Affirmative Action Plans – The Good, the Bad, and the Ugly

A Brief Interview of
Bruce Mills, Esq.
Wessels Pautsch & Sherman P.C.

Q:  Bruce, as an attorney, do you find that many clients you speak to are not aware of the essentials of affirmative action?

BRUCE:  Yes.  Many clients aren’t even aware that they are required to complete affirmative action plans until they receive a letter from the government asking to audit the plans the company was supposed to have developed.  Any government contractor or subcontractor that has 50 or more employees and does $50,000 a year in business, either as a contractor or subcontractor is required to complete an affirmative action plan. If the company does not have a plan and they are audited by the OFCCP, they will likely have to complete a plan for the OFCCP to review and then annually submit plans to the government to review for several years in the future.

Most companies are not aware that the problem with the affirmative action plan process is not so much the paperwork required, but that an audit allows the OFCCP to examine all of a company’s hiring and firing and other personnel practices and  look specifically for any signs of past discrimination. If the OFCCP finds any such discrimination, they can then file suit on behalf of any employees they feel might have been wronged. This is why you will see in the paper once in a while where a company signs a conciliation agreement with the OFCCP agreeing to pay millions of dollars to employees in backpay. The best way to avoid this is to have affirmative plans carefully developed before the audit process starts, so the company can be prepared for anything the OFCCP may find.

In addition, many clients are not aware of the changes in the regulations and requirements for affirmative action plans that took place in January of 2002. Too many are still using the old affirmative action plans that they developed before the changes. The new requirements are actually much simpler, and companies should change their plans to meet the new regulations. Again, being up to date is a way of keeping the OFCCP from becoming suspicious over what may be innocuous problems.

Q:  Can you give an example of the changes?

BRUCE: One example of the 2002 changes in the regulations is that the employer is no longer required to post an Equal Opportunity Notice signed by the Chief Operating Officer at that location.  Another change is that companies are no longer required to have a section in the affirmative action plan on the dissemination of the affirmative action plan.  The employer is also no longer required to have a plan on file that they make available to the employees. A big change is that the number of factors that the company must examine in determining whether or not they have an appropriate number of females and minority employees in the workforce is now only two instead of eight.

Q:  Why has the OFCCP cut down on their requirements?

BRUCE:  Because a lot of employers were complaining about the paperwork burden that went along with developing affirmative action plans. It is important to keep in mind that the OFCCP sees its mission as not simply reviewing affirmative action plans, but in finding any possible discrimination. The changes do not affect this mission negatively.

Q:  So, this is good news for employers?

BRUCE:  It is, but you also need to understand these two aspects to developing an affirmative action plan, and both are very important. 

First, there is simply the paperwork requirement that the company develop a plan and to calculate whether or not the number of female and minority employees in their workforce meets the appropriate community requirements.

As mentioned earlier, the second, and most important factor to consider, is that if a company is a government contractor, the OFCCP can come in and audit its affirmative action plan, and, in doing so, they can examine every one of the company’s hires, fires and promotions and look for any possible act of discrimination.  When they do this, they are looking specifically for any place where they feel a female or minority person should have been hired or promoted, or where they feel a disproportionate number of minority employees have not been promoted. Then, the OFCCP will ask the company to place the person in the position the OFCCP feels they should have been placed and ask for backpay for this person or persons.  This can add up to a tremendous amount of money, as is shown by the huge settlements that the OFCCP has reached with companies in the past.

Q:  Do you see many such actions being taken?

BRUCE:  All the time.  You will notice in the news where an employer such as the Kohler Company in Wisconsin, for example, a few years ago reached an agreement with the OFCCP to pay $1,000,000 in damages to employees because of what the OFCCP discovered when they audited the Kohler plant in Wisconsin. Recently, the OFCCP has become very interested in equal pay issues and looks very carefully to find cases where they feel female and minority employees are paid less than white males in similar positions.

Q:  Do they work with the EEOC?

BRUCE:  Yes, they do when they file charges, but they have the independent authority on behalf of any employee to file charges in court against the employer.

Q:  What is the most common mistake you see employers making in this area?

BRUCE:  Companies not understanding the mechanics of the affirmative action process. The biggest mistake is not completing the plan on an annual basis, examining the results of the plan and taking action where necessary to correct any problem areas. In most cases statistical discrepancies can be explained by past history, but it is much better to examine these discrepancies before the OFCCP comes for an audit. In my career, I have had numerous occasions where clients have come to me saying they received a notice they were going to be audited, and they have to submit their plan to the OFCCP in 30 days.  Either they have not done a plan in the past five years, or they have never done a plan.  So, it’s a matter of catching up and doing all the analyses that are required within a very short period of time

Q:  Is it a big burden on a company to do a plan?

BRUCE:  It’s not a big burden once the first plan has been done.

Q:  Can you help companies complete their plan?

BRUCE:  Very definitely.  I work with companies all the time on completing their plans.  I prefer to assist companies in developing the first plan and then turning over the computer files which enable them to update the plans themselves in the future. I can then work with them on areas the OFCCP might find suspicious and help them with the rationale for making the decisions which led to these discrepancies.

Q:  So, you help them to be independent so they can do it in the future?

BRUCE: Yes, then all I have to do is review it to see if there are any red flags that they need to be aware of.  For example, as I said, one big area of interest is discrimination in compensation, particularly where females are concerned.  The OFCCP in an audit will ask for the compensation of all of the employees and then look to see where they feel females are underpaid.

Q:  Are they looking for violations of the Equal Pay Act?

BRUCE:  Yes. That’s one of their mandates, but they also look for Title VII violations.  If they see in a particular job category (or job area) that females are being paid less than their male counterparts, then that employer either has to a) rectify it, or b) be able to provide a business justification for the differential.  Quite often, there is an experience differential or something else, but that is something should know before they get caught in an audit with the OFCCP.

Q:  What employers have to complete an EEO-1 Report?

BRUCE:  Any employer with more than 100 employees, whether or not they are a federal contractor, under Title VII has to complete what is called an EEO-1 Report, which you send to the Equal Employment Opportunity Commission, not the OFCCP.  The OFCCP always requests an EEO-1 form for the past two years when they do an audit.

Q:  But, there are further requirements if I have to do an affirmative action plan?

BRUCE:  Any employer, whether or not they have a federal contract, has to complete an EEO-1 form.  If you are a federal contractor, and you have only 50 employees, then you have to have an affirmative action plan.  One other form that many employers are not familiar with is called a VETS-100 form in which a company has to report on an annual basis at the same time they do their EEO-1 report for veteran status.  That’s something that if they give me a call, I can get them a copy of that form.

Q:  So, anyone who does an EEO-1 report must also do the VETS-100 report?

BRUCE:  Yes.

Q:  Do you feel it’s important for a company to have you review these forms before they send them in?

BRUCE:  Not the EEO-1 or the VETS-100, but, obviously, an affirmative action plan needs to be reviewed and, most particularly, any employer that receives a Notice of Audit from the OFCCP should call immediately to strategize before they actually let the OFCCP into their company for the audit. I can ensure that they have the paperwork in the best form possible.  The secret is to make it as easy for the Compliance Officer from the OFCCP as possible so that you have everything right in front of them so that they won’t spend a lot of time nosing around.

Q:  Do you feel you should be there personally when the OFCCP comes in?

BRUCE:  Definitely.  It makes it much easier because I understand the terminology and the process the OFCCP follows.  I can lead them in the direction that I know they are looking whereas someone without experience with the OFCCP quite often will not be able to respond with the same level of accuracy.

Q:  If people want to reach you to discuss their affirmative action plan, OFCCP audits, EEO-1 and VETS-100 reports, how can they reach you?

BRUCE:  At the St. Charles office of Wessels Pautsch & Sherman P.C. at 630-377-1554.