Are You Covered by Affirmative-Action Requirements?

By: MARY M. KRAKOW

January 2008

Employers covered by federal, state, city, or county affirmative-action requirements must prepare a written affirmative-action program (AAP) and fulfill other applicable requirements. If a company fails to fulfill the requirements, it could lose a desired government contract. If the government contract already has been entered into, the governmental body could take action against the company to enforce compliance, including assessing fines.

Who Must Have a Written AAP?

Employers with 50 or more employees (counting full-time, part-time, and temporary employees at all sites) must prepare and maintain a written federal AAP for each of their establishments if the employer also satisfies any of these requirements:

• Has a federal contract or subcontract of $50,000 annually,
• Is a financial institution that is an issuing and paying agent for U.S. Savings Bonds or Notes,
• Serves as a depository of federal government funds in any amount,
• Has government bills of lading that in any 12-month period total or will likely total $50,000 or more, or
• Has an open-ended or indefinite quantity federal nonconstruction contract or subcontract that will total $50,000 or more in a 12-month period.

Minnesota employers with 41 or more full-time employees that enter into a contract of $100,000 or more annually with any state agency must prepare a written Minnesota AAP and submit it to the Minnesota Department of Human Rights for approval and certification.

Employers that contract with county agencies or with large cities, such as Minneapolis and St. Paul, must comply with that county’s or city’s applicable AAP requirements.

Typically, the State of Minnesota and city and county agencies will accept a federally compliant AAP so employers covered by federal and by state, city, or county AAP requirements need to prepare and maintain only one AAP.

The applicable federal, state, city, or county regulations will dictate when companies with a main site and branch locations may prepare one composite AAP or must prepare separate AAPs for separate sites. The written AAP, once completed and implemented, must be updated in accordance with the applicable regulations. Federal AAPs require annual updating; Minnesota AAPs require bi-annual updating.

Who Does a Written AAP Cover?

A federal AAP must include the required provisions for women, minorities, qualified individuals with disabilities, and covered veterans. As of September 2007, covered veterans include disabled veterans, recently separated veterans, other protected veterans as defined by law, and armed forces service medal veterans.

A Minnesota AAP, and most city and county AAPs, must include the required provisions for women, minorities, and qualified individuals with disabilities.

What Are the Requirements of a Written AAP for Women and Minorities?

A federal AAP covering women and minorities must include at least these five quantitative components:

1. Organizational profile or workforce analysis,
2. Job group analysis,
3. Availability analysis,
4. Comparison of incumbency to availability, and
5. Placement goals.

The governing federal regulations provide detailed guidance regarding each of these components. Minnesota, city, and county AAP’s typically must include the same or similar quantitative components.

The quantitative components’ objective is to identify specific job groups in which fewer women and/or minorities are employed than would be reasonably expected given the availability of qualified women and/or minorities among the employer’s existing workforce or in the applicable recruitment area. When fewer women and/or minorities are employed in a particular job group than the availability analysis indicates would reasonably be expected, the employer must set a placement goal for that job group.

Placement goals are not quotas, however. In fact, quotas are expressly forbidden. Employers must make all selection decisions in a nondiscriminatory manner and may not use a placement goal as a justification for selecting an individual based on race, religion, sex, or national origin.

In addition to the quantitative components, at least four qualitative components must be included in a federal AAP for women and minorities:

1. Designation of responsibilities to an executive or other official of the organization;
2. Identification of problem areas, including in-depth analyses of the total employment process to determine whether and where impediments to equal employment opportunity exist;
3. Development and execution of action-oriented programs designed to correct any identified problem areas; and
4. Development and implementation of internal audit and reporting systems that periodically measure the effectiveness of the employer’s total affirmative-action program.

The governing regulations leave much room to interpret what must be included for each of these four components. Similar qualitative components typically also must be included in state, city, or county AAPs.

The Need to Protect Information from Discovery

Because the AAP’s qualitative components leave so much room for interpretation, particularly the tasks of identifying problem areas and performing the required in-depth analyses of the total employment process (including hiring and compensation analyses), employers must carefully consider how they complete these steps and afterward what information to include in the AAP. These considerations include deciding what documentation will be created and by whom, what measurement processes will be used, what standards for review will be used, and how and when management will be advised of the program’s effectiveness and any recommendations for improvement.

Any information that is created could be subject to discovery during litigation involving employment disputes or brought by the applicable federal, state, city, or county agency that oversees affirmative-action compliance. This generally means that employers should work closely with their legal counsel to implement appropriate processes for completing the required qualitative components and protecting information under the attorney/client privilege whenever appropriate.

Record-Keeping and Tracking Requirements

In addition to the written AAP, covered employers must maintain personnel and employment records for the required period. Generally this means preserving all personnel or employment records for not less than two years from the date the record is made or the personnel action taken, whichever is longer. This includes, for example, records pertaining to hiring, job assignment, promotion, demotion, transfer, lay off or termination, rates of pay or other terms of compensation, and selection for training or apprenticeship. It also includes records relating to requests for reasonable accommodation, the results of any employee physical examination, job advertisements and postings, applications and résumés, tests and test results, and interview notes.

Another requirement all affirmative-action employers must fulfill is tracking applicants, hirings, promotions, and terminations. Federal affirmative-action employers that solicit or accept job applications or résumés from job candidates via the Internet or other electronic methods must comply with additional record-retention and applicant-tracking requirements.

For any records maintained, the employer must be able to identify the gender, race, and ethnicity of every employee and, where possible, every applicant.

Any employer that has received notice of a discrimination complaint, initiation of an affirmative-action compliance evaluation, or commencement of an enforcement action must preserve all relevant personnel and employment records until the action’s final disposition. This includes, for example, personnel and employment records for the employee making the complaint, for all other employees holding positions similar to the one the complainant held or sought, and also for unsuccessful applicants for the same position.

Failure to preserve complete and accurate records constitutes noncompliance. If an employer has destroyed or failed to preserve records, the respective affirmative-action agency may presume that the information destroyed or not preserved would have been unfavorable to the employer.

Enforcement Actions

Employers covered by federal, state, city, or county affirmative-action requirements may be subject to a compliance evaluation by the respective governing agency to determine whether the employer maintains nondiscriminatory hiring and employment practices and is taking affirmative action as required. If deficiencies are found, the governing agency may issue a compliance order. This may include, for example, actions the employer must take, dates for completion, and fines.

Employers with questions regarding any of their affirmative-action obligations, including preparation of a written AAP and record-keeping and tracking compliance, are encouraged to contact an attorney in Fredrikson & Byron’s Employment & Labor Law Group.

Takeaway

“Affirmative action” does not equal “hiring quotas.” Still, an employer covered by federal, state and/or local affirmative action laws must fulfill several requirements.