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OFCCP Directive On Functional Affirmative Action Plans Approved On March 21st

  • March 27, 2002

Since November 13, 2000, when the final rule revising the affirmative action regulations became effective, contractors have been waiting for guidance on how to prepare functional affirmative action plans ("AAPs"). The revised regulations added a new provision, at 41 CFR 60-2.1(d)(4), permitting contractors to develop AAPs along business or functional lines upon approval by the Office of Federal Contract Compliance Programs (OFCCP). This is a departure from the conventional method of preparing plans by establishment. The wait for guidance is now over. On March 21, 2002, Charles James, the OFCCP Director, issued the procedural directive for processing what the OFCCP refers to as Functional Affirmative Action Program (FAAP) requests.

The OFCCP's new Directive outlines the process whereby contractors may apply for approval to prepare functional AAPs. Requests for functional AAP agreements must be made in writing to the OFCCP at least 120 days prior to the expiration of the current AAP for a company's headquarters. Requests should briefly explain why the contractor believes that use of a functional AAP would be most appropriate for its organization. The OFCCP's principal consideration in evaluating the request is whether the functional or business units operate somewhat autonomously. Factors that may be considered when determining autonomy include whether the functional or business unit: (1) has its own managing official; (2) is listed separately on an organizational chart; and/or (3) operates under separate cost centers. Only multi-establishment supply and service contractors may submit requests.

Functional AAPs may not be instituted before the contractor has received written approval from the OFCCP. However, if, after 120 days from the OFCCP's confirmed receipt of the request, the Agency has neither approved nor denied the contractor's request, it will be deemed automatically approved. Requests submitted prior to the issuance of the Directive will be considered received by OFCCP on March 21, 2002; the date on which the directive was signed. OFCCP will send a written acknowledgement to contractors confirming the receipt of their FAAP request, and advising them that an OFCCP representative will contact them within ten (10) business days to begin the FAAP approval process. This process may include meeting(s) or conference call(s) to discuss the request. Any contractor who has previously submitted a FAAP request should contact OFCCP at 1-800-397-6251 if they have not been contacted either by letter or telephone within 30 calendar days from the date the Directive was issued.

Contractors can send a written request for a FAAP Agreement to: Charles E. James, Sr., Deputy Assistant Secretary, Office of Federal Contract Compliance Programs, Room C-3325, 200 Constitution Avenue, N.W., Washington, D.C. 20210.

Despite these events, contractors should not scrap their establishment AAPs just yet for several reasons. First, the OFCCP may not accept the proposed structure. Second, even if the OFCCP approves, submitting a formal application for an exception may put the company on the OFCCP's audit "radar screen." Finally, the Agency has stated that although "a contractor may receive permission to use functional or business unit affirmative action programs, OFCCP could still conduct an evaluation of a facility at a single geographic location." See 41 C.F.R. 60-2.1(d)(4). This means that despite approving the functional plan structure, the OFCCP could still "turn around" and insist upon review of any given facility included within the FAAP. The OFCCP's option to audit a single facility included in a broader "functional" plan poses significant risks because the OFCCP may identify compensation or employee selection problems -- resulting in significant monetary exposure -- at the facility level that may not be apparent in the "functional" plan. Furthermore, the Directive fails to articulate any standards that the OFCCP may use to insist upon a facility-specific audit.

Moreover, according to the Directive, when a company with an existing FAAP agreement "significantly changes its structure" due to a merger, acquisition, downsizing, restructuring, etc., the company must "immediately" notify the OFCCP of these changes in writing to allow the OFCCP to determine if the FAAP agreement should be modified or eliminated as a result of the corporate changes. If a company fails to "immediately" provide the written notification, this may result in cancellation of the FAAP agreement.

©2002 Jackson Lewis P.C. This material is provided for informational purposes only. It is not intended to constitute legal advice nor does it create a client-lawyer relationship between Jackson Lewis and any recipient. Recipients should consult with counsel before taking any actions based on the information contained within this material. This material may be considered attorney advertising in some jurisdictions. Prior results do not guarantee a similar outcome.

Reproduction of this material in whole or in part is prohibited without the express prior written consent of Jackson Lewis P.C., a law firm that built its reputation on providing workplace law representation to management. Founded in 1958, the firm has grown to more than 900 attorneys in major cities nationwide serving clients across a wide range of practices and industries including government relations, healthcare and sports law. More information about Jackson Lewis can be found at www.jacksonlewis.com.

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