Employer Bulletin No. 330
January 4, 2001

NEW AND REVISED AFFIRMATIVE ACTION REGULATIONS

The Labor Department has issued final revisions to Regulations outlining affirmative action obligations for federal contractors under Executive Order 11246. These new and revised Regulations, which became effective for all affirmative action plans beginning after December 13, 2000, include several significant changes. Coverage continues to extend to any contractor or subcontractor who employees 50 or more persons and 1) has a government contract of $50,000 or more; 2) serves as a depository of Government funds in any amount; or 3) is a financial institution which is an issuing and paying agent of US savings bonds and notes, must comply with these new Regulations.
 
Critics of the Clinton Administration have suggested that the timing of the publication of the revisions as "final" was designed to prevent the Bush Administration from changing them or delaying their implementation. The Office of Federal Contract Compliance Programs ("OFCCP"), the agency which oversees compliance with affirmative action obligations, claims to have initiated these regulatory changes with the goal of reducing paperwork obligations for contractors and reducing the technical requirements under the old Regulations.  Although this is the stated purpose, many of these changes will enable OFCCP to more readily identify employers who are not in compliance with regulatory requirements, and target such employers for review.  The major revisions to the regulations include the following:

Broader definition of job applicant.
For years, contractors have been at odds with the OFCCP over the definition of "job applicant." The OFCCP has consistently claimed that the definition of  "job applicant" includes anyone who expresses an interest in employment, regardless  whether that person meets the employer's minimum qualifications for the job. Conversely, contractors have taken the position that only those persons who possess the minimum qualifications for the position should be considered job applicants.  In its commentary to the regulatory revisions, the OFCCP takes the position that the regulations have always required contractors to evaluate their selection process to determine if, at any stage in the process, females and minorities, are being adversely effected. Thus, OFCCP maintains that the employer has an obligation to make a reasonable effort to identify and track the race/ethnicity and gender of any individual whose expression of interest in employment and/or qualifications are provided to, reviewed, or considered by the employer.

Although the OFCCP has not outlined specific methods for obtaining this demographic information, the commentary to the regulations provides some examples of what is considered a "reasonable effort."  This would include providing a "tear off" form as part of the employment application for individuals who complete the application as their expression of interest. As for individuals who submit their resumes, the commentary states that employers should make a reasonable effort to obtain demographic information on such individuals by sending out a voluntary self-identification form for the individual to complete and return to the employer. Employers would be required track demographic information for, and include the responding individuals in the required statistical analysis of applicants to hires to determine if minorities and females are adversely affected, with a potential increase in the likelihood that adverse impact will exist against females and minorities since the pool of applicants will include individuals who do not meet the employers' minimal qualifications.

Functional AAPs.
Instead of preparing a separate affirmative action plan ("AAP") for each individual site, a contractor can now seek approval from the OFCCP to create a "functional" AAP, which is a single plan based on business function or line of business without regard to geographical location. Even if a contractor is granted permission to create a functional AAP, the OFCCP may continue to evaluate facilities at single geographical locations if that contractor is selected for an onsite compliance review.

The new Organizational Profile.
In the past, the contractor has been required to create a Work Force Analysis which breaks down the work force by department as part of their written affirmative action plan. In the work force analysis, each job title in a department is listed along with the gender and race/ethnic statistics for all persons holding that job title. Under the new Regulations, a contractor can chose to eliminate the Work Force Analysis and instead prepare an Organizational Profile, which the OFCCP envisions to be a more accurate representation of the breakdown of the work force. An Organizational Profile will include the job title of the supervisor(s) within each department, the gender and race/ethnic information for the supervisor(s), the total number of employees within each department and the race/ethnic information for the employees. Although the OFCCP claims this change will reduce the time required to prepare an AAP, most organizations do not have detailed organizational charts which can be converted into an Organizational Profile. For most contractors, it will be easier to continue using the Work Force Analysis.

Revisions to the Eight Factor Analysis. 
The new Regulations have modified the Eight Factor Availability analysis, which measures the percentage of minorities and females available to a contractor when calculating goals for the year.  Previously, several of the factors an employer was required to consider had no realistic relationship to the number of females and minorities actually available to a contractor, such as work force population and in the unemployed population. The OFCCP has finally recognized this, and the new analysis considers only the two most relevant factors, which are the internal and external availability of minorities and women having similar job skills.

To determine external availability, the contractor must define a reasonable recruitment area by looking to see where it received applicants for a certain position over the past year, where it hired persons for that position over the last year, or from where the current incumbents in that position applied. To determine internal availability, the contractor must define a reasonable feeder group by looking to see what positions in the company the incumbents held prior to assuming their current positions. The new Regulations explicitly state that the OFCCP will be focusing on a contractor's definition of reasonable recruitment area to prevent the exclusion of select areas with high representations of females or minorities.

EO Survey. 
In the spring of 2000, the OFCCP sent out approximately 7,000 EO surveys as a pilot program to determine the usefulness of the survey as a tool for selecting contractors for reviews. The mandatory EO survey seeks compensation information for all full-time employees grouped by the various EEO categories based on race and gender. This information would be analyzed to determine whether disparities in compensation exist for females and minorities in the EEO categories. In addition to the compensation information, the EO survey also requests information on employment activity including applicant flow, hires, promotions, and terminations for the year, which the OFCCP will analyze to determine whether females and/or minorities appear to be adversely affected. Under the new Regulations, these surveys are now scheduled to be sent to at least 50% of the federal contractor population in 2001, with the remaining 50% being sent in the year of 2002. With the EO Survey, the OFCCP intends to target those employers who appear from the survey to have problems in compensation for minorities and females and/or problems in the selection process for hires, promotions, and terminations related to minorities and females.

Now more than ever before, employers who are covered by the jurisdiction of the OFCCP must ensure they are in full compliance with the regulations at all times. This includes the annual develop of written affirmative action plans for all locations as well as developing a pro-active approach to compensation analyses for the entire organization.

If you have any questions regarding the new Regulations or your company's affirmative action obligations, please contact Mandi Smith T. at our Birmingham, Alabama office, Rosemary Lumpkins at our Atlanta, Georgia office, or Angelique Lyons in our Tampa, Florida office.