Employment Law Guide

Federal Contracts-Equal Opportunity in Employment: Employment Nondiscrimination and Equal Opportunity in Supply & Service Contracts

Executive Order 11246, as amended (Parts II, III, and IV) (https://www.dol.gov/ofccp/regs/statutes/eo11246.htm)
(41 CFR Parts 60-1, 60-2, 60-3, 60-20, and 60-50(https://www.dol.gov/dol/cfr/Title_41/Chapter_60.htm))

Who is Covered

Executive Order 11246 (E.O. 11246) as amended, and its implementing regulations are administered by the Office of Federal Contract Compliance Programs (OFCCP) and cover employers with Federal contracts or subcontracts and federally assisted construction contracts and subcontracts that exceed $10,000 or that will (or can reasonably be expected to) accumulate to more than $10,000 in any 12-month period.

Contracts covered by E.O. 11246 and the implementinh regulations may be for the purchase, sale, or use of personal property or nonpersonal services. In this context, the term "personal property" includes supplies and contracts for the use of real property, such as lease arrangements, unless the contract for the use of real property is itself considered real property (such as with easements). The term "nonpersonal services" includes, but is not limited to, services such as utilities, construction, transportation, research, insurance, and fund depository. Agreements in which the parties stand in the relationship of employer and employee are not covered.

The following types of contracts and subcontracts are exempt from E.O. 11246:

• Those not exceeding $10,000 with the exception of government bills of lading and certain types of agreements with certain financial institutions
• Contracts for indefinite quantities when the contracting agency determines that the cost in any one year will not exceed $10,000
• Those for work that is performed outside the U.S. by employees who were not recruited in the U.S.

Specific exemptions may apply to the following:

• Contracts and subcontracts with certain religious entities or educational institutions
• Contracts and subcontracts for work on or near Indian reservations
• Contracts and subcontracts involving national security, if the head of the contracting agency determines both that the contract is essential to national security, and noncompliance with a particular requirement of E.O. 11246 or the regulations with respect to the process of awarding the contract is essential to national security
• Specific contracts or subcontracts, if the Director of the Office of Federal Contract Compliance Programs decides that special circumstances in the national interest require such an exemption
• Contractor facilities not related to contract performance as determined by the OFCCP
• Contracts and subcontracts with state or local governments, except for the specific government entity that participates in work on or under the contract

Moreover, contractors or subcontractors that are religious entities may grant employment preferences to individuals of a particular religion but must comply with other requirements of E.O. 11246.

E.O. 11246 and its implementing regulations apply only to the specific state or local government entities that participate in work on or under a Federal contract or subcontract. This coverage is narrower than that which applies to private sector employers.

Basic Provisions/Requirements

E.O. 11246 requires covered contractors and subcontractors to refrain from discrimination and to engage in affirmative steps to ensure that applicants and employees receive equal employment opportunity regardless of race, color, religion, sex, sexual orientation, gender identity, and national origin. Additionally, E.O. 11246 prohibits contractors and subcontractors from taking adverse action against employees or applicants for asking about, discussing or disclosing their pay or the pay of their co-workers.

E.O. 11246 requires all covered contractors and subcontractors to include a specific equal opportunity clause in each of their nonexempt contracts and subcontracts. E.O. 11246 and the regulations provide the required language for this clause.

The Department of Labor's regulations prohibit discrimination in such employment practices as recruitment, rates of pay, upgrading, layoff, promotion, and selection for training. Employers may not make distinctions based on race, color, religion, sex, sexual orientation, gender identity or national origin in recruitment or advertising efforts, employment opportunities, wages, hours, job classifications, seniority, retirement ages, or job fringe benefits such as employer contributions to company pension or insurance plans. Additionally, contractors are prohibited from taking adverse action against employees or applicants for asking about, discussing or disclosing their pay or the pay of their co-workers. The regulations include other requirements, such as those summarized below.

Nonconstruction (supply and service) contractors and subcontractors that employ 50 or more persons and that also satisfy at least one of four additional criteria (e.g., having a Federal contract of $50,000 or more) must develop and maintain written affirmative action programs (AAPs). Usually an AAP must cover each of the contractor's establishments.

If a contractor wishes to establish an AAP other than by establishment, the contractor may reach agreement with OFCCP on the development and use of functional AAPs, which are organized along functional or business lines. The AAP is a management tool designed to ensure equal employment opportunity.

In general, the AAP will describe the policies, practices, and procedures that the contractor or subcontractor uses to ensure that all qualified applicants and employees receive equal opportunities for employment and advancement. If the contractor or subcontractor is not employing women or minorities at a rate to be expected given their availability in the relevant labor pool, the AAP will include specific practical steps to address the issue. Contractors with AAPs must implement them, keep them on file, and update them annually. Additional information on AAPs may be found on the OFCCP website.

Covered contractors and subcontractors, regardless of company size, may not use exclusionary policies that treat men and women differently. For example, a contractor or subcontractor that hires or promotes a man who has young children cannot deny a job or a promotion to a woman because she has young children.

Covered contractors and subcontractors also may not depend on state "protective" laws to deny employment to qualified female applicants. Such "protective" laws include those prohibiting women from performing certain types of occupations, from working more than a certain number of hours, or from lifting more than a certain amount of weight.

Moreover, employers are required to take all necessary actions to ensure that no one attempts to intimidate or discriminate against an individual for filing a complaint or participating in a proceeding under E.O. 11246.

Employee Rights

Anyone has the right to file a complaint with OFCCP if he or she believes that a Federal contractor or subcontractor has discriminated against him/her on the basis of race, color, religion, sex, or national origin. In most cases, complaints must be filed within 180 days of the discriminatory action. Anyone may contact OFCCP with a question about interpreting the regulations, filing a complaint, or any other related matter.

Recordkeeping, Reporting, Notices and Posters

Notices and Posters

Contractors and subcontractors who hold a single federal contract or subcontract in excess of $10,000 or who hold contracts or subcontracts with the federal government in any 12-month period that have a total value of more than $10,000 are required to display the "Know Your Rights" Poster. Federal contractors and subcontractors who (1) hold government bills of lading; (2) serve as a depository of federal funds in any amount; or (3) act as issuing and paying agents for U.S. savings bonds and notes must also display the "Know Your Rights" Poster.

The "Know Your Rights" Poster must be displayed in conspicuous places available to employees and applicants for employment and representatives of each labor union with which the covered contractor or subcontractor has a collective bargaining agreement, such as, the personnel office, work-out facility, lunchroom, or company bulletin board. There is no particular size requirement.

The "Know Your Rights" Poster is available in Spanish. There is no requirement to display the poster in languages other than English.

Additionally, contractors and subcontractors who hold a single federal contract or subcontract in excess of $10,000 or who hold contracts or subcontracts with the federal government in any 12-month period that have a total value of more than $10,000 are required to post the Pay Transparency Nondiscrimination Provision. Federal contractors and subcontractors who (1) hold government bills of lading; (2) serve as a depository of federal funds in any amount; or (3) act as issuing and paying agents for U.S. savings bonds and notes must also post the Pay Transparency Nondiscrimination Provision.

This posting requirement may be accomplished by posting the provision electronically or by posting a copy of the provision in conspicuous places available for employees and applicants. There is no particular size requirement.

Recordkeeping

Personnel records. Federal contractors are required to maintain any personnel or employment records made or kept by the contractor. Examples of records that must be maintained include:

• Job descriptions
• Job postings and advertisements
• Records of job offers
• Applications and resumes
• Interview notes
• Tests and test results
• Written employment policies and procedures
• Personnel files

Federal contractors and subcontractors with fewer than 150 employees or a contract of less than $150,000 must keep records for one year from the date of the making of the personnel record or personnel action, whichever occurs later.

Federal contractors and subcontractors with 150 or more employees or who have a government contract of $150,000 or more must keep employment records for two years from the date of the making of the personnel record or personnel action, whichever occurs later.

For any record contractors maintain, they must be able to identify the gender, race, and ethnicity of each employee and where possible, the gender, race, and ethnicity of each applicant or Internet applicant, whichever is applicable to the particular position.

The Internet applicant regulations address recordkeeping and the use of the Internet and electronic data technologies in contractors’ recruiting and hiring processes. This regulation includes soliciting data on the race, gender and ethnicity of applicants. For more detail about recordkeeping requirements for Internet applicants, see OFCCP’s Frequently Asked Questions .

Affirmative Action Program. Federal supply and service contractors and subcontractors who employ 50 or more persons and have a contract of $50,000 or more (or have Government bills of lading which in any 12-month period, total or can reasonably be expected to total $50,000 or more; or serves as a depository of Government funds in any amount; or is a financial institution which is an issuing and paying agent for U.S. savings bonds and savings notes in any amount) must develop and annually update a written affirmative action program (AAP) for each of their establishments. OFCCP has provided a Sample Affirmative Action Program (PDF).

A contractor establishment required under Executive Order 11246 to develop and maintain an AAP must preserve its AAP and documentation of its good faith efforts to affirmatively recruit and promote women and minorities in accordance with its AAP for the immediately preceding year, unless the contractor establishment was not then covered by the AAP requirement.

Covered construction contractors and subcontractors are not required to develop a written E.O. 11246 AAP. However, they must maintain documentation of the actions they took to meet the contract specifications (the 16 Steps ).

Reporting

All covered Federal contractors and subcontractors who have 50 or more employees, and who have a contract, subcontract, or purchase order amounting to $50,000 or more or serve as a depository of Government funds in any amount, or is a financial institution which is an issuing and paying agent for U.S. Savings Bonds and Notes are required to submit the Employer Information Report also known as the EEO-1 Report each year to Equal Employment Opportunity Commission and the Department of Labor's Office of Federal Contract Compliance Programs Joint Reporting Committee. For information on filing the EEO-1 Report see EEO-1 forms.

Note that covered contractors may be asked to submit AAPs and other employment records to OFCCP if selected for a compliance evaluation or because of a complaint investigation.

Penalties/Sanctions

OFCCP conducts compliance evaluations and complaint investigations assessing whether Federal contractors and subcontractors are in compliance with E.O. 11246. If a violation is found, OFCCP may ask the Federal contractor or subcontractor to enter into conciliation negotiations. If conciliation efforts fail, OFCCP may, through its attorneys (Solicitor of Labor), initiate an administrative enforcement proceeding by filing an administrative complaint against the contractor, or refer the matter to the Department of Justice for action by the Attorney General.

If OFCCP files an administrative complaint, the contractor or subcontractor has 20 days to request a review by an Administrative Law Judge, who hears the case and recommends a decision. If the contractor or subcontractor is dissatisfied with the Administrative Law Judge's decision, it may appeal the decision to the Department of Labor's Administrative Review Board. The Board issues the final decision, whether or not there is an appeal.

If the Board finds that the contractor or subcontractor has violated E.O. 11246, it may order the contractor or subcontractor to provide appropriate relief, which may include restoration of back pay and employment status and benefits for the victim(s) of discrimination. Depending on the circumstances, violations also may result in cancellation, suspension, or termination of contracts, withholding of progress payments, debarment, and/or other sanctions.

If the contractor or subcontractor is dissatisfied with the Board's decision, it may seek judicial review of the decision in the Federal courts.

Relation to State, Local, and Other Federal Laws

OFCCP generally refers individual complaints alleging discrimination based on race, color, religion, sex, or national origin to the Equal Employment Opportunity Commission for investigation and resolution.

Covered contractors and subcontractors that qualify as "employers" under Title VII of the Civil Rights Act of 1964 are required to comply with the Pregnancy Discrimination Act of 1978. Additional information on this law may be found at on the Equal Employment Opportunity Commission’s Facts About Pregnancy Discrimination webpage. All covered contractors and subcontractors must also provide equal fringe benefits, and make equal contributions for such benefits for men and women.

Compliance Assistance Available

The Department of Labor provides employers, workers, and others with clear and easy-to-access information and assistance on how to comply with Executive Order 11246. Among the many resources available are:

• Facts on Executive Order 11246
• Frequently Asked Questions
  Federal Contract Compliance Manual: A reference tool for Federal contractors and their equal employment opportunity (EEO) and human resource managers. This manual describes the Department of Labor's Office of Federal Contract Compliance Programs' (OFCCP) standard operating procedures for OFCCP compliance officers.
• elaws Federal Contractor Compliance Advisor: This Advisor helps Federal contractors and subcontractors answer basic questions about jurisdictional coverage and compliance issues related to the equal employment opportunity laws administered by OFCCP.

DOL Contacts

Office of Federal Contract Compliance Programs (OFCCP)(https://www.dol.gov/ofccp/)
E-mail: OFCCP-Public@dol.gov
Tel: 1-866-4USADOL (1-866-487-2365) or 1-800-397-6251; TTY: 1-877-889-5627

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