Taking a page from the Obamacare experience (keep the substance of controversial new policy changes intact, but delay implementation to allow those affected more time to adapt to the new policy regimen), OFCCP’s most recent Webinar (December 17, 2013) on VEVRAA and Section 503 has now “aligned” contractor obligations to comply with the so-called “Subpart C” requirements with the Affirmative Action Plan (AAP) implementation date. This position now firmly clarifies what had been differing written and oral statements about the issue of when contractors had to comply with Subpart C. The practical affect (and I will lay out some specific examples below) is to delay almost all (but NOT all) of the federal contractor community’s new VEVRAA and 503 affirmative action requirements to 2015 and some even into 2016. (See catalogue below of the several compliance obligations contractors MUST nonetheless implement on or before March 24, 2014). This is welcome relief to a weary federal contractor community.

Despite giving contractors a longer runway to comply, OFCCP is nonetheless strongly encouraging (but NOT requiring) those federal contractors who can earlier comply with the Subpart C requirements to do so effective on or after March 24, 2014…the ostensible “effective date” of the new Final regulations.

So, here is what has happened, and then the concrete (and surprising) examples:

(1)
OFCCP first exercised its regulatory discretion to delay implementation of the Final Rules 180 days (that was a gift, in and of itself, to the contractor community since the Administrative Procedure Act allowed OFCCP to implement the new Rules after only 30 days after their publication in the Federal Register this past September);
(2)

OFCCP also initially exercised its regulatory discretion to allow current federal contractors to “phase in” those “Affirmative Action Programs (AAPs)” created or updated before the March 24, 2014 effective date of the new Rules. Since AAPs have a one year life span, OFCCP reasoned (good for the contractor community) that your AAPs should be allowed to continue after March 24, 2014 if there was still “some time left” on your old pre-March 24, 2014 AAP. That regulatory permission was in OFCCP’s Preambles to both Final Rules:

“Although the final rule becomes effective 180 days after publication, full compliance with the requirements of this final rule by current contractors will be phased in as follows: Current contractors subject to Subpart C of the existing 41 CFR part 60-741 regulations that have written affirmative action programs (AAP) prepared pursuant to those regulations in place on the effective date of this final rule may maintain that AAP for the duration of their AAP year. Such contractors are required to update their affirmative action programs to come into compliance with the requirements of Subpart C of this final rule at the start of their next standard 12-month AAP review and updating cycle.“ Emphases added. See, for example, 78 Federal Register No. 185 at p. 58685 , middle column, middle.

(3)
Then, OFCCP issued a first set of FAQs and held its first Webinar on the new Rules and published a PowerPoint which, fairly read, heavily implied (but did not state outright) that all of Subpart C’s four other compliance requirements were also being delayed (or “phased in”) to the contractor’s AAP “phased in” date. (Note: having an Affirmative Action Program (AAP) is only one of five requirements of Subpart C, as we will see below, but it is NOT Subpart C’s only requirement).
(4)
Then, Debra Carr, OFCCP’s Policy Director, reportedly told the Mid-Atlantic ILG members that only a contractor’s AAP was being “phased in”, and not the other four requirements of Subpart C.
(5)

Then, OFCCP Director Pat Shiu’s December 4, 2013 testimony to the House of Representatives (House Committee on Education and the Workforce Subcommittee on Workforce Protections) seemed to align with the Final Rules Preamble and Policy Director Carr’s statement:

“First of all, to ensure that contractors have adequate time to make changes to their business systems and processes that place them in a position to optimize the employment prospects of both Veterans and people with disabilities, these rules will become effective 180 days after publication. In addition, both rules also provide a phase-in period of up to 12 months for current contractors to develop affirmative action programs (AAPs) in compliance with the new regulatory requirements.” (emphases added)

(6)

In OFCCP’s most recent Webinar (Tuesday December 17, 2013), Lynn White, an OFCCP Policy Division employee, clarified that:

“As a contractor, you can delay compliance with the affirmative action program requirements with subpart C until your first AAP is due following the March 24, 2014 effective date. This includes delaying compliance with the newly required pre-offer, self-identification and data collection requirements.”

(7)
And then, later in the December 17 Webinar, Naomi Levin, OFCCP’s Branch Chief for Policy Development and Procedures and OFCCP’s disability law guru, seemed to reveal a further intended exercise of OFCCP’s prosecutorial discretion to also align Subpart C with the first AAP of not just a “current” contractor but also a new (or also presumably) returning contractor which signs a covered federal contract/subcontract after March 24, 2014. A further post-Webinar inquiry confirmed Ms. Levin’s Webinar statement. See my example of this new “phase in” allowance, below, for both new and (by implication) returning federal contractors which the law treats as “new” federal contractors.
(8)
And then, later in the December 17 Webinar, OFCCP discussed two examples of AAPs created after the March 24, 2014 effective date of the new Final Regulations. These examples do not report any exercise of prosecutorial discretion to allow contractors to “phase in” Subpart C requirements for those AAPs created after March 24, 2014. See my discussion and example below of what that means transactionally, for a new federal contractor, or one “gapping” coverage and returning to federal contractor status after March 24, 2014.

FOX COMMENT: This is now an exercise of OFCCP’s prosecutorial discretion (not previously deployed regulatory discretion) to:

(a) not enforce Subpart C on March 24, 2014, as to both “current” and future covered federal contractors; and
(b) align its enforcement date of Subpart C with the date of the first AAP the contractor implements after March 24, 2014, as to “current” and future covered federal contractors.

– REFRESHER: You may find OFCCP’s new Final Rule “Subpart C” requirements at 41 CFR § 60-300.40, and following (VEVRAA) AND 41 CFR § 60-741.40, and following (503).

Subpart C’s five different subsections/requirements are these:

.40 General Purpose: Annual AAP Review/Update:
.41 Availability of Affirmative Action Program
.42 “Invitation to self-identify” (this section includes, among other things, the Pre-Offer and Post-Offer Self Identification invitations)
.43 “Affirmative Action Policy”
.44 “Required Contents of Affirmative Action Programs” (There are 11 specific required “ingredients” to the new AAPs)
.45 Goals

NOTE: Knowing these subsections of Subpart C is important for four different reasons:

-First, to know what new compliance obligations, specifically, OFCCP has now delayed;

-Second, to know the 11 specific (and several new) ingredients of the new-style AAPs for individuals with a disability and for Protected Veterans (and note: 503/VEVRAA Goals are not in 503/VEVRAA AAPs);

-Third, to know what is NOT in the Affirmative Action Programs (AAPs) which have to be disclosed to applicants and employees (and thus are “public” documents for all practical purposes); and

-Fourth, to know what compliance obligations are not in Subpart C and what compliance obligations a current contractor must implement effective March 24, 2014 and what compliance obligations future covered federal contractors must comply with when their contracts “commence”.

Here is what is NOT in Subpart C. OFCCP has thus NOT delayed the following new requirements and thus a current contractor must implement the following requirements beginning March 24, 2014 (and future contractors must implement them when their contracts commence after March 24, 2014):

a. All the Subpart A requirements, including especially the .5 (EEO Clause requirements). Significantly, the EEO Clauses include:

(a) the new “job listing” requirements;
(b) the new requirement to put disability/protected veteran “tag lines” in all “solicitations and advertisements for employees”;
(c) the requirement to tattoo all covered federal “subcontracts” with the new EEO Clauses….BUT WAIT….you do NOT necessarily have to put the new tattoos on your existing covered federal subcontracts or before March 24, 2014…but rather only when the contractor modifies, renews or extends an existing covered federal subcontract. See para (a) (first sentence) of each of the Final VEVRAA and Section 503 Rules. See, for example, the Section 503 version of the same wording found in OFCCP’s VEVRAA Final Rule:

41 CFR Section 60-741.5 Equal opportunity clause

a. Government contracts. Each contracting agency and each contractor shall include the following equal opportunity clause in each of its covered Government contracts or subcontracts (and modifications, renewals, or extensions thereof if not included in the original contract) (emphases added):

6. The contractor will include the provisions of this clause in every subcontract or purchase order…so that such provisions will be binding upon each subcontractor or vendor.” * * *”

b. All the Subpart B requirements (“Discrimination Prohibited”) making discrimination based on disability unlawful (updated to the standards of the new ADA amendments) and purporting (under VEVRAA) to make discrimination based on Protected Veteran status unlawful (although I believe this portion of OFCCP’s regulation lacks statutory authority);

c. All the Subpart D requirements (OFCCP’s “General Enforcement and Complaint Procedures”); and

d. All the Subpart E requirements (“Ancillary Matters”) but which includes, significantly, OFCCP’s new recordkeeping requirements and access to contractor records provisions.

Now, here are some examples of what all this means, transactionally, the way it comes across your desk and mine every day…or will on and after March 24, 2014:

EXAMPLE 1: Current Contractor with AAP Dated Before March 24, 2014

-AAP may contain only the old 10 required ingredients (not the new 11 ingredient recipe) and may continue in place until it naturally expires (i.e. runs its one-year course or the contractor’s covered federal contract ends)

-OFCCP will not enforce the requirements of all the other new Subpart C requirements (pre-offer and post-offer Self IDs per VEVRAA and 503), and employee surveys (503), etc., until the current contractor’s old-style AAP expires

NOTE: The effect of OFCCP’s December 17 Webinar was to allow a variable compliance window extending from 180 days after the September 24, 2013 publication of the new Final Rules to 545 days after the September publication. Said another way, if a contractor created or updated an AAP on March 23, 2014, it would not have to comply with any of OFCCP’s Subpart C requirements until March 23, 2015 and would not undertake its first “effectiveness evaluations” until March 2016.

-Contractor must comply with Subparts A, B, D and E on and after March 24, 2014

EXAMPLE 2: Current Contractor with First AAP Dated AFTER March 24, 2014

-Contractor must comply with all of OFCCP’s new Rules (Subparts A-E), including Subpart C, meaning the contractor must have a new-style AAP and must comply with Subpart C beginning on the date of that new AAP. See OFCCP’s Power Points at pp. 18-19 from the December 17, 2013 Webinar.

EXAMPLE 3: New Contractor (or Returning former Contractor) with First AAP Dated AFTER March 24, 2014

NOTE: Many covered federal contractors and subcontractors “gap” covered federal contracts and are NOT continuously a federal contractor 12 months a year, every year. Rather, thousands of contractors every year “weave in and out of” covered status. Thus, a federal contractor returning to the contractor fold is like a “new” federal contractor when it returns. It is starting from scratch with all new obligations embedded in its new federal contract and now requiring it, among many other things, to comply with OFCCP’s regulatory requirements…whatever they are at the time the contract commences.

-Contractor must comply with all of OFCCP’s new Rules. This means. however, that the contractor must have a new-style AAP, BUT:

1) under OFCCP’s Rules, please remember that the contractor has 120 days to build its first AAPs after “commencement” of the covered federal contract/subcontract: see 41 CFR Section 60-300.40(b)=VEVRAA and 41 CFR Section 60-741.40(b)=503.

2) OFCCP has, as of its December 17, 2013 Webinar further exercised its prosecutorial discretion to now allow new contractors (and returning contractors, by implication) not covered on March 23, 2014 but thereafter signing a covered federal contract/subcontract, to delay (i.e. “phase in”) the Subpart C requirements to the date of the new contractor’s first AAP (which OFCCP’s regulations allow the contractor to deploy at any time between 1 and 120 days after the covered federal contract “commences”). Please do not be confused by OFCCP’s December 17, 2013 Power Point Slides at pages 18 and 19 (which assume an April 1, 2014 AAP year date, i.e., a new AAP after the new Final OFCCP Rules become legally effective), as one example, and do not so state, but apparently also assume that the language of the slides and the examples on page 19 apply ONLY to “current” federal contractors:

Contractor must provide opportunity for pre and post offer self-IDs, offer Section 503 self-ID to employees within 1 year, and collect all data in .44(k) of new rules beginning April 1, 2014”. (emphases added)

Yes, that means the “phase in” permission is differential between a new federal contractor which signs a covered federal contract, let’s say, on April 1, 2014 (Subpart C could be delayed as late as 120 days=July 30, 2014) while a current federal contractor which updates its existing AAP on April 1, 2014 would have to comply with Subpart C on April 1, 2014 (i.e. no phase in past March 30). OK. Live with it. Transition years are always ragged…unless OFCCP were to simply force-march all contractors to comply with all requirements come heck or high water on March 24, 2014 (as the Clinton Administration did in 2000 with respect to the Executive Order 11246 2000 AAP changes). So, count your blessings. Those of you who update your 503/VEVRAA AAPs in the late-Spring and early-Summer of 2014 may be a bit jealous of your calendar year and early-Spring industry colleagues, in the same way I am jealous of the guy across town from me who just won half of the $600 Million Powerball Mega-Jackpot. I’m learning to live with that reality, too.

All-in-all, OFCCP’s December 17, 2013 Webinar was a very nice Holiday gift to federal contractors and should start you all off this new year with new enthusiasm and new confidence that you and your company can comply with OFCCP’s new regulations! HAPPY NEW YEAR! Thanks…John

Reminder: If you have specific OFCCP compliance questions and/or concerns or wish to offer suggestions about future topics for the OFCCP Fox Report, please contact your membership representative at 866-268-6206 (for DE members), or send an email to Candee Chambers at candee@directemployers.org with your ideas.

THIS COLUMN IS MEANT TO ASSIST IN A GENERAL UNDERSTANDING OF THE CURRENT LAW AND PRACTICE RELATING TO OFCCP. IT IS NOT TO BE REGARDED AS LEGAL ADVICE. COMPANIES OR INDIVIDUALS WITH PARTICULAR QUESTIONS SHOULD SEEK ADVICE OF COUNSEL.

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John C. Fox
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