Federal Contractor Affirmative Action Requirements: Are You Keeping Up?

May 18, 2016

By Sarah H. Lamar
Special to Business in Savannah

By some accounts, approximately 20 percent of all American businesses are federal contractors or subcontractors. If your business contracts with the federal government, or if you contract with another company that does business with the federal government, you may have affirmative action obligations under a number of federal laws. Indeed, over the last several years, these obligations have significantly increased.

The three most important affirmative action laws are Executive Order 11246 (women/minorities), the Vietnam Era Veterans Readjustment Assistance Act (VEVRAA), and § 503 of the Rehabilitation Act of 1973 (the disabled). These laws require covered employers to recruit, employ, and advance individuals in certain legally protected categories. There are also a number of other laws, each of which addresses different aspects of a contractor’s responsibilities.

Am I Required to Comply?

A federal contractor’s affirmative action obligations vary depending on the type of contract (service/supply vs. construction), the number of employees, the dollar amount of the contract, and the law at issue. The requirement to prepare an annual written affirmative action plan (AAP) is determined by number of employees and the value of the contract.

Although construction contractors need not comply with the AAP requirements of E.O. 11246, they still have obligations to recruit, employ, and advance minorities and women and are subject to regulatory requirements in this regard.

What Do I Have to Do?

All covered federal contractors and subcontractors have certain basic obligations, which include but are not limited to the following:

  • Use the “EEO Employer/Vets/Disabled” tagline in advertising and on the website.
  • Display all required posters, including the “EEO is the Law” poster, the “EEO is the Law” poster supplement, the Pay Transparency poster, the National Labor Relations Act poster, and the E-Verify poster in both English and Spanish.
  • List all jobs (except certain exempted jobs) with the State Department of Labor.
  • E-Verify appropriate workers. Also, a Georgia employer with more than 10 employees must comply with E-Verify requirements pursuant to state law.
  • Add “sexual orientation, gender identity” as a protected category in company EEO policies.
  • Add “pay transparency” language to your policies, stating that the contractor will not discriminate against employees who discuss their compensation. (Certain exceptions apply.)
  • Include certain equal opportunity language in all new, modified, or renewed contracts as of March 24, 2014.
  • Pay employees performing on or in connection with certain types of federal contracts (for example, under the Service Contract Act) the current minimum wage of $10.15/hour.

In addition, regulations are pending to require certain contractors to offer up to 56 hours of paid sick leave annually to employees. Regulations are also pending to implement the “Fair Pay and Safe Workplaces” executive order, which requires certain contractors to disclose their violation of certain employment laws.

On top of the above responsibilities, employers subject to the AAP requirements must collect data on applicants and employees through self-identification questionnaires; file certain annual reports by September 30 of each year; prepare annual written affirmative action plans; conduct statistical analyses on hiring, promotion, and termination practices; and be prepared to submit their AAPs to the Office of Federal Contract Compliance Programs (OFCCP), which enforces federal affirmative action laws, if selected for an audit.

What If I Don’t Follow the Rules?

Ultimately, federal contractors who fail to comply with their legal obligations could face “debarment” from government contracts, which means that they could lose the opportunity to do business with Uncle Sam. This is a rarely imposed sanction, however. More likely is that the OFCCP finds that a contractor is not in compliance and demands payment of back wages to individuals in certain classes who were not hired or promoted or who were terminated because of allegedly discriminatory reasons (race, sex, disability, veteran status, etc.). If the contractor agrees to pay back wages or agrees to offer jobs to qualified applicants, a settlement known as a “conciliation agreement” results. Such agreements can be very expensive and often come with an OFCCP press release publicizing the contractor’s purported bad acts.

In the end, the contractor must be able to demonstrate its good faith efforts to attract qualified minorities, women, veterans, and the disabled. Federal contractors should monitor compliance with all affirmative action mandates if they want to continue to do business with the federal government.

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