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Archive for February 20th, 2014

Expert provides detailed discussion of documents necessary for compliance with OFCCP’s revised disability & veterans regulations

February 20th, 2014  |  Published in Blog

The process of compliance with the new requirements of the OFCCP’s revised regulations on protected veterans and workers with disabilities is “going to be a fairly easy transition for a good chunk of the [contractor] universe,” said OFCCP expert John C. Fox during the second part of a two-part webinar presented by the National Employment Law Institute (NELI). However, the transition will be “tough” for about 5 to 10 percent of that universe, he added. Both segments of the webinar were focused on providing a transactional approach to compliance.

The revised regulations were published in the Federal Register on September 24, 2013 (78 FR 58614–58679 and 78 FR 58682-58752). The VEVRAA rule revises the OFCCP’s regulations at 41 CFR Part 60-300 (and rescinds the outdated regulations at 41 CFR Part 60-250); the Section 503 rule revises the agency’s regulations in 41 CFR Part 60-741. The rules will require federal contractors to establish a 7 percent utilization goal for workers with disabilities (per job group) and a variable hiring benchmark for protected veterans (per establishment) as well as impose new data collection and recordkeeping requirements.

Although federal contractors and subcontractors will be required to comply with Subparts A, B, D, and E of both new rules by March 24, 2014, the obligations in Subpart C of the new rules will be phased in. Contractors with existing affirmative action programs (AAPs) on the effective date may wait to comply with the new requirements of Subpart C of both rules as part of their standard AAP review and updating cycle. In other words, contractors with AAPs in operation (mid-cycle) on March 24 do not have to create a new AAP on that date to comply with the new requirements, but rather can continue under the current rules until the conclusion of the annual AAP cycle. Nevertheless, contractors must still comply with all existing obligations under the current regulations while they are waiting for their new annual AAP cycle (and thus, the new requirements) to begin.

As previously reported in Employment Law Daily, in the first part of the webinar (Segment A), Fox reviewed the architecture of the new rules, effective dates and compliance deadlines, including whether starting early is advisable. He also discussed to what extent contractors may legally start compliance early, transitional AAPs, confidentiality requirements, and budget and staffing concerns.

External notices. Fox listed the following five external notices that contractors will need:

(1) Notification to labor organizations of the contractor’s obligations under VEVRAA and Section 503 (41 CFR §60-300.5(a)(10) and 41 CFR §60-741.5(a)(5));

(2) Notification to subcontractors and vendors of company policy related to the contractors affirmative action efforts (41 CFR §60-300.44(f)(1)(ii) and 41 CFR §60-741.44(f)(1)(ii));

(3) “Listing” (not “posting”) requirement with the appropriate employment service delivery system (ESDS) (41 CFR §60-300.5(a));

(4) VEVRAA pre-offer self-identification form (41 CFR §60-300.42); and

(5) Section 503 self-identification form for pre-offer stage (41 CFR §60-741.42).

The VEVRAA and Section 503 self-identification forms (items (4) and (5) above) were discussed in detail in Segment A of the webinar.

Because the notification to labor organizations (item (1) above) is a Subpart A requirement, compliance will be required whenever the contractor signs it first collective bargaining agreement (CBA) following March 24, 2014, he pointed out. Although the regulations are a “bit fuzzy” on this point, Fox thinks that contractors only have to send these notifications once. Thus, an employer that is presently a covered contractor, and has already sent these notifications, doesn’t have to do anything unless and until they sign a new CBA because this is not a new requirement.

The notification to subcontractors and vendors of the company policy related to the contractor’s affirmative action efforts (item (2) above) is a new requirement, Fox observed.  For this notification, contractors may attach a copy of relevant AAP or include an appropriate description. The AAP is public anyway because the regulations require it to be disclosed to employees and applicants upon request, he said. This requirement is distinct from (i.e. not to be confused with) the requirement (contained at 41 CFR §60-300.5(d) and 41 CFR §60-741.5(d)) to incorporate specified EEO clauses into covered subcontracts, he pointed out.

The job listing obligation (item (3) above) is a requirement of the VEVRAA regulations that is not included the Section 503 regulations. VEVRAA, as amended by the Jobs for Veterans Act, requires covered contractors to list all employment openings — for jobs lasting longer than three days and not involving an executive or senior management position — with “the appropriate” ESDS as specified in the regulations.

It is important to note that regulations require contractors to “list” the jobs, rather than “post” the jobs, Fox advised, adding that it is the ESDS that “posts” the jobs, not the contractor. The revised regulations clarify that when listing their job openings, contractors must provide that information in a manner and format permitted by the appropriate state or local ESDS, so that the service can access and use the information to make the job listings available to job seekers. Most contractors use a third party “listing service” vendor to meet this requirement, he observed, adding that most contractors will continue to do so under the new rules.

A new obligation in the revised regulations requires contractors to send pieces of background info to the ESDS upon the first job listing: (1) the company is a federal contractor subject to VEVRAA; (2) the contractor desires priority referrals of protected veterans; (3) the name and location of each hiring location in the state; and (4) the contact information for the hiring officer at each location, including the identity of any third party search companies. When one or more of these four background pieces of information changes, the contractor must notify the ESDS.

Internal notices. Fox discussed the following five internal notices that contractors will need:

(1) Posting of rights for protected veterans and individuals with disabilities (IWDs) (41 CFR §60-300.5(a), para 9 and 41 C.F.R. §60-741.5(a), para 4);

(2) Notice of availability of AAPs to applicants and employees (41 CFR §60-300.41 and 41 CFR §60-741.41);

(3) VEVRAA post-offer self-identification form (41 CFR §60-300.42);

(4) Section 503 self-identification form for post-offer and post-employment invitations (41 CFR §60-741.42); and

(5) AAP policy statement (41 CFR §60-300.44(a) and 41 CFR §60-741.44(a)).

As stated previously, the VEVRAA and Section 503 self-identification forms (items (3) and (4) above) were discussed in detail in Segment A of the webinar.

Both new rules will require contractors to post notices stating “the rights of applicants and employees, as well as the contractor’s obligation under the law to take affirmative action to employ and advance in employment qualified employees and applicants” (item (1) above). The regulations will require these notices to be in a form prescribed by the OFCCP, “provided by or through the contracting officer,” but this form(s) has not yet been made available to the public, Fox noted.

Contractors may provide these notices electronically for employees with telework arrangements or for those who do not work at the contractor’s physical location if: (a) the contractor provides computers to these employees to access the posting, or (b) the contractor has “actual knowledge” that these employees may otherwise be able to access the electronic notice. Those contractors with employees who work “off the grid” — meaning that their work environment is so remote that they don’t have access to computers — will need to find a workaround to meet this requirement, Fox said.

Also, if a contractor uses electronic or internet-based application processes, an electronic notice of employee rights and contractor obligations must be “conspicuously stored with, or as part of, the electronic application,” the regulations state.

Providing notice of the availability of AAPs for inspection by applicants and employees (item (2) above) is not a new requirement, Fox noted. However, contractors do not have to include the data metrics that will be required by the new regulations at part .44(k) when providing access to the AAPs. If the requestor is able to access the electronic version of the AAP, then the contractor may provide it electronically.

The equal opportunity policy statement (item (5) above) must be included in the contractor’s AAP and must also be posted on company bulletin boards. There is a First Amendment issue lurking in the requirement that the policy statement “shall indicate” support of the AAP by the contractor’s “top United States executive,” Fox pointed out, explaining that this is a government requirement compelling the executive to express a certain viewpoint.

Advertising tag lines. The regulations (at 41 CFR §60-300.5(a) para 12 and 41 CFR §60-741.5(a) para 7) require contractors to state in all solicitations or advertisements for employees that all qualified applicants will receive consideration for employment and will not be discriminated against on the basis of protected veteran status or disability. There is a big debate as to whether employers should use acronyms, and if so which ones, in print media ads because print media still charges for ads by the keystroke, Fox said. In contrast, there is not a similar concern for electronic media ads because the rates for those ads are not based on cost per keystroke. In the end, the advertising lawyers in big newspapers will decide this issue by determining what they will accept and publish, Fox predicted.

The OFCCP’s February 20, 2014 webinar will discuss this issue, he noted. Since the regulations are silent on this point, however, the OFCCP doesn’t have the authority to dictate acronym usage, according to Fox. Nevertheless, the agency will be in a powerful position of leverage in audits since it won’t be worth the cost to litigate this issue, he said.  The OFCCP’s Frequently Asked Questions for the new rules already clarify that the terms “veteran” and “disability” may not be abbreviated to simply using “V” and “D”; in agency’s view. “Vet” and “disabled” are the preferred terms.

Evaluations/surveys. Fox listed the following evaluations and surveys required by the revised regulations:

(1) Review of personnel processes (41 CFR§60-300.44(b) and 41 CFR §60-741.44(b));

(2) Self-assessment of outreach and recruitment (41 CFR §60-300.44(f)(3) and 41 CFR §60-741.44(f)(3)); and

(3) Data collection analysis (41 CFR §60-300.44(k) and 41 CFR §60-741.44(k))   .

A requirement carried over from the current regulations is for contractors to review their personnel processes “periodically” and “make any necessary modifications” to ensure that their obligations under the regulations are carried out (item (1) above). Since the regulations do not specify what the length of the review “period” should be, contractors need to determine this period on their own, Fox said. Appendix C of the VEVRAA rule contains a set of procedures which contractors may use to meet this requirement.

The current regulations require contractors to engage in outreach and recruitment of IWDs and protected veterans. Under the revised outreach and recruitment provisions, contractors will have the additional obligation to document their outreach and recruitment efforts and undergo an annual written assessment of their effectiveness (item (2) above). This obligation will require a contractor to evaluate whether the totality of its efforts is “effective” in identifying and recruiting qualified protected veterans and individuals with disabilities. In doing so, contractors must identify the criteria they have used to determine effectiveness and these criteria must at least include the .44(k) data metrics for the current year and for the two most recent years. It will take at least three years following the effective date of the regulations for the data pipeline as to this obligation to be completely filled, Fox noted.

This assessment is of the totality of the contractors efforts, not each single effort on its own, he stressed. This requirement is illustrative of OFCCP Director Patricia Shiu’s “primary and most emphatic point,” of these regulations, he said, which is that Shiu wants contractors to take a “nuanced and thoughtful approach” to the employment of veterans and the disabled, rather than merely following a series of checklists. Segment A of the webinar included some additional discussion of this requirement.

The annual data collection analysis (item (3) above) obligation will require the calculation of the data collections required by part. 44(k) of the new rules:

•           number of IWD and protected veteran applicants;

•           total number of applicants for all jobs;

•           total number of job openings and jobs filled;

•           number of IWDs and protected veterans hired; and

•           total number of applicants hired.

This analysis does not have to be included in the AAP; Fox suggested finding a location for this analysis on a computer or human resources information system. Different forms will be required for the VEVRAA rule analysis and the Section 503 analysis because the 7 percent utilization goal for workers with disabilities will be assessed by job group and the variable hiring benchmark for protected veterans will be assessed by establishment.

EEO clauses. Under the revised regulations (at 41 CFR §60-300.5(d) and 41 CFR §60-741.5(d)), contractors may incorporate the required Section 503/VEVRAA equal opportunity clauses into covered subcontracts by reference to the regulations, only if they use the language specified in both regulations at part .5 (d). The specified language must be included in bold font.

Contractor may add their own language before and after the specified language, Fox advised, so long as they do not alter the OFCCP’s prescribed language.

A contractor may add a prelude sentence to the prescribed EEO clauses (whether recited in full or incorporated by reference) to note that the clauses attach to the contractor’s contract with its subcontractors “where applicable.” Although contractors might consider having two forms of subcontract language, one for those subcontractors who are not covered or which are not federal subcontractors and another for covered federal subcontractors, Fox advised against that approach because it would require parsing contract-by-contract to determine subcontractor coverage.  Instead, he recommended that contractors use the “where applicable” language to encompass all covered subcontractors. Segment A of the webinar included some additional discussion of these EEO clauses.

Outsourcing. Generally, contractors could outsource 100 percent of the obligations under the new rules, Fox said, but he added that there is not really a lot of additional work to outsource to vendors once the contractor has managed the first year-transitions.  He cautioned, though, that outsourcing does not relieve a contractor of any compliance failures. From a practical standpoint, contractors should determine whether vendors can effectively do the work, especially if the work requires intimate and detailed knowledge of the contractors employment practices, policies, culture, and HR systems/reports.

Moreover, in audits, the OFCCP is simply no longer going to accept checklists and form letters, but rather is now insisting on a nuanced or individualized approach. In particular, Fox stated that  he does not think that outsourcing the outreach and recruitment requirements will pass muster in an OFCCP audit.

The webinar, presented on January 30, 2014, was the second segment (Segment B) of a two part program, entitled, “What You Need to do to Implement OFCCP’s Final Section 503/VEVRAA regulations: A Transactional Approach.” Segment A of the webinar was presented on January 23, 2014. Fox, a former OFCCP official and current president of Fox, Wang & Morgan P.C. in San Jose, California, provided sample forms and language for all of the notices and forms discussed in the webinar. The power points slides containing these samples, as well as re-broadcasts of both segments of the webinar, may be ordered by going to NELI’s website at www.neli.org.