United States: Are You Ready For Your Next Audit?

Last Updated: April 4 2014
Article by Tracey E. Diamond and Robert C. Ludolph

By now, federal contractors should have taken a hard look at their current Affirmative Action Plan (AAP) policies, procedures and documentation to ensure compliance with the new requirements. Under the Office of Federal Contract Compliance Programs' (OFCCP) Final Rule, effective March 27, 2014, contractors are required to gather data and set hiring goals for individuals with disabilities and protected veterans. Some of the other rules, however, will not become effective until contractors update their annual AAP. To be confident that your company is ready for a future Department of Labor audit, these are a few of the issues you need to understand.

1. Have you made the required changes to your EO clauses in contracts and subcontracts?

Contractors are required to state in employment solicitations and other advertisements, among other things, that they are equal employment opportunity employers of individuals with disabilities and protected veterans. Contractors may combine the required equal opportunity (EO) clauses into a single "incorporation by reference" clause, provided that the clause is set in bold text and the prescribed content of the veteran and disability EO "incorporation by reference" clauses are preserved. The OFCCP provided an example of the combined EO clause:

This contractor and subcontractor shall abide by the requirements of 41 CFR §§ 60-1.4(a), 60-300.5(a) and 60-741.5(a). These regulations prohibit discrimination against qualified individuals based on their status as protected veterans or individuals with disabilities, and prohibit discrimination against all individuals based on their race, color, religion, sex, or national origin. Moreover, these regulations require that covered prime contractors and subcontractors take affirmative action to employ and advance in employment individuals without regard to race, color, religion, sex, national origin, protected veteran status or disability.

Contractors also are permitted to incorporate the EO clause into subcontracts by reference.

2. What is your utilization goal and are you doing what you need to do to meet it?

The new regulations include the utilization goal of 7 percent to give contractors a means to measure their success in outreach and recruitment of individuals with disabilities and a hiring benchmark of 8 percent for protected veterans in their workforce. Employers will need to know how many individuals with disabilities and protected veterans currently are in their workforce and in what job groups or EEO-1 job categories.

When the percentage of individuals with disabilities in one or more job groups is less than the utilization goal, the contractor must take steps to determine whether and where impediments to equal employment exist. This process includes the employer's assessment of its existing personnel processes, the effectiveness of its outreach and recruitment efforts, the results of its affirmative action program audit, and any other areas that might affect the success of the affirmative action program. After conducting this assessment, the contractor must develop programs to correct any identified problem areas.

Failure to meet the utilization goal will not automatically lead to any form of sanction. The regulations specifically provide that the disability goal is not to be used as a quota or a ceiling that limits or restricts the employment of individuals with disabilities. A contractor's determination that it failed to meet the disability goal does not constitute either a finding or admission of discrimination in violation of the regulation.

3. Have you invited applicants and employees to self-identify?

The new regulations require contractors to invite applicants to self-identify as an individual with a disability and/or protected veteran at the pre-offer stage, in addition to the existing post-offer self-identification requirement. OFCCP has developed a specific required form for contractors to use to invite applicants to self-identify. The form is posted on the OFCCP Web site.

OFCCP added a pre-offer invitation requirement so that contractors will track the number of individuals with disabilities and protected veterans who apply for jobs, and use this information to assess the effectiveness of their outreach and recruitment efforts. The pre-offer invitation to self-identify may be included in the contractors' application materials for a position, but the invitation must be separate from the application. Contractors are required to invite applicants to self-identify as an individual with a disability and/or a protected veteran at the same time that the contractor collects demographic data regarding race, gender, and ethnicity from applicants.

The Internet Applicant Rule allows contractors to screen out individuals whom they believe do not meet the basic qualifications for the position prior to collecting demographic data regarding race, gender, and ethnicity. In order to harmonize the pre-offer invitation to self-identify requirement with Internet Applicant Rule recordkeeping provisions, OFCCP permits contractors to invite applicants to self-identify after they meet the Internet Applicant Rule requirements, including the basic qualification screen.

In addition to inviting applicants to self-identify at the pre-offer and post-offer stage, contractors must also regularly ask their current employees to voluntarily self-identify as an individual with a disability using the self-identification form at least once every five years. In addition, contractors must remind their employees that they may voluntarily update their disability status at any time. The OFCCP emphasized that contractors may not compel or coerce individuals to self-identify, and that contractors must keep all self-identification information confidential.

Through the invitation and reminder to employees to voluntarily self-identify, contractors can capture data on employees who become disabled while employed, as well as those with existing disabilities who may feel more comfortable self-identifying once they have been employed for some time.

4. Have you made the necessary changes to meet the new data collection requirements?

The data collection requirements in the Final Rule require contractors to document the "total number of job openings and the total number of jobs filled." The total number of job openings refers to the number of individual positions advertised as open in a job vacancy announcement or requisition. Jobs "filled" refers to jobs that the company fills by any means, including, for example, through a competitive process, reassignment or promotion.

5. Have you stored the "EEO is the Law" poster electronically?

It is likely that the "EEO is the Law" poster will be revised in light of the new regulations. However, contractors should continue to use the existing poster until the new poster is available. The revised regulations require that the poster be made available in a "form that is accessible and understandable" to individuals with disabilities and disabled veterans, such as Braille and large-print versions, or as an audio recording. However, contractors need only make the poster available in that format when an applicant or employee requests it, or when the contractor knows that the applicant or employee is unable to read the poster otherwise. The contractor also has an obligation to "conspicuously store" the EEO poster with an electronic application. This can be accomplished by displaying a prominent link to the poster, along with a brief explanation of what the link connects to, as part of the electronic application.

6. What must you do if you are preparing your first Affirmative Action Plan after the effective date of the new requirements?

Within 120 days of the commencement of a contract, contractors must maintain an affirmative action program at each establishment, which includes, among other things, the following elements:

  • Invitation to Self-Identify: As set forth above, the company must extend an invitation for applicants to inform it whether the applicant is an individual with a disability and/or protected veteran, both before and after an offer of employment is made.
  • Policy Statement: A contractor must include an equal employment opportunity policy statement in its affirmative action program and post it on company bulletin boards.
  • Review of Processes: The company must ensure that its personnel processes provide for careful, thorough and systematic consideration of the job qualifications of applicants and employees with known disabilities for job vacancies and training opportunities, that they have policies in place to ensure that individuals with disabilities are not harassed, and that their recruitment efforts are reasonably designed to recruit qualified individuals with disabilities.
  • Job Qualification Standards: The contractor must provide and adhere to a schedule for the review of all physical and mental job qualification standards to ensure that, to the extent that the qualifications screen out qualified individuals with disabilities, they are job-related and consistent with business necessity.
  • Audit System: The contractor must design and implement an audit and reporting system.
  • Snapshot: The contractor must take a snapshot of the disability composition of its workforce, results of the utilization analysis and application of the goal, and a discussion of any problem areas identified and the actions planned to address them.

The OFCCP recognizes that the first AAP will be a transitional one for contractors and will not assess violations, so long as the contractor can demonstrate that it acted reasonably, in light of its particular circumstances.

These new requirements represent significant changes to the ways contractors gather statistical information, analyze hiring decisions and store data. Working with experienced outside counsel and third-party vendors, contractors should be able to comply without much difficulty and avoid problems at the next AAP audit.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Tracey E. Diamond
Robert C. Ludolph
Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions