Doing Business With The Feds: Special Employment Related Compliance Obligations Presented by Douglas B. Brown

Doing Business With The Feds: Special Employment Related Compliance Obligations

Presented by Douglas B. Brown

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Special Employment Related Compliance Obligation

• If a construction contractor (CC) or construction subcontractor (CS) does business with the federal government or works on a federally assisted construction contract, there may be very specific employment related compliance obligations with which the CC/CS must comply.

What Are the Relevant Regulations

1 Executive Order 11246

2 Section 503 of the Rehabilitation Act

3 Section 4212 of the Vietnam Era Veterans Readjustment Assistance Act

The three relevant regulations are:

What is EO 11246

• EO 11246 requires government contractors and subcontractors to take Affirmative Action to hire, train, retain and not discriminate against minorities and females in the construction industry. It also establishes goals for the participation of minorities/females in the workforce of the CC/CS.

• Goals differ depending on the labor market where the work is being performed.

What is Section 503?

• Section 503 of the Rehabilitation Act requires government contractors/subcontractors to take Affirmative Action to hire, train, retain, and not discriminate against individuals with disabilities (IWDs) in the construction industry.

What is Section 4212?

• Section 4212 of the Vietnam Era Veteran’s Readjustment Assistance Act of 1974 requires government contractors/subcontractors to take Affirmative Action to hire, train, retain and not discriminate against protected veterans in the construction industry.

What is a Construction Contract?

• A construction contract is any contract for the construction, rehabilitation, alteration, conversion, extension, demolition, or repair of buildings or highways, or other changes or improvements to real property, including facilities providing utility services.

Who is Covered?

• A federal construction contractor is someone who holds a federal construction contract (e.g. – working on military bases; Veterans’ Administration hospitals; federal office buildings and court houses; national parks, the federal highway system, etc.)

Who is Covered?

• A federal construction subcontractor is someone who is providing support either in the form of construction services or supplies that are necessary to the performance of the primary contract (e.g. – electrical/plumbing/concrete/steel or providing the supplies necessary to complete these tasks).

Who is Covered?

• Organizations working on a federally assisted construction contract (in whole or in part with funds obtained from the government or borrowed on the credit of the government) who are either a CC or a CS may also be covered.

So What Gets Us Covered?EO 11246

• If you have a federal construction contract or subcontract of more than $10K, you’re covered.

• If you have a federally assisted construction contract or subcontract of more than $10K, you’re covered.

• If you have a construction contract of more than $10K that is necessary to the performance of a federal non-construction contract, you’re covered.

So What Gets Us Covered?EO 11246

• If you have multiple federal construction contracts or subcontracts of less than $10K, that when added together total more than $10K in any 12 month period, or can be reasonably expected to total more than $10K in that time, you’re covered.

So What Gets Us Covered?Section 503

• If you have federal construction contracts or subcontracts of more than $10K in the past 12 months, you’re covered.

So What Gets Us Covered?Section 4212

• If you have federal construction contracts or subcontracts of more than $100K in the past 12 months, you’re covered.

So What Gets Us Covered?Federally Assisted Construction Contracts

Sections 503 and 4212

• If you have a federally assisted construction contract or subcontract in any amount, you’re not covered under the 503/4212 regulations.

So How Will We Know If We Are Covered?

• All covered federal and federally assisted construction contracts in their bid solicitations should contain a “Notice of Requirement for Affirmative Action to Ensure Equal Employment Opportunity (Executive Order 11246).”

• The notice informs the contractor/bidder of the requirements including the specified goals for minority/female participation.

Who Enforces These Regulations?

• The regulations are enforced by the Office of Federal Contract Compliance Programs (OFCCP) of the U.S. Department of Labor.

• OFCCP monitors compliance with the regulations through Compliance Reviews of CC/CSs.

• OFCCP’s 2016 budget proposal calls for 450 audits of CC/CSs nationwide with a focus on “mega projects” (projects with a value of more than $25M).

What Do We Have To Do To Comply?

1 Maintain a work environment free of harassment, intimidation and coercion.

2 Maintain a list of minority/female recruitment sources and notify those sources when opportunities are available.

3 Maintain a list of each minority/female off-the-street applicant and referral.

To comply with EO 11246, there are sixteen (16) steps that contractors/subcontractors must follow:


4 Notify the OFCCP if a union fails to refer someone whom the CC/CS has sent to the union.

5 Develop OTJ training opportunities/programs that expressly include minorities/females.

6 Disseminate the CC/CSs EEO policy to unions and training programs and request their assistance in meeting its EEO obligations.

7 Annually review the policy/obligations with all employees having responsibility for hiring, layoffs, and other employment decisions.


8 Disseminate the EEO policy externally (news media, other CC/CSs with whom may do business).

9 Direct recruiting efforts to minorities/females (schools, community organizations, training, and recruitment organizations).

10 Encourage current minority/female employees to recruit other minority/female persons and provide after school, summer and vacation employment opportunities to minority/female youth.


11 Validate all tests and other selection requirements where there’s an obligation to do so under the Uniform Guidelines on Employee Selection Procedures.

12 Annually inventory all minority/female personnel for promotional opportunities.

13 Ensure that seniority practices do not have a discriminatory effect.

14 Ensure that facilities and company activities are non-segregated (except for bathrooms).


15 Document offers for subcontracts from minority/female construction contractors.

16 Annually review all supervisor’s compliance with and performance under the CC/CSs EEO policies and obligations.

Is There Anything Special We Need To Do To Comply with Sections 503/4212?

• Remember, 503/4212 do not apply to federally assisted construction contracts.

• If you have a contract/subcontract for more than $50K and you have more than 50 employees, then you need to have a written affirmative action plan (AAP) for IWDs.

• If you have a contract/subcontract for more than $100K and you have more than 50 employees, then you need to have a written AAP for protected veterans.


1CC/CSs must include/reference the EEO Clause in all contracts/POs of more than $10K for 503. The EO Clause must be included/referenced in all contracts/POs of more than $100K for 4212.

2 The CC/CS must invite all current employees and applicants to self-identify as to their disability status.

There are eight basic tasks CC/CSs must perform to comply with the 503/4212 regs:


3The CC/CS must review personnel practices to ensure IWDs are considered for job vacancies/training opportunities.

4 The CC/CS must review all mental/physical job requirements to ensure that they are valid and job related.

5 The CC/CS must provide reasonable accommodations as necessary to any employee/applicant with a disability.


6The CC/CS must undertake effective outreach to identify and recruit qualified and interested IWDs and protected veterans.

7 If covered by 4212, CC/CSs must list all eligible job opportunities with the appropriate jobs delivery system in the state where the jobs exist.


8The CC/CS must collect and retain for up to three years, certain demographic data including:

• # of IWD/veteran applicants

• # of job openings and jobs filled

• # of total applicants for all jobs

• # of IWDs/veterans hired

• # of total hires

If covered by 4212, CC/CS must annually file a VETS-4212 Report on the number of protected veterans in their workforce.

What Happens If We’re Audited by the OFCCP?

• As noted earlier, the construction industry is one of the two major target areas for 2016. The OFCCP monitors CC/CS compliance by conducting compliance reviews (audits).

• The audit process starts with the receipt of a scheduling letter (see copy included in your materials.)

• A construction audit always includes an onsite visit.


An audit consists of:

• A document review

• A visit to one or more construction worksites

• Interviews with employees


Document Review – The OFCCP will request to see the following documents:

• Original payroll records for the review period, including total hours worked, overtime hours worked, gender/race/ethnicity of each employee

• Personnel records for all apprentices

• List of all applicants, hires, promotions, layoffs, recalls, and terminations (voluntary/involuntary) including name, job classification, gender/race/ethnicity


• Documentation of compliance with the 16 affirmative action standards

• Copies of subcontracts in excess of $10,000

• Copy of EEO Policy Statement

• Notifications sent to OFCCP of subcontracts in excess of $10,000

• Notifications to subcontractors about their EEO obligations


• EEO-1 reports for the last two years

• List of construction contracts in the geographic area (federal and non-federal)

• Communications with unions/community organizations regarding the company’s EEO efforts

• Records identifying union/trade organizations who provide workers and copies of applicable CBAs


• Copies of AAPs for IWDs and Veterans if subject to Sections 503 and 4212

• Copies of purchase orders

Is There Anything Else We Need to Know

Oh yeah – Strap in and hold on to the edge of your chair. It may be a bumpy ride.

What Is New?

New regulations regarding the disabled (503) and veterans (4212):

• Any issues?

• Goals/Benchmarks – What is meeting the goal/benchmark dependent on?

• Must invite employees/applicants to self-ID as to disability/veterans status

• Do we want to know if our employees have disabilities?

What Is New?

LGBT Discrimination – Sexual Orientation/Gender Identity:

• Effective 4/8/15 for new contracts or existing contracts modified after that date

• Must modify existing policies (postings – on the internet and posted on the bulletin boards, handbooks, AAP, policy manuals, etc.)

• No invitation to self-identify

• No goals

• Enforced by the OFCCP

What Is New?

Non-Retaliation for Disclosure of Compensation Information:

• Contractors are prohibited from retaliating against employees who choose to share/discuss their compensation with their co-workers

• Claims that free discussion of compensation information will ensure that employers will pay their employees equitably

What Is New?

Revisions to OFCCP Scheduling Letter:

• Went from 11 requested items to 22 requested items without providing any additional time in which to respond

• Now asking for 8 new items regarding data collection and evaluation of effectiveness of efforts concerning individuals with disabilities and protected veterans

What Is New?

Revisions to OFCCP Scheduling Letter:

• Now asking for detailed employee-level compensation data (including part-time, contract, per diem or day labor, and temporary employees.)

• Compensation includes base and “other compensation” (bonuses, incentives, commissions, merit increases, locality pay, or overtime.)

What Is New?

Increase in federal minimum wage to $10.10 an hour:

• Effective 1/1/15 – for new/modified contracts• Applies to:

• Procurement Contracts for Construction

• Service Contracts under the SCA

• Contracts for Concessions (e.g. parks, buildings)

• Contracts in connection with federal property/lands for the provision of services (e.g., parks, buildings, etc.)

What Is New?

Fair Pay and Safe Workplaces (“Blacklisting”):

• Effective some time in 2016?

• Requires contractors to provide the contracting officers with a three (3) year history of all labor and employment law violations under federal and companion state laws when submitting bids

• Contracting officers are directed to “consider” the contractor’s history when awarding, maintaining or withdrawing contracts

• Once contract awarded, must update every six (6) months

What Is New?

Compensation Data Collection Tool:

• NPRM (Notice of Proposed Rule Making) for Data Collection Tool

• Requirement for contractors to submit yearly annualized compensation data to the OFCCP for the purpose of identifying instances of systemic discrimination between the pay of females/males and minorities/non-minorities

What Is New?

Revised Sex Discrimination Guidelines:

• The adoption of the “implicit bias” theory of discrimination because …“[r]esearch clearly demonstrates that widely held social attitudes and biases can lead to discriminatory decisions, even where there is no formal sex-based (or race-based) policy or practice in place.”

• A new requirement that contractors must provide light duty to all pregnant employees regardless of whether an impairment substantially limits a major life activity

What Is New?

Revised Sex Discrimination Guidelines:

• A new requirement that contractors allow transgendered individuals to use the restroom of his or her choice (despite Congress’ decision not to enact the Employment Nondiscrimination Act)

• A prohibition on contractors imposing a shorter maximum amount of pregnancy leave as compared to the maximum time off allowed for other types of medical or short-term disability leave

What Is New?

Expanded Overtime Eligibility:

• Proposed changes to the thresholds for determining when an individual is considered exempt from the provisions of the Fair Labor Standards Act. Proposed earnings threshold moving from $23,660 to $50,440 in addition to still meeting the “duties” tests

National Labor Relations Acts

While the NLRA primarily applies in the union setting, the current National Labor Relations Board is actively expanding its protections in the non-union setting.

Employees who are engaged in “protected, concerted activities” can claim the protections of the NLRA even in a non-union setting.


Section 7 of the NLRA states:

“Employees shall have the right to self-organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection, and shall also have the right to refrain from any or all such activities . . .”


The NLRB has shown no reluctance to extend the rights provided under the NLRA to employees in a non-union setting if the employee claims that they were retaliated against for having engaged in protected, concerted activity.

e.g. – Speaking with co-workers or on the behalf of co-workers regarding the terms and conditions of their employment.

OFCCP’s Role

• Increased emphasis on compensation discrimination

• Investigate discrimination and enforce AA requirements

• Monitor company’s self-audit programs

• Greater attention to compliance with veterans/disabled

• Outreach to minorities/females/veterans/disabled

• Develop performance measures

• Contractor compliance

• Compliance with technical requirements

What to Expect

• Focus on compensation

• New regulations for the disabled/veterans

• The Agency will go after any perceived issues:

• e.g. Hillshire Farms- $330K for a class of 2,500 males not considered for employment as Biscuit Sandwich Assemblers.

What to Expect

• There will continue to be never-ending data requests

• DATA/RECORDS ARE KING! Just like in the medical field, “If it’s not written down, it didn’t happen!”

• Time and costs to comply are simply going to be greater. The Agency is on a “Mission from God”

• The OFCCP is not afraid to use its power

Questions?

Thanks for Attending

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Doing Business With The Feds: Special Employment Related Compliance Obligations

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Doing Business With The Feds: Special Employment Related Compliance Obligations Presented by Douglas B. Brown