Has your organization ever considered switching from “establishment” AAPs to functional affirmative action plans (“FAAPs”)? OFCCP wants contractors to consider moving to FAAPs and, in that spirit, is looking to make FAAPs more attractive by proposing new FAAP requirements that would lighten the burden for those who apply for, and those that already have, FAAP agreements with OFCCP. OFCCP last modified the FAAP requirements in 2016 but the program was significantly changed in 2013 to its current structure.
Generally, covered federal contractors are required to have a written AAP for each “establishment” with 50 or more employees. This baseline requirement presumes a contractor’s personnel activity decisions and AAP compliance efforts are centered around a physical establishment. That’s not always the case. As the Agency acknowledges
an affirmative action program only covering employees in one building at a specific geographical location does not always reflect how business actually operates.
Rather, it may make better sense for some contractors to prepare AAPs for each of the company’s autonomously operating functional units.
For example, a contractor may have manufacturing, sales and marketing, corporate, and service delivery functions and sub-functions that span multiple locations, in different geographic regions. If those functions/sub-functions operate “autonomously,” and have “identifiable personnel practices or transactional activities specific to the functional or business unit (e.g., applicant flow, hires, promotions, compensation determinations, terminations, etc.) that are distinguishable from other parts of the contractor,” the contractor may seek OFCCP approval to prepare FAAPs according to those functions, as opposed to an establishment-based AAP.
To foster consideration of FAAPs, OFCCP is sweetening the pot by making the FAAP option more desirable and less burdensome. Among its new proposals, set forth in the proposed FAAP Directive and a Supporting Statement, OFCCP would loosen the rules in some notable respects:
- Require contractors to renew a FAAP Agreement every five years, rather than the current three years, in order to reduce the burden on FAAP contractors;
- Eliminate the requirement that FAAP contractors undergo at least one compliance evaluation during the term of their agreements. Apparently, this proposed revision means there is a possibility that a FAAP contractor could go without any FAAP audit during the entire five-year tenure of the FAAP agreement. This is interesting and sounds attractive but given the relatively low number of FAAP contractors (currently, 71 contractors, 1,932 FAAPs), we wouldn’t count on this; and,
- Removal of the requirement that FAAP contractors provide OFCCP with an annual update regarding its FAAP structure. OFCCP would, however, retain the existing requirement that contractors provide OFCCP notice of significant changes to its FAAP structure within 60 days of the effective date of those changes.
Contractors interested in commenting on these and the other proposed changes may submit comments by November 13, 2018 according to the procedures set forth in OFCCP’s Federal Register notice.
For certain, there are positives and negatives to a FAAP structure as compared to a routine establishment-based AAP structure. Any contractor considering a move to FAAPs should carefully weigh the implications for its organization. As always, we are here to assist with any questions you may have.