We have had many inquiries as to the use of the two standard deviation test to determine if a job group is at or exceeds the “reasonably acceptable” availability. Over the years the OFCCP has allowed contractors to select one of several tests to determine if a job group is underutilization or not.

In May 2000, OFCCP proposed to revise various regulations implementing Executive Order 11246 that were open for public comment and later adopted and implemented on November 13, 2000. The proposed revisions to the CFR’s were part of the “Reinventing Government Initiative” and were focused on Equal Pay, reducing paperwork and compliance burdens and make the regulations easier to understand. One of the key elements of the revisions were the CFR’s as they relate to Executive Order 11246. The document that was open for public comment contains the DOL/OFCCP’s explanations and rational in modifying the existing regulations. These explanations were not present in the final version.

Below is the actual language that addresses “underutilization” and how a contractor can determine if the difference between the non-protected classes when compared to the protected classes is “reasonably acceptable”. You will note that the DOL/OFCCP provide four tests that a contractor may use to determine what is a “reasonably acceptable” underutilization. One of the tests identified below is the two standard
deviation test, CRI uses this test.

“Proposed Sec. 60-2.15 addresses an aspect of the existing regulations that is referred to as the ``utilization analysis,'' and would replace one portion of existing Sec. 60-2.11(b). Proposed Sec. 60-2.15(a) would require the contractor to compare the representation of minorities and women in each job group with their representation among those available to be employed in that group. During compliance reviews, OFCCP typically finds that more minorities and women are available for employment in particular occupations and job groups than are actually employed in those positions. Indeed, OFCCP Regional Directors report that virtually every AAP reviewed by their offices contains one or more job groups in which availability exceeds actual employment. If the availability for a job group is greater than incumbency, and the difference is of a sufficient magnitude, the contractor must establish a goal.

The current regulation refers to the difference between availability and incumbency as "underutilization,'' which is defined as ``having fewer minorities or women in a particular job group than would reasonably be expected by their availability.'' When this condition exists; the contractor must establish a goal. Under the current practice, contractors are permitted to identify underutilization using a variety of methods, including: the ``any difference'' rule, i.e., whether any difference exists between the availability of minorities or women for employment in a job group and the number of such persons actually employed in the job group; the “one person” rule, i.e., whether the difference between availability and the actual employment of minorities or women equals one person or more; the “80 percent rule,” i.e., whether actual employment of minorities or women is less than 80 percent of their availability; and a “two standard deviation” analysis, i.e., whether the difference between availability and the actual employment of minorities or women exceeds the two standard deviations test of statistical significance. We propose no substantive change from the current regulation. The proposal, which is slightly reworded for clarity, appears at Sec. 60-2.15(b).”

If you have further questions please contact James Gutierrez (james@eeo-aap.com) of Career Resources, Inc.