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This Employer Webinar Series program is presented by Spencer Fane Britt & Browne LLP in conjunction with United Benefit Advisors Kansas City Omaha Overland.

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Presentation on theme: "This Employer Webinar Series program is presented by Spencer Fane Britt & Browne LLP in conjunction with United Benefit Advisors Kansas City Omaha Overland."— Presentation transcript:

1 This Employer Webinar Series program is presented by Spencer Fane Britt & Browne LLP in conjunction with United Benefit Advisors Kansas City Omaha Overland Park St. Louis Jefferson City www.spencerfane.com www.ubabenefits.com This Employer Webinar Series program is presented by Spencer Fane Britt & Browne LLP in conjunction with United Benefit Advisors

2 Do You Have an Affirmative Action Plan? Maybe You Should. Monica M. Fanning, Esq.

3 Agenda Is Your Company a Covered Federal Contractor/Sub-Contractor? Overview of Affirmative Action Obligations Office of Federal Contract Compliance Programs (OFCCP) Audits Consequences of Noncompliance 3

4 Federal Contractor Affirmative Action Obligations Government contractors and subcontractors have affirmative action obligations as a condition of their government contracts: Executive Order 11246 - Females and Minorities Section 503 of the Rehabilitation Act- Qualified Individuals With Disabilities VEVRAA: Covered Veterans 4

5 What is Affirmative Action (AA)? Provides for equal employment and makes it unlawful for federal contractors to discriminate based on gender, race, religion, disability, or veteran status. Requires federal contractors to go beyond the equal employment opportunity laws by actively recruiting and providing outreach to women, minorities, veterans and disabled individuals. 5

6 Who is a Federal Contractor? Federal contractor is any person who holds a government contract. -Service and Supply Contract: Agreement with a federal agency or entity for the purchase, sale or use of personal property or nonpersonal services. Personal property includes supplies and goods Nonpersonal services includes utilities, construction, transportation, research, insurance and fund depository -Construction Contract 6

7 Who is a Federal Contractor? (Cont) Construction Contract: Any agreement to provide construction services directly to any department, agency, establishment, or instrumentality of the executive branch of the Federal Government. Hiring Percentages for Female and Minority-Owned businesses but no requirement for written AAP 7

8 Are Financial Institutions Federal Contractors? 8 Yes, provided the financial institution employs 50 or more employees Company-wide, and Participates in the Federal Deposit Insurance Corporation (FDIC) or National Credit Union Association (NCUA) Federal Reserve Banks are not subject to OFCCP jurisdiction

9 Are Any Types of Contracts Excluded? Contracts involving work performed outside of the U.S. (if employees performing the work were not recruited in U.S.) Contracts with State or local governments Contracts with religious entities or religiously affiliated education institutions Contracts involving work on or near an Indian reservation 9

10 Issues to Consider in Determining Federal Contractor Status OFCCP broadly interprets its jurisdiction but there are a few defenses against coverage that all federal contractors should consider: 1. Is the contract with a federal agency or entity? - Quasi-Governmental agencies [consult usa.gov, A-Z Index Dept./Agencies] 2. Is the arrangement really a contract? - Personal services is interpreted very narrowly- employer/ employee relationship; government has complete control Grant 10

11 Issues to Consider in Determining Federal Contractor Status (Cont) What is the value of the contract? Specific amount or open-ended If open-ended, you must make a good faith estimate of the amount likely to be received during a 12 month period -Based upon past purchasing history/price of goods/services What is the duration of the contract? Specific term or project/performance driven 11

12 Who is a Federal Subcontractor? Subcontractor has a direct contract with a federal contractor Subject of the contract is to provide goods or services necessary to the performance of the prime government contract Perform an obligation of the federal contractors prime government contract 12

13 Single-Entity Test Some businesses or organizations that do not independently hold Federal contracts/subcontracts may still be covered Federal Contractors if they are considered a "single entity" with a related business or organization that holds such contracts. OFCCP uses a Single Entity" test to determine whether the businesses or organizations are so closely related that they may constitute a single entity for purposes of OFCCP jurisdiction. 13

14 Single-Entity Test (Cont) Subsidiaries, Parent Corporations -OFCCP Uses a 27 Point Test Focusing on Related Interests: Common Ownership Common Directors and/or Officers De Facto Exercise of Control Unity of Personnel Policies Emanating From Common Source Dependency of Operations 14

15 Coverage Executive Order 11246: Females and Minority Basic Coverage: Single government contract or subcontract of $10,000 or more Aggregate contracts Open-ended contracts covered if reasonably expect amount to exceed $10,000 in 12 month period Obligation: Prohibits discrimination on the basis of race, color, sex, religion or national origin 15

16 Coverage Executive Order 11246: Females and Minority (Cont) Major Coverage: Single government contract or subcontract of $50,000 or more -Do not aggregate 50 or more employees Company wide OFCCP requires written affirmative action plan; use of E-Verify; and specific outreach to females and minorities Specific percentage hiring goals 120 days to prepare AAP after entering contract 16

17 Coverage Thresholds: Section 503/Disabled Individuals Basic Coverage: Single government contract or subcontract of $10,000 or more Aggregate contracts Open-ended contracts covered if reasonably expect amount to exceed $10,000 in 12 month period Obligation: Prohibits discrimination on the basis of disability 17

18 Coverage Thresholds: Section 503/Disabled Individuals (Cont) Major Coverage: Single government contract or subcontract of $50,000 or more -Do not aggregate 50 or more employees OFCCP requires written affirmative action plan; and outreach to disabled individuals No hiring percentage goals Revised Regulations: Anticipated 7% goal 18

19 Coverage Thresholds: VEVRAA/Covered Veterans Basic Coverage: Single government contract or subcontract of $10,000 or more -Open-ended contracts covered if reasonably expect to exceed $10,000 in 12 month period Obligation: Prohibits discrimination against covered veterans; requires outreach Covered Veterans: Armed Forces service medal veterans, disabled veterans, recently separate veterans and other protected veterans 19

20 Coverage Thresholds: VEVRAA/Covered Veterans (Cont) Major Coverage:Single government contract or subcontract of $100,000 or more -Open ended contracts covered if reasonably expect amount to exceed $100,000 in 12 month period Obligation:Written AAP; outreach; no current hiring percentage goals Revised Regulations: OFCCP/DOL expected to include specific hiring percentage goals 20

21 Health Care Providers OFCCP attempted to expand jurisdiction In past, Medicare and Medicaid are grants-not government contracts OFCCP asserts jurisdiction over HCP who participate in TRICARE networks Florida Hospital appeals-TRICARE federal financial assistance like Medicare/Medicaid 21

22 Health Care Providers (Cont) In December 2011, President Obama signed the National Defense Authorization Act (NDAA); Section 715 exempts TRICARE providers from coverage as federal contractors OFCCP announced last week during suspending audits based solely on TRICARE/Rescinded Directive 293 (participation in Medicare C and D subjects HCP to OFCCP jurisdiction) 22

23 Action Items Did your Company check yes on Question 3 of Section C of the EEO-1 Report? 23

24 Action Items (Cont) Check to see whether your Company or any of its related entities are listed in: USAspending.gov [most comprehensive] governmentcontractswon.com ccr.gov (central contractor registration) 24

25 Action Items (Cont) Obtain copies of all of your federal contracts Often a difficult task Review duration and amount to determine AA obligations Train contracting personnel to review contracts for the following phrases: Affirmative Action EO 11246, Sec. 503, VEVRAA 25

26 OFCCP Audits Receive a Notice of Desk Audit Will be addressed to top Company official Have 30 days to provide written AAP and other required personnel data No extensions of 30 day period 26

27 OFCCP Audits (Cont) Focus on compensation Outreach to veterans and disabled individuals On-site visit: Review personnel files; FMLA records; applicant logs; payroll information; interview employees and managers 27

28 Penalties for Non-Compliance Conciliation Agreement (promise to comply/keep better data)-must submit future plans to OFCCP Require Company to reimburse applicants who were discriminated against; offer them positions Require Company to remedy pay disparity 28

29 Penalties for Non-Compliance (Cont) Withhold payments until compliant File suit on behalf of discriminated applicants or employees Cancellation of current government contracts Debarment from future government contracts-list on DOLs website; very rare in past; more common now 29

30 Questions? 30

31 THANK YOU! Copyright 2012 31 If we can ever assist your organization with federal contractor/affirmative action issues or any other legal concerns, please give us a call. Monica M. Fanning mfanning@spencerfane.com (816) 474-8100

32 This Employer Webinar Series program is presented by Spencer Fane Britt & Browne LLP in conjunction with United Benefit Advisors Kansas City Omaha Overland Park St. Louis Jefferson City www.spencerfane.com www.ubabenefits.com 32 Thank you for your participation in the Employer Webinar Series. This program, has been approved for 1.5 (General) recertification credit hours toward PHR, SPHR and GPHR To obtain a recording of this presentation, or to register for future presentations, contact your local UBA Member Firm.


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