OFCCP Contractor Portal Will Require Federal Contractors to Certify Affirmative Action Compliance, and More Federal Contractor Updates

As if federal contractors did not already have enough to worry about amidst the vaccine mandate rollercoaster, the Department of Labor’s Office of Federal Contract Compliance Programs (“OFCCP”) has announced several notable initiatives.  Here’s what federal contractors and subcontractors should know.

OFCCP Contractor Portal

On December 2, 2021, the OFCCP announced the roll-out of its Contractor Portal.  This online Portal will be used for two purposes:

1. For covered federal contractors and subcontractors to certify, on an annual basis, whether they have developed and maintained an affirmative action program (“AAP”) for each establishment.
2. For covered contractors to securely submit their AAPs (and other requested information) to the OFCCP during compliance evaluations (aka, “audits”).

Because these obligations relate to the preparation of AAPs, the reporting obligation only applies to “supply and service” federal contractors/subcontractors who have 50 or more employees, and hold a federal contract/subcontract in excess of $50,000 (for gender/race obligations and disability obligations) or $150,000 (for veteran obligations).  For this reason, if an organization is considered a “federal contractor” for other reasons (such as related to the Federal Contractor Vaccine Mandate), but does not otherwise have to comply with the affirmative action laws, these obligations are inapplicable.  Construction contractors also are exempted from the certification requirement.

While the OFCCP’s recent announcement provides little detail on what exactly contractors will be certifying, the Office of Management and Budget (“OMB”) has already approved Admin and User Guides which provide some insight.  While these Guides may change before the Portal opens, the User Guide currently requires contractors to attest to one of the following options:

1. It has developed and maintained affirmative action programs at each establishment, as applicable, and/or for each functional or business unit. See 41 CFR Chapter 60.

2. It has been party to a qualifying federal contract or subcontract for 120 days or more and has not developed and maintained affirmative action programs at each establishment, as applicable. See 41 CFR Chapter 60.

3. It became a covered federal contractor or subcontractor within the past 120 days and therefore has not yet developed applicable affirmative action programs. See 41 CFR Chapter 60.

The OFCCP will likely use contractors’ responses to prioritize contractor establishments for audit.  With that in mind, an entity which selects Option 2 is more likely to be selected for audit.  The flip side, however, is not true, as the OFCCP’s FAQs make clear that selecting Option 1 will not exempt a contractor from an audit.

The OFCCP promises to provide additional information in the coming months regarding the certification requirements. 

In the meantime, contractors may begin registering for access to the Portal beginning February 1, 2022.  To register, contractors will be required to enter their Employer Identification Number (“EIN”) and EEO-1 Headquarter/Company Number and Establishment/Unit Number.  If the contractor does not know its EEO-1 identifiers, they will be required to enter their EIN, Legal Business Name, DUNS Number, and NAICS Code.

Once registered, contractors must certify their AAP compliance beginning March 31, 2022, with a final deadline of June 30, 2022.  This makes ensuring a current AAP is in place even more important so that contractors can legitimately certify compliance when required.

We will provide more detailed guidance as more information becomes available.

New Federal Contractor Minimum Wage

On November 22, 2021, the Department of Labor’s Wage and Hour Division announced a Final Rule implementing Executive Order 14026, which increases the hourly minimum wage for certain federal contractors to $15, effective January 30, 2022.  This minimum wage can be increased annually by the Secretary of Labor. 

The Final Rule applies to new contracts entered into on or after January 30, 2022, or contracts that are extended or have an option exercised on or after January 30, 2022.  Notably, however, not all federal contracts are subject to the new obligations.  Coverage under the Executive Order and the Final Rule generally extends to four major categories of contractual agreements:

1. Procurement contracts for construction covered by the Davis Bacon Act (“DBA”);
2. Service contracts covered by the Service Contract Act (“SCA”);
3. Concessions contracts, including any concessions contracts excluded from the SCA by the Department’s regulations at 29 C.F.R. 4.133(b); and
4. Contracts in connection with federal property or lands and related to offering services for federal employees, their dependents, or the general public.

These were the same categories used for previous federal contractor minimum wage rules. 

The Executive Order also establishes value threshold requirements for coverage.  The Order only applies to prime contracts covered by the DBA that exceed $2,000 and prime contracts covered by the SCA that exceed $2,500.  For procurement contracts where workers’ wages are governed by the FLSA, the Final Rule specifies that it applies only to contracts that exceed $10,000.  There is no value threshold requirement for subcontracts awarded under such prime contracts.

The minimum wage obligations will not apply to those who are federal contractors for affirmative action purposes, but who do not hold a contract described above.

New Census Data

Beginning January 1, 2022, contractors must use updated census data (here, the 2014-2018 EEO Tabulation data) for their external availability estimates in their 2022 AAPs.  This change will likely require little additional work for most federal contractors and subcontractors who use a third party (like Baird Holm) to prepare their AAPs; however, the new data may require additional follow-up discussions about job coding, and result in different goals in the coming plans.  We will contact our affirmative action clients individually should we require additional or updated information to prepare their 2022 AAPs.

Pay Data Collection

On September 2, 2021, the OFCCP announced its rescission of a 2019 policy in which the OFCCP stated it would not use EEO-1 Component 2 data compensation data in its efforts to combat pay discrimination.  The OFCCP’s rescission signals its plans to acquire and use Component 2 data at some point in the future and consider whether such data could be useful to OFCCP enforcement.  More to come…

As always, we will continue to monitor for any additional developments relevant to federal contractors and affirmative action compliance.