Who is a Federal Contractor?
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Transcript Who is a Federal Contractor?
This Employer Webinar Series program
is presented by Spencer Fane Britt & Browne LLP
in conjunction with United Benefit Advisors
This Employer Webinar Series program
is presented by Spencer Fane Britt & Browne LLP
in conjunction with United Benefit Advisors
Kansas City = Omaha = Overland Park
St. Louis = Jefferson City
www.spencerfane.com
www.ubabenefits.com
Do You Have an Affirmative Action
Plan? Maybe You Should.
Monica M. Fanning, Esq.
Agenda
Is Your Company a Covered Federal
Contractor/Sub-Contractor?
Overview of Affirmative Action Obligations
Office of Federal Contract Compliance Programs
(“OFCCP”) Audits
Consequences of Noncompliance
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Federal Contractor Affirmative
Action Obligations
Government contractors and subcontractors have
affirmative action obligations as a condition of
their government contracts:
Executive Order 11246 - Females and Minorities
Section 503 of the Rehabilitation Act- Qualified
Individuals With Disabilities
VEVRAA: Covered Veterans
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What is Affirmative Action (AA)?
Provides for equal employment and makes it
unlawful for federal contractors to discriminate
based on gender, race, religion, disability, or
veteran status.
Requires federal contractors to go beyond the
equal employment opportunity laws by actively
recruiting and providing outreach to women,
minorities, veterans and disabled individuals.
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Who is a Federal Contractor?
Federal contractor is any person who holds a
“government contract.”
-Service and Supply Contract: Agreement with
a federal agency or entity for “the purchase, sale
or use of personal property or nonpersonal
services.”
Personal property includes supplies and goods
Nonpersonal services includes utilities, construction,
transportation, research, insurance and fund depository
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Who is a Federal Contractor?
(Con’t)
Construction Contract: Any agreement to
provide construction services directly to any
department, agency, establishment, or
instrumentality of the executive branch of the
Federal Government.
Hiring Percentages for Female and
Minority-Owned businesses but no
requirement for written AAP
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Are Financial Institutions Federal
Contractors?
Yes, provided the financial institution employs
50 or more employees Company-wide, and
Participates in the Federal Deposit Insurance
Corporation (“FDIC”) or National Credit Union
Association (“NCUA”)
Federal Reserve Banks are not subject to OFCCP
jurisdiction
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Are Any Types of Contracts
Excluded?
Contracts involving work performed outside of
the U.S. (if employees performing the work were
not recruited in U.S.)
Contracts with State or local governments
Contracts with religious entities or religiously
affiliated education institutions
Contracts involving work on or near an Indian
reservation
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Issues to Consider in Determining
Federal Contractor Status
OFCCP broadly interprets its jurisdiction but there are a
few defenses against coverage that all federal contractors
should consider:
1.
Is the contract with a federal agency or entity?
2.
-Quasi-Governmental agencies [consult
usa.gov, “A-Z Index Dept./Agencies”]
Is the arrangement really a contract?
-Personal services is interpreted very narrowly-
employer/ employee relationship; government
has complete control
Grant
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Issues to Consider in Determining
Federal Contractor Status (Con’t)
What is the value of the contract?
Specific amount or open-ended
If open-ended, you must make a good faith estimate
of the amount likely to be received during a 12 month
period
-Based upon past purchasing history/price of goods/services
What is the duration of the contract?
Specific term or project/performance driven
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Who is a Federal Subcontractor?
Subcontractor has a direct contract with a federal
contractor
Subject of the contract is to provide goods or services
necessary to the performance of the prime
government contract
Perform an obligation of the federal contractor’s
prime government contract
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“Single-Entity” Test
Some businesses or organizations that do not
independently hold Federal contracts/subcontracts
may still be covered Federal Contractors if they are
considered a "single entity" with a related business
or organization that holds such contracts.
OFCCP uses a “Single Entity" test to determine
whether the businesses or organizations are so
closely related that they may constitute a single
entity for purposes of OFCCP jurisdiction.
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“Single-Entity” Test (Con’t)
Subsidiaries, Parent Corporations
-OFCCP Uses a 27 Point Test Focusing on
Related Interests:
Common Ownership
Common Directors and/or Officers
De Facto Exercise of Control
Unity of Personnel Policies Emanating From
Common Source
Dependency of Operations
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Coverage Executive Order 11246:
Females and Minority
Basic Coverage: Single government contract or
subcontract of $10,000 or more
Aggregate contracts
Open-ended contracts covered if reasonably expect
amount to exceed $10,000 in 12 month period
Obligation: Prohibits discrimination on the
basis of race, color, sex, religion or national
origin
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Coverage Executive Order 11246:
Females and Minority (Con’t)
Major Coverage: Single government contract or
subcontract of $50,000 or more
-Do not aggregate
50 or more employees Company wide
OFCCP requires written affirmative action plan;
use of E-Verify; and specific outreach to females
and minorities
Specific percentage hiring goals
120 days to prepare AAP after entering contract
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Coverage Thresholds: Section
503/Disabled Individuals
Basic Coverage: Single government contract or
subcontract of $10,000 or more
Aggregate contracts
Open-ended contracts covered if reasonably expect
amount to exceed $10,000 in 12 month period
Obligation: Prohibits discrimination on the
basis of disability
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Coverage Thresholds: Section
503/Disabled Individuals (Con’t)
Major Coverage: Single government contract
or subcontract of $50,000 or more
-Do not aggregate
50 or more employees
OFCCP requires written affirmative action plan;
and outreach to disabled individuals
No hiring percentage goals
Revised Regulations: Anticipated 7% goal
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Coverage Thresholds:
VEVRAA/Covered Veterans
Basic Coverage: Single government contract or
subcontract of $10,000 or more
-Open-ended contracts covered if reasonably expect to
exceed $10,000 in 12 month period
Obligation: Prohibits discrimination against
“covered veterans”; requires outreach
“Covered Veterans”: Armed Forces service
medal veterans, disabled veterans, recently
separate veterans and other protected veterans
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Coverage Thresholds:
VEVRAA/Covered Veterans (Con’t)
Major Coverage:
Single government
contract or subcontract of $100,000 or more
-Open ended contracts covered if reasonably expect
amount to exceed $100,000 in 12 month period
Obligation:
Written AAP; outreach; no
current hiring percentage goals
Revised Regulations: OFCCP/DOL expected to
include specific hiring percentage goals
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Health Care Providers
OFCCP attempted to expand jurisdiction
In past, Medicare and Medicaid are grants-not
government contracts
OFCCP asserts jurisdiction over HCP who
participate in TRICARE networks
Florida Hospital appeals-TRICARE federal
financial assistance like Medicare/Medicaid
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Health Care Providers (Con’t)
In December 2011, President Obama signed the
National Defense Authorization Act (NDAA);
Section 715 exempts TRICARE providers from
coverage as federal contractors
OFCCP announced last week during suspending
audits based solely on TRICARE/Rescinded
Directive 293 (participation in Medicare C and D
subjects HCP to OFCCP jurisdiction)
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Action Items
Did your Company check “yes” on Question 3 of
Section C of the EEO-1 Report?
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Action Items (Con’t)
Check to see whether your Company or any of
its related entities are listed in:
USAspending.gov
[most comprehensive]
governmentcontractswon.com
ccr.gov (central contractor registration)
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Action Items (Con’t)
Obtain copies of all of your federal contracts
Often a difficult task
Review duration and amount to determine AA
obligations
Train contracting personnel to review contracts
for the following phrases:
Affirmative Action
EO 11246, Sec. 503, VEVRAA
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OFCCP Audits
Receive a Notice of Desk Audit
Will be addressed to top Company official
Have 30 days to provide written AAP and other
required personnel data
No extensions of 30 day period
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OFCCP Audits (Con’t)
Focus on compensation
Outreach to veterans and disabled individuals
On-site visit: Review personnel files; FMLA
records; applicant logs; payroll information;
interview employees and managers
27
Penalties for Non-Compliance
Conciliation Agreement (promise to
comply/keep better data)-must submit future
plans to OFCCP
Require Company to reimburse applicants who
were discriminated against; offer them positions
Require Company to remedy pay disparity
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Penalties for Non-Compliance
(Con’t)
Withhold payments until compliant
File suit on behalf of discriminated applicants or
employees
Cancellation of current government contracts
Debarment from future government contracts-list
on DOL’s website; very rare in past; more
common now
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Questions?
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THANK YOU!
If we can ever assist your organization with federal
contractor/affirmative action issues or any other legal
concerns, please give us a call.
Monica M. Fanning
[email protected]
(816) 474-8100
Copyright 2012
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future presentations, contact your local UBA Member Firm.
This Employer Webinar Series program
is presented by Spencer Fane Britt & Browne LLP
in conjunction with United Benefit Advisors
Kansas City = Omaha = Overland Park
St. Louis = Jefferson City
www.spencerfane.com
www.ubabenefits.com
32