OFCCP Initiatives and New VEVRAA Regulations February 11, 2014

OFCCP: Office of Federal Contract Compliance Programs Arm of the Department of Labor Charged with Enforcing Affirmative Action Obligations of Federal Contractors Executive Order (“EO”) 11246 Section 503 of the Rehabilitation Act Vietnam Veterans’ Readjustment Assistance Act (“VEVRAA”) Affirmative Action: recruit, hire and promote women, minorities, disabled and veterans

Who is covered? Federal Contract or Subcontract and Meet Dollar Threshold Contract of $10,000 or more (EEO Policy) OR Contract of $50,000 or more + 50 employees (AAP Women and Minorities and Individuals with Disabilities) OR Contract of $100,000 or more + 50 employees (AAP Veterans) Federal Contract Subcontract:

Notes on the dollar threshold Watch out for Indefinite Quantity Contracts and Open-Ended Contracts Aggregation What about multiple contracts under the dollar threshold?

What is a federal contract? The implementing regulations at 41 CFR 60-1.3 define "Government Contract" as: any agreement or modification thereof between any federal contracting agency and any person for the purchase, sale or use of “personal property” or “nonpersonal services.” Examples of nonpersonal services - Utilities, construction, transportation, research, insurance, and fund depository

What is a subcontract? “Subcontract” is any agreement between the Prime Federal Contractor with a third party to provide goods or services that are, in whole or in part, NECESSARY TO THE PERFORMANCE of the that Prime Federal Contractor’s government contract, OR Under which any portion of the contractor's obligation under any one or more contracts is performed, undertaken or assumed.

Industry Coverage Issues Financial Institutions Federal fund depository? FDIC or NCUA insurance? Construction No women and minority AAP

Industry Coverage Issues Hospitals and Healthcare Providers TRICARE? Medicare? Veterans Affairs, Department of Defense? Federal Prison Contracts? U.S. Office of Personnel Management, Federal Employee Health Benefits Program (FEHB)? TRICARE – exempted in the National Defense Authorization Act in December 2011; unique legislation that the health care industry lobbied hard to get. OFCCP was not happy about this piece of legislation and has responded by targeting the health care industry Medicare and Medicaid – NO, federal financial assistance, which is treated as a “grant” and is excluded

Industry Coverage Issues UPMC Braddock, et al v. Seth D. Harris, Acting Secretary of Labor (D.D.C. 3/30/2013) OPM Contract to “offer medical products and services” UPMC UPMC Braddock v. Harris (3/30/2013) – The university lost for the third time. UPMC established an HMO, which contracts with OPM to provide “medical services and supplies” to federal employees through FEHB. The HMO then signed contracts with three of UPMC’s hospitals to provide “medical services and supplies” HMO Contract to provide “medical products and services” UPMC Braddock Hospital UPMC Southside Hospital UPMC McKeesport Hospital

What is an affirmative action plan? The written AAP will include both: Quantitative (data analysis); and Qualitative (narrative) Components Plan must be developed within 120 days of contract award and be updated annually Unless selected for compliance review, the AAP is not submitted Do not underestimate the length of time it takes to become compliant

New VEVRAA Regulations Part 60-300

Regulation Structure Divided into 5 subparts (Subparts A-E): Subpart A: Preliminary Matters Definitions Coverage EEO Clause* Subpart B: Discrimination Prohibited Subpart C: Affirmative Action Program Invitation to Self-Identify* Required Contents of AAP* Hiring Benchmark*

Regulation Structure Subpart D: General Enforcement and Criminal Complaints Compliance Evaluations Enforcement Proceedings Sanctions Subpart E: Ancillary Matters Recordkeeping*

Hot Regulation Sections 41 CFR 60-300.5 (Equal Opportunity Clause) 41 CFR 60-300.42 (Invitation to Self-Identify) 41 CFR 60-300.44 (AAP 11 parts) 41 CFR 60-300.45 (Hiring Benchmark) 41 CFR 60-300.80 (Recordkeeping)

Language Changes Change 41 CFR 60-250 to 41 CFR 60-300 As of effective date, 41 CFR 60-250 will be rescinded Eventually VETS-100 report will also be suspended New Term: Pre-JVA Veteran Those veterans who were protected under 41 CFR 60-250 (contractor with a contract of $25,000 or more entered into prior to December 1, 2003) No reporting

Categories of Veterans Pre-JVA Veterans (no reporting) Disabled Veterans Active Duty Wartime or Campaign Badge Veteran previously “other protected veteran” Armed Forces Service Medal Veteran Recently Separate Veteran last 3 years in active duty beginning on date of discharge

Equal Opportunity Clause 41 CFR 60-300.5 (contained in Subpart A)

Timing EEO Clause Requirements March 24, 2014 No delayed compliance because not part of Subpart C

Job Listings 41 CFR 60-300.5(a)(2) List openings with state/local employment service except: Executive and senior management Filled from within Positions lasting 3 days or less Information to the Employment Service Delivery System (ESDS): Include in all listings to local service: “VEVRAA Federal Contractor” and desire for priority referral of protected veterans. Identify official responsible for hiring and contact information (1-800# and e-mail sufficient) Identify contact info for any outside job search companies (such as headhunters/recruiters, etc.) Executive and senior management: 1) compensation $455 per week, 2) primary duty is management, 3) customarily and regularly directs 2 or more employees and 4) authority to hire and fire Filled from within: no consideration to outside applicants

Job Listings 41 CFR 60-300.5(a)(2) Listing must be given in “manner and format” of local Employment Service Delivery System (ESDS) Big deal if you have lots of locations Regulation gives express option to use third parties Suggested tag line for print: “EEO Employer W/M/Vet/Disabled” No listing requirement for independent contractors Joint employer issue

Update Contract EEO Clause 41 CFR 60-300.5(d) Can still incorporate by reference Suggested Language: [Company] is an Equal Employment Opportunity employer.  As such, the requirements of 41 CFR 60- 1.4(a)(7), 41 CFR 60-300.5(a), 41 CFR 60-741.5(a) and 29 CFR Part 471, Appendix A to Subpart A are herein incorporated by reference, if applicable. These numbers refer to clauses in Executive Order 11246 (41 CFR 60-1), Vietnam Veterans’ Readjustment Assistance Act (41 CFR 60-300), Section 503 of the Rehabilitation Act of 1973 (41 CFR 60- 741), Executive Order 13496 (29 CFR Part 471, Appendix A to Subpart A).  This contractor and subcontractor shall abide by the requirements of 41 CFR 60-300.5(a). This regulation prohibits discrimination against qualified protected veterans, and requires affirmative action by covered prime contractors and subcontractors to employ and advance in employment qualified protected veterans. This contractor and subcontractor shall abide by the requirements of 41 CFR 60-741.5(a). This regulation prohibits discrimination against qualified individuals with disabilities, and requires affirmative action by covered prime contractors and subcontractors to employ and advance in employment qualified individuals with disabilities.

Posting of Rights for Protected Veterans 41 CFR 60-300.5(a)(9) Conspicuous place (available to all applicants and employees) If electronic application, must be available for electronic applicants Form will be prescribed by OFCCP May be electronic Company intranet Sent by e-mail Must be accessible to disabled veterans Braille or large print Accessible from wheelchair

Notification to Labor Organizations 41 CFR 60-300.5(a)(10) Need to inform labor organization that you are: A federal contractor bound by the terms of VEVRAA Committed to affirmative action to employment and advance in employment, and not discriminate against, protected veterans Timing: March 24, 2014 (technically) Send once + anytime new CBA

Invitation to Self-Identify 41 CFR 300.42 (Contained in Subpart C)

Invitation to self-identify 41 CFR 60-300.42 Applicants New Hires Invite applicants to self-identify protected veteran status pre-job offer Same time as employer invites applicants to self-identify race and gender Invite new hires to self-identify protected veteran status Ask if need reasonable accommodation Same time as employer invites new hires to self-identify race and gender

Invitation to self-identify 41 CFR 60-300.42 Multiple File System Employee Personnel File Employee Medical File (ADA) NEW: Confidential Self-ID File (“Data Analysis File”) Unlike invitation to self-identify disability status (Section 503), may be combined into same form as women and minorities (E.O. 11246). Sample in Appendix B to regulations Sample only, not required verbatim like Section 503 form

Invitation to self-identify 41 CFR 60-300.42 Required Elements Federal contractor required to take affirmative action to employ and advance in employment protected veterans Summarize relevant portions of act and contractor’s affirmative action program Voluntary Confidential Refusal = no adverse action Not used in manner inconsistent with VEVRAA

Affirmative Action Plan Parts 41 CFR 300.44 (contained in Subpart C)

Overview of Parts Old Regulations New Regulations 41 CFR 60-300.44(a) Policy Statement Same .44(b) Review of personnel processes .44(c) Physical and mental qualifications .44(d) Reasonable accommodation to physical and mental illness .44(e) Harassment .44(f) External dissemination of policy .44(g) Internal dissemination of policy .44(h) Audit and reporting systems .44(i) Responsibility for Implementation .44(j) Training .44(k) Data Collection Analysis

EEO Policy Statement (.44(a)) New: Must indicate the top United States executive’s support for the contractor’s affirmative action program. Top executive examples: Chief Executive Officer OR the President of the U.S. Division (if foreign company)

Review of Personnel Processes (.44(b)) Unchanged. Contractors are required to periodically review their personnel processes to ensure protected veterans are afforded equal opportunity in the operation of these processes in hiring, promotions, and training. Contractors must develop procedures to facilitate this review. Appendix C provides a set of sample procedures contractors have the option of implementing.

Physical and Mental Qualifications (.44(c)) Unchanged. Contractors must provide and adhere to a schedule for the periodic review of all physical and mental job qualification standards.

Reasonable Accommodation (.44(d)) “If an employee who is known to be a disabled veteran is having significant difficulty performing his or her job and it is reasonable to conclude that the performance problem may be related to the known disability, the contractor shall confidentially notify the employee of the performance problem and inquire whether the problem is related to the employee’s disability; if the employee responds affirmatively, the contractor shall confidentially inquire whether the employee is in need of a reasonable accommodation”

Reasonable Accommodation (.44(d)) The Breakdown Known to be disabled AND Having significant difficulty performing job AND Reasonable to conclude due to disability Contractor must: Confidentially notify of performance problem Inquire whether related to disability If so, ask if needs a reasonably accommodation

Anti-Harassment Procedures (.44(e)) Unchanged. Contractors are required to develop and implement anti-harassment procedures.

Outreach (.44(f)) New: Mandated written notification to subcontractors/vendors of company policy regarding affirmative action efforts Old: “should”

Outreach (.44(f)) Examples of outreach and recruitment activities: Local Veterans’ Employment Representative Department of Veterans Affairs Regional Office Veterans’ Counselors and Coordinators (“Vet-Reps”) on college campuses Service Officers for national veterans’ groups Local veterans’ groups and veterans’ service centers Department of Defense Transition Assistance Program (TAP) Organization listed in the Employer Resources section of the National Resource Directory (www.nationalresourcedirectory.gov)

OFCCP resources http://www.dol.gov/ofccp/regs/compliance/Resources.htm

OFCCP Resources http://www.dol.gov/ofccp/regs/compliance/resources_recruit.htm

Outreach (.44(f)): Effectiveness Evaluation Must, on annual basis, review external outreach and recruitment efforts during previous 12-month period Written self-assessment “Each effort” Use “data analysis” for current year and 2 previous years (keep records for three years)

Sample Table Analyzing Outreach (from OFCCP)

Internal Dissemination of Policy (.44(g)) Contractors are required to incorporate its Affirmative Action policy in its policy manual, or make it otherwise available to employees. Contractors who are parties to Collective Bargaining Agreements (CBAs) must notify union officials of the Affirmative Action policy and request their cooperation.

Audit and Reporting System (.44(h)) Contractors must design and implement a self-audit and reporting system to: Measure the effectiveness of the contractor’s AAP; Indicate any need for remedial action; Determine the degree to which the contractor’s objectives have been attained; Determine whether known protected veterans have had opportunity to participate in all company sponsored educational, training, recreational, and social activities; and Measure the contractor’s compliance with the AAP’s specific obligations. Contractors must document all actions taken to comply with audit and reporting requirements and retain such as employment records.

Sample Self-Audit Table (from OFCCP)

Sample Audit Personnel Activity (from OFCCP)

Responsibility for Implementation (.44(i)) Unchanged. Contractors are required to designate an official responsible for implementation of the AAP.

Training (.44(j)) Unchanged. Contractors must provide EEO and AA training for employees involved in personnel processes.

Data Collection Analysis (.44(k)) Contractors are required to document: The number of applicants who self-identified as protected veterans pre-offer; The total number of job openings and jobs filled; The total number of applicants for all jobs; The number of protected veteran applicants hired; and The total number of applicants hired.

Sample Data Collection Table (.44(k)) (from OFCCP)

41 CFR 60-300.45 (contained in Subpart C) Hiring Benchmark 41 CFR 60-300.45 (contained in Subpart C)

Hiring Benchmark for Veterans 41 CFR 60-300.45 Contractors are required to set a hiring benchmark on an annual basis Apply benchmark to each establishment (not job group like women, minorities and individuals with disabilities) Not listed in “AAP Parts”

Hiring Benchmark for Veterans 41 CFR 60-300.45 Two Options: Use national percentage of veterans in civilian workforce, as posted on OFCCP website OR OR Own Benchmark: Average in civilian workforce over 3 years Number in last 4 quarters who participated in state employment service Applicant and hiring ratios for previous years Recent assessments of effectiveness of outreach Any other factors that would affect availability of qualified protected veterans Hiring benchmark is different than a goal, it is a yardstick to measure success.

Hiring Benchmark for Veterans 41 CFR 60-300.45 If contractors establish a benchmark using the five-factor approach, they must document consideration of each factor and retain such records for three (3) years.

Notice of AAP Availability 41 CFR 60-300.41 (contained in Subpart C)

Notice of Availability of AAP (41 CFR 60-300.41) Full affirmative action program must be made available to any employee or applicant Exclusion: data metrics contained in 300.44(k) Location and hours of availability must be posted at each establishment

41 CFR 60-300.80 (contained in Subpart E) Recordkeeping 41 CFR 60-300.80 (contained in Subpart E)

Record Retention Old Rule: 1 or 2 years New rule: 1, 2 or 3 years Personnel or Employment Record Only if less than 150 employees and contract less than $150,000 2 Years 3 Years Applicants: Total, Total with Disabilities and Total Veterans Hires: Job Openings, Jobs Filled, Number of Veterans and Disabled Hired Evaluations of outreach and recruitment efforts Records relating to hiring benchmark

New VEVRAA Requirements Effective Dates New VEVRAA Requirements

Effective Date Regulations effective March 24, 2014 What if you are in middle of AAP year? Delay compliance of your written AAP (and all new requirements in Subpart C including self-identification and hiring benchmark) until next AAP year Comply with other subparts provisions as of effective date EEO clause Non-discrimination Recordkeeping Delay – OFCCP does not encourage this approach.

Can I change my AAP date? Yes. No prohibition against changing date to start next cycle before March 24, 2014. For example, if you have a calendar year AAP started January 1, 2014, you could do a plan “update” on March 23, 2014. Result: next AAP cycle does not start until March 23, 2015.

OFCCP Recommendations Before Next AAP Cycle “Strongly encourages” Train employees engaged in key personnel activities Work out any “kinks” Start invitation to self-identify for applicants pre- and post- hire Survey existing employees Implement documentation procedures for outreach, recruitment, self-audit and reporting Conduct assessment of outreach and recruitment

OFCCP Recommendations Before Next AAP Cycle Draft EO policy statement showing top executive support for AAP Ensure applicants and employees have equal access to personnel processes Conduct data analysis related to applicants and hires Establish a hiring benchmark and apply it to the workforce in each establishment

Transitional AAP First AAP after March 24, 2014 Transitional AAP Must: Comply with all existing obligations; Address everything that that contractor has done to come into compliance with new requirements that take effect on March 24, 2014; and To the extent that the contractor has not achieved full compliance with new requirements, discuss steps that the contractor will take to come into compliance.

May I start now? Yes Nothing prohibits implementing new VEVRAA requirements early As long as you DO NOT ask about disability status pre-offer

2014 Initiatives

Enforcement 2014 CSAL letters issued January 2014 Notice that contractor may be selected 2,193 establishments on scheduling list 856 distinct companies Sent to attention of Human Resources Director Went to each establishment

2014 OFCCP Agenda Systemic pay discrimination Directive 307 Federal Contract Compliance System (FCCS) software NPRM Pay Data Tool January 2014 was “target date” NPRM Construction Contractors E.O. 11246 Target date April 2014 NPRM Sex Discrimination Target date May 2014

About the Presenter Erin Schilling provides advice, counsel, and peace of mind so that employers can focus on what they do best – operating their business. Erin represents employers in state court, federal court, and before state and federal agencies, defending clients against allegations of sexual harassment, retaliation, and breach of contract, as well as discrimination claims including age, race, disability, religion, national origin, and sex discrimination. In addition, Erin advises clients on affirmative action plan structure and preparation and represents clients in during audits by the Department of Labor. Erin also oversees the preparation of affirmative action plans for her clients. Erin D. Schilling Polsinelli 900 West 48th Place Kansas City, MO 64112 816.374.0559 816.817.0138 eschilling@polsinelli.com You may also visit us on the web at polsinelli.com

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