In a significant development for federal contractors in South Carolina, the Office of Federal Contract Compliance Programs (OFCCP) has announced that contractors must now certify Affirmative Action Program (AAP) compliance through the OFCCP’s Contractor Portal. This new obligation is effective as of June 30, 2022.
For federal contractors in South Carolina, this new certification requirement significantly increases the risks of AAP non-compliance. While federal contractors have long been subject to compliance evaluations, they did not previously have an obligation to certify compliance. Now that they do, failure to make the requisite certifications will almost certainly increase contractors’ risk of facing OFCCP scrutiny—which can have consequences up to and including loss of contractors’ federal business.
New OFCCP Certification Requirement Seeks to Implement Longstanding AAP Enforcement Authority
The OFCCP announced its plans to implement an AAP compliance certification process in September 2020. The announcement followed the issuance of a Government Accountability Office (GAO) report in 2016, which recommended that the OFCCP “develop a mechanism to monitor AAPs from covered federal contractors on a regular basis.” In making its recommendation, the GAO noted that the OFCCP audits only approximately two percent of federal contractors for AAP compliance annually, and that it “does not have reasonable assurance that it is focusing its compliance efforts on those contractors with the greatest risk of noncompliance.”
As a result, the new AAP compliance certification requirement seeks to serve two parallel purposes: (i) fostering broadscale AAP compliance within the federal contractor community; and, (ii) providing the OFCCP additional insights for targeting its AAP compliance enforcement efforts.
While the OFCCP sought public comment on its plans to implement an online AAP compliance certification process, it did not engage in the complete rulemaking process. Instead, it relied on an existing regulation authorizing the OFCCP to require an annual summary of AAP compliance. This allowed the process to move more quickly than it would have otherwise.
Federal Contractors’ New Obligations Regarding AAP Compliance Certification
Since the new AAP compliance certification requirement is effective as of June 30, 2022, federal contractors in South Carolina need to be taking steps now to ensure compliance. Here is an overview of the key requirements:
- All federal contractors must register their companies through the OFCCP Contractor Portal using their EIN number, Headquarter/Company Number, and Establishment/Unit Number from their EEO-1 Reports.
- By June 30, 2022, existing federal contractors must certify that they have developed and maintained an AAP for each establishment and/or functional unit in compliance with OFCCP requirements.
- New federal contractors have the same 120-day window to develop their AAPs, but they must now register and certify compliance through the OFCCP Contractor Portal within 90 days of developing their programs.
- Federal contractors must now use the OFCCP Contractor Portal to upload their AAPs during scheduled compliance evaluations (contractors do not currently have to upload their AAPs as part of the certification process).
- Supply and service federal contractors must certify their AAP compliance annually through the OFCCP Contractor Portal.
Affirmative Action Program Compliance Guidance for Federal Contractors in South Carolina
Given the new AAP certification requirement and the increased risk of facing OFCCP scrutiny due to non-compliance, federal contractors in South Carolina should be taking proactive steps to minimize their risk in this area. These steps include (but are not necessarily limited to):
1. Develop an OFCCP-Compliant Affirmative Action Program
All federal contractors that are subject to the AAP requirement should have an OFCCP-compliant program in place. This requirement applies to most federal contractors with 50 or more employees and at least one contract of $50,000 or more. Contractors with existing AAP programs should review these programs to ensure that they satisfy all requirements—as this is a requirement for certification.
In addition to adopting a compliant affirmative action program, federal contractors subject to AAP requirements must also implement additional policies and procedures as required by applicable law. For example, the U.S. Department of Labor (DOL) instructs that service and supply contractors should:
- Maintain additional personnel and employment records;
- Set recruitment and placement goals;
- Invite applicants and employees to voluntarily self-identify race, gender, disability, and veteran status; and,
- Report demographic data on their job applicants and employees.
Federal construction contractors are subject to additional requirements. These include (but are not limited to) taking the 16 affirmative action steps outlined in 41 C.F.R. Part 60-4.
2. Document Internal AAP Compliance and Enforcement Efforts
Federal contractors should document their internal AAP compliance and enforcement efforts on an ongoing basis. In the event of an OFCCP compliance evaluation or employee discrimination complaint, such documentation can provide a solid foundation for a federal contractor’s defense.
3. Register and Certify Through the OFCCP Contractor Portal
Federal contractors must register and certify through the OFCCP Contractor Portal as discussed above. To ensure that they meet the OFCCP’s new validation requirements, federal contractors should work with their compliance counsel during this process.
4. Maintain AAP Compliance Annually
In addition to developing an AAP and complying with the initial registration and certification requirements, federal contractors should also adopt policies and procedures designed to ensure AAP compliance on an ongoing basis. For supply and service federal contractors, this will include submitting an annual certification as noted above. The OFCCP may eventually extend this annual certification requirement to other federal contractors as well.
5. Monitor for Additional Updates to the OFCCP’s AAP Requirements
Given the possibility of additional developments, federal contractors in South Carolina should monitor for updates to the OFCCP’s AAP requirements. At Gignilliat, Savitz & Bettis LLP, we regularly monitor for updates to clients’ compliance obligations, and we assist our clients with updating their compliance programs as necessary.
Schedule an Appointment at Gignilliat, Savitz & Bettis LLP
If you need to know more about the new AAP compliance certification requirements for federal contractors, we invite you to get in touch. Please call 803-799-9311 or contact us online to schedule an appointment with a South Carolina employment lawyer at Gignilliat, Savitz & Bettis LLP.