2015 Year in Review for Federal Contractors

Affirmative Action Plans being looked at closely using binochulars

In 2015 the Office of Federal Contract Compliance Programs celebrated its 50th anniversary.  In 2015, Career Resources, Inc. identified some noteworthy activities that took place, which kept federal contractors on their toes.

In this year-end review, Career Resources, Inc. will discuss the most important highlights of 2015, current focus areas for federal contractors, and anticipated changes for 2016. In the first part of 2015, we saw OFCCP focus on several issues, some of which stemmed from changes that went into effect in 2014.  The changes from 2014, which had implications that carried into 2015, include revisions made to the OFCCP’s scheduling letter and compliance with revised VEVRAA and Section 503 regulations.  Also, in 2015 we saw OFCCP increase its focus on steering issues in audits.

Revised OFCCP Scheduling Letter:

The revised letter includes a 22 itemized listing as opposed to 11 items on the previous letter. It also requires contractors to submit documentation and analyses concerning the revised VEVRAA and Section 503 regulations pertaining to protected veterans and individuals with disabilities. The most notable difference in the new scheduling letter is the request for contractors to provide detailed compensation data upfront with the initial AAP submission.

Revised VEVRAA and Section 503 Regulations:

Concerning the revised VEVRAA and Section 503 regulations, because more than a year has gone by since the effective date (March 24, 2014), the OFCCP expects that all contractors have now incorporated the requirements of the revised regulations into their affirmative action plans.  Career Resources, Inc. has developed a comprehensive guide to assist federal contractors with the revised regulations. You can download the guide to assist you here: VEVRAA & Section 503 White Paper. 

Focus on Steering Issues in Audits:

In 2015, we saw an increased focus on steering issues by the OFCCP during audits. “Steering” refers to the placement of individuals from certain groups (i.e., minorities, females) into specific positions or career ladders, which could potentially lead to less pay and room for growth. OFCCP is concerned with this practice because it ultimately has a negative impact on compensation for these affected individuals. In 2015, we saw that the OFCCP identified potential compensation issues due to steering and promotion patterns. We reported this in January of this year (“Expect OFCCP’s Focus on Steering Issues to Continue in 2015”) and anticipate that the concentration on steering will only increase moving into 2016. In addition to the areas we saw OFCCP focus on in 2015, other noteworthy events affected federal contractors in 2015, as outlined below.

Executive Orders that Impacted Federal Contractors in 2015:

Moving through 2015, a large number of changes came by way of Executive Orders. In the final year of his presidency, President Obama published 24 Executive Orders, several having a significant effect on federal contractors. The following Executive Orders which were signed or became effective in 2015 have a substantial impact on federal contractors:

  • Executive Order 13658 (Establishing a Minimum Wage for Federal Contractors) went into effect on January 1, 2015.  This Executive Order raised the minimum wage to $10.10 for employees of federal contractors and will be evaluated each year by the Secretary of Labor to determine future increases.*  What many employers may not be aware of is that acting as a supplier, provider, partner, or sister-company of a federal contractor, the employer may transform into a federal subcontractor subject to the E.O.nds of E.O. 11246.
  • Executive Order 13672 went into effect on April 8, 2015.  This Executive Order added sexual orientation and gender identity to the list of protected groups under EO 11246.  Employers need to ensure that employees and job applicants are not discriminated against based on their sexual orientation or gender identity.  Also, contractors are required to update their E.O. clause and update equal opportunity language used in job postings.  It should be noted that these new regulations do not require federal contractors to set placement goals or collect data concerning gender identity or sexual orientation.
  • Executive Order 13706 was signed on September 7, 2015. This Executive Order provides employees working on federal contracts and subcontracts a minimum of one hour of paid sick leave for every 30 hours worked (up to 56 hours per year). The Executive Order will go into effect on January 1, 2017.
  • On September 11, 2015, the OFCCP published the Final Rule promoting pay transparency, which implements Executive Order 13665, signed by President Obama in 2014. Taking effect on January 11, 2016, the Final Rule will prohibit federal contractors from terminating or taking disciplinary action against job applicants or employees for discussing their pay or the pay of their co-workers.
  • President Obama signed Executive Order 13673 (Fair Pay and Safe Workplaces) on July 31, 2014. The Executive Order subjects federal contractors to scrutinize prior violations of 14 covered labor laws and imposes extensive recordkeeping and reporting obligations.

Federal contractors should be aware of the implications of these Executive Orders and watch for updates early in 2016.

OFCCP’s Class Member Locator (CML):

Another noteworthy event during 2015 came at the end of September with the launch of the OFCCP’s “Class Member Locator” on their website.  The CML was created to alert the public about OFCCP settlements and encourage individuals who applied or worked for one of the companies listed on the website to come forward and contact the OFCCP if they believe they have been discriminated against.  The alleged discrimination would need to have taken place during the time period outlined on the website.  The CML posts recent conciliation agreements where there were financial settlements, including the details of the violations and applicable remedies.  While the intent of the CML is to help individuals who may have been discriminated against, there are many unanswered questions and concerns with regard to the implications for federal contractors.  What is clear is that the OFCCP is going to great lengths to locate affected class members and this should be even more of an incentive for contractors to fulfill their affirmative action obligations.

New Resources on OFCCP’s Website

Throughout this year the OFCCP has released a series of tools meant to assist contractors and employees of federal contractors.  The tools include videos, infographics, links to documents, and a pocket card.  You can review the resources below that were published on the OFCCP’s website under the “Workforce Corner,” “Federal Contractor Corner,” and “Speeches, Presentations, Webinars, and Multimedia” sections.  It is important to note, that while these tools are meant to be helpful, using them does not guarantee compliance.  Make sure to check in with your affirmative action specialist.

Top OFCCP Settlements:

In terms of OFCCP’s focus areas in audits, the main target continues to be discrimination in the selection process, most commonly identified in hiring for entry-level jobs. It is pertinent to point out that in several of these cases, there was also a focus on steering issues. The following links provide descriptions of OFCCP settlements where there were findings of discrimination that resulted in financial remedies.

Take Away:

The year 2015 turned out to be very eventful for federal contractors with all of the revised regulations, OFCCP’s current focus areas, and new information relevant to compliance.  With more changes on the horizon in 2016, it’s more important than ever for federal contractors to have their affirmative action plans updated and implemented to comply with the regulations.  The following is a list of action items to consider as 2016 approaches:

  1. Ensure that your company’s affirmative action plan is up-to-date.
  1. Conduct compensation analyses and review the results to determine whether any changes or adjustments need to be made.
  1. Conduct impact ratio analyses and review the results to determine whether your selection process is adversely affecting any group.
  1. Ensure that you are inviting applicants and employees the opportunity to identify as an individual with a disability using OFCCP’s mandated OMB form.
  1. Ensure that you are inviting applicants and employees the opportunity to identify their race, gender, and protected veteran status.
  1. To comply with OFCCP’s Pay Transparency Final Rule (Executive Order 13665) which goes into effect on January 11, 2016, ensure that you have included the OFCCP’s mandated Pay Transparency Policy Statement in employee handbooks and have disseminated it to employees and applicants. You can find the link to the policy statement here: EO 13665 Policy Statement
  1. Ensure that the “EEO is the Law” poster is posted in conspicuous areas at all sites as well as being accessible to applicants for employment.  A best practice to ensure that every electronic applicant has the opportunity to view the poster during the application process would be to display a link to the poster.  Note: based on the Pay Transparency Final Rule, the poster will be updated to include a reference to pay transparency.  The updated poster (or supplement) will need to be posted after January 11, 2016.
  1. Ensure that you document your assessments of any physical and mental qualifications including the date the assessment was performed, any actions taken or changes made as a result of the assessment, and the date of the next scheduled assessment.
  1. Ensure that you have conducted an assessment of your personnel processes including the date the assessment was performed, any action taken or changes made as a result of the assessment, and the date of the next scheduled assessment.
  1. Ensure that you have documentation of all actions taken to comply with the audit and reporting system requirements.
  1. Continue to undertake and document outreach efforts with veteran recruitment sources and outreach organizations directed toward the employment of individuals with disabilities and protected veterans.
  1. Continue to ensure that any reasonable accommodations that are requested (i.e. for disabilities, medical reasons, and religious practices) are documented as well as the outcome of each request.
  1. With regard to job postings, there are two options – you can either use a general tagline similar to “Company Name is an Equal Employment Opportunity/Affirmative Action Employer/Vets/Disability,” or you can spell out the protected groups with a tagline similar to “Company Name is an Equal Employment Opportunity/Affirmative Action Employer/Minority/Female/Vets/Disability/Sexual Orientation/Gender Identify.”
  1. Ensure that your E.O. clause in subcontracts and purchase orders reflects all revised regulations.  A sample statement can be found on OFCCP’s website.

Career Resources, Inc. will continue to provide federal contractors with the latest information regarding affirmative action regulations.  

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