Does your company need an Affirmative Action Plan?
Companies that meet the following criteria are covered by federal affirmative action obligations and must prepare an Affirmative Action Plan annually to comply with federal requirements:
- The company performs work on federal government contracts, as either a contractor or a subcontractor, and the contract is valued at $50,000 or more; and
- The company has 50 or more employees (part time and seasonal employees are included in this count).
In addition, financial institutions that are federally insured and hold federal loans must implement written Affirmative Action Plans.
Every company that meets these criteria must have an Affirmative Action Plan in place.
What is an Affirmative Action Plan?
An Affirmative Action Plan (“AAP”) is a written document or “program” outlining the steps a company has taken and will take to ensure equal employment opportunity. An AAP is prepared based on employment data for the previous year and looks forward to what steps the employer will take over the next year. For example, a company which, over the previous year, had fewer female applicants than are generally available in the eligible population, may be tasked with attempting to expand its pool of candidates by posting open positions on new job boards or participating in different or additional job fairs. Preparation of the plan involves analyzing employment data using regulatorily required statistical analysis, summarizing the results, and formulating a plan based on that analysis, and all of these steps must comport with federal requirements.
Employers covered by federal affirmative action obligations may also be required to establish certain policies (such as a transparency in pay policy) and to offer applicants and employees the chance to voluntarily self-identify their race, gender, or veteran status, among other things
What if a company has fewer than 50 employees or works on government contracts valued at less than $50,000?
Though the requirement to prepare an Affirmative Action Plan does not apply to companies with fewer than 50 employees, some federal requirements do apply to contractors with less than 50 employees that work on government contracts valued at $10,000 or more.
Covered Federal Contractors and Subcontractors Must Certify Compliance Through the OFCCP Contractor Portal
On February 1, 2022, OFCCP officially launched the Contractor Portal, and covered federal contractors and subcontractors are now able to access and register their organization in the portal. Beginning March 31, 2022, federal contractors will be able to certify the status of their AAPs for each establishment and/or functional/business unit, as applicable. Through the Portal, covered federal contractors and subcontractors must certify, on an annual basis, whether they are meeting their requirement to develop and maintain annual AAPs. The Portal allows multiple users from individual organizations to register, manage records, and certify each establishment and/or functional/business unit, as applicable. Additional information regarding the Portal can be found here.
Affirmative Action Requirements are Enforced Through OFCCP Audits
The Office of Federal Contract Compliance Programs (OFCCP) oversees compliance with affirmative action requirements. This oversight is most often exercised through compliance audits, which can escalate to on-site inspections.
Compliance reviews often begin with a standardized written request for submission of the company’s Affirmative Action Plans and supporting data. Following a “desk audit” of the plans, a review officer may come on-site to review additional company records and to interview company officials and employees.
Audits Can Result in Monetary Penalties and Settlements if Discrimination is Found
If this on-site review reveals discrimination, the OFCCP may impose monetary penalties, among other consequences. Monetary penalties are imposed when the OFCCP finds issues of discriminatory policies and actions during the audit process. Such issues usually involve adverse impact in hiring, promotion, and termination of qualified minorities and women. Discriminatory compensation practices also are a focus of compliance reviews.
The penalties for failing to comply with federal contractor requirements can be severe. In addition to monetary penalties, non-compliant companies can have their federal contracts terminated, and they can be barred from receiving future government contract work.
Contact MEA for Help
Companies can help protect against these penalties by annually preparing and following an Affirmative Action Plan.
MEA offers Affirmative Action Plan preparation services through an AAP partner. AAPs purchased through MEA come with plan production, interpretation of the plan, training for Human Resources staff on managing the AAP, compensation analysis, policy review, and audit support.
If you have any questions about whether your company needs an Affirmative Action Plan or about government contractor compliance generally, please contact MEA’s Hotline.
Editor’s Note: This post was originally published in September of 2019 and has been updated for accuracy and comprehensiveness.
