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Can CA Employers Still Implement Federal AAPs?

November 10, 2020 By Matt Nusbaum

The short answer is, YES.

Several BCGi members have inquired recently about the defeat of Proposition 16 in California, which would have repealed a California constitutional amendment in place since 1996 that has been characterized as “prohibiting affirmative action” in government employment. The question on some California government employers’ minds, particularly those that are federal contractors subject to federal affirmative action requirements, is whether or not this has any impact on their federal AAPs. The short answer there is, NO.

To understand all this we have to clear up some terminology and make some distinctions between different types of affirmative action.

“Affirmative action” in the context of requirements for federal contractors means making sure that the organization is not discriminating on the basis of protected characteristics, like sex or race/ethnicity. It involves taking a self-critical look at the organization, specifically the demographics of the workforce, and identifying areas that look “off,” then digging deeper in those areas to determine whether or not there is an actual discrimination issue and, if so, correcting it. So, while employers generally are prohibited from sex and race discrimination, federal contractor employers are required to actively monitor their workplaces for potential issues, essentially self-policing in a way that is not required of non-federal-contracting entities.

When it comes to what an employer does if a potential discrimination issue is uncovered, we talk about “good faith efforts.” These are generally things such as increasing outreach and recruiting efforts that target specific groups like women or people of color. Such outreach and recruiting efforts should be in addition to, not in place of, the organization’s “regular” recruiting practices. Other common and recommended responses include reminding managers, supervisors, and employees of company nondiscrimination policies and practices, and providing training and “refresher” training to decision-makers. These are all things that do not involve “taking” something from one group and “giving” it to another and therefore do not violate the underlying principles of the prohibitions found in Title VII and Executive Order (E.O.) 11246.

But there is another form or type of “affirmative action” representing the vast majority of peoples’ understanding—what should be thought of as corrective affirmative action. Those are things like quotas, point systems, and set-asides that “force” the issue, directly manipulating the direction that “the needle” we are fond of referring to points. Those types of affirmative action have always been strictly limited and tightly controlled and are prohibited by the California constitution. For these forms of affirmative action to be implemented, one of two things must be true — either the employer is doing it wrong, or something has gone wrong that needs to be corrected, usually the result of a lawsuit.

In the area of employment, almost all of the corrective affirmative action efforts are the result of an enforcement action by a federal law enforcement agency or private lawsuit. That’s because, for such efforts to be legal under Title VII (or E.O. 11246), there must be a finding of discrimination (something employers are unlikely to admit on their own), a showing that other efforts that do not violate nondiscrimination law have been or would be ineffective, and that the proposed remedy will violate the law in both the least possible way and for the least possible duration.

These elements are met if/when the OFCCP finds that a federal contractor’s selection process discriminated against, for example, Hispanic applicants. In such instances, typically the agency will calculate the number of Hispanic applicants that theoretically would have been hired in the absence of the discriminatory practice (referred to as the “shortfall”), require the employer to contact past Hispanic applicants who were not selected during the relevant time period and, as positions come open, give preference to those applicants who meet the basic qualifications until either the number of new Hispanic hires meets the shortfall or for a specified period of time.

That is, effectively, a quota. Hiring someone because of their race/ethnicity (in this example, Hispanic) is a clear violation of Title VII. But it is being done in order to comply with Title VII, which makes lawyers’ and judges’ heads hurt just as much (if not more) than your own. As a general rule, any form of affirmative action that can be characterized as taking something from one group and giving it to another, is prohibited unless it is absolutely necessary.

Take the NFL’s “Rooney Rule,” for example. The National Football League faced a situation in which, despite there being a plethora of Black players and lower-level coaching staff who amass the necessary skills and experience for head coaching positions,  Blacks are consistently and massively underrepresented in the head coaching ranks. Civil rights attorneys released a study concluding that the NFL had a problem with longstanding, systemic racism that could not be effectively addressed by traditional affirmative action measures (such as targeted recruiting and training). The league hired a consulting company that essentially confirmed the study and recommended corrective action.

The solution they landed on was the “Rooney Rule,” named after Dan Rooney (the former owner of the Pittsburgh Steelers and former chair of the league’s diversity committee). Despite the league’s admission of the necessary elements for corrective affirmative action, they did not implement a quota, point system, set-aside, etc. Instead, and following well-established Supreme Court precedent, the league sought potential action that might “move the needle” while minimizing the harm done by making employment selection decisions based on race. So the league just required teams to interview at least one Black candidate when hiring for head coaching positions. That’s it. All they required was that a Black candidate get in the room with the decision-makers and be given real consideration. Teams were still free to hire the “best qualified” candidate as determined by the team, not the league. After the rule was implemented, the number of Black head coaches in the NFL quadrupled from 2 to 8, not because the league set a quota or gave a meaningful advantage to Black candidates, but because Black candidates were able to get in the room and make their case.

Traditionally, we have given wider latitude to higher education institutions to engage in “stronger” affirmative action with regard to admittance policies to address the “pipeline problem” for employers (though even that is going the way of the dodo). But the workplace has always been a different arena in which affirmative action efforts that otherwise violate nondiscrimination law are tightly controlled.

Those are the types of affirmative action efforts outlawed by California’s constitution. And they are only outlawed for government agencies and entities, not private employers. There are carve-outs, for example, for a state university that is also a federal contractor that is ordered by the Department of Labor to implement a temporary hiring quota to correct an instance of hiring discrimination, but that university would be prohibited from implementing such affirmative action voluntarily. Affirmative action that does not violate nondiscrimination law—the bulk of affirmative action for federal contractors—is still allowed.

So, while the California constitutional provision “prohibiting affirmative action” might have a significant impact on university admission policies and practices, it has virtually no impact on state employers’ federal affirmative action obligations. State entities can still set “placement goals” for women and people of color (which are not “goals” in the sense that most think of that term), and implement affirmative action efforts to address those goals that do not violate nondiscrimination law (outreach, training, etc.). A non-government employer in California could theoretically implement something like the Rooney Rule if it were willing to admit to having a problem with racial discrimination that could not be effectively addressed any other way, but a government employer could not unless ordered to do so by the federal government or court.

If you have questions about the distinctions discussed in this post, feel free to reach out to BCGi by contacting us at bcgi@biddle.com.

OFCCP COVID-19 “Exemption” Clarification

March 23, 2020 By Matt Nusbaum

To be clear, the OFCCP is still open for business. The agency is still auditing and still expects contractors to complete, implement, and maintain their AAPs.

BCGi has been getting several questions that appear to be prompted by incomplete and potentially misleading headlines regarding the OFCCP’s coronavirus relief exemption.

The “exemption” here only applies to federal contracts related to coronavirus relief, as determined by the contracting agency. Entering into such a contract does not exempt the organization from existing affirmative action obligations.

If a contractor holds no other qualifying federal contracts, they will not be required to prepare AAPs and will not be audited because they enter into a contract related to coronavirus relief. Existing federal contractors are not affected by this exemption.

If you have questions, please do not hesitate to reach out to us at BCGi@biddle.com.

OFCCP Issues National Interest Exemption for Coronavirus Relief

March 18, 2020 By Matt Nusbaum

Much as the agency has done in response to past crises, the OFCCP has granted a three-month “exemption” for federal contracts pertaining to coronavirus relief. What does that mean?

First, let’s be clear that this does not have any significant impact on existing federal contractors. If you are already obligated to prepare AAPs, you still have to finish and implement your AAPs. If you are already subject to OFCCP audit, those audits will still happen. This mainly applies to new contractors and is only a partial exemption from OFCCP requirements.

Federal contracting agencies are required to insert the OFCCP’s “EO clauses” in their federal contracts. That is the “hook” that imposes special EEO/AA obligations on federal contractors. Federal agencies do not have the authority to pick and choose the circumstances in which they will include the EO clauses. In other words, they do not have the authority to decide whether and to what extent OFCCP jurisdiction applies to any particular contract. Even if the agency fails to insert the required contract language, the EO clauses will be read-into the contract as a matter of law.

In times of crisis, when OFCCP’s requirements might discourage organizations from providing essential help, the OFCCP can and does grant limited waivers. Most recently, the OFCCP has done this repeatedly in recent years for hurricane relief efforts.

The OFCCP does not grant blanket waivers for any purpose. Instead, federal agencies are authorized to insert special language exempting certain portions of the OFCCP’s EO clauses. This special language allows an organization to enter into federal contracts without fear of that triggering an audit.

How does that work? The OFCCP basically grants federal contracting agencies the authority to determine whether or not a particular contract falls into the national interest exemption. Here, the contract must specifically be for “coronavirus relief.” But the OFCCP does not define that term; they leave it up to the contracting agency to decide.

If the contract is deemed to fall into the exemption, the federal contracting agency inserts special language into their contracts provided by the OFCCP. If that language is not included in the contract, the contract is not exempt.

And those contracts are not exempt from OFCCP jurisdiction entirely. Contracts subject to these national interest exemptions still confer the obligation to ensure nondiscrimination under the OFCCP’s various laws. However, they do not confer the obligation to prepare formal, written affirmative action programs (AAPs). And the OFCCP commits to not initiating an audit based on these contracts.

That is not the same as the OFCCP not auditing companies that hold such a contract—it is not a “get out of jail free” card. It simply means that if the OFCCP schedules the company for an audit, they must point to a different federal contract to establish jurisdiction, one that does not contain the special national exemption language.

Because the nondiscrimination provisions are not exempted, the OFCCP can still investigate discrimination complaints based on an “exempted” federal contract.

What is less clear is whether and to what extent this extends to subcontracts. Logic dictates that if an organization enters into a subcontract that is necessary for the performance of a prime contract that, in turn, is subject to the national interest exemption, then the exemption should “flow-down” to the subcontracts. The OFCCP confirms that (not in the exemption itself, but in subregulatory guidance). As long as the prime contract is exempt, all necessary subcontracts are similarly exempt. It is up to each contractor whether or not to include special language in the EO “flow-down” clause. Unlike the prime contract, though, the special language does not have to appear in subcontracts for those contracts to be exempt.

Is your head spinning yet? That’s okay. If you are otherwise already a federal contractor required to prepare AAPs and subject to audit, this is unlikely to impact you at all. It is just a way to encourage new federal contractors to pitch in and help out.

The coronavirus relief exemption applies to contracts entered into from March 17, 2020 to June 17, 2020. The exemption and guidance are available on the OFCCP’s website here.

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