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or contractors doing What is Affirmative Action? What is an AAP? business with the U.S. “Affirmative action” brings to mind “quo- tas”—hiring an individual based upon his or federal government, her race or gender to meet some required “quota,” and an AAP must be a plan to do “affirmative action” exactly that, right? In fact, that is not what F affirmative action means nor is that what is a lawfully required process. an AAP is designed to do.

But what does “affirmative action” Affirmative action, at least as called for by 11246 and the associated even mean? Is your company additional legislation affecting government required to prepare an “affirmative contractors,1 is really designed to require federal contractors to: action plan” (AAP)? And what is ƒƒ Evaluate the racial and gender makeup an AAP exactly? What access does of their workforce as compared to the makeup of the pool from which each the U.S. federal government have employee is either hired or promoted and consider whether there is any to HR processes once a company disparity between the two that would suggest that unlawful discrimination prepares an AAP? might have occurred, and

44 Contract Management | January 2015 AFFIRMATIVE ACTION PLANS—YOUR COMMON QUESTIONS ANSWERED

ƒƒ Evaluate the hiring, promotion, and But certainly, the OFCCP will use the analy- fairs focused on opportunities for women in termination decisions that occurred ses performed by the contractor as a jump- an effort to increase the applicant pool in during the past year and consider ing off point for investigating as to whether underrepresented groups. whether any particular racial or gender or not unlawful discrimination has occurred. group appears to be overrepresented Make no mistake, becoming a federal Affirmative action does not require the with the respect to such actions based contractor subject to the requirement of employer to hire applicants based on their on a comparison of the race and gender preparing an AAP opens up an employer to race or gender in order to remedy what of the applicants with those hired or an extraordinary amount of scrutiny with appears to be underrepresentation in the the pool of current employees from respect to its various employment practices. workforce. To do so obviously would be an whom employees were selected for act of unlawful discrimination—failing to either termination or promotion. hire other applicants because of their race What Does Affirmative or gender. If an employer’s analysis suggest Such a comparison, by itself, clearly does Action Mean? the possibility of discrimination in hiring or not establish whether or not unlawful dis- If an employer’s workforce does not mir- terminations, then the employer is called crimination occurred, nor does the Office of ror the racial and gender makeup of the upon to review the processes used in both Federal Contract Compliance Programs pool out of which the workforce has been and determine how to address what has (OFCCP)2 take the position that it does. The selected, then the employer is required to happened—but not to engage in unlawful idea behind the analyses required when pre- take “affirmative action” to ensure that the discrimination in an attempt to remedy such paring an AAP is not to convict the employer underrepresented groups of individuals discrimination that occurred previously. of having engaged in unlawful discrimina- have the opportunity to apply for and obtain tion, but rather to encourage some respon- jobs—but on the same terms as all other sive action if there is, at a very high level, applicants. For example, the OFCCP will some indication of possible discrimination. look for documentation that the employer At least, that is the position of the OFCCP. has participated in minority job fairs or job

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Who Has to Prepare an AAP? A federal contractor that employs at least 50 employees and has a contract with the federal government of $50,0003 or more must prepare an AAP. A covered federal subcontractor is an employer with at least 50 employees and a subcontract of at least $50,000 with a federal contractor, and the subcontract is to either perform a portion of the prime contractor’s federal contract or to provide services or equip- ment that are necessary for the federal prime contractor to fulfill its federal contract.

What about / Reimbursement? TRICARE Participation? In recent years, the OFCCP has sought to expand its jurisdiction to the fullest extent possible. In a 2010 directive, the OFCCP as- serted that healthcare entities that provide services to a federal contractor receiving funds under a contract with Medicare Part C or Part D may be considered “federal subcontractors” and, thus, subject to Executive Order 11246. Similarly, the OFCCP has successfully assert- ed that healthcare entities that contract to provide medical services to beneficiaries under TRICARE or the Federal Employees Health Ben- Note that the moratorium does not extend do not themselves have federal contracts in efits Program may also be considered federal to healthcare providers who are subcontrac- excess of $50,000, then the company must subcontractors,4 despite congressional efforts tors only under Medicare Parts C and D or the determine whether to contest the reach by to limit the OFCCP’s regulatory scope.5 Federal Employees Health Benefits Program. the OFCCP to cover all of the facilities. If the company determines to contest that issue, On May 7, 2014, in response to pressure then the employer would simply refuse to from Congress, the OFCCP issued a five-year Are All of My Facilities participate in audits of those facilities that do enforcement moratorium applicable to Covered? not themselves have covered contracts. That healthcare entities that: Many companies have multiple facilities would require the OFCCP to file an adminis- across the country and it is not uncommon trative complaint alleging jurisdiction and ƒƒ Participate in TRICARE only as for one (or less than all) of the facilities to there would be an administrative trial regard- subcontractors, have a federal contract in excess of $50,000 ing whether there is jurisdiction, potentially while the remaining facilities do not. Is an for each separate facility,6 within 60 days. ƒƒ Participate in TRICARE as subcontrac- AAP required for every facility owned by the tors and as subcontractors under any company? That question is addressed by the The employer may likely face an uphill Medicare program, “single entity” doctrine. If one facility has a battle with respect to that issue before a covered contract, then all of the company’s Department of Labor administrative law ƒƒ Participate in TRICARE as subcontrac- facilities may be covered if the corporate judge. Assuming an adverse decision by the tors and as subcontractors under the headquarters exercises enough control over judge, the company would then have to Federal Employees Health Benefits the individual facilities such that the govern- file an appeal to the Administrative Review Program, and ment can effectively argue that the company Board, where again the employer may have is a “single entity” for jurisdictional purposes. difficulty in obtaining a decision overturn- ƒƒ Participate in TRICARE as subcontrac- ing a finding of jurisdiction. Once the board tors and as subcontractors under any If a company receives an audit notification supports the finding of jurisdiction, the other federal health program. from the OFCCP that includes facilities that OFCCP would issue an order that the facility

46 Contract Management | January 2015 AFFIRMATIVE ACTION PLANS—YOUR COMMON QUESTIONS ANSWERED

comply with its request to review the AAP What is in the AAP? position by job group. The contractor must for the facility within 30–90 days or the An AAP is designed to require an employer then determine the “reasonable recruitment employer will face debarment as a federal to engage in a process of auditing its hiring, area” out of which the employees in each job contractor. The employer would then have promotion, and firing processes to deter- group were hired or promoted. For example, to appeal the issue to a federal district mine whether there is any indication of po- some entry level jobs may be hired entirely court, and also file a motion for a tempo- tential unlawful discrimination and whether from the immediate county in which the rary restraining order seeking to stay the affirmative action is necessary. contractor is located. Then, data must be order of the OFCCP regarding compliance obtained regarding the racial and gender and debarment. A loss at the federal district An AAP includes an “organizational profile” makeup of the qualified individuals within court level would again be followed by an that is typically a “workforce analysis” in the reasonable recruitment area (often using order to comply within 30–90 days with the which every position in the facility is listed census data) for each of the employer’s job OFCCP directives regarding preparing an by department, and then information is pro- groups. The contractor then compares the ra- AAP, etc., or face debarment, at which time vided regarding the gender and race for every cial and gender makeup of the applicant pool the employer must determine whether to employee in that position. For example, part against the racial and gender makeup of the appeal to a federal court of appeals. of the workforce analysis might indicate that incumbents in each job group to determine in the environmental services department, if any gender or race is underrepresented Obviously, an employer must consider care- there are two employees in the “environmen- as compared to the applicant pool. If any fully whether to take on this jurisdictional is- tal attendant II” position, one of which is a minority groups are underrepresented, then sue. Even if the employer believes that it has white male and the other an Asian female. the contractor must establish “placement a decent chance of successfully arguing to goals” that its workforce will mirror the ap- the federal district court that the company’s The AAP also must include a “job group” anal- plicant pool with respect to gender and race. corporate headquarters does not exercise ysis in which all of the contractor’s positions sufficient control over the separate facilities are organized into large “job groups,” such But, again, the employer may not engage in to render all of the facilities a “single entity,” as executive, professional, clerical, techni- unlawful consideration of race or gender to one can easily imagine the cost of fighting cal, etc. with information regarding the accomplish such placement goals. Rather, jurisdiction for each of its facilities. race and gender of every employee in each the employer may only engage in the

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Contract Management | January 2015 47 AFFIRMATIVE ACTION PLANS—YOUR COMMON QUESTIONS ANSWERED

affirmative action previously described—in- while preparing the AAP that the plan ENDNOTES creasing its recruiting of underrepresented is not just an internal document. 1. Covered federal contractors also have AAP obli- groups in order to give those individuals gations under Section 503 of the Rehabilitation Act and the Vietnam Era Veteran’s Readjust - opportunities to apply for the available posi- ƒƒ The OFCCP may come calling by means ment Assistance Act (VEVRAA). tions during the next plan year. of a letter that the OFCCP will be engag- 2. I.e., the government agency responsible for ing in an audit of the employer’s AAP enforcing the “contractual promise of affirma - The AAP also must include: and employment practices. The OFCCP tive action and equal employment opportunity required of those who do business with the fed - will perform a desk audit in which it eral government.” ƒƒ A “designation of responsibility” that reviews the AAP, including the analytical 3. Or has government bills of lading that, in any describes who will be responsible for portions regarding the contractor’s hir- 12-month period, total or can reasonably be the implementation of the AAP; ing, firing, termination, and compensa- expected to total $50,000 or more; serves as a depository of government funds in any tion practices, and then has the author- amount; or is a financial institution that is an ƒƒ An “identification of problem areas” ity to visit the employer’s facilities and issuing and paying agent for U.S. savings bonds that is essentially documentation of the access the employer’s records—all in and savings notes in any amount. employer’s analysis of its hiring, firing, an effort to determine whether the 4. See UPMC Braddock v. Harris, 934 F. Supp. 2d 238 (D.D.C. 2013) (upholding DOL Administra- promotion, and compensation practices OFCCP believes that the employer has tive Review Board decision finding hospitals to determine whether there is any indi- engaged in unlawful discrimination. that contract to provide medical services and cation of unlawful discrimination; supplies to HMOs that provide coverage to fed- eral employees in the FEHBP are federal sub- A visit to the front page of the OFCCP’s web- contractors for purposes of EO 11246), appeal ƒƒ “Action-oriented programs” designed to site will reveal a number of multimillion- docketed, No. 13-5158 (D.C. Cir., September 22, correct any problem areas identified; and dollar settlements reached between the 2014); and OFCCP v. Florida Hospital of Orlando, 2009-OFC-00002, Summary Decision and Order OFCCP and federal contractors as a result of (Dep’t of Labor, October 18, 2010) (aff’d on ƒƒ A description of the contractor’s such audits. The access provided by federal appeal, DOL Administrative Review Board, No. “internal audit and reporting program” contractors to the federal government to 11-011, July 22, 2013) (holding hospital that subcontracted to provide medical services to by which the contractor periodically review their employment practices is truly TRICARE beneficiaries was a federal subcontrac- measures the effectiveness of its AAP.7 unique and should be carefully considered tor for purposes of EO 11246). by any company considering the possibility 5. See, e.g., National Defense Authorization Act The OCFFP has a model AAP on its website.8 of doing a significant amount of work with for Fiscal Year 2012, Pub. L. 112-81 §715 (“For the purpose of determining whether network the federal government. CM providers under such provider network agree- Preparation of such a plan is clearly a ments are subcontractors for purposes of the significant undertaking, and one can easily Federal Acquisition Regulation or any other law, a TRICARE managed care support contract that understand the risk inherent in an employer includes the requirement to establish, manage, preparing the various analyses of employ- ABOUT THE AUTHOR or maintain a network of providers may not be ment practices as previously described. ROBERT W. HORTON currently chairs the considered to be a contract for the perfor- mance of health care services or supplies on Many employers obtain the assistance of Labor & Employment practice at Bass Berry the basis of such a requirement.”). any one of a number of experienced vendors & Sims, PLC. He has more than 20 years of 6. Which is really up to the discretion of the in preparing an initial draft of a plan in as- experience representing clients in employment OFCCP whether to consolidate the approach. sociation with their employment counsel. issues and defending companies against all 7. A covered federal contractor is also required to manner of employment claims throughout the prepare a separate AAP under Section 503 of the Rehabilitation Act and VEVRAA that pro- United States. He can be reached at rhorton@ hibit discrimination on the basis of disability What Happens After You bassberry.com. and veteran status, respectively. The contrac- Prepare the AAP? tor must give employees an opportunity to After the AAP is prepared, at least two The opinions expressed in this article are “self-identify” as either being disabled or a cov - ered veteran. The employer must then assess things of significance occur: those of the author and do not express the whether disabled and veteran applicants are views of his employer. This article is for gen- being hired in a way that reflects their “avail - ƒƒ Employees must be given the opportu- eral information purposes only based upon ability” with respect to veterans or the “aspira- tional goal” set by the OFCCP with respect to nity to review the AAP. Employers are the author’s experiences and is not intended disabled applicants. required to give employees notice as to to be and should not be taken as legal advice. 8. Available at www.dol.gov/ofccp/regs/ where they may review the employer’s compliance/pdf/sampleaap.pdf. AAP. Note, however, that an employer Send comments about this article to is not required to provide to employees [email protected]. the analytical sections of the AAP, but only the narrative portion. But, obvi- ously, an employer should be mindful

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