Who is a Federal Contractor?

Report
This Employer Webinar Series program
is presented by Spencer Fane Britt & Browne LLP
in conjunction with United Benefit Advisors
This Employer Webinar Series program
is presented by Spencer Fane Britt & Browne LLP
in conjunction with United Benefit Advisors
Kansas City = Omaha = Overland Park
St. Louis = Jefferson City
www.spencerfane.com
www.ubabenefits.com
Do You Have an Affirmative Action
Plan? Maybe You Should.
Monica M. Fanning, Esq.
Agenda

Is Your Company a Covered Federal
Contractor/Sub-Contractor?

Overview of Affirmative Action Obligations

Office of Federal Contract Compliance Programs
(“OFCCP”) Audits

Consequences of Noncompliance
3
Federal Contractor Affirmative
Action Obligations

Government contractors and subcontractors have
affirmative action obligations as a condition of
their government contracts:

Executive Order 11246 - Females and Minorities

Section 503 of the Rehabilitation Act- Qualified
Individuals With Disabilities

VEVRAA: Covered Veterans
4
What is Affirmative Action (AA)?

Provides for equal employment and makes it
unlawful for federal contractors to discriminate
based on gender, race, religion, disability, or
veteran status.

Requires federal contractors to go beyond the
equal employment opportunity laws by actively
recruiting and providing outreach to women,
minorities, veterans and disabled individuals.
5
Who is a Federal Contractor?

Federal contractor is any person who holds a
“government contract.”

-Service and Supply Contract: Agreement with
a federal agency or entity for “the purchase, sale
or use of personal property or nonpersonal
services.”

Personal property includes supplies and goods

Nonpersonal services includes utilities, construction,
transportation, research, insurance and fund depository
6
Who is a Federal Contractor?
(Con’t)


Construction Contract: Any agreement to
provide construction services directly to any
department, agency, establishment, or
instrumentality of the executive branch of the
Federal Government.
Hiring Percentages for Female and
Minority-Owned businesses but no
requirement for written AAP
7
Are Financial Institutions Federal
Contractors?

Yes, provided the financial institution employs
50 or more employees Company-wide, and

Participates in the Federal Deposit Insurance
Corporation (“FDIC”) or National Credit Union
Association (“NCUA”)

Federal Reserve Banks are not subject to OFCCP
jurisdiction
8
Are Any Types of Contracts
Excluded?

Contracts involving work performed outside of
the U.S. (if employees performing the work were
not recruited in U.S.)

Contracts with State or local governments

Contracts with religious entities or religiously
affiliated education institutions

Contracts involving work on or near an Indian
reservation
9
Issues to Consider in Determining
Federal Contractor Status

OFCCP broadly interprets its jurisdiction but there are a
few defenses against coverage that all federal contractors
should consider:

1.
Is the contract with a federal agency or entity?


2.
-Quasi-Governmental agencies [consult
usa.gov, “A-Z Index Dept./Agencies”]
Is the arrangement really a contract?

-Personal services is interpreted very narrowly-

employer/ employee relationship; government
has complete control
Grant
10
Issues to Consider in Determining
Federal Contractor Status (Con’t)

What is the value of the contract?

Specific amount or open-ended

If open-ended, you must make a good faith estimate
of the amount likely to be received during a 12 month
period
-Based upon past purchasing history/price of goods/services

What is the duration of the contract?

Specific term or project/performance driven
11
Who is a Federal Subcontractor?

Subcontractor has a direct contract with a federal
contractor

Subject of the contract is to provide goods or services
necessary to the performance of the prime
government contract

Perform an obligation of the federal contractor’s
prime government contract
12
“Single-Entity” Test

Some businesses or organizations that do not
independently hold Federal contracts/subcontracts
may still be covered Federal Contractors if they are
considered a "single entity" with a related business
or organization that holds such contracts.

OFCCP uses a “Single Entity" test to determine
whether the businesses or organizations are so
closely related that they may constitute a single
entity for purposes of OFCCP jurisdiction.
13
“Single-Entity” Test (Con’t)

Subsidiaries, Parent Corporations

-OFCCP Uses a 27 Point Test Focusing on
Related Interests:

Common Ownership

Common Directors and/or Officers

De Facto Exercise of Control

Unity of Personnel Policies Emanating From
Common Source

Dependency of Operations
14
Coverage Executive Order 11246:
Females and Minority


Basic Coverage: Single government contract or
subcontract of $10,000 or more

Aggregate contracts

Open-ended contracts covered if reasonably expect
amount to exceed $10,000 in 12 month period
Obligation: Prohibits discrimination on the
basis of race, color, sex, religion or national
origin
15
Coverage Executive Order 11246:
Females and Minority (Con’t)

Major Coverage: Single government contract or
subcontract of $50,000 or more

-Do not aggregate

50 or more employees Company wide

OFCCP requires written affirmative action plan;
use of E-Verify; and specific outreach to females
and minorities

Specific percentage hiring goals

120 days to prepare AAP after entering contract
16
Coverage Thresholds: Section
503/Disabled Individuals


Basic Coverage: Single government contract or
subcontract of $10,000 or more

Aggregate contracts

Open-ended contracts covered if reasonably expect
amount to exceed $10,000 in 12 month period
Obligation: Prohibits discrimination on the
basis of disability
17
Coverage Thresholds: Section
503/Disabled Individuals (Con’t)

Major Coverage: Single government contract
or subcontract of $50,000 or more

-Do not aggregate

50 or more employees

OFCCP requires written affirmative action plan;
and outreach to disabled individuals

No hiring percentage goals

Revised Regulations: Anticipated 7% goal
18
Coverage Thresholds:
VEVRAA/Covered Veterans

Basic Coverage: Single government contract or
subcontract of $10,000 or more

-Open-ended contracts covered if reasonably expect to
exceed $10,000 in 12 month period

Obligation: Prohibits discrimination against
“covered veterans”; requires outreach

“Covered Veterans”: Armed Forces service
medal veterans, disabled veterans, recently
separate veterans and other protected veterans
19
Coverage Thresholds:
VEVRAA/Covered Veterans (Con’t)

Major Coverage:
Single government
contract or subcontract of $100,000 or more

-Open ended contracts covered if reasonably expect
amount to exceed $100,000 in 12 month period

Obligation:
Written AAP; outreach; no
current hiring percentage goals

Revised Regulations: OFCCP/DOL expected to
include specific hiring percentage goals
20
Health Care Providers

OFCCP attempted to expand jurisdiction

In past, Medicare and Medicaid are grants-not
government contracts

OFCCP asserts jurisdiction over HCP who
participate in TRICARE networks

Florida Hospital appeals-TRICARE federal
financial assistance like Medicare/Medicaid
21
Health Care Providers (Con’t)

In December 2011, President Obama signed the
National Defense Authorization Act (NDAA);
Section 715 exempts TRICARE providers from
coverage as federal contractors

OFCCP announced last week during suspending
audits based solely on TRICARE/Rescinded
Directive 293 (participation in Medicare C and D
subjects HCP to OFCCP jurisdiction)
22
Action Items

Did your Company check “yes” on Question 3 of
Section C of the EEO-1 Report?
23
Action Items (Con’t)

Check to see whether your Company or any of
its related entities are listed in:

USAspending.gov
[most comprehensive]

governmentcontractswon.com

ccr.gov (central contractor registration)
24
Action Items (Con’t)

Obtain copies of all of your federal contracts



Often a difficult task
Review duration and amount to determine AA
obligations
Train contracting personnel to review contracts
for the following phrases:


Affirmative Action
EO 11246, Sec. 503, VEVRAA
25
OFCCP Audits

Receive a Notice of Desk Audit

Will be addressed to top Company official

Have 30 days to provide written AAP and other
required personnel data

No extensions of 30 day period
26
OFCCP Audits (Con’t)

Focus on compensation

Outreach to veterans and disabled individuals

On-site visit: Review personnel files; FMLA
records; applicant logs; payroll information;
interview employees and managers
27
Penalties for Non-Compliance

Conciliation Agreement (promise to
comply/keep better data)-must submit future
plans to OFCCP

Require Company to reimburse applicants who
were discriminated against; offer them positions

Require Company to remedy pay disparity
28
Penalties for Non-Compliance
(Con’t)

Withhold payments until compliant

File suit on behalf of discriminated applicants or
employees

Cancellation of current government contracts

Debarment from future government contracts-list
on DOL’s website; very rare in past; more
common now
29
Questions?
30
THANK YOU!
If we can ever assist your organization with federal
contractor/affirmative action issues or any other legal
concerns, please give us a call.
Monica M. Fanning
[email protected]
(816) 474-8100
Copyright 2012
31
Thank you for your participation in the Employer Webinar Series.
This program, has been approved for 1.5 (General)
recertification credit hours toward PHR, SPHR and GPHR
To obtain a recording of this presentation, or to register for
future presentations, contact your local UBA Member Firm.
This Employer Webinar Series program
is presented by Spencer Fane Britt & Browne LLP
in conjunction with United Benefit Advisors
Kansas City = Omaha = Overland Park
St. Louis = Jefferson City
www.spencerfane.com
www.ubabenefits.com
32

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