aap development in 2011

Compliance Trends

in Support of EEO Legislation

Affirmative Action and the DCAA

Proprietary Slide 2© Hampton Resources 0510

• The purpose of this webinar is to inform you about the regulations and provide ideas for discussion within your recruiting, compliance, legal, and HR teams. This webinar does not contain legal advice.

• Your corporate legal and compliance team must interpret these regulations and:– Review and approve all policies and procedures for compliance– Identify areas of uncertainty or ambiguity– Provide clear guidelines and protocols. – Monitor changes in the regulations and their interpretations– Answer any specific questions you have about the regulations

and how they apply to YOUR company.

Inform vs. Interpret


Session Goals

• The legal requirements that drive Affirmative Action• The regulating authorities that are mandated to review

and audit compliance efforts• Recent trends and activity out of the Department of

Labor, DCAA, and OFCCP• The most common misunderstandings of AAP and

most frequent compliance failures• How to equip yourself with the ability to successfully

handle an audit and to fully implement a compliant program


Affirmative Action’s True Meaning

“Affirmative action” means positive steps taken to increase the representation of veterans, women and minorities in areas of employment, education, and business from which they have been historically excluded.


The EEO Clause in Contracts

• Requirement to take Affirmative Action

• Clause makes EEO and AA integral elements of contractual agreement

• EO 11246 provides the mandate to measure EEO activities

• EEO clause in Prime, then Subcontractors bound by the requirement


Requirement for Written AAPs

• Contracts and Subcontracts for $50K or more– Formal Written AAP

• Women and Minorities

• Disabled Individuals

• Veterans

• When there are 50 or more employees• Must define underutilization• Must set goals for hiring and promoting• Must demonstrate internal and external equity


Expanded Veteran Requirement

• Contracts for $100k or more– Disabled Veterans– Veterans Serving During a War or Campaign– Veterans having participated in a US Military

Operation and awarded a medal– Recently Separated Vets

• Qualified Covered Veteran Defined


Office of Federal Contract Compliance Programs (OFCCP)

• OFCCP Mission Description Enforces:– EO 11246– Section 503 of the Rehabilitation Act of 1973– AA provisions of the Vietnam Era Veterans’

Readjustment Assistance Act

• Jurisdiction– 26 million (22%) of the total civilian workforce

• EEO Requirement as condition of contract:– Written plan of action with engagement in self-

analysis to discover barriers to EEO


OFCCP Enforcement Trends

• 4000-5000 desk audits in 2008– 10-15% of audits ended in conciliation agreements– 70% of conciliation agreements included financial penalties

• 2010 budget increase of more than $25.6m– Addition of 213 full-time employees– New case management system

• Heavy concentration on the final rule for Internet Applicant

• Significant increase in small business audits• OFCCP refining and analyzing data themselves


More Aggressive…More Systematic

“Compared with years past, OFCCP more quickly and accurately screens contractor establishments for indicators of potential discrimination … OFCCP

is monitoring a larger portion of the federal contractor universe than it has in the past...”


The Dilemma

Comply…or wait and see?

Fiscal Year

Financial Remedies Obtained

Workers Re-compensated

by OFCCP Agreement

Average Benefit Per Person

Compliance Evaluations

2008 $67,510,982 24,508 $2,755 4,333

2007 $51,680,950 22,251 $2,323 4,923

2006 $51,525,235 15,273 $3,374 3,975

2005 $45,156,462 14,761 $3,059 2,730

2004 $34,479,294 9,615 $3,586 6,529

2003 $26,220,356 14,361 $1,825 4,698

2002 $23,975,000 8,969 $2,673 4,135

2001 $28,975,000 9,093 $3,187 4,716

Change from 2001 to 2008 133.0% 169.5% -13.6% -8.1%

Change from 2006 to 2008 31.0% 60.5% -18.3% 9.0%

Change from 2005 to 2006 14.1% 3.5% 10.3% 45.6%

Change from 2001 to 2005 55.8% 62.3% -4.0% -42.1%


OFCCP ENFORCEMENT PROCEDURES

• Focuses resources on finding and resolving systemic discrimination

• Technical Assistance when requested• Compliance Evaluations and Complaint Investigations• Obtains Conciliation Agreements• Monitors both Prime Contractors and Subcontractors• Recommends Enforcement Action to include

debarment and victim relief to include back pay• Close working relationship with other Departmental

Agencies


Compliance Evaluations

• Compliance Review

• Compliance Check

• Focused Review


Most Common Issues

Most common Misunderstandings

Most Common Audit Traps

1. Affirmative Action is a diversity program

2. Numerical goals are designed to achieve proportional representation

3. Goals essentially set quotas requiring preferential hiring

4. OFCCP sets penalties for not meeting goals

1. Poorly defined protocol and recordkeeping of applicant data

2. Disparate impact found in resume search strings

3. Search and staffing firm data failures

4. Job posting missteps 5. Poor data analysis6. Compliant Pay System7. The Inference Provision


The “Applicant” Trap

• 2005 - New definition of “Applicant”

• Establish protocol that identifies a candidate vs. an “Applicant”

• Requirement to track resume activity


Definition of an “Applicant”

1. Resume submitted with expressed interest in employment

2. Considered for employment

3. Individual possesses the basic quals for the position

4. Individual does not remove themselves from further consideration

41 CFR Part 60-1


• Electronic mail/email• Fax transmissions• Web-site submissions• Internal or external resume data bases• Electronic scanning technology • Applicant screening technology• Applicant tracking systems• Applicant service providers • Job Boards • BOT searches• Any other related electronic

technologies

If a single applicant comes into your recruiting process for a position through one of these means, the ‘Internet Applicant’ definition and the associated record retention rules of 41 CFR Part 60.1 apply for that entire REQ. As a result, 41 CFR Part 60.1 is the de facto definition of ALL applicants for all corporations that use the Internet for recruiting.

Definition of an Applicant #1

The individual submits an expression of interest in employment through the Internet or related electronic data technologies;


The contractor considers the individual for employment in a particular position;

• Considers means ‘the contractor assesses the substantive information provided in the expression of interest with respect to any qualifications involved with a particular position’

• The word considers is the root cause of much of the confusion regarding these new regulations.

Definition Of An Applicant #2


The individual’s expression of interest indicates the individual possesses the basic qualifications for the position.

• Basic qualifications need to be 1) established before recruiting begins; 2) non-comparative; 3) objective; 4) and relevant to the position.

• Understanding who meets the basic qualifications of a REQ is critically important to your record keeping obligations.



The individual at no point in the contractor’s selection process’ prior to receiving an offer of employment from the contractor, removes himself or herself from further consideration or otherwise indicates that he or she is no longer interested in the position.• An individual can remove themselves from consideration by 1)

verbally or in writing declaring they are not interested in the position, 2) not following a uniformly applied and communicated application process or 3) indicating on their resume or ‘expression of interest’ a salary preference, work preference, or location of work preference that is inconsistent with uniformly applied policies or procedures for the REQ.

• This is a very valuable tool in reducing your data collection

obligations.



Search & Staffing Firm Traps

The Contractor’s recordkeeping obligations under 41 CFR 60-1.12

• Obligations for recordkeeping belong to the Contractor.

• Prudent to contractually define recordkeeping requirements and expectations.

• Ensure that the Agency is held accountable to those requirements and expectations and is provided in a timely manner that is equally defined.


Search String Trap Prevention

If you limit your search to Basic Qualifications– Data Management Technique (DMT) will limit who you

consider.– You must consider all hits if you don’t use DMT.

Search Beyond Basic Qualifications– Considers every resume you review in your database– Considers only those resumes that represent a

positive hit from your Basic Qualifications search from an external database when using DMT.


Job Posting Trap

• OFCCP Endorsed Internal Job Posting Programs

– Records regarding the program must be retained

– Contractors with $100k or more in contracts

• List all Employment Openings with Appropriate Employment Service Delivery Systems


Statistical Report Traps

• AAP Statistical Reports for Minorities and Women – Workforce Analysis – Job Group Analysis – Availability Analysis – Incumbents vs. Availability Analysis – Goals Analysis – Goals Progress Report

• Disparate Impact Analysis Reports - Minorities vs. Non-Minorities and Females vs. Males – New Hires vs. Job Applicants – Promotions vs. Available Pool – Terminations vs. Available Pool

• Compensation Analysis that follows OFCCP Protocol for Statistical Analysis called "First Pass Testing" – Females vs. Males – Minorities vs. Non-Minorities


Pay System Trap

• A compliant plan must meet two external audits - DCAA and DOL/EEOC– DCAA is concerned that the plan pays fair wages

compared to the external market • Are you paying in line with peer companies?

– DOL is concerned that the plan pays fair wages compared to internal equity• Are your minorities paid in line with majorities?• Are “equal” jobs rewarded equally? (after adjustment for experience, etc.)


Job Group Placement Trap

• All jobs located in an establishment must be reported in the analysis for that establishment except for:– Employees reported in the establishment of their manager– In establishments of less than 50 EEs may be captured under

any of the following three manners:• AAP for the establishment they work within• Location of the personnel function that supports that

establishment• Location of the program that covers the individual to whom they

report

– Employee selections made at a higher level establishment must be included in the program where the decision is made.


Recordkeeping Trap

• Any and All Recruiting and Personnel records• Complaints and Evaluations• Past AAPs• Records retention is included in the requirement

for good faith efforts at compliance• Missing records presumed unfavourable to the

employer and infers a practice of discrimination


Inference Provision Trap

Where the user has not maintained data on adverse impact as required by the

documentation section of applicable guidelines, the Federal enforcement agencies may draw an

inference of adverse impact of the selection process from the failure of the user to maintain

such data… (emphasis added).

41 CFR 60-3.4(D)


Audit Focus

• Established Lines of Authority• Internal Controls• Established Policies & Procedures• Applicant Tracking & Structured Data Analysis• Formal Pay Structures, Merit Budgets & Analysis• External Consistency - Survey Data • Internal Equity – Job Group Analysis• ADA complaint job descriptions• Defined Training and Communications


Preparing for the Audit

• Current year AAP and two previous years if asked for

• Adverse impact analysis

• Veterans and Disabled Workers plan

• EEO-1s


Preparing for the Audit, Cont.

• Total Compensation Plan with Methodology• I-9s• Job Postings• Employment law posters• General facility appearance• Regular Review of Diversity Progress


Penalties for Noncompliance

• Conciliation Agreement– Back pay– Job offers– Seniority credit– Additional training programs– Special recruitment efforts

• Enforcement proceedings– Debarment– Monetary sanctions


Summary

Don’t breathe a sigh of relief. Have a policy and enforce it on both internal and external

recruiting resources. Design an Affirmative Action Program with policies for the

long-run. Use data management and basic qualification to manage

your record keeping burden. Look at how you can use technology to reduce manual

labor AND turn the record keeping requirements into a mechanism for talent pool development.

Seek expert services for guidance, guessing is not worth the consequence of getting it wrong.


Questions

Cathleen M. Hampton

Hampton Resources

[email protected]

www.hamptonresources.com

(703) 794-9442

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