3,500 Federal Contractors May Face Affirmative Action Audits

April 9, 2019Alerts

The Office of Federal Contract Compliance (OFCCP) recently published a list of 3,500 federal contractors that face possible Affirmative Action Plan (AAP) audits, and outlined five categories of review under which a contractor may be audited.

This latest wave of enforcement is a reminder that federal contractors should review their AAPs to ensure timely compliance with federal obligations. 

On March 25, 2019, the OFCCP, a division of the U.S. Department of Labor, issued a Courtesy Scheduling Announcement List (CSA List), notifying 3,500 contractors that their AAPs may be audited for the Fiscal Year 2019. The CSAL was published in lieu of sending courtesy scheduling announcement letters (CSA letters) to contractors, which is a deviation from prior protocol. Like the CSA letters, the CSA List provides contractors with 45-day notice prior to sending out Office of Management and Budget (OMB) approved scheduling letters. After receiving OMB scheduling letters, contractors will have 30 days to submit their AAPs. Additionally, the OFCCP grants a one-time 30-day extension for supporting data where AAPs are provided timely.

The CSAL indicates the five categories of review under which a contractor may be audited:

  • Section 503 Reviews cover only those obligations that are specified under Section 503 of the Rehabilitation Act of 1973;
  • Corporate Management Compliance Evaluations (CMCE) cover the full scope of a contractor’s compliance with all three of OFCCP’s laws (Executive Order No. 11246, Section 503 and the Vietnam Era Veterans’ Readjustment Assistance Act);
  • Compliance Checks evaluate the contractor’s efforts in meeting its affirmative action goals, outreach activities and recruitment efforts for protected groups;
  • Establishment Reviews are CMCEs at the establishment level; and
  • Functional Affirmative Action Program (FAAP) Reviews for contractors who have entered into a FAAP agreement with the OFCCP.

As contractors will no longer receive a CSA letter, contractors must check the CSA List to determine whether their AAPs may be audited. Contractors who are on the list should immediately:

  • Collect copies of Affirmative Action Plans for the current and prior year, as well as gather raw data concerning applicants, hires, terminations, promotions and employee compensation.
  • Perform an analysis to determine whether the entity complies with all federal affirmative action requirements.
  • Prepare an Impact Ratio Analysis using its raw data to determine whether women, minority and individual minority groups experience an adverse impact in hiring, promotion or termination.
  • Prepare a compensation analysis to determine if existing wage disparities exist based on race or gender; and, if disparities exist, determine whether they are defensible.
  • Gather documentation of outreach efforts in job groups that do not meet availability percentages with women and minorities.
  • Gather documentation of outreach efforts regarding veterans and individuals with disabilities.
  • Gather any EEO-1 Reports and VETS 4212 Reports that have been filed for the previous three years.

Federal contractors or subcontractors who receive an OFCCP audit notice should consult with experienced counsel to ensure that their company's affirmative action plan satisfies all requirements. If you have any questions or need assistance, please contact attorney Kenneth A. Rosenberg at [email protected] or 973.994.7510 or any attorney in our Labor & Employment practice.