It usually begins like this. A client receives a letter from a very good customer asking to certify that the client is in compliance with Executive Order 11246, the 1965 Executive Order which established requirements for non-discriminatory practices in hiring and employment on the part of U.S. government contractors. My client calls me and says that they have received many letters like this and that they typically ignore them. “Is this a problem?” I am asked.
If the client is a federal government contractor or subcontractor, has more than 50 employees, and has been doing more than $50,000 in business with this customer, it is likely that the client should have an affirmative action plan. In fact, failure to have an affirmative action plan could result in the company being barred from doing work for any customers who are federal contractors or subcontractors. If the client doesn’t know whether it is a federal government contractor or subcontractor, it is important to find out, and having an affirmative action plan as a prophylactic measure isn’t a bad idea.
Until now, employers have been unlikely to get in trouble for not having an affirmative action plan unless they are one of the small number of contractors who gets audited every year. That may be about to change. On August 24, 2018, the OFCCP announced its new Affirmative Action Program Verification Initiative in which it will begin requiring federal contractors to certify on an annual basis that they have complied with the AAP requirements. Under this new initiative, it will be more likely that the OFCCP will become aware of federal contractors who are not in compliance by virtue of the fact that they have not received a certification from that employer, which could possibly lead to an audit.
In light of this initiative, this may be a good time for employers to determine whether they need to have an affirmative action plan. If you are a human resources manager, that may take a little effort since the human resources department is not always privy to all of the contracts that the company has entered into with its customers. Moreover, a subcontractor may not always be aware that it is doing work that is related to a larger contract. For this reason, it is really important for people in your company to carefully review any contracts that they enter into with customers and flag any that may suggest the contract is a federal contract.
If you determine that you are a federal contractor — and you decide that your federal contracts are worth the hassle — don’t delay putting together your affirmative action plan. If the OFCCP asks you for your plan, it is not something that can be done in a couple of days, and you don’t want to get caught without a plan if you are required to have one.