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Federal Contractor Update

on Friday, 6 December 2019 in Health Law Advisory: Zachary J. Buxton, Editor

The Office of Federal Contract Compliance Programs (OFCCP) is picking up speed with a variety of updates this fall.  The following reflects the most noteworthy of the OFCCP’s activity.

TRICARE Jurisdiction? Good News on the Horizon!

Healthcare employers who receive TRICARE dollars have long suffered through the back and forth about whether or not their TRICARE contracts bring it under OFCCP jurisdiction.  See our November 2018 Newsletter article for more history.  If you recall, on May 7, 2014, the OFCCP published Directive 2014-01, which established a five-year moratorium on its enforcement of obligations related to affirmative action programs and recordkeeping under the three affirmative action laws (Executive Order 11246, Section 503 of the Rehabilitation Act of 1973 (Section 503), and the Vietnam Era Veterans’ Readjustment Assistance Act of 1974 (VEVRAA)).  On May 18, 2018, the OFCCP extended that moratorium for an additional two years until 2021. 

On November 6, 2019, the OFCCP published a proposed rule that would formalize, once and for all, the current OFCCP’s position that it “lacks authority over Federal health care providers who participate in TRICARE.”  The proposed rule would specifically revise the definition of “subcontractor” to exclude healthcare institutions with agreements to furnish medical services and supplies to individuals participating in TRICARE.

Before you throw your affirmative action plans out the window, remember that this is only a proposed rule and is not yet final.  Additionally, this proposed rule would only affect those with only TRICARE contracts.  If the healthcare institution has any other federal contracts or subcontracts in excess of the monetary threshold, affirmative action compliance would still be required.  With this in mind, healthcare institutions should closely review their current contacts to determine whether any other revenue may qualify as a federal contract or subcontract, thus requiring continued compliance.

Guidance on Postings and Notice Requirements

On August 2, 2019, the OFCCP released a new compliance assistance guide (available here) [https://www.dol.gov/ofccp/CAGuides/files/Postings&NoticesGuide-CONTR508c.pdf] related to the “EEO Tagline” that federal contractors can use in job postings and advertisements.  The “EEO tagline” fulfills federal contractors’ obligation to provide notice that qualified applicants will receive consideration without regard to their race, color, religion, sex, sexual orientation, gender identity, national origin, disability, or status as a protected veteran. 

The regulations implementing Executive Order 11246 offer contractors two options for the “tagline”: contractors may use either (1) the phrase “an equal opportunity employer” or “EOE” instead of listing all protected bases, or (2) the phrase “All qualified applicants will receive consideration for employment without regard to race, color, religion, sex, sexual orientation, gender identity, or national origin”.  However, a contractor that lists only one or a few of the protected bases will be required to list all of them to be in compliance.

To satisfy Section 503 (disability) and VEVRAA (vet) requirements, a contractor may not simply use the EOE designation; rather, “vet” and “disability” must still be stated.  The OFCCP provides the following options for acceptable taglines under all three affirmative action laws: (1) “All qualified applicants will receive consideration for employment without regard to race, color, religion, sex, sexual orientation, gender identity, national origin, disability, or status as a protected veteran;” or (2) “EOE, including disability/vets.” 

Functional AAPs

In order to provide contractors with different options for complying with affirmative action plan requirements, the OFCCP has updated its Functional Affirmative Action Program (FAAP).  Specifically, the OFCCP issued a new directive, effective June 20, 2019, which includes the following key updates:

  • As has always been the case, a contractor interested in preparing a FAAP must apply with the OFCCP and enter into an agreement with the OFCCP to do so.  The OFCCP extended the term for re-certifying FAAP agreements from three years to five years.
  • The OFCCP extended the time frame for which FAAP units that have undergone a compliance evaluation will be exempt from another evaluation.  Prior to the new directive, this exemption period was 24 months; it is now 36 months from the date on which OFCCP closed the previous evaluation.  But as before, this exemption period does not eliminate the possibility of OFCCP conducting a compliance investigation or evaluation based on credible third-party evidence.
  • Complete FAAP applications will be determined by the OFCCP within 60 days of OFCCP’s receipt of the package whereas historically, there was no deadline.
  • OFCCP no longer requires that FAAP contractors undergo at least one compliance evaluation during the term of their FAAP agreement. 
  • The directive eliminates consideration of contractors’ EEO compliance history as part of the FAAP approval process.
  • The directive eliminates the requirement that contractors annually modify and update their FAAP agreements.

Please contact us if you would like to discuss whether a FAAP is a good option for your workforce.

OFCCP Issues “Back to School” Update

On September 5, 2019, the OFCCP released three new initiatives with a campus/student-related focus in its “back to school” update: 

  1. The first is a set of FAQs for those organizations that have multi-building establishments that are campus-like in nature, such as hospitals, universities, and larger companies. The FAQs provide a list of factors multi-building establishments may use for determining whether one or multiple affirmative action programs (AAPs) should be maintained.
  2. The second provides colleges and universities guidance on whether student workers should be included in AAPs and lists the support data that should be submitted to OFCCP during a compliance evaluation on such question.
  3. The third and final initiative is a new HBCU Webpage, a “one-stop shop” to help connect college students with internship, apprenticeship, and entry-level job opportunities as part of the White House Initiative on Historically Black Colleges and Universities.

Notice of Proposed Rulemaking for Religious Organizations

On August 15, 2019, the OFCCP released a Notice of Proposed Rulemaking focused on clarifying the civil rights protections for religious organizations that contract with the federal government.  Consistent with the Trump administration’s policy to enforce religious freedoms, the proposed rule seeks to provide broad protection of religious rights.  Importantly, the proposed rule does not exempt federal contractors from adhering to other required affirmative action obligations.  

Most notably, the proposed rules would broaden the current definition of “exercise of religion” to encompass “any exercise of religion, whether or not compelled by, or central to, a system of religious belief.”  The proposed rules also provide clearer guidance to contractors by setting forth the three factors the OFCCP will consider when determining whether a federal contractor is a religious entity:

  1. “The contractor must be organized for a religious purpose, meaning that it was conceived with a self-identified religious purpose. This need not be the contractor’s only purpose.”
  2. “The contractor must hold itself out to the public as carrying out a religious purpose.”
  3. “The contractor must exercise religion consistent with, and in furtherance of, a religious purpose.”

OFCCP Releases New Website Portal

On September 16, 2019, the OFCCP announced a new feature for the Contractor Assistance Portal (available here [https://ofccpcontractor.dol.gov/s/]).  The portal offers frequently asked questions, OFCCP news and events, compliance assistance issues, sample AAPs, required posters, and various methods of contacting OFCCP with questions.  Additionally, the new “Topics” feature allows contractors to post questions for timely review and feedback from the contractor community.  OFCCP designed this new feature to encourage discussion among stakeholders and provide a network of learning from others in the contractor community.

Federal Contractor Minimum Wage Increase

On September 19, 2019, the OFCCP updated the minimum wage rates for workers performing work on or in connection with certain federal contracts.  Beginning January 1, 2020, federal contractors must pay covered workers at least $10.80 per hour.  Covered tipped employees performing work on or in connection with federal contracts must be paid at least $7.55 per hour.  There are exclusions to these requirements so be sure to review how the new regulations apply to your specific situation. 

AAP “Monitoring” on the Horizon?

The OFCCP recently implemented a web-based portal for contractors to upload their AAPs electronically for OFCCP review (see “OFCCP Releases New Website Portal” above).  This new portal may be reflective of a GAO recommendation for the OFCCP to “monitor” federal contractors’ AAPs by requiring contractors to annually submit written AAPs to the OFCCP, regardless of whether the contractor has been selected for compliance review. 

While there is an existing provision in the regulations that requires contractors to annually summarize and update their AAPs and submit these “program summaries” to the OFCCP each year, this provision has not been enforced since its inception.  That being said, it would be relatively easy for the OFCCP to “activate” this provision in furtherance of the GAO’s “monitoring” initiative. 

Proposed Changes to Disability Self-Identification Form

No doubt in light of the fact that the current OFCCP disability form expires in January 2020, on October 3, 2019, the OFCCP proposed changes to the required voluntary self-identification form for soliciting disability status from applicants and employees.  

The proposed form would now only be one page instead of two as a result of the OFCCP’s proposal to remove the reasonable accommodation language from page two.  OFCCP removed this language to avoid confusion among “applicants and employees who thought that completing the form automatically referred them for a reasonable accommodation.”  The proposed form also updates and expands the list of disabilities to include, for example, autoimmune disorders, low vision, cardiovascular or heart disease, hard of hearing, anxiety, gastrointestinal disorders, nervous system conditions, and schizophrenia. 

The proposed form also contains new language regarding the OFCCP’s goal to have individuals with disabilities comprise seven percent of the workforce and emphasizes the requirement that employees update their disability status every five years. The new language also promises that all information will be kept confidential. 

Morgan L. Kreiser

Kelli P. Lieurance

1700 Farnam Street | Suite 1500 | Omaha, NE 68102 | 402.344.0500