Archive for the ‘Affirmative Action Plans and OFCCP Compliance’ Category

Busy Week at the OFCCP – Does it affect your company?

          On August 27, the U.S. Department of Labor’s Office of Federal Contract Compliance Programs (“OFCCP”) announced its long awaited Final Rules regarding significant revisions to the affirmative action obligations pertaining to the hiring of veterans and the disabled under the Vietnam Era Veterans Readjustment Assistance Act and Section 503 of the Rehabilitation Act of 1973, respectively.  For many years, most federal contractors have been developing two separate affirmative action plans:  one relating to the employment of Minorities and Women under Executive Order 11246, and the other relating to the employment of the Disabled and Veterans under the two statutes mentioned previously.  Up until now, the AAP for the Disabled and Veterans did not include any numerical goals, but the new Rules establish such goals and include new data collection and analysis requirements for contractors.  Broadly, the goal for employment of the Disabled is 7%, but whether this is looked at in each job group or in the work force as a whole is dependent upon whether the contractor has 100 employees or more.  The goal for the employment of Veterans is 8%, although there is a procedure established that would allow a contractor to develop a different goal based upon the “best available data.”  If your firm does business with the U.S. Government as a contractor or subcontractor, you are probably subject to these new requirements.

           Also, on August 23, the OFCCP announced the rollout of its updated Federal Contract Compliance Manual, a 500 page multi-chapter manual which provides guidance for OFCCP Compliance Officers in areas such as the conducting of desk audits of affirmative action programs, on-site reviews of supply and service contractors, and the appropriate remedial actions to take in the event of demonstrated noncompliance.  This revised manual has been in the works for several years and seeks to incorporate some of the practices of the OFCCP under the Obama administration.  For example, it provides guidance to Compliance Officers as to when and how to seek additional employment data from contractors for further analysis during the desk audit phase of an OFCCP audit.  The Compliance Manual itself does not have the force of law, but it does allow us to anticipate the most likely actions of the OFCCP during any possible audits.

          Harmon & Davies, P.C. has been working with federal contractors (both those providing supplies or services, as well as construction) to assist them with developing Affirmative Action Plans and dealing with the OFCCP during audits or investigations.  Please contact us if you need assistance in these areas.

This article is authored by attorney Thomas R. Davies and is intended for educational purposes and to give you general information and a general understanding of the law only, not to provide specific legal advice.  Any particular questions should be directed to your legal counsel or, if you do not have one, please feel free to contact us.

 

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Update Regarding Affirmative Action Plans (AAPs)

Federal Supply and service contractors with 50 or more employees and a contract worth more than $50,000 are required to prepare written AAPs.  Of note, federal construction contractors are not currently required to develop written AAPs.  Earlier this month, the Office of Federal Contract Compliance Programs (“OFCCP”) announced that as of January 1, 2014, federal contractors must start using the 2010 census codes rather than the 2000 census codes.  In other words, it is acceptable to use the 2010 or 2000 codes for 2013 AAPs, but the 2014 AAPs must use the 2010 census codes.  Harmon & Davies has already started using the 2010 census codes in the 2013 AAPs that we are preparing. 

This article is authored by attorney Shannon O. Young and is intended for educational purposes and to give you general information and a general understanding of the law only, not to provide specific legal advice. Any particular questions should be directed to your legal counsel or, if you do not have one, please feel free to contact us.

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In 2008, a worker was performing maintenance on the conveyor system at the Lancaster Municipal Authority Waste Water Treatment Plant when a large chunk of debris got caught in a roller at the end of a conveyor.  The worker tried unsuccessfully to clear the debris by spraying it with a hose.  When that didn’t work, the worker used his putty knife, while the conveyor was still running, to scrape the debris away from the roller.  In the process, the worker’s arm became caught in the conveyor’s pulley system and was amputated just below the elbow.

[Tip:  Employers, employees should be trained in safety procedures and advised never to attempt to make repairs while a machine is running.  Violations of safety procedures should be taken seriously and addressed in accordance with the company’s policies.] 

Following his injury, the worker sued several parties on theories of negligence and strict liability.  The sued parties included: (1) the engineering company that developed and designed the specifications for the conveyor system (“Buchart Horn, Inc”); (2) the company that manufactured the conveyor system and sold it to the construction company (“WRC”);  (3) the construction company that sold and installed the pre-assembled conveyor to the plant (“Johnston Construction Company”); (4)  the company that designed and manufactured the safety stop mechanism for the conveyor (“Material Control” parent company of “Conveyor Components”);  and (5) the company that represented the manufacturer of the conveyor system in the sale of the conveyor to the construction company (“Kappe Associates, Inc.”).  The defendants tried to have the case dismissed before it went to trial.  Here are the lessons to be learned:

Lesson No. 1:  If you sell any product to an owner as part of your construction or installation contract, you might be held strictly liable for defects in the product.   

The court refused to dismiss the strict liability action against Johnston Construction Company because Pennsylvania has adopted Section 402A of the Restatement (Second) of Torts, which says that one who sells any product in a defective condition unreasonably dangerous to the user or consumer or to his property is subject to liability for physical harm thereby caused to the ultimate user or consumer.  Although the term “seller” is not defined in Section 402A, the Lancaster County Court of Common Pleas court found that Johnston Construction Company was clearly a seller within the meaning of Section 402A because it sold the conveyor to the Plant as part of the installation contract.

For this same reason the court refused to dismiss the company that designed and manufactured the safety stop mechanism for the conveyor.  Despite these holdings, but for the case settling, a jury still would have had to decide whether the Johnston Construction Company’s failure to install a guard at the point on the conveyor where the plaintiff was injured did, in fact, render the conveyor defective and unsafe for its intended purposes.

Lesson No. 2:  Engineers not in the business of manufacturing or distributing equipment may not be held strictly liable, but may be held liable for negligent design.    

With regard to the defendant that developed and designed the specifications for the conveyor system, the court stated that in Pennsylvania, engineers have a duty to exercise that degree of skill and care in performing those services that ordinary and reasonable members of the engineering profession would exercise in the same or similar circumstances.  Here, Buchart was the engineering firm designated by the City of Lancaster to develop and design the conveyor system at issue.  Based on the findings in the plaintiff’s expert report, the court stated that whether Buchart breached its duty to employees of the Plant to use due skill in the design of the conveyor system raises a material question of fact.  Accordingly, the court found that there was sufficient evidence for a jury to consider whether Buchart negligently designed the conveyor system.

However, the court held that Buchart could not be subjected to a strict liability claim because it was not a seller within the meanings of Section 402A of the Restatement (Second) of Torts because it was not in the business of manufacturing or distributing equipment.

Lesson No. 3:  Manufacturer’s agents may be held strictly liable: 

Kappe, the company that represented the manufacturer of the conveyor system in the sale of the conveyor to the construction company, unsuccessfully argued that it was not a seller within the meaning of Section 402A and therefore could not be subject to the claim of strict liability.  In rejecting this argument, the court noted that the Pennsylvania Superior Court has held that all entities in the chain of distribution may be strictly liable for a defective product.   In another case, a manufacturer’s agent was found to be subject to a strict liability claim, despite the agent never having taken title to or possession of the product, because the court reasoned that it was not the means of marketing, but rather the fact of marketing which is fundamental to the rule of strict liability.  Here, Kappe represented WRC, the manufacturer, in finding a buyer/installer for the conveyor.  Kappe is in the business of selling and marketing maintenance equipment to wastewater treatment plants.  Kappe facilitated the sale of the conveyor between WRC and Johnston.  Accordingly, while Kappe did not select the particular product to be sold, it introduced the manufacturer to the purchasers or installer and helped to facilitate the marketing chain in the sale of a particular product.  As such, the court held that Kappe was subject to claims of strict liability.

This article is authored by attorney Shannon O. Young and is intended for educational purposes and to give you general information and a general understanding of the law only, not to provide specific legal advice. Any particular questions should be directed to your legal counsel or, if you do not have one, please feel free to contact us.

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Federal Contractor and OFCCP Go Blow for Blow

The Labor Department’s Office of Federal Contract Compliance Programs (“OFCCP”) and a federal contractor that provides security services to the State Department are engaged in a battle over whether the federal contractor was obligated to produce written affirmative action plans for certain sites.  The OFCCP has asked an administrative law judge to order the federal contractor to produce the affirmative action plans or risk termination of its current federal contracts and debarment from future contracts.  Meanwhile, the federal contractor appears to be steadfast in its position that it is not obligated to produce the affirmative action plans because the OFCCP failed to establish it had probable cause to commence compliance evaluations at 21 of its establishments in fiscal year 2011.

If you don’t already know, companies with federal contracts of $50,000 or more and more than 50 employees have obligations under Executive Order 11246, Section 503 of the Rehabilitation Act, and the Vietnam-Era Veterans Readjustment Assistance Act to develop, implement and maintain affirmative action plans (“AAPs”) for each establishment.  Under the applicable regulations, when requested, a federal contractor is required to submit to the OFCCP the company’s annual AAP and supporting documentations for the facility selected for a compliance review.

In the case discussed above, the OFCCP notified the federal contractor via a scheduling letter that the agency had selected its Milwaukee, Wisconsin establishment for a compliance review.  The federal contractor had previously received scheduling orders notifying it that its Portage, Indiana establishment was chosen for a compliance review.  When compliance officers requested information from the federal contractor pursuant to the desk audit phase of the compliance reviews for the establishments, the federal contractor failed to provide copies of its AAPs and other supporting documents to the OFCCP.  As stated above, the OFCCP filed a complaint with an administrative law judge asking the judge to order the federal contractor to produce the AAPs or risk termination of its federal contracts and debarrment from future federal work.  The outcome should be interesting.

The attorneys at Harmon & Davies are here to assist you with your affirmative action plan and OFCCP compliance needs.

This article is authored by attorney Shannon O. Young and is intended for educational purposes and to give you general information and a general understanding of the law only, not to provide specific legal advice. Any particular questions should be directed to your legal counsel or, if you do not have one, please feel free to contact us.

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Under the Uniform Guidelines on Employee Selection Procedures (“UGESP”) adopted by the OFCCP, a federal contractor with a pre-employment testing procedure that is determined to have an adverse impact on a protected group must show that the test is “job-related and consistent with business necessity” to avoid liability under Executive Order 11246.  To show this, an employer must demonstrate that the test has been validated for the purpose for which it is being used.

Accordingly, the OFCCP frequently scrutinizes the discriminatory effects of pre-employment tests.  In fact, this past summer, a food manufacturer agreed to pay $550,000 to settle allegations by the OFCCP that the company used a pre-employment test that had a discriminatory adverse impact on a class of minority applicants rejected for laborer positions.  In a complaint filed by the OFCCP against the food manufacturer, the OFCCP alleged that the food manufacturer could not substantiate its claim that its WorkKeys exam was related to the job functions of on-call laborers.

The WorkKey exam tested applicants’ math, workplace observation, and location skills.  The OFCCP took the position that WorkKeys was not job-related because the skills tested were not critical to the entry-level tasks performed by on-call laborers, which tasks included maintaining sanitation at the facility, inspecting products, and monitoring equipment.  Although the food manufacturer produced validity reports for the WorkKeys test, the OFCCP determined that the evidence did not support the validity of the testing component used to select individuals for on-call positions in the Labor Job Group.

Lessons for Employers:  Exercise caution when using pre-employment tests.  If you use such tests ensure that the tests assess skills that are critical to the positions that are being filled and that the tests have been validated for such uses.

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An on-site audit by the Labor Department’s Office of Federal Contract Compliance Programs (“OFCCP”) can be an intimidating process for a company’s hiring managers and supervisors who undergo interviews with OFCCP compliance officers, but nerves can be quelled with preparation tactics.  Below are a few tips on how to prepare your hiring managers and supervisors:

Begin briefing hiring managers/supervisors at least a week before the scheduled interviews in order to give managers/supervisors time to review relevant material (i.e., personnel records/job postings and descriptions/resumes, etc.).

Managers/supervisors should thoroughly understand the nature of the review and the OFCCP compliance standards that the company is obligated to meet.

Managers/supervisors should be able to explain employment decisions and potential discrimination/disparate impact concerns.

Ensure that the managers/supervisors can explain the “necessity for a job’s minimum qualifications.”  In other words, if a company is requiring all entry-level administrative assistants to hold a four-year college degree, the manager/supervisor should be prepared to explain what aspect of the job requires a four-year degree as opposed to, for example, a two-year associate’s degree or a high school degree.

The goal is for the managers/supervisors to convey the legitimate non-discriminatory reasons for the company’s actions.

Convey the company’s position with respect to signing statements.

At the end of interviews, witnesses are often being asked to sign a statement, prepared by an OFCCP compliance officer, recapping the witness’s statements.

Managers/supervisors should know that they may face pressure to sign such statements.

Companies have the right to have a representative attend interviews of management witnesses and to defend such witnesses if they refuse to sign the OFCCP’s interview notes.  Managers/supervisors should be told if the company intends to send a representative to attend the interview and to possibly defend them.

If a witness does not want to sign an interview statement, the representative (usually an attorney or designated human resources representative) should point out as many differences as possible between the representative’s notes and the OFCCP’s interview statement.

Tell managers/supervisors not to sign any written statement without reviewing it for total accuracy with in-house counsel or the designated human resources representative.

If the company’s position is to never sign anything, it should convey this position to the witness in advance of the interview.  Employers should explain to witnesses that nothing in the regulations requires the company or its witnesses to sign off on the OFCCP’s interview statement so that the witness does not feel as though he or she is violating the law by refusing to sign.

If the company’s policy is to sign accurate interview statements, as opposed to refusing to sign any statements, advise managers/supervisors to take the OFCCP interview statement to another room and review it for accuracy.  This may mean checking the statement against company records. The witness and the company representative should take as much time as needed to review the statement so that it is correct and complete as to matters of significance.

Train managers/supervisors on how to deal with inaccuracies in the statement.  Depending on company policy, the managers/supervisors should either be told to make corrections to the statement and return the document to the OFCCP compliance officer unsigned, or to make corrections and then sign the statement.

Under no circumstances should a witness sign something that is not correct or complete because the statement can be subpoenaed.

The attorneys at Harmon & Davies, P.C. are here to assist you through the OFCCP audit process.

This article is authored by attorney Shannon O. Young and is intended for educational purposes and to give you general information and a general understanding of the law only, not to provide specific legal advice. Any particular questions should be directed to your legal counsel or, if you do not have one, please feel free to contact us.

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The U.S. Department of Labor’s Office of Federal Contract Compliance Programs (“OFCCP”) proudly announced on March 22, 2012 that it entered into a conciliation agreement to resolve allegations of hiring discrimination by two subsidiaries of FedEx Corp. with federal contracts.  These subsidiaries, like most companies that are awarded federal contracts, must comply with OFCCP requirements and regulations.

By way of background, federal contractors of a certain size or with federal contracts of a certain amount must file annual affirmative action plans (“AAPs”).  AAPs are generated using computer software.  The computer software creates an overview of the federal contractor’s workforce based on the overall workforce and the number of applicants, hires, promotions, and terminations that occurred during the previous year.  Such computer programs specifically look at the number of female and minority applicants, hires, promotions, and terminations to determine whether the federal contractor’s decisions with respect to hiring, promoting, and terminating indicates any statistically disparate impact on females and minorities.

In the case of the two FedEx subsidiaries, the OFCCP’s allegations against the FedEx subsidiaries were based on computer statistical analysis that presumably indicated a disparity in the subsidiaries’ hiring process and sparked the OFCCP’s investigation.  In other words, the OFCCP’s allegations against FedEx did not step from individual complaints of discrimination.  Even though no one apparently complained that FedEx’s subsidiaries discriminated against them during the hiring process, according to Secretary of Labor, Hilda L. Solis, that is okay because findings of discrimination can rest on disparate impact statistical analysis alone.  In the FedEx case, according to Solis, the OFCCP saw statistical “trends of discrimination, not only against one group, but against many groups across the country.”

More specifically, according to the OFCCP News Release, during a series of regularly scheduled reviews, OFCCP compliance officers found evidence that FedEx’s hiring processes and selection procedures violated Executive Order 11246 by discriminating on the bases of sex, race, and/or national origin against specific groups identified at 23 facilities in 15 states.  The reviews also allegedly uncovered extensive violations of the executive order’s record-keeping requirements.

The FedEx subsidiaries admitted no wrongdoing, but rather than engage in a prolonged and expensive resolution process with the Department of Labor, the subsidiaries entered into a conciliation agreement with the OFCCP under which the companies agreed to pay a total of $3 million in back wages and interest to 21,635 applicants who were rejected for entry-level package handler and parcel assistant positions and agreed to extend job offers to 1,703 of the affected workers as positions become available.

The FedEx subsidiaries also committed to wide-ranging reforms including: (1) the company promising to correct any discriminatory hiring practices and implement equal employment opportunity training; (2) launching extensive self-monitoring measures to ensure that all hiring practices fully comply with the law; (3) agreeing to engage an outside consultant to perform an extensive review of the company’s hiring practice and provide recommendations to change and improve those practices; (4) agreeing to train incumbent and future supervisors and employees to monitor compliance with the equal opportunity laws enforced by the OFCCP; and (5) taking necessary steps to comply with all record keeping requirements.

The conciliation agreement entered into by the FedEx subsidiaries appears to have been an economic decision made by the company.  It will forever remain unknown whether FedEx actually engaged in discriminatory hiring decisions.

What’s clear from the FedEx ordeal is that federal contractors should be particularly attentive when it comes to OFCCP compliance. In addition to Executive Order 11246, the OFCCP enforces certain other acts aimed at protecting the disabled and veterans.  Those who do business with the federal government, both contractors and subcontractors, must not discriminate in employment on the basis of sex, race, color, religion, national origin, disability or status as a protected veteran.

For assistance with creating your Affirmative Action Plan or other OFCCP compliance issues, please contact Harmon & Davies, P.C.

This article is authored by attorney Shannon O. Young and is intended for educational purposes and to give you general information and a general understanding of the law only, not to provide specific legal advice.  Any particular questions should be directed to your legal counsel or, if you do not have one, please feel free to contact us.

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