdated requirements, burdensome paperwork requirements, and inconsistent requirements, and to propose ways to improve the quality of AAPs, the rate of voluntary compliance, the ability of OFCCP personnel to monitor compliance, and relations between contractors and OFCCP compliance officers. To that list has recently been added the goal of ensuring employees are compensated equally for performing equal work, regardless of race, color, religion, sex, or national origin. The recommendations of the regulatory team are the basis for this proposed rule.

Besides rewriting Part 60-2 to simplify, streamline, and clarify the regulations, the following would be the most significant changes:

• Paragraph (b) of proposed Section 60-2.10, General Purpose and Contents of Affirmative Action Programs, would outline the required elements of an AAP so contractors can get a general sense of what is required for an AAP: the analysis of the workforce (Section 60.2-11, Organizational Profile; Section 60-2.12, Job Group Analysis; Section 60-2.13, Placement of Incumbents in Job Groups; Section 60-2.14, Determining Availability; Section 60-2.15, Comparing Incumbency to Availability; and Section 60-2.16, Placement Goals); and remedial actions (designation of responsibility for implementation; identification of problem areas; action-oriented programs; and periodic internal audits -- see Section 60.2-17 below).
  
  
• The "workforce analysis" described in paragraph (a) of current Section 60-2.11, Required Utilization Analysis ("listing of each job title as appears in applicable collective bargaining agreements or payroll records (not job group) ranked from the lowest paid to the highest paid"), would be replaced by Section 60-2.11, Organizational Profile, which would require an organization chart for the establishment, showing each of the organizational units and their relationships to one another, and the gender, race, and ethnic composition of each organizational unit. Reporting of race, sex, and salary information by job title would be eliminated.
  
  
• Current paragraph (b) of Section 60.2-11 would become revised Section 60.2-12, Job Group Analysis (paragraphs (b)(1) and (b)(2) would become Section 60-2.14 -- see below). While larger contractors will continue to conduct the job group analysis as currently required in Section 60.2-11(b) (that is, jobs at the establishment with similar content, wage rates, and opportunities, must be combined to form job groups), proposed Section 60.2-12(e) permits contractors with 150 employees or fewer to prepare "a job group analysis that utilizes 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." This is being proposed because "contractors that are smaller employers tend to have so few employees that to subdivide them into smaller job groups than required by the EEO-1 categories would make goal setting unreliable." OFCCP is expressly soliciting comments on this proposed change.
  
  
• The number of availability factors contractors would be required to consider would be reduced from the current eight (Section 60-2.11(b)(1) for minorities and (b)(2) for women) to two (proposed paragraph (d) of Section 60-2.14, Determining Availability): "(1) The percentage of minorities or women with requisite skills in the reasonable recruitment area...(2) The percentage of minorities or women among those promotable, transferable, and trainable within the contractor's organization..." (EDITOR'S NOTE: The eight factors are for minorities and women are similar but not identical, which complicates matters.) OFCCP requests comments on whether the regulation should be changed to require the contractor to compute availability for individual minority subgroups, specifically on these questions:
  
  
  1. Should contractors be required to compute availability separately for individual minority subgroups as a general rule?
     
     
  2. Should contractors be required to compute availability for individual minority subgroups only when the minority subgroup represents a specified percentage of the population in the immediate labor area?
     
     
  3. How large must the minority subgroup population be before the contractor is required to compute the separate availability for minority subgroups?
     
     
• The number of action elements required to be included in contractor AAPs would be reduced to those elements and actions considered necessary and appropriate to carry out the nondiscrimination and affirmative action commitments of government contracts. Proposed Section 60-2.17, Additional Required Elements of Affirmative Action Programs, would retain the following four elements from current Section 60.2-13, Additional Required Ingredients of Affirmative Action Programs:
  
  
  • Designation of responsibility for implementation
    
    
  • Identification of problem areas
    
    
  • Action-oriented programs
    
    
  • Periodic internal audits
  
  Deleted from current Section 60.2-13 would be the following six elements:
  
  
  • 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
    
    
  • Consideration of minorities and women not currently in the workforce having requisite skills
    
    
  • Compliance of personnel policies and practices with the Sex Discrimination Guidelines
    
    
• To help OFCCP monitor compliance better and aid contractor self-analysis, Section 60-2.18, Equal Opportunity Survey, would require nonconstruction contractors to submit a new survey each year. The survey, which would be in a format specified by the Deputy Assistant Secretary of Labor, would provide OFCCP with the data it needs to identify contractor establishments with problems meeting their equal employment obligations, and to select those contractors for further evaluation under new compliance evaluation procedures. Contractors would be "encouraged" to transmit the survey electronically.
  
  
• Current Subpart C, Methods of Implementing the Requirements of Subpart B (Required Contents of Affirmative Action Programs), would be removed. However, OFCCP recognizes that much of the information in current Subpart C is of value to many contractors, so it intends to incorporate the information in a technical assistance manual for contractors. Current Subpart C consists of Section 60-2.20, Development or Reaffirmation of the Equal Employment Opportunity Policy; Section 60-2.21, Dissemination of the Policy; Section 60-2.22, Responsibility for Implementation; Section 60-2.23, Identification of Problem Areas by Organizational Units and Job Groups; Section 60-2.24, Development and Execution of Programs; Section 60-2.25, Internal Audit and Reporting Systems; and Section 60-2.26, Support of Action Programs.
  
  
• Subpart D, Miscellaneous, would be redesignated as Subpart C, but only current Section 60-2.31, Preemption (which would be redesignated as Section 60-2.33), and current Section 60-2.32, Supersedure (which would be redesignated as Section 60-2.34), would come along. Other new sections would be 60-2.30, Corporate Management Compliance Evaluations (in which OFCCP evaluates whether "glass ceilings" exist); 60-2.31, Program Summary (current Section 60-2.14, Program Summary); 60-2.32, Affirmative Action Records; and 60-2.35, Compliance Status (current 60-2.15, Compliance Status).

In addition, the following sections in Part 60-1, Obligations of Contractors and Subcontractors, would be revised:

• Section 60.1-12, Record Retention, would be revised to remove the word "written" from "written AAP". In addition, a new paragraph (c) would be added to require the contractor to be able to identify the gender, race, and ethnicity of each employee and, where possible, each applicant (recognizing the increased use of e-mail applications).
  
  
• Section 60.1-40, Affirmative Action Programs, would be revised to remove the word "written" from "written AAP". While the portion of paragraph (a) that explains who must develop and maintain an AAP would be retained, the rest of paragraph (a) and all of paragraphs (b) and (c) would be removed because it is either outdated or does not address discrimination against women. Portions have been updated and moved to the appropriate sections in Part 60-2. However, a new paragraph (b) would be added to direct nonconstruction contractors to Part 60-2 and construction contractors to Part 60-4, Construction Contractors -- Affirmative Action Requirements.

FOR FURTHER INFORMATION CONTACT: Barry McVay at 703-451-5953 or by e-mail to BarryMcVay@FedGovContracts.com.

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