If you are an owner of a business that is a federal contractor or a subcontractor to a business that is, you likely already know the regulations that the Department of Labor’s Office of Federal Contract Compliance Programs applies to government contracts. This includes affirmative action plans that ensure business stay complaint with non-discrimination practices. However, you might not be aware of the Federal Contractor Scheduling System that the OFCCP uses to randomly select federal contractors and subcontractors–who have at least 50 employees and contracts worth $50,000 or more–to be audited for compliance.
It begins with a desk audit
If you fall into this group, each year, the OFCCP chooses various federal contractors to assess their compliance with affirmative action guidelines. This is called a desk audit. If you are selected for one, notification will come via a scheduling letter from the OFCCP. Once you receive the letter, you have 30 days to provide the required affirmative action plan and documentation so that the OFCCP can conduct a thorough evaluation that includes but not limited to an impact ratio breakdown, compensation examination and appraisal of the reasonableness and acceptability of the affirmative action plan.
What happens during an onsite review
In additional to a desk audit, the OFCCP has the option to carry out an onsite review if compliance issues were discovered during the desk audit. During the onsite review, the OFCCP will perform a more detailed analysis and might request additional documentation concerning compensation, personnel files and other policies and procedures. The OFCCP might also conduct interviews with hiring members and the staff.
What should contractors and subcontractors do?
With the new directive the U.S. Department of Labor issued at the end of November 2018, federal contractors and subcontractors can expect desk audits to be conducted more quickly but also a lot more of them, which makes maintaining accurate and organized records of recruitment, applicants, employees, promotions and terminations more important than ever. Affirmative action plans are multifaceted and take time to create. According to the OFCCP, creating, maintaining and annually updating an affirmative action plan takes almost 200 hours for contractors and subcontractors–not including third-party disclosures and scheduling letters. This can put a toll on your human resources department. One thing you might want to consider is outsourcing this task to a company like Lincoln Tyler, which is experienced in preparing affirmative action plans.