Affirmative action compliance essential in stimulus era
When I typed in the words “job creation” on Google’s news engine recently more than 12,000 hits appeared. No surprise. As we move toward mid-term elections the phrase has become all the rage _ especially in context of stimulus packages such as the American Recovery and Reinvestment Act of 2009 (ARRA). According to the government’s official ARRA tracking site (www.recovery.gov), $219 billion in funding has been awarded as of June 2010, and President Obama’s economic advisers are working on new proposals that are expected to generate more awards. According to news accounts, the President has proposed a $50 billion program to rebuild roads, railways and airports. Republicans are countering with their own “Pledge to America.”
In the middle of all the rhetoric lies a very important message for recipients of “stimulus” money, as well as all companies who fall under the laws of affirmative action. It goes something like this: As the folks in Washington try to fulfill their promise of “accountability,” the government is more motivated than ever to aggressively enforce affirmative action rules.
This approach was made crystal clear when the Office of Federal Contract Compliance Programs (OFCCP), which oversees affirmative action and equal opportunity enforcement, released its Fiscal Year 2011 budget request earlier this year. The OFCCP sought – and received – a 25-percent budget increase.
Given these changes – and the fact that many companies will become federal contractors for the first time after receiving Stimulus funding – it’s more important than ever for companies receiving ARRA funding and businesses seeking or fulfilling federal contracts, to understand and comply with the current laws governing affirmative action plans, or AAPs.
The basics of affirmative action
Here are a few frequently asked questions about Affirmative Action Plans (AAPs) and compliance:
Question: What is an affirmative action plan?
Answer: An affirmative action plan is a written plan that employers doing business with the federal government (including contractors and subcontractors) must prepare each year in order to remain in favorable standing.
The regulations governing affirmative action were established in Executive Order 11246 and administered by the OFCCP. These regulations mandate that employers take constructive steps to avoid illegal discrimination.
The creation of an affirmative action plan involves conducting diagnostic analyses on a contractor’s current work force and the previous AAP year’s employment activity (applicants, hires, promotions and terminations) to discover potential problems. If problem areas are identified, the contractor must implement programs to correct or eliminate them.
An AAP is not simply a policy on equal employment opportunity such as is found in many employee handbooks. Rather, it is a detailed analysis of work force utilization and includes both narrative and statistical analysis. Additionally, an AAP provides a commitment to eliminating discrimination in the workplace against women, minorities, individuals with disabilities and all covered veterans.
Question: Who needs an affirmative action plan?
Answer: A company is required to have a current AAP if it has 50 or more employees and:
- the company has a federal contract or subcontract worth $50,000 or more, or
- the company is a financial institution that is an issuing agent for U.S. savings bonds and notes, or
- the company serves as a depository of government funds in any amount.
Question: What will happen to my company if we don’t prepare an AAP?
Answer: A contractor that fails to comply with affirmative action provisions is in violation of its contract with the federal government. The OFCCP conducts compliance reviews to investigate the employment practices of government contractors. If a compliance review reveals problems, and conciliation is not reached, the OFCCP may impose sanctions. This could result in fines or even in the contractor having its contracts canceled, terminated or suspended in part or in whole. The contractor may also be debarred or declared ineligible for future government contracts. Additionally, bad publicity and employee relations issues may occur.
Question: As a federal contractor, is my company required to establish quotas?
Answer: No. Quotas are not part of an AAP; in fact, they are expressly forbidden. Based on the availability of qualified individuals, contractors are required to establish goals to reduce or overcome underutilization of women and minorities. These goals do not create set-asides for specific groups. In all selection decisions, equal opportunity must be granted and the most qualified candidate chosen.
The OFCCP’s website (http://www.dol.gov/ofccp/index.htm) is a valuable resource for companies looking to learn more about affirmative action requirements.
A stepping stone to diversity
Upon becoming federal contractors, many companies view the creation of an affirmative action plan as nothing more than an administrative task that must be checked off in order to avoid OFCCP penalties. However, the necessity of creating an affirmative action plan can present a unique opportunity to enhance an organization’s workforce.
Nixon Peabody LLP, an international law firm with approximately 1,600 employees, is known for its strong commitment to diversity. The firm has been recognized by many organizations, including the Human Rights Campaign Foundation, MultiCultural Law magazine, and the National Bar Association, for its efforts to create an inclusive workplace. The firm also encourages the development of affinity groups within the organization and promotes diversity within the hiring process. Over the years, Nixon Peabody has found its affirmative action program to be a crucial component of the firm’s commitment to diversity.
Like many businesses, Nixon Peabody developed its first affirmative action plan to gain business with federal contractors, said Kristin Montesano, director of performance, rewards and operations and based in the firm’s Rochester office, However, the firm’s management soon realized that a well-implemented affirmative action program is a useful tool for monitoring and analyzing where the company’s diversity program is working, and where there is room for improvement.
Creating a strong affirmative action program “helps to create an environment of inclusion,” Montesano said. For example, Nixon Peabody uses information gained from its annual affirmative action plan to develop goals for its diversity action committee, and to ensure the firm is recruiting, retaining and promoting individuals from a wide range of backgrounds. Companies creating an affirmative action plan for the first time “should view it as an opportunity to enhance your business,” explains Montesano. “It says a lot about a company when you’re creating an affirmative action plan because you want to, not just because it’s required.”
Considerations for first-time federal contractors
Because the steps required to become an affirmative action employer can be daunting, outsourcing is a valuable option for new federal contractors, according to Montesano. “By using an expert to develop our affirmative action plan and explain the results, we were able to focus on how we could implement diversity initiatives internally.”
Thorough training is another crucial aspect for new federal contractors. Educating the workforce on topics such as outreach efforts, reasonable accommodations, recordkeeping requirements and self-auditing is an important step towards meeting affirmative action requirements. Recruiters and managers also must understand regulatory requirements and affirmative action best practices in order to ensure OFCCP compliance.
Conclusion
Achieving compliance with current affirmative action regulations is a complex process that can be particularly puzzling to companies developing affirmative action plans for the first time. Contractors and subcontractors must be sure they fully understand what the current law requires of them to avoid penalties. Although this takes some effort, a properly implemented affirmative action program not only fulfills an administrative requirement but can enhance a company’s workforce by promoting diversity.
