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Wake Up Federal Contractors; Key Affirmative Action Issues for 2016


Wake Up Federal Contractors; Key Affirmative Action Issues for 2016

Although the Office of Federal Contract Compliance Programs (“OFCCP”) has not been as active as the National Labor Relations Board  (“NLRB”) in updating regulations and issuing harsh decisions, unprepared federal contractors or subcontractors may face significant problems with the OFCCP during 2016.

Some time ago, the President of the United States signed Executive Order 13658 putting into effect a new minimum wage for certain federal contractors. The Executive Order affects those involved in federal construction jobs, Service Contract Act projects, concession contracts and contracts in connection with federal property or lands. The Executive Order, which went into effect January 1, 2016, established a minimum wage of $10.10 for those covered. Other obligations include updating agreements with subcontractors and providing notice to all impacted workers of the new rate. Any company with a federal contract that is not paying this new minimum wage should immediately confirm that it is not covered by Executive Order 13658 or become compliant.

Other rules becoming effective in 2016 include Executive Order 13665, which is related to pay transparency. The regulations for this new Executive Order went into force on January 11, 2016. In summary, employers may not discharge or otherwise discriminate against employees or applicants for inquiring about, discussing, or disclosing their own pay or that of another employee or applicant. Most employers know that the NLRB has imposed similar obligations on all employers (not just federal contractors) for many years. However, the NLRB does protect supervisors—this new Executive Order does. Thankfully, an employer may still prohibit disclosure of wage information by those employees who have access to compensation as an essential job function. Covered contractors are required to post a pay transparency policy statement, which may be found on the OFCCP website (www.dol.gov/ofccp/PayTransparencyNondiscrimination.html).

As a reminder for 2016, federal contractors subject to the requirements imposed by the Vietnam Era Veterans Readjustment Assistance Act must now comply with the regulations related to the establishment of hiring benchmarks for veterans. The benchmark may be set using one of two different methods: (1) utilize the percentage periodically published by the OFCCP on its website (currently approximately 8 percent); or (2) utilize a formula set out in the relevant regulations to calculate the benchmark. In order to analyze achievement of the benchmark, contracting employers must invite veterans to self-identify at the time of application and upon making a conditional offer of employment. In addition to the benchmark, written notice of the new requirements are also to be sent to all subcontractors, and contractors must conduct annual assessment of outreach efforts, list vacancies with state employment services, and perform other related activities.

At the time the veteran hiring benchmark went into effect, contractors also became subject to a utilization/placement goal of 7 percent for individuals with disabilities in each job group. This new guideline requires contractors to compile and retain data in order to perform the required utilization/placement analysis. This data gathering process includes inviting all applicants to self‑identify as individuals with disabilities pre‑offer and then inviting all new hires to self‑identify as individuals with disabilities, if applicable. Contractors are also required to invite current employees to self‑identify at least every five years. As such, all affirmative action plans now in place must include the analysis related to the veterans hiring benchmark and utilization goals for individuals with disabilities. 

Contractors should also be reminded of the new extended by Executive Order 13672, which was enacted during April 2015. This Executive Order amended Executive Order 11246, adding gender identity and sexual orientation as protected classes for both workers and applicants. Covered employers must now include gender identity and sexual orientation in all materials in which the company lists protected classes and will also need to display the updated “EEO is the Law” poster when it is available on the EEOC’s website.

As a final note, the OFCCP has focused very aggressively on compensation during its audits in recent years. This focus on compensation is emphasized by the recent announcement of a proposed rule requiring that contractors file equal pay reports revealing employee compensation. If implemented, this report would be mandatory for all entities with 100 or more employees holding federal contracts or subcontracts of at least $50,000 which last at least 30 days. The scrutiny of compensation will continue to intensify.