500 Federal Contractors Now Facing Affirmative Action Audits

November 11, 2019Alerts

The U.S. Department of Labor’s Office of Federal Contract Compliance Programs (OFCCP) recently issued a Courtesy Scheduling Announcement List (CSAL) notifying 500 contractors of potential audits to determine their compliance with the Vietnam Era Veterans’ Readjustment Assistance Act (VEVRAA).

Since OFCCP is no longer sending CSAL letters, contractors must check the OFCCP’s website to determine whether they are on the VEVRAA Focused Review list.

Federal contractors or subcontractors that receive an OFCCP audit notice should ensure that their Affirmative Action Plans (AAP) and other employment documents satisfy all audit requirements.

About the VEVRAA Focused Review

The VEVRAA Focused Review CSAL, released on November 8, follows the OFCCP’s March 25 CSAL letters, which advised 3,500 contractors that they may be selected for one of the following types of audits:

  • Section 503 Review – Covers only those obligations that are specified under Section 503 of the Rehabilitation Act of 1973
  • Corporate Management Compliance Evaluation (CMCE) – Covers the full scope of a contractor’s compliance with all three of OFCCP’s laws (Executive Order No. 11246, Section 503 and VEVRAA)
  • Compliance Check – Evaluates the contractor’s efforts in meeting its affirmative action goals, outreach activities and recruitment efforts for protected groups
  • Establishment Review – Considered to be CMCEs at the establishment level
  • Functional Affirmative Action Program (FAAP) Review – Applies to contractors who have a FAAP agreement with the OFCCP

After being selected for a VEVRAA Focused Review (or any of the above audits), the contractor will have 30 days to submit its AAPs with supporting documentation and may request a one-time, 30-day extension under certain circumstances.

According to OFCCP Directive 2018-04, a focused review will not only seek the contractor’s AAP and support documentation but will also entail a comprehensive onsite evaluation of whether the contractor is compliant with VEVRAA. Onsite reviews include interviews with managers responsible for  the company’s equal opportunity policy and compliance with VEVRAA and employees affected by those policies. The OFCCP will also seek to analyze hiring and compensation data, and review the company’s equal employment opportunity policy and anti-discrimination obligations regarding veterans and all other protected classes.

Audit Preparations

Federal contractors or subcontractors chosen for VEVRAA Focused Reviews should immediately:

  • Collect copies of Affirmative Action Plans for the current and prior year and 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.
  • Devise 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 for
    • job groups that do not meet availability percentages with women and minorities.
    • protected veterans and individuals with disabilities.
  • Collect any EEO-1 Reports and VETS 4212 Reports that have been filed for the previous three years.

Consulting with experienced counsel can help federal contractors or subcontractors facing an OFCCP audit notice mitigate risk and ensure that their company's affirmative action plans are up standard. If you have any questions about this alert or VEVRAA Focused Reviews, please contact attorney Kenneth A. Rosenberg at [email protected] or 973.994.7510 or any member of our Labor & Employment Practice.