A New Compliance Report for Federal Contractors.

This report, to be filled out by government contractors, may prove troublesome.

What would the impact be on your business if you lost all of your customers that were government agencies, banks, credit unions (or other finance-related businesses), utility, oil transportation or construction companies? If the answer to this question is "we'd be in real trouble," then you may want to pay close attention to the new regulations being implemented by the Office of Federal Contract Compliance.

The OFCCP monitors federal contractors and subcontractors on their compliance with Equal Employment Opportunity and Affirmative Action regulations. If a company is covered and found not in compliance, one of the consequences could be debarment from performing work or doing business with other covered organizations.

For the last two years, the OFCCP has been revamping the way it monitors covered contractors. After years of limited enforcement actions, the OFCCP is now implementing new procedures to ensure contractors comply with Federal Equal Employment Opportunity and Affirmative Action requirements.

Before the change in the OFCCP regulations, the only enforcement method authorized by the Code of Federal Regulations was for a federal compliance officer to schedule an onsite desk audit of affected companies. This compliance review could take as long as three days and meant that contractors were audited only periodically; some not for years at a time.

However, in April of this year, the OFCCP began mailing out its new Equal Opportunity survey to all covered contractors. The survey requires contractors to supply detailed demographic and salary information on their employees and on their affirmative action plans to the OFCCP. The OFCCP request limits the response time to supply the information to only 30 days.

Who Qualifies as an Affirmative Action Employer?

The definition of a covered company is:

* A federal contractor or contract with one or more covered federal contractors; and

* Has 50 or more employees; and

* Provides over $50,000 of goods or services under federally subsidized contracts in a 12-month period.

While the company size threshold is fairly straightforward, some companies can meet the $50,000 threshold without realizing they have met the requirements for reporting. Clear indicators that they are or have become a covered contractor may not appear until the OFCCP sends them a request for information. This is because companies can meet the $50,000 threshold by providing goods and/or services to covered contractors that add up to $50,000 over a period of 12 months.

What are the Costs of Noncompliance?

The CFR outlines a specific process that the Department of Labor must follow before sanctioning an employer for noncompliance. However, once an organization is found to be noncompliant, the DOL may institute administrative or judicial proceedings against a company and seek back pay and other whole relief for those it judges to have been victims of discrimination. A company may also be debarred from receiving any further federal contracts. Debarment may be imposed for an indefinite term or for a fixed minimum period of at least six months. The bottom line is that noncompliant companies will spend a great deal of human and financial resources to deal with the consequences of noncompliance.

Who Will be Required to Complete this Report?

It is the goal of the OFCCP to have contacted all 92,500 federal contractors by the end of 2001. Some contractors have already received requests to complete this report. However, it is expected that over 60,000 contractors will have been contacted by the third quarter of this year. The OFCCP will make a determination as to how often the report will be required on an ongoing basis once the first round of reports is completed.

What Does the Report Ask For?

There are three categories of information that will be covered in the survey. They are:

* General information on your company's Equal Employment Opportunity and Affirmative Action program activities;

* Combined personnel activity information for each Equal Employment Opportunity-1 category by gender, race and ethnicity; and

* Combined compensation data for each Equal Employment Opportunity-1 category for minorities and nonminorities by gender.

You can preview a sample of the report on the OFCCP's Web site at www.dol.gov.

Why Have I Never Seen This Report Before?

Before the change in the OFCCP regulations, the only enforcement method authorized by the Code of Federal Regulations was for a federal compliance officer to schedule an onsite desk audit of affected companies. This compliance review could take as long as three days. However, the regulations were changed to allow the government alternative forms of monitoring compliance. The regulationsat4l CFR Part 60-1 now authorize the OFCCP to use additional methods to evaluate a contractor's compliance. The Equal Opportunity Survey is one of those additional methods.

How Was This Survey Developed?

The staff at the OFCCP developed a draft survey instrument that was field tested by 150 volunteer organizations. The OFCCP then sent the survey to 3,000 contractors who had been due for review in 2000. While the OFCCP will not use the EQ Survey data as means of determination of noncompliance with the regulations, it will use the data as a means of conducting more focused reviews. The OFCCP will also process and analyze the survey data collected to refine their analytical tools that evaluate contractor data.

What is the Purpose of the EO Survey?

The EO Survey is to ensure continued integration of women, minorities, the disabled and veterans into America's workplaces. The OFCCP believes the survey will accomplish this by:

* Improving the compliance evaluation process; and

* Allowing OFCCP to more efficiently obtain contractor compliance information; and

* Alleviate undue burdens of contractors under review.

Additionally the OFCCP wants to encourage contractor self audits.

How Can I Be Prepared to Complete the Report?

The best way to be prepared is to make sure your company is currently complying with federal record keeping and work force monitoring requirements. These requirements are defined at 41 Code of Federal Regulations (41 CFR)-Section 60; 41 CFR Section 60-120 allows the OFCCP to require a contractor to keep employment records.

Contractors are required to furnish such information to the OFCCP upon request. More specifically, contractors should be keeping applicant flow data, along with data on hires, transfers, promotions, terminations, lay-offs and training by race, gender, disability and Equal Employment Opportunity code. When looking for a program to implement or when designing your own program to maintain this data for easy access, ensure that it will keep history data by date so you can retrieve it for the time period requested by a reporting agency.

Companies that do not have a current Affirmative Action Plan, or that do not keep adequate records to provide the requested data, and fall into the covered company category, will have a difficult time completing the report in just 30 days. Getting this data together can be expensive and time-consuming for small companies in particular who have been free of these reporting requirements in the past. Weeding through personnel files and folders and trying to reconstruct missing data is an avoidable hassle.

Small companies have sometimes combined Equal Employment Opportunity reporting with many other functions for one individual who may be so buried in daily duties that reporting requirements are at the bottom of the pile. A good local HR consultant brought in to help sort things out before the OFCCP asks is probably a good management practice.

Where Do I Get More Information?

The OFCCP Web site has a great deal of information on their new compliance initiatives. You can also get a sample of the report, a Questions and Answers brochure along with access to the agency's compliance manual. If your company needs guidance in making sure its day-to-day operations are in compliance, a good human resources consultant can help you get a good start by performing a compliance review.

ALERT: Another important change in the OFCCP regulations is that there are now four new demographic categories to be included in your Equal Employment Opportunity Information requested for employees and applicants. The new categories include:

Rather than Asian:

* Native Hawaiian, or

* Other Pacific Islander 

Rather than just Hispanic

* Latino (white race only), or

* Latino (all other races)

Employers should review their data-gathering methods and record keeping procedures to ensure they are collecting the new data.

Roberta Clark Goughnour, MBA, SPHR owns 3R Consultants. She provides human resource and business management consulting services. Her company specializes in supporting the development and implementation of policies and procedures that encompass HR best practices. Using industry best practices allows her client companies to maximize the contribution of their Human Resources toward the organizations' success. Ms. Goughnour is an adjunct professor of business and human resources at the University of Alaska Anchorage and Alaska Pacific University, and is a successful trainer for local businesses and the Anchorage Chamber of Commerce.