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Complying with Your Affirmative Action Program and Avoiding Major Fines

Under Executive Order 11246, federal contractors and subcontractors with 50 or more employees who have entered into at least one contract valued at $50,000 or more with the federal government must prepare and maintain a written Affirmative Action Program (AAP). The AAP must be developed within 120 days from the time the contract begins, and it must be updated annually. The program should cover recruitment, hiring and promotion of women, minorities, veterans and disabled persons. The central premise underlying affirmative action is that, over time, absent discrimination, an employer’s workforce will generally reflect the gender, racial, and ethnic profile of the labor pools from which he/she recruits and selects. If your manufacturing firm makes parts or provides services to government “prime” contractors that use those parts under a federal contract, then this requirement extends to your company.

In essence, an Affirmative Action Program is a management tool designed to ensure equal employment opportunity. It includes the policies, practices, and procedures (including for hires, promotions, transfers and terminations, and compensation at all levels) that the employer implements to ensure all qualified applicants and employees are receiving an equal opportunity for recruitment, selection, advancement, and every other term and privilege associated with employment. The AAP also includes action-oriented programs so that if women, minorities and others are not being employed at a rate to be expected given their availability in the relevant labor pool, there will be specific practical steps (training programs, outreach efforts) a company can take to address this underutilization.

In addition, effective Affirmative Action Programs include internal auditing and reporting systems as a way of measuring the company’s progress toward achieving the workforce that would be expected in the absence of discrimination. Reporting should be performed on a periodic basis and reviewed by appropriate management. Top officials at the company should be notified of the program’s effectiveness and any recommendations for improvement.

AAP Compliance

Affirmative Action Programs are not filed with the Office of Federal Contract Compliance Programs (OFCCP); they are kept by the employer and must be produced in case of a compliance audit by the OFCCP. During a compliance review, the OFCCP examines the employer/contractor’s Affirmative Action Program; checks personnel, payroll, and other employment records; interviews employees and company officials; and investigates virtually all other aspects of employment in the company. The investigator will also check to see whether the employer is making special efforts to achieve equal opportunity through affirmative action. According to the Department of Labor (DOL), when a compliance review discloses problems, the OFCCP attempts to work with the contractor, often entering into a conciliation agreement. A conciliation agreement may include back pay, job offers, seniority credit, promotions or other forms of relief for victims of discrimination. It may also involve new training programs, special recruitment efforts, or other affirmative action measures. In the event conciliation efforts are unsuccessful, the OFCCP refers the case to the Office of the Solicitor for enforcement through administrative enforcement proceedings. A contractor cited for violating affirmative action requirements may have a formal hearing before an administrative law judge. If conciliation is not reached before or after the hearing, sanctions may be imposed.

EEOC Proactively Addressing Allegations of Employment Practices Violations

Employees may file complaints if they believe they have been discriminated against by federal contractors or subcontractors. Complaints must be filed within 180 days of the date the alleged discrimination took place, although filing time can be extended for a good reason. If a complaint filed under Executive Order 11246 involves discrimination against only one person, the OFCCP will normally refer it to the Equal Employment Opportunity Commission (EEOC). Cases involving groups of people or indicating patterns of discrimination are generally investigated and resolved by the OFCCP.

Discrimination claims against employers continue to rise each year, as underscored by the EEOC’s recently released breakdown of workplace discrimination charges, which totaled 89,385 for 2015. Topping the list are retaliation claims, which prevents employers from firing, demoting, harassing or otherwise “retaliating” against an individual for filing a charge of discrimination, participating in a discrimination proceeding, or otherwise opposing discrimination. Racial and gender discrimination also top the list of claims filed by the EEOC.

The takeaway here is to ensure your employment practices are in line with federal and state law. If you have 50 or more employees and have entered into a federal contract, be sure that your Affirmative Action Program is properly prepared and in compliance. This can be both time-consuming and cumbersome. Precision Manufacturing Insurance Services (PMIS) can assist you with your AAP to help ensure it meets all regulatory requirements. We also provide the training and tools to manage your program going forward. We use the latest software and demographic data to prepare accurate and up-to-date programs.

All employers, whether or not an AAP is required, should have robust employment practices in place along with a strong Employment Practices Liability Insurance (EPLI) policy in the event of allegations involving discrimination, harassment, wrongful termination and other workplace issues. PMIS provides manufacturers throughout California with HR Services to help mitigate the potential for losses, including assisting in the creation of an Employee Handbook, Recruiting & Hiring Practices, HR Audits & Compliance Review, Harassment Prevention Training and more. We will also secure an EPLI policy for your company that will step in to cover defense and settlement costs should you be the target of an employment practices lawsuit. An EPLI policy can be designed to provide you with protection from claims made by employees, former employees, or even potential employees.

At PMIS, our professionals are manufacturing insurance and risk management specialists. We’re here to help you minimize your exposures through compliance and loss prevention measures and provide you with the insurance programs needed should your company find itself facing litigation. Give our professionals a call at 855.910.5788.

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