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This Employer Webinar Series program is presented by Spencer Fane Britt & Browne LLP in conjunction with United Benefit Advisors. Do You Have an Affirmative Action Plan? Maybe You Should. Monica M. Fanning, Esq . Agenda. Is Your Company a Covered Federal Contractor/Sub-Contractor?
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This Employer Webinar Series program is presented by Spencer Fane Britt & Browne LLPin conjunction with United Benefit Advisors
Do You Have an Affirmative Action Plan? Maybe You Should. Monica M. Fanning, Esq.
Agenda • Is Your Company a Covered Federal Contractor/Sub-Contractor? • Overview of Affirmative Action Obligations • Office of Federal Contract Compliance Programs (“OFCCP”) Audits • Consequences of Noncompliance
Federal Contractor Affirmative Action Obligations • Government contractors and subcontractors have affirmative action obligations as a condition of their government contracts: • Executive Order 11246 - Females and Minorities • Section 503 of the Rehabilitation Act- Qualified Individuals With Disabilities • VEVRAA: Covered Veterans
What is Affirmative Action (AA)? • Provides for equal employment and makes it unlawful for federal contractors to discriminate based on gender, race, religion, disability, or veteran status. • Requires federal contractors to go beyond the equal employment opportunity laws by actively recruiting and providing outreach to women, minorities, veterans and disabled individuals.
Who is a Federal Contractor? • Federal contractor is any person who holds a “government contract.” • -Service and Supply Contract: Agreement with a federal agency or entity for “the purchase, sale or use of personal property or nonpersonal services.” • Personal property includes supplies and goods • Nonpersonalservices includes utilities, construction, transportation, research, insurance and fund depository • -Construction Contract
Who is a Federal Contractor?(Con’t) • Construction Contract: Any agreement to provide construction services directly to any department, agency, establishment, or instrumentality of the executive branch of the Federal Government. • Hiring Percentages for Female and Minority-Owned businesses but no requirement for written AAP
Are Financial Institutions Federal Contractors? • Yes, provided the financial institution employs 50 or more employees Company-wide, and • Participates in the Federal Deposit Insurance Corporation (“FDIC”) or National Credit Union Association (“NCUA”) • Federal Reserve Banks are not subject to OFCCP jurisdiction
Are Any Types of Contracts Excluded? • Contracts involving work performed outside of the U.S. (if employees performing the work were not recruited in U.S.) • Contracts with State or local governments • Contracts with religious entities or religiously affiliated education institutions • Contracts involving work on or near an Indian reservation
Issues to Consider in Determining Federal Contractor Status • OFCCP broadly interprets its jurisdiction but there are a few defenses against coverage that all federal contractors should consider: • 1. Is the contract with a federal agency or entity? • -Quasi-Governmental agencies [consult usa.gov, “A-Z Index Dept./Agencies”] • 2. Is the arrangement really a contract? • -Personal services is interpreted very narrowly-employer/ employee relationship; government has complete control • Grant
Issues to Consider in Determining Federal Contractor Status (Con’t) • What is the value of the contract? • Specific amount or open-ended • If open-ended, you must make a good faith estimate of the amount likely to be received during a 12 month period -Based upon past purchasing history/price of goods/services • What is the duration of the contract? • Specific term or project/performance driven
Who is a Federal Subcontractor? • Subcontractor has a direct contract with a federal contractor • Subject of the contract is to provide goods or services necessary to the performance of the prime government contract • Perform an obligation of the federal contractor’s prime government contract
“Single-Entity” Test • Some businesses or organizations that do not independently hold Federal contracts/subcontracts may still be covered Federal Contractors if they are considered a "single entity" with a related business or organization that holds such contracts. • OFCCP uses a “Single Entity" test to determine whether the businesses or organizations are so closely related that they may constitute a single entity for purposes of OFCCP jurisdiction.
“Single-Entity” Test (Con’t) • Subsidiaries, Parent Corporations • -OFCCP Uses a 27 Point Test Focusing on Related Interests: • Common Ownership • Common Directors and/or Officers • De Facto Exercise of Control • Unity of Personnel Policies Emanating From Common Source • Dependency of Operations
Coverage Executive Order 11246:Females and Minority • Basic Coverage: Single government contract or subcontract of $10,000 or more • Aggregate contracts • Open-ended contracts covered if reasonably expect amount to exceed $10,000 in 12 month period • Obligation: Prohibits discrimination on the basis of race, color, sex, religion or national origin
Coverage Executive Order 11246:Females and Minority (Con’t) • Major Coverage: Single government contract or subcontract of $50,000 or more • -Do not aggregate • 50 or more employees Company wide • OFCCP requires written affirmative action plan; use of E-Verify; and specific outreach to females and minorities • Specific percentage hiring goals • 120 days to prepare AAP after entering contract
Coverage Thresholds: Section 503/Disabled Individuals • Basic Coverage: Single government contract or subcontract of $10,000 or more • Aggregate contracts • Open-ended contracts covered if reasonably expect amount to exceed $10,000 in 12 month period • Obligation: Prohibits discrimination on the basis of disability
Coverage Thresholds: Section 503/Disabled Individuals (Con’t) • Major Coverage: Single government contract or subcontract of $50,000 or more • -Do not aggregate • 50 or more employees • OFCCP requires written affirmative action plan; and outreach to disabled individuals • No hiring percentage goals • Revised Regulations: Anticipated 7% goal
Coverage Thresholds: VEVRAA/Covered Veterans • Basic Coverage: Single government contract or subcontract of $10,000 or more • -Open-ended contracts covered if reasonably expect to exceed $10,000 in 12 month period • Obligation: Prohibits discrimination against “covered veterans”; requires outreach • “Covered Veterans”: Armed Forces service medal veterans, disabled veterans, recently separate veterans and other protected veterans
Coverage Thresholds: VEVRAA/Covered Veterans (Con’t) • Major Coverage:Single government contract or subcontract of $100,000 or more • -Open ended contracts covered if reasonably expect amount to exceed $100,000 in 12 month period • Obligation:Written AAP; outreach; no current hiring percentage goals • Revised Regulations: OFCCP/DOL expected to include specific hiring percentage goals
Health Care Providers • OFCCP attempted to expand jurisdiction • In past, Medicare and Medicaid are grants-not government contracts • OFCCP asserts jurisdiction over HCP who participate in TRICARE networks • Florida Hospital appeals-TRICARE federal financial assistance like Medicare/Medicaid
Health Care Providers (Con’t) • In December 2011, President Obama signed the National Defense Authorization Act (NDAA); Section 715 exempts TRICARE providers from coverage as federal contractors • OFCCP announced last week during suspending audits based solely on TRICARE/Rescinded Directive 293 (participation in Medicare C and D subjects HCP to OFCCP jurisdiction)
Action Items • Did your Company check “yes” on Question 3 of Section C of the EEO-1 Report?
Action Items (Con’t) • Check to see whether your Company or any of its related entities are listed in: • USAspending.gov [most comprehensive] • governmentcontractswon.com • ccr.gov (central contractor registration)
Action Items (Con’t) • Obtain copies of all of your federal contracts • Often a difficult task • Review duration and amount to determine AA obligations • Train contracting personnel to review contracts for the following phrases: • Affirmative Action • EO 11246, Sec. 503, VEVRAA
OFCCP Audits • Receive a Notice of Desk Audit • Will be addressed to top Company official • Have 30 days to provide written AAP and other required personnel data • No extensions of 30 day period
OFCCP Audits (Con’t) • Focus on compensation • Outreach to veterans and disabled individuals • On-site visit: Review personnel files; FMLA records; applicant logs; payroll information; interview employees and managers
Penalties for Non-Compliance • Conciliation Agreement (promise to comply/keep better data)-must submit future plans to OFCCP • Require Company to reimburse applicants who were discriminated against; offer them positions • Require Company to remedy pay disparity
Penalties for Non-Compliance (Con’t) • Withhold payments until compliant • File suit on behalf of discriminated applicants or employees • Cancellation of current government contracts • Debarment from future government contracts-list on DOL’s website; very rare in past; more common now
THANK YOU! • If we can ever assist your organization with federal contractor/affirmative action issues or any other legal concerns, please give us a call. • Monica M. Fanning • mfanning@spencerfane.com • (816) 474-8100
Thank you for your participation in the Employer Webinar Series. This program, has been approved for 1.5 (General) recertification credit hours toward PHR, SPHR and GPHR To obtain a recording of this presentation, or to register for future presentations, contact your local UBA Member Firm.