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
In association with
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
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). 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 & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd 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 or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

*** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.