Since 2013, OFCCP has revised its Functional Affirmative Action Plan (FAAP) Directive several times, most recently to make it easier for covered federal contractors and subcontractors to obtain its permission to create AAPs by functional unit.
AAP regulations require establishment AAPs but allow for the option to prepare plans by separate “functional units,” provided each functional unit has its own “managing official” and has 50 or more employees.
Functional or Business Unit – A component within an organization. A functional or business unit should also 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. Functions or business units should be identified and defined based on the organization’s existing business operations, personnel practices, and management structures.
While the Agency could amend the regulations to favor FAAPs over establishment plans, it has instead issued Revision 3 to Directive 2013-01 Functional Affirmative Action Programs – effective September 21, 2022 – as an enticement to FAAPs. OFCCP also published FAQs with the revised Directive.
In summary, Revision 3 says a contractor seeking a FAAP Agreement with OFCCP must:
Request a FAAP Agreement by submitting the ten items of information in Attachment A, including,
- An organizational chart that clearly identifies all the proposed functional or business units to be covered by the requested FAAP and how they are related to each other within the corporation’s overall structure.
- A narrative description of the “business or function” of each proposed FAAP unit and how it meets the definition of a functional or business unit set forth above.
Notably, “approval of FAAP agreement requests by OFCCP is not automatic… Generally, OFCCP makes this decision within 60 calendar days of the request if all the required information is provided. OFCCP may require additional time if more information is needed.”
OFCCP also characterizes FAAP application as a “negotiation process” the “discussion items” for which are outlined in Attachment B.
- The reporting hierarchy of the functional or business units.
- Personnel procedures, including recruitment, hiring, promotion, compensation, termination, and record retention and data analysis as they apply to each functional or business unit, including identification of units that have differing personnel or compensation practices.
- How the contractor anticipates complying with the affirmative action requirements of Executive Order 11246, Section 503, and VEVRAA.
- How each functional unit manages its human resources and equal employment opportunity responsibilities.
- Notify OFCCP of FAAP changes to the FAAP structure within 60 days. For dynamic organizations, this may be a considerable burden, requiring the contractor to essentially negotiate with OFCCP over a new FAAP structure each time there is a change to an existing functional unit.
- Notify OFCCP within 60 calendar days of any changes to the primary corporate contact identified in the FAAP Agreement.
- Request renewal of the FAAP Agreement at least 120 days prior to expiration of the five-year term of a FAAP Agreement. The renewal process may essentially entail re-applying for a FAAP Agreement.
It is undoubtedly true that securing a FAAP Agreement is more efficient than it has ever been, but in addition to the foregoing requirements, FAAPs pose another challenge because FAAPs may be larger in terms of workforce headcount and personnel activity than establishment plans. Any time we must submit more data to the Agency during a compliance review, the risks increase. Thus, a primary consideration for any contractor considering FAAPs is whether its organizational structure is amendable to manageably-sized functional units, each with its own managing official.
There are advantages to engaging in affirmative action via FAAPs because they may better align with how a contractor does business and conducts affirmative action. However, Revision 3 does not entirely ease the administrative burden of applying for, updating, renewing, or maintaining a FAAP Agreement with OFCCP and does not address the main drawback to FAAPs: size.