Changes to Functional Affirmative Action Plan Approval Process Proposed

Cara Crotty, partner with leading national labor and employment law firm (and ThinkHR strategic employment law partner) Constangy, Brooks, Smith & Prophete, LLP explains the details of the OFCCP’s proposal to make the FAAP approval process less burdensome.

As I reported last week, the Office of Federal Contract Compliance Programs (OFCCP) has submitted proposed changes to the Office of Management and Budget regarding its functional affirmative action plan (FAAP) approval process. Functional AAPs, or FAAPs, allow contractors to prepare their Executive Order 11246 affirmative action plans along lines of business or other organizational units instead of based on physical establishments. However, contractors cannot prepare FAAPs without obtaining approval from the OFCCP.

Although analyzing a workforce on a functional basis is often the most practical and logical approach, the approval process is long, complicated, and burdensome, and very few contractors have elected to prepare FAAPs for that reason.

According to the OFCCP, only 71 contractors currently have approval to prepare FAAPs, and the agency estimates that it will receive requests from only five additional contractors each year (even with its revised process in place).

What Changes Are Proposed

The most meaningful proposed change is the elimination of the requirement that at least one OFCCP compliance evaluation occur during the term of the FAAP agreement. Other proposed changes to the approval process include the following:

• Decreasing the frequency of contractors’ required certifications that their organizational structure has not changed. (Currently, contractors must do this every three years; under the proposal, they would be required to certify only every five years.)
• Lengthening the period during which FAAPs are exempt from compliance reviews. (Currently, FAAPs that have been the subject of a compliance evaluation are exempt from having another one for two years; under the proposal, the exemption period after a review would be three years.)
• Removing prior EEO compliance history from consideration.
• Eliminating the three-year waiting period to seek FAAP re-approval after termination of a FAAP agreement.
• Scrapping the annual requirement to modify the FAAP agreement.

With these changes, the OFCCP estimates a significant decrease in overall reporting burden — from the current 1,297 hours to 862 hours.

What Will Not Change

What will not change, however, is the extensive amount of information that contractors are required to provide to the OFCCP during the approval process:

• Proof that they are a covered contractor by providing specific contract information.
• Most recent consolidated EEO-1 Report.
• Organizational chart that identifies all of the proposed functional or business units to be covered by the FAAP and how they are related to each other within the corporation’s overall structure.
• Narrative description of the function or business of each proposed FAAP unit and how it meets the definition of a functional or business unit.
• Company or subsidiary name, street address, and total number of employees at each location covered in the functional unit, and the name and address of the managing official for each proposed functional or business unit.
• Statement explaining where each proposed FAAP unit will maintain its employee personnel records and applicant processing activities.
• If the contractor proposes to maintain some establishment-based AAPs, a list of locations with establishment-based AAPs, including for each the physical address, number of employees, phone number of the establishment’s managing official, and AAP contact and EEO-1 unit number.
• Statement addressing how the contractor plans to transition from establishment-based AAPs to FAAPs, including a timeline for completion.
• Dates of the proposed FAAP year.
• If different from corporate policies, unit-specific personnel policies relevant to evaluating the proposed functions or business units, including policies related to recruitment, hiring, promotion, compensation, and termination.

The OFCCP also notes, “OFCCP and the contractor will discuss information related to reporting hierarchy, personnel procedures, how the contractor anticipates complying with the AAP requirements of § 503 [of the Rehabilitation Act of 1973] and [the Vietnam Era Veterans Readjustment Assistance Act (VEVRAA)], and how each functional or business unit manages its human resources and equal employment opportunity responsibilities during the FAAP negotiation process.” Significantly, § 503 and VEVRAA do not provide for the development of FAAPs, so contractors would continue to develop those AAPs on an establishment basis.

The information to be provided during the FAAP approval process represents a substantial amount of data to which the OFCCP would not generally have access.

Comments to the OFCCP’s proposal must be submitted by November 13, 2018.