United States: OFCCP Implements New Directive On Functional Affirmative Action Programs

On April 28, 2016, the U.S. Department of Labor's Office of Federal Contract Compliance Programs ("OFCCP") rescinded its earlier guidance on Functional Affirmative Action Programs ("FAAPs") and issued a new enforcement guidance document on this subject, Directive 2013-01 Revision 1, Functional Affirmative Action Programs (the "Directive"), which took effect on the same date.

By way of background, each federal contractor with 50 or more employees and a federal government contract of $50,000 or more must develop a written affirmative action program (AAP) for each of its physical "establishments." OFCCP defines an "establishment" as a "facility or unit which produces goods or services, such as a factory, office, store, or mine." However, contractors may be eligible to apply for permission to develop an AAP based on business function or unit—a functional affirmative action plan, or FAAP—in lieu of, or in conjunction with, one or more existing establishment-based AAPs. OFCCP defines "functional or business unit" as a "component within an organization that operates autonomously in the ordinary course of the organization's business."

FAAPs may provide certain efficiencies to contractors whose business is managed at the business unit level. Before a contractor may develop a FAAP, OFCCP must approve in writing the contractor's proposal to implement the FAAP and enter into a FAAP agreement with the contractor. Once approved, contractors must follow the agency's strict procedures for maintaining and renewing FAAPs.

OFCCP has made certain changes to these procedures, as announced in the Directive.

Old Guidance on FAAPs Formally Rescinded

OFCCP first issued guidance on the development of FAAPs on December 17, 2002. The agency replaced that guidance document on June 14, 2011, and most recently, on December 12, 2012. The Directive supersedes the agency's earlier guidance documents on FAAPs.

New Directive 2013-01 Revision 1: Functional Affirmative Action Programs

The Directive provides detailed guidance regarding the procedures under which OFCCP will consider a contractor's application to develop and implement a FAAP.

Many of the prerequisites and procedures for obtaining FAAPs remain unchanged. For example, the contractor's functional or business unit must continue to meet the following criteria to be considered suitable for a FAAP: (1) currently exists and operates autonomously; (2) includes at least 50 employees; (3) has its own managing official; and (4) has the ability to track and maintain its own personnel activity.

Similarly, many of the "basic principles" of FAAP agreements articulated in the Directive remain unchanged, including, but not limited to: required approval from OFCCP for new FAAPs and amendments or modifications to FAAPs; OFCCP's consideration of the contractor's past compliance with affirmative action requirements and EEO violations in the three preceding years when evaluating a contractor's FAAP application; the three-year term of a FAAP agreement; and the process and grounds for terminating a FAAP agreement.

However, for federal contractors considering applying for and developing a FAAP, as well as federal contractors with an existing FAAP, the Directive contains a few key changes of which they should be aware:

  1. Compliance with Updated Affirmative Action Requirements for Individuals with Disabilities and Protected Veterans

    OFCCP now requires contractors with approved FAAP agreements to comply with the affirmative action requirements of Section 503 of the Rehabilitation Act of 1983 ("Section 503"), as amended, and the Vietnam Era Veterans' Readjustment Assistance Act of 1974, as amended ("VEVRAA"). Contractors have to demonstrate their compliance with these requirements during the FAAP negotiation or certification process. This requirement serves as yet another reminder of the significance of compliance with the expanded Section 503 and VEVRAA regulations effective in March 2014.
  2. Compliance Evaluations During FAAP Term

    The prior directive did not require federal contractors with a FAAP to undergo an OFCCP compliance evaluation during the term of the FAAP agreement, but rather provided that to be eligible for renewal of the FAAP agreement, contractors had to undergo two compliance evaluations during the term of the FAAP agreement. Like all contractors, those with a FAAP were subject to ostensibly administratively neutral selection criteria to select the contractor for a compliance evaluation, and OFCCP could extend the FAAP agreement term until the two compliance evaluations were completed.

    The Directive, however, provides that contractors "will undergo at least one compliance evaluation during the term of their FAAP agreement." This requirement in effect puts contractors with FAAPs in a special category when it comes to selection for OFCCP compliance evaluations, guaranteeing that they will be in OFCCP's crosshairs.
  3. FAAP Request Process

    For the most part, the FAAP request process remains unchanged. However, one potentially welcome development is that OFCCP no longer will require each contractor applicant to have a conference with OFCCP to discuss its proposed FAAP. Instead, the agency recognizes that it may need to meet with the contractor before it makes a final determination on the request to use a FAAP and explains that "every effort will be made to gather sufficient information regarding the contractor's corporate structure to process the FAAP agreement request" so as to minimize the need for a conference.
  4. Certifying a FAAP

    Whereas prior guidance required contractors with a FAAP to apply for renewal of the FAAP agreement, the Directive sets forth a similar "certification" process that appears to require a contractor with a FAAP to include updated business information to allow OFCCP to determine whether it will re-issue the FAAP agreement. Just as with the prior renewal process, a contractor must submit the certification request at least 120 days before the expiration of its FAAP agreement.

What This Means for Employers

In recent years, OFCCP has significantly stepped up its audit and enforcement efforts. Accordingly, the contractor community should remain vigilant to ensure compliance with the myriad laws and regulations that OFCCP enforces.

FAAPs long have been a double-edged sword for contractors. While a FAAP may make sense for contractors with organizational structures along functional lines, obtaining OFCCP approval necessarily invites heightened scrutiny from the federal government. The Directive's "guaranteed" compliance evaluation requirement and expanded review of Section 503 and VEVRAA compliance during the negotiation and certification process only reinforce this potential risk.

Federal government contractors considering applying for and developing one or more FAAPs in lieu of establishment-based AAPs should consult with legal counsel regarding the risks, benefits and other considerations associated with FAAPs, particularly in light of the new Directive. Contractors with existing FAAPs should review the Directive to ensure that they are in compliance with the new procedures for maintaining and updating FAAPs, and they should consider auditing their compliance with all applicable affirmative action requirements to prepare for a compliance evaluation.

If you have any questions about this Alert, please contact any of the attorneys in our Employment, Labor, Benefits and Immigration Practice Group or the attorney in the firm with whom you are regularly in contact.

Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. For more information, please see the firm's full disclaimer.

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.

Similar Articles
Relevancy Powered by MondaqAI
Ogletree, Deakins, Nash, Smoak & Stewart
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Ogletree, Deakins, Nash, Smoak & Stewart
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