Some years back a client related the following call she received from the Office of Federal Contract Compliance Programs (OFCCP), and asked me if she’d done the right thing:
OFCCP: “We’re conducting a desk audit of your affirmative action plan, and we need you to provide us with copy of your plan.”
Client: “I’ve never heard of your so-called agency before, and I think this is a scam. We don’t have an affirmative action-y whatever, and even if we did, I wouldn’t give it to you, since you’re clearly calling from some made-up agency.”
Client: Hangs-up on the OFCCP, and calls me, “The OFCCP’s a fake agency, isn’t it?”
Me: “No, they’re quite real, and they wield a lot of clout. Why?”
Client: “Oh my, what have I done?”
Sound unbelievable? It’s not. A surprising number of our clients have federal contracting obligations (including the requirement to implement a full-fledged affirmative action program), but don’t know it.
So how can this be? Well, there are three primary ways that you might wind up being considered a federal contractor, and thus have to have an affirmative action plan in place:
The client in the anecdote above was a credit union, and no one had bothered to tell them that they needed a plan simply because of the deposit insurance they carried. Fortunately, the industry-specific coverage obligations are quite narrow, so you probably don’t have to worry about them.
Unfortunately, it’s not uncommon to be a “first-tier” or “second-tier” contractor and not even know it. Ultimately, if the goods or services you provide are necessary to the goods or services being provided by a primary federal contractor, you will likely be on the hook for affirmative action compliance, even if there are one or more companies in the food chain between you and the primary contractor.
So why wouldn’t you know that you’re considered to be a downstream federal contractor. To start, unless you’re a primary contractor, the government doesn’t put you on notice of your status until they show up to audit you.
Instead, the government pushes that burden back onto their primary contractors, who, in turn, are supposed to formally inform downstream contractors of their affirmative action obligations. That might work well between primary and first-tier contractors, but the further down the food chain you get, the less likely it is that you’ll be given effective notice.
And while some contractors include proof of affirmative action compliance as a pre-condition to go through the RFP process, many contractors simply tuck compliance language into the miscellaneous clauses contained at the end of the 18-page contract that your sales people readily sign (but don’t read) in order to close the deal.
To compound matters, contracts are usually handled by sales or compliance, and rarely make their way to HR, even though HR will typically be responsible for creating the affirmative action plans that are required by the contracts. Indeed, I’ve reviewed countless numbers of contracts for clients who were quite surprised when I informed them that they’d committed to having an Affirmative Action Plan (AAP).
There are times when you might be considered a first or second-tier contractor but not have to implement a full-fledged AAP. For instance, if your company has fewer than 50 employees, or you receive less than $50,000 in revenue from your contracts, then you probably won’t be obligated to prepare and implement an AAP. However, the majority of our clients easily pass both thresholds.
It is a very big deal, indeed. An AAP is a complex and very detailed document that can run to hundreds of pages in length.
The purpose of an AAP is to help ensure that an employer’s employee population reflects the census data for the communities in which they do business, and that their internal practices ensure pay and promotional equity. The process of implementing an AAP requires employers to self-evaluate their recruiting, hiring, and promotional policies, programs, and procedures to make sure that they do not unfairly or unintentionally result in women, minorities, veterans, or those with disabilities being hired, compensated, or promoted at levels lower than available internal and external census data would suggest should be the case.
The OFCCP is responsible for enforcing AAP compliance, which it does through periodic compliance reviews (their version of IRS audits) and investigating private complaints. Deficient plans and/or noncompliance can lead to the loss of federal monies, as well as other potential penalties, such as having your name publicized for failure to comply, losing the right to work on any future government contracts, or enforcement proceedings by the Department of Justice (especially when fraud or intentional misrepresentations are suspected).
Start by reviewing your contracts, and the companies with whom you do business. If a contract says you need an AAP, then you probably need an AAP. If there isn’t a contract (e.g., you simply have an ongoing invoicing relationship), then take a look at the type of work the company does, and consider contacting them to see if they might be a primary or downstream contractor. Educate with your sales, contract, and/or compliance people internally to understand what questions to ask, and what things to look for.
For more information about your obligations as a federal contractor, as well as what goes into implementing such plans, consider attending our upcoming webinar, “Federal contractor obligations.”
And if you need to implement a plan, it may be worth having a conversation with us to determine whether or not it makes sense to have us create an AAP for you. Although you can technically prepare such plans on your own, few people have the time, expertise, or resources to effectively do so.
James provides guidance to employers on a variety of topics with a focus on employment, risk management and liability issues. In addition to working directly with employers, he regularly conducts in-depth training through webinars, at client sites, and through the University of Minnesota’s Continuin
James provides guidance to employers on a variety of topics with a focus on employment, risk management and liability issues. In addition to working directly with employers, he regularly conducts in-depth training through webinars, at client sites, and through the University of Minnesota’s Continuing Ed program. He previously was a plaintiff’s attorney and brings that perspective into his advice to employers. James received his law degree from the University of Minnesota and his BA from Washington University in St. Louis.
On May 11, 2014, the governor of Minnesota signed the Women’s Economic Security Act (WESA), a bill that will require Minnesota employers to make dramatic changes to their employment policies and practices.
While WESA directly impacts employers who conduct business in Minnesota, the changes follow plans by federal and local governments to expand legal protections for women and other employees. For this reason, employers in other jurisdictions should pay close attention to these national and state law trends.
“The only thing that is constant is change.”
Turns out that dusty old Greek philosophers occasionally say profound things (Heraclitus also said that a man’s character is his destiny). And since the Greeks are considered the fathers of democracy and were responsible for no small number of laws themselves, it seems an appropriate departure point to talk about the constantly changing landscape of employment laws.
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