Department Of Labor Issues New Regulations On Affirmative Action Plans For Federal Contractors
 
July 1, 2000
 
Andrew Stephenson - Washington

On May 4, 2000, the Labor Department’s Office of Federal Contract Compliance Programs (OFCCP) published proposed amendments to regulations governing Affirmative Action plans of federal contractors. The proposed amendments are designed to implement Executive Order 11246, as amended, which prohibits federal contractors and subcontractors from discriminating against, or otherwise treating, employees or applicants for employment on the basis of race, color, religion, sex, or national origin. The proposed amendments would significantly restructure and refocus current regulations that prescribe the requirements for affirmative action plans of federal contractors.

The current regulations, codified at 41 CFR Part 60-2 (known in the industry as “60-2”), require federal contractors employing more than 50 employees, or receiving more than $50,000 in annual federal contracts, to complete an extensive 23-page “Workforce Analysis.” The current workforce analysis requires contractors to list all employees by race, ethnicity, and sex in each department ranked by position and salary. The proposed amendments would replace the workforce analysis with a simpler one-page organizational profile. According to Shirley Wilcher, Deputy Assistant Secretary of the OFCCP, whether “you list your salaries high to low or low to high, we don’t care . . . What we care about is action.” As such, federal contractors can “expect the workforce analysis to be extremely streamlined,” said Wilcher.

In addition, the proposed amendments would require a “significant number” of targeted contractors—those considered in need of improvements to their affirmative action policies—to file a controversial equal opportunity survey (EOS). The mandatory EOS is part of the Labor Department’s equal pay initiative. The EOS requires targeted contractors to provide summaries of the compensation, personnel data, and tenure of full-time employees, as well as general information regarding the contractors’ affirmative action plan. These surveys, which contractors would primarily submit electronically, are intended to aid contractors in assessing their pay and personnel practices. OFCCP officials estimate that 60,000 contractors will be required to submit the EOS by the end of the year.

After years of criticism by the regulated community of contractors regarding the complexity, time, and expense of compiling and reporting data under the eight-factor availability workforce analysis, OFCCP officials convened a series of public meetings to elicit recommendations to simplify the regulations. The proposed amendments are based on the results obtained from these meetings. The proposed amendments state that OFCCP “opted in favor of this new direction . . . [because it would] greatly benefit the interests of contractors, minorities and women, and OFCCP itself.” To that end, the proposals would make the following changes to the current regulations:

• Simplify the 23-page workforce analysis to a one-page workforce analysis.
• The highly criticized and burdensome “eight-factor availability analysis” — whereby contractors must compare the availability of minorities for each job group to the overall workforce, unemployment rate, and several other determinants—would be abolished and replaced with a two-factor availability workforce analysis. The two factors are external availability (i.e., the percentage of qualified minorities or women in the “reasonable recruitment area”) and internal availability (i.e., the percentage of promotable minorities or women within the organization).
• Make the regulatory language more understandable by using clear terms. For example, the word “shall” would be replaced with the word “must.”
• Targeted contractors would have to complete and submit the EOS.
• Expand the scope of the OFCCP’s corporate management (also known as “glass ceiling”) reviews beyond corporate headquarters if OFCCP finds that compliance problems exist at other corporate locations.
• Contractors with between 50 to 150 employees would be permitted to use EEO-1 categories for job groups rather than create specific job groups tailored to their own organizations.

The proposed amendments represent a “significant departure” from OFCCP’s current regulatory approach to affirmative action compliance of federal contractors. The proposed amendments explicitly state that the OFCCP is more concerned with contractors’ actual nondiscrimination and affirmative action practices, than with an “item-by-item review of whether contractor affirmative action plans meet detailed technical standards.” According to Assistant Secretary of Labor Bernard Anderson, “[t]he simple intent of the regulations is to reduce paperwork and to improve the compliance evaluation process.” As Mr. Anderson declared, preparation time for affirmative action plans “will be virtually cut in half” because paperwork will be reduced by “75 to 80 percent.” Yet, despite the reduction of paperwork and preparation time, contractors would be mistaken to think that the proposed amendments would relax their affirmative action obligations. What the proposed regulations do permit, however, is increased freedom and flexibility for federal contractors to design their affirmative action plans “around their unique business structure and needs.”

The proposed amendments are a resolute statement by the Labor Department to effectuate the principle that contractor workplaces “should be free of discrimination.” As one top OFCCP official put it, “[w]e want to get to the heart of affirmative action. That’s what’s important.” Under the proposed amendments, although reporting affirmative action compliance by contractors should be faster, more accurate, and less burdensome, their underlying affirmative action obligations will remain largely unchanged.

For more information please contact Andrew W. Stephenson at 1-888-688-8500 or at astephen@hklaw.com. Kosa So is a summer associate and is a third-year law student at American University in D.C.