One of the most common questions an employer asks when it realizes it is a federal contractor with affirmative action obligations is, “What happens if I do not create an affirmative action plan?” Many employers claim they do not have time to create a plan and perform all the associated tasks. Often, employers don’t know all the steps necessary to create a plan, so they ignore the obligation or create a plan that does not comply with the regulations. After all, what is the likelihood that anyone will know that the plan was not completed or was poorly executed?
The Office of Federal Contract Compliance Programs (OFCCP) projects to conduct more than 4,000 compliance reviews or audits each year. Within the last few years, those involved with affirmative action compliance have noted that compliance reviews are longer and more aggressive than ever before. Many prognosticators believe the final year of the Obama administration will see a surge in agency activity.
OFCCP v. Manheim Auctions Inc. illustrates the consequences of not producing an affirmative action plan. Viewed separately, neither Manheim Auctions Government Systems LLS nor its subsidiary met the threshold for affirmative action obligations (generally 50 employees and $50,000 in federal contracts), but would meet the threshold if viewed as a single entity. Unfortunately, the parent and subsidiary were audited and found to be a single entity. Having failed to create an affirmative action plan, Manheim Entities had the choice of complying with the OFCCP or facing debarment from further government contract work. Manheim chose to debar itself.
The U.S. Department of Labor is currently suing Convergys Customer Management Group for failing to submit documents and comply with an audit by the OFCCP. While not yet clear, it appears that Convergys failed to create the required affirmative action plans while enjoying the benefits of being a government contractor. The OFCCP indicated it is “prepared to take all actions necessary to correct this, up to and including seeking to ban future government contracts for Convergys.” Those are serious consequences for any organization that relies on federal contracts for business.
MSEC can assist member companies in achieving compliance in affirmative action. Contact us at AAPS@msec.org or 800.884.1328 for questions and assistance.