Affirmative Action 101

February 12, 2013

What is Affirmative Action?

A set of focused procedures and good faith efforts, which

an employer carries out to ensure that equal employment

opportunities are provided for all employees and

applicants.

What is an Affirmative Action Plan?

There are two types of Affirmative Action Plans (AAPs)

• AAP for Veterans and Individuals with Disabilities• AAP for Minorities and Women

The AAP for Veterans and Individuals with Disabilities contains only narrative information while the AAP for Minorities and Women contains detailed workforce analysis, tables and reports in addition to a narrative.

How do the types of AAPs differ?

• Women & Minorities

– Statistical analyses

– Percentage placement rate goals

– Narrative components

• Individuals with Disabilities/Covered Veterans

– Narrative elements only

– Focus on outreach, accommodation & removing barriers to employment

Who needs to have an Affirmative Action Plan?

Employers are required to establish written AAPs for females and minorities and for veterans and individuals with disabilities if they have 50 or more employees and meet one of the following four criteria:

1. Have at least one single government contract for $50,000 or more in any 12-month period

2. Have government bills of lading totaling $50,000 or more in any 12-month period

3. Serve as a depository of Government funds in any amount, or

4. Are a financial institution which is an issuing and payment agent for the US savings bonds and savings notes in any amount

What needs to be done in order to comply?

• Track and analyze employment data, including hires, promotions, terminations and applicant flow

• Compensation analysis

• Training

• Equal employment opportunity recruiting of qualified individuals

• Post positions with state workforce agencies

• Post required federal and state posters

• Record retention

– Including employment records that can demonstrate that all decisions were based on legitimate, non-discriminatory reasons

– Recordkeeping violations are historically the most frequent OFCCP citations

– OFCCP has the right to presume that information not available or not properly maintained would have been unfavorable to the contractor

Do all facilities need to have an AAP?

• Each facility may not need its own AAP, but every single employee needs to be included in an AAP

• If there are fewer than 50 employees at a particular establishment, the contractor may:

– Develop an AAP including only the workforce at the establishment

– Include those employees in the AAP that covers the location of the human resources function which supports that facility

– Include those employees in the AAP that covers the location of the official to whom those employees report

• Some contractors also develop FAAP’s

– Based on business units of multi-establishment companies rather than by facility

– Prior approval must be received by the Deputy Assistant Secretary for the OFCCP

Objectives of an AAP

• Attempting to remove imbalances between availability and the incumbency of women and minorities

• Equal opportunities, not preferences

• Commitment of good faith efforts

• Commitment to review practices, monitor performance and correct problems

Components of an AAP

• Organizational Profile (Workforce Analysis)

• Job Group Analysis

• Placement of incumbent employees in job groups

• Determination of the availability of qualified women and minorities in the relevant labor market

• Analysis comparing employee incumbency to availability

• Placement goals for any underutilized groups

What is Adverse Impact?

• Adverse impact is a significant difference in the selection rates of one group compared with another group

• Selections encompass hires, promotions and terminations

• Groups for comparisons include:– Men vs. women– Minorities vs. non-minorities– Must include individual race/ethnic groups for each

group that makes up 2% or more of population

How is Adverse Impact measured?

• The Hiring Adverse Impact analysis compares the applicant pool vs. those selected for the positions

– Adverse Impact in Hiring means that over a period of time, women and/or minorities, or a particular minority group, were not hired in proportion to their representation in the candidate pool

• For Promotions and Terminations, you need to compare workforce demographics as of the start of the previous plan year vs. the employees who were promoted or left the company during the year

How is Adverse Impact measured?

• Two common tests– 80% rule of thumb– Statistical significance

• “Test of the two proportions” for larger groups• Fisher’s exact test for small groups• Other professionally accepted tests may be used

• The 80% rule of thumb is a commonly used test, but it has its flaws

• Statistical significance is the true test

Action Oriented Programs

• Should be tailored to remedy specific concerns

• Should cite the type and frequency of action

• Should include monitoring and evaluation process used to determine success

– Develop and execute action oriented programs designed to correct problems areas

– Must annually evaluate effectiveness to ensure results are achieved; if not, new efforts must be taken

– Must demonstrate good faith efforts

What are EEO Categories and Job Groups?

• In order to regulate job titles included in your organization as required by the regulations, all contractors are required to group their job titles into subsets called ‘EEO job categories’• Groupings represent broad categories into which all jobs at your location fall based on skill, job function and wages• Traditionally, these broad categories are identified as follows:

1 - Officials & Managers 1.1 - Executive/Senior Level1.2 - First/Mid Level

2 - Professionals3 - Technicians4 - Sales Workers5 - Office & Clerical6 - Craft Workers7 - Operatives8 - Laborers9 - Service Workers

What are EEO Categories and Job Groups?

• 1A2 – Vice Presidents• 1A3 – Directors• 1B4 – Managers• 1B5 – Supervisors• 2A – Admin. Profs.• 2B – Financial Profs.• 2C – Data Proc. Profs.• 2D – Scientific Profs/• 2E - Engineers

• 3A – General Technicians• 3B – Computer Technicians• 4 – Sales• 5A – Office & Clerical - Salaried• 5B –Office & Clerical - Hourly• 6A – Craft Workers• 6B – Leaders• 7A – Operatives• 7B – Truck Drivers• 8 – Laborers• 9 – Service Workers

Annual Affirmative Action Obligations

• 50 Employees & $50,000

• AAP Update

• Adverse Impact Analysis

- Applicants/Hires, Promotions, Terminations, Testing - Component Analysis

• Compensation Analysis

• EEO-1 Report

• VETS 100

• Outreach, outreach, outreach

OFCCP Scheduling Letter

• Requests AAPs

-Executive Order 11246

- Section 503 of the Rehabilitation Act

- Vietnam Era Veterans’ Readjustment Assistance Act

• Requests Support Data

-Personnel Activity (Prior & Current Year)

- EEO-1 Reports (last 3 years)

- Compensation Data (current snapshot)

- Past and present goals

OFCCP Audit Process

• Compliance Evaluations

– Review contractors’ employment practices

• Examines whether contractor maintains nondiscriminatory hiring and employment practices

• Examines whether contractor is taking affirmative action to ensure applicants and employees have an equal employment opportunity without regard to race, color, religion, sex, national origin, disability or status as a protected veteran

• Also conducts Corporate Management Compliance Evaluations

– Review designed to determine whether qualified minorities, women, persons with disabilities and protected veterans have encountered artificial barriers to advancement into mid-level and senior corporate management

OFCCP Audit Process

• Types of Compliance Evaluations

– Desk Audit

• Compliance Officer analyzes employment and demographic data provided by the contractor

• Information is provided regarding hiring, promotion, and termination actions, and the establishment’s compensation practices

• Facility’s affirmative action efforts are also examined

• If there are no indications of possible violations, the compliance evaluation may be closed at this state

OFCCP Audit Process

• Types of Compliance Evaluations

– On-site Investigation• If the investigation is not closed at the Desk Audit stage, an on-site

investigation will be scheduled and conducted– OFCCP may request additional information related to any

issues they found during the Desk Audit stage– OFCCP will most likely request to to speak with company

officials or staff

– Complaint Investigations• OFCCP also conducts investigations of complaints of

discrimination that are filed by applicants or employees against Federal Contractors

• OFCCP works in coordination with the EEO when processing discrimination complaints

OFCCP Audit Process

• Types of Compliance Evaluations

– On-site Investigation• If the audit is not closed at the Desk Audit stage, an on-site

investigation will be scheduled and conducted– OFCCP may request additional information related to any

issues they found during the Desk Audit stage– OFCCP will most likely request to speak with company

officials or staff

– Complaint Investigations• OFCCP also conducts investigations of complaints of

discrimination that are filed by applicants or employees against Federal Contractors

• OFCCP works in coordination with the EEO when processing discrimination complaints

Common Problems – OFCCP Audits

• Insufficient Applicant Flow– Census Data– Recordkeeping

• Outreach Efforts– Listing jobs (Must post to all State Workforce Agencies, in the

manner in which each state requires)– Recruitment efforts– No tracking of efforts– 59% of the violations in FY12 were related to outreach and

recruitment

• Internal Audit & Reporting (Self-Audit)

• Compensation disparities (Fix before you are audited)

What are potential penalties?

• Show Cause Notice

– 30 days to comply

– Enforcement Proceedings

– Not just more time to submit

• Conciliation Agreement

– Outlines violations found related to nondiscrimination and equal opportunity provisions

– Formal legal document

– Requires written remedies

– Reporting to OFCCP for a specific time period

Worst-Case Scenario

• Back pay

– Formula relief is calculated using a shortfall• Shortfall (Expected minus Actual)

– Number in shortfall x value of position (mitigated)• Interest is compounded quarterly

• Mandated Hires = number in the shortfall

• Retroactive seniority and benefits

OFCCP Audit Experience

• What are the most important things contractors can do to ensure a successful outcome?

– Build a positive relationship with the Compliance Officer (CO)

• Try to find something they might have in common

• Mention affiliation with an Industry Liaison Group

• Be pleasant in all discussions with the CO

– Notify everyone with a ‘need to know’ that an audit is underway – including Direct Employers!

– Send AAP within the 30-day time period

Best Practices

• CEO and leadership support

• Annual Management meetings

• Accountability

• Safeguarding Data Integrity

– Awareness of changes in HRIS

– Employment Actions Match HRIS

• Frequent Monitoring of Employment Decisions & Follow Up

• Hands-On Relationships with Community Organizations

• Unbiased Internal Assessment (Mock Audit)

Final Thoughts…

• Bottom Line:

– The culture today with the OFCCP is more of a ‘we vs. them’ approach

– They have an expectation that they will find discrimination in one form or another in each audit – in fact, they receive bonuses based on the financial remedies they recover

– Audits can extend for an unlimited period of time so the CO can revisit areas already discussed and agreed upon

– OFCCP is now acting as a true enforcement agency

– Contractors need to build relationships with their CO’s

– Remember, everyone should all have the same goal:

Proving that companies are not discriminating!

Q&A

Thank You!