Barry McVay's FEDERAL CONTRACTS DISPATCH
DATE: November 13, 2000
FROM: Barry McVay, CPCM
SUBJECT: Office of Federal Contract Compliance Programs; Government Contractor Affirmative Action Requirements
SOURCE: Federal Register, November 13, 2000, Vol. 65, No. 219, page 68021
AGENCIES: Department of Labor (DOL), Employment Standards Administration (ESA), Office of Federal Contract Compliance Programs (OFCCP)
ACTION: Final Rule
SYNOPSIS: This final rule refocuses, revises, and restructures OFCCP's regulations that require 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 final rule changes 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 final rule introduces a new tool to aid contractors in assessing their pay and other personnel practices -- the Equal Opportunity Survey, which will normally be submitted "via the Internet".
EDITOR'S NOTE: For more on the proposed rule, see the May 4, 2000, FEDERAL CONTRACTS DISPATCH "Office of Federal Contract Compliance Programs; Government Contractor Affirmative Action Requirements."
OFCCP's regulations are in Title 41 of the Code of Federal Regulations (CFR), 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.
EFFECTIVE DATE: December 13, 2000.
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 in 41 CFR Part 60-2, Affirmative Action Programs, which implement Executive Order 11246, 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.
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 insuring employees are compensated equally for performing equal work, regardless of race, color, religion, sex, or national origin.
The recommendations of the regulatory team was the basis for a proposed rule that was published May 4, 2000. A total of 187 comments were received from: five contractor advocacy organizations; 137 labor, civil rights, and women's advocacy organizations and their individual members; four law firms; 14 contractors; 17 consulting firms; 9 civil rights and affirmative action officials of state and local governments and institutions of higher learning; and one member of Congress. This final rule adopts most of the changes proposed May 4, 2000, but some of the proposed provisions have been modified in response to the comments.
The following are the significant changes being made by this final rule to 41 CFR Part 60-1, Obligations of Contractors and Subcontractors, and 41 CFR Part 60-2, with changes between the proposed rule and final rule included in brackets ("[ ]"):
- 41 CFR Part 60-1:
- To Section 60.1-12, Record Retention, is added a new paragraph (c) which requires contractors 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). [It was proposed to remove the word "written" from "written AAP". However, several commenters strongly encouraged the retention of "written" AAPs because they provide needed structure. OFCCP agreed, and decided to leave in the word "written". However, OFCCP states, "A contractor may maintain its AAP in electronic format if all of its employees who are permitted or required to have access to the AAP have equal access to the electronic version of the AAP. If some of a contractor's employees lack access to an electronic version of the AAP, the contractor also must provide access to a hard (paper) copy of the AAP."]
- Section 60.1-40, Affirmative Action Programs, is revised to retain the portion of paragraph (a) that specifies which contractors and subcontractors must develop and maintain AAPs, but the rest of paragraph (a) and all of paragraphs (b) and (c) are removed because they are either outdated or do not address discrimination against women. Also, a new paragraph (b) is added to direct nonconstruction contractors to 41 CFR Part 60-2 and construction contractors to 41 CFR Part 60-4, Construction Contractors -- Affirmative Action Requirements. [OFCCP is retaining the requirement that AAPs be "written" -- see 41 CFR 60.1-12 above.]
- 41 CFR Part 60-2:
- Paragraph (b) of Section 60-2.1, Scope and Application, is revised to specify which contractors and subcontractors must develop and maintain AAPs. OFCCP explains that this "repeats the standards found in Sec. 60-1.40, because recitation of the scope of coverage is important for completeness in both parts of the regulation."
A new paragraph (c) is added which requires that AAPs "be developed within 120 days from the commencement of a contract and must be updated annually." This requirement was previously set out in Part 60-1, Obligations of Contractors and Subcontractors (specifically, Section 60.1-40, Affirmative Action Programs). Since Part 60-2 addresses the requirements of AAPs, OFCCP decided it would be more appropriate to include this information in Part 60-2.
Paragraph (d) describes who is included in AAPs. Subparagraph (d)(2) provides three options for contractors with fewer than 50 employees at a particular establishment to account for those employees for AAP purposes, and subparagraph (d)(3) clarifies that the AAP at the establishment that makes the selection decision is the appropriate establishment for inclusion of their selectees. [A new subparagraph (d)(4) is added because OFCCP agreed with several commenters who recommended that contractors be permitted develop AAP based on how their businesses actually are organized (these are sometimes referred to as "functional" AAPs since they are based on a business function or a line of business without regard to the geographic locations of the establishments and employees). The Deputy Assistant Secretary or designee must approve the use of such agreements.]
- Paragraph (b) of Section 60-2.10, General Purpose and Contents of Affirmative Action Programs, outlines 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).
- Section 60-2.11, Required Utilization Analysis, is renamed "Organizational Profile," and paragraph (b) becomes revised Section 60.2-12, Job Group Analysis (though paragraphs (b)(1) and (b)(2) become Section 60-2.14, Determining Availability -- see below). The "workforce analysis" which was described in paragraph (a) of the old Section 60.2-11 ("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"), is moved to paragraph (c), and new paragraph (a) permits contractors to use the old "workforce analysis" or the new "organizational display" described in new paragraph (b) as its organizational profile. The "organizational display" is "a detailed graphical or tabular chart, text, spreadsheet or similar presentation of the contractor's organizational structure." The organizational display must "identify each organizational unit in the establishment, and show the relationship of each organizational unit to the other organizational units in the establishment," and the gender, race, and ethnic composition of each organizational unit. Reporting of race, sex, and salary information by job title is eliminated under the organizational display method of reporting. [The proposed Section 60.2-11 would have required contractors to provide a graphical organization chart. However, several contractors objected that this would be more burdensome than the workforce analysis, so OFCCP decided to retain the workforce analysis as an option. In addition, it was proposed that the organization chart be a "graphical representation." Again, several contractors objected, so the organizational display may be provided as "a detailed graphical or tabular chart, text, spreadsheet or similar presentation..."]
- Most of paragraph (b) of old Section 60.2-11 becomes revised Section 60.2-12, Job Group Analysis. Larger contractors will continue to conduct the job group analysis as specified in old 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). However, 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 change is being made because "grouping by EEO-1 category [is] simpler both for smaller employers and for OFCCP." (EDITOR'S NOTE: "EEO" is an abbreviation for "Equal Employment Opportunity".)
- The number of availability factors which contractors are required to consider when determining the availability of minorities and women for employment in each job group is reduced from eight (old Section 60-2.11(b)(1) for minorities and (b)(2) for women) to two (new 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..."
- To reduce the number of action elements required to be included in contractor AAPs to those elements and actions considered necessary and appropriate to carry out the nondiscrimination and affirmative action commitments of government contracts, New Section 60-2.17, Additional Required Elements of Affirmative Action Programs, retains four elements from old Section 60.2-13, Additional Required Ingredients of Affirmative Action Programs: designation of responsibility for implementation; identification of problem areas; action-oriented programs; and periodic internal audits.
- Section 60-2.18, Equal Opportunity Survey, requires "a substantial portion of all nonconstruction contractor establishments" to submit a new survey each year (in the introductory material, OFCCP states that "OFCCP interprets 'a substantial portion' to mean half of all nonconstruction contractor establishments"). The survey will be in a format specified by the Deputy Assistant Secretary of Labor, and will provide OFCCP with the data it needs to select contractors for further compliance evaluation. Contractors are "encouraged" to transmit the survey "via the Internet" [the proposed rule had stated "in an electronic format"].
- The old Subpart C, Methods of Implementing the Requirements of Subpart B (Required Contents of Affirmative Action Programs), is removed. However, OFCCP stated in the introductory material of the proposed rule that it recognizes that much of the information in the deleted Subpart C is of value to many contractors, so it intends to incorporate the information in a technical assistance manual for contractors. The old Subpart C consisted 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.
- Old Subpart D, Miscellaneous, is redesignated as new Subpart C, but only two sections come along: old Section 60-2.31, Preemption (which is redesignated as Section 60-2.33), and old Section 60-2.32, Supersedure (which is redesignated as Section 60-2.34). Other new sections are 60-2.30, Corporate Management Compliance Evaluations (in which OFCCP evaluates whether "glass ceilings" exist which prevent individuals from advancing into mid-level and senior corporate management positions); 60-2.31, Program Summary (old Section 60-2.14, Program Summary); 60-2.32, Affirmative Action Records; and 60-2.35, Compliance Status (old Section 60-2.15, Compliance Status).
FOR FURTHER INFORMATION CONTACT: Barry McVay at 703-451-5953 or by e-mail to BarryMcVay@FedGovContracts.com.
Copyright 2000 by Panoptic Enterprises. All Rights Reserved.
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