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OFCCP and the Pending Executive Order #13673 Outcome of Your Audit May Impact Your Future Contracts

How difficult is passing an OFCCP audit in 2015? Very difficult! How critical is it that a contractor be able to pass an OFCCP without violations? More critical than ever before! Why? Read on…

There is no question that the new regulations have imposed unprecedented obligations on companies.   The large funding given to the OFCCP can only be justified if they are uncovering discrimination during enough of their audits. In the past, violations, without financial payouts, were not a huge problem for employers. However, Executive Order 13673 is on the horizon. The “Fair Pay and Safe Workplace” Order (who can be against that!) will directly impact contractors who receive violations during an OFCCP audit, or who receive charges and violations from other federal or state agencies.   Broadly speaking, if this Executive Order goes into effect as expected, prime contractors bidding (or renewing) federal contracts worth more than $500,000 must disclose, as part of their bid submission, if they have received any violations with regard to any of 14 federal labor laws (i.e. FLSA, OFCCP, OSHA, NLRA, SCA, ADA, and Title VII – among others) and their state equivalents. Then, an Agency Labor Contract Advisor along with the procurement officer will determine whether the contractor has a satisfactory enough record of integrity and business ethics before the contract will be awarded.   Additionally, the Executive Order would require the prime contractors to solicit this information from their subcontractors before awarding the subcontract.

For those contracts in excess of $1-million, Executive Order #13673 will prohibit companies from arbitrating Title VII claims, as well as sexual assault and sexual harassment claims, unless the complaining employee agrees to arbitration after the claim arises. The prime contractor will be required to incorporate this requirement into the federal subcontracts worth over $1-million.

Of course, there are many more stipulations in this Executive Order, far too many to include in this article. The goal of these regulations is to ensure equal opportunity and compliance with OFCCP and other labor and employment laws. However, it is clear that maintaining compliance has become an added burden of time, staff and money.

What’s a contractor to do? If you want to play in this field, you need to address these compliance issues head-on. That means, sit down with a knowledgeable subject matter expert (HR consultant or counsel) who can assist you in navigating the new regulations and implementing policies and procedures to assure compliance. There are no short-cuts! In my recent travels around the country conducting training to federal contractors, I have found that HR is still unaware of the depth of information they need to provide to address the new 22 criteria points itemized in OFCCP’s new audit letter. Of more concern is that, due to lack of managers’ training, the company is leaving itself wide open for possible liability and violations. Managers either don’t know the regulations or don’t understand how their actions, words or notes (or lack of notes) can cause the company to fail an audit; and now the pending Executive Order #13673 may impact the contractor’s ability to bid on future contracts. Now, more than ever before, investing in training for the HR staff and all managers involved in personnel decisions is critical for federal contractors and subcontractors.

How can you best protect your ability to renew your current contracts or bid on future contracts? Here are the top five best practices. For a (free) complete list, please contact PMP.

  1. Assure that as you renew/update your Affirmative Action Plan document it contains language that addresses all of the regulations effective March 24, 2014;

  2. Formulate a list of local organizations that assist individuals with disabilities, veterans, minorities and women in obtaining jobs (name of person, organization name, how you post open positions with the organization);

  3. Have proof that you submitted all open positions to these organizations for which you are seeking outside candidates along with proof of listing with the local Department of Labor/Job Bank;

  4. Review job descriptions to ensure that there are no mental or physical requirements that are not bona fide requirements of the position. (The new OFCCP scheduling letter requires the contractor to attest to when this review was conducted and when it will be conducted in the future);

  5. Assure that you can document the process/procedures of when/how you request voluntary self-identification for “Protected Veteran” and “Individual with Disability” for applicants, new hires and within one year of being subject to the new regulations.

It’s not easy being a federal contractor or subcontractor in 2015.   Current and pending compliance requirements have made it a minefield. There is significant risk to contractors who still feel they can go this alone. PMP’s affirmative action specialists spend hours reading the regulations, speaking with auditors and learning how these regulations are interpreted in the six OFCCP Regions throughout the United States. This is no place for wimps! Call PMP today.

This article is intended for general information only and should not be construed as legal advice.


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