The Department of Labor maintains a set of regulations that (a) are the basis for a large increase in enforcement activity, (b) apply to virtual all transportation contractors and subcontractors, and (c) most contractors and subcontractors are not complying with. Those regulations are found at 41 C.F.R. 60-4.1 and are the implementing regulations for Executive Order 11246, an LBJ era order seeking to end discriminatory hiring practices on federal construction projects.  These regulations are sometimes referred to as Affirmative Action regulations.

Why You Should Be Concerned.

The DOL’s Affirmative Action regulations apply to all contractors and subcontractors with a contract value exceeding $10,000 on an federally funded project or project receiving federal funding assistance.  This is critical because many contractors make several false assumptions about the applicability of the Affirmative Action regulations to them.  First, the regulations apply to any contractor or subcontractor working on a federal or federally assisted construction project and not just to those contractors maintaining a direct contractual relationship with the government agency letting the work.  Second, unlike many federal regulations, there is no employee threshold for the regulations to apply because it applies to any contractor or subcontractor holding a contract or subcontract in excess of $10,000 is subject to the regulations regardless of company size.  Third, it applies to any project receiving some sort of federal funding assistance, not just those solely funded by the federal government.  What this means is that it is hard to envision a public construction project that is not subject to the regulations.

Contractors should be concerned because after years of little enforcement activity the DOL’s Office of Federal Contract Compliance Programs is rapidly stepping up enforcement activities.  The regulations permit the DOL to conduct an on-site audit of your firm’s compliance with the regulations and permits the DOL to access a wide variety of records, including payment and payroll records for non-public private projects.  Moreover, unlike an OSHA investigation, this can all be done without a warrant.

What the Regulations Require You to Do.

Generally, the Regulations require you to use “good-faith efforts” to increase minority and female employment within your firm.  The Regulations set forth specific requirements that firms must do to help achieve this goal.  For example, the Regulations require you to keep a record of all female and minority applicants, to actively recruit female and minority employees through various community organizations, and to create and maintain a equal employment opportunity policy within your firm.  The OFCCP publishes a helpful “Technical Assistance Guide for Federal Construction Contractors,” which goes into to much greater detail on the requirements of the Regulations and should be required reading for contractors.  It can be found HERE.

Where Problems Occur.

First and foremost, problems occur because most contractors and subcontractors falsely assume the regulations do not apply to them so they are left completely flatfooted when they receive a letter from the DOL advising that them that they have been selected for EEO audit.

Second, while no doubt laudable, the Regulations (like many federal regulations) sometimes do not consider the real world.  For example, the Regulations require that contractors and subcontractors “provide written notification to minority and female recruitment sources and to community organizations when the Contractor or its unions have employment opportunities available, and maintain a record of the organization’s responses.”  For contractors signed to collective bargaining agreements, such an effort amounts to little more than a waste of time because all hiring must go through the respective union hall.  The regulations also require firms to develop “on-the-job training opportunities’ targeted females and minorities.  Again, this becomes cumbersome, at best, when firms hire through union halls that maintain their own apprentice and training programs.

The Consequence of Non-Compliance.

Beside the cost and expense of a lengthy DOL audit, non-compliant contractors run the risk of fines and sanctions, including debarment, for failing to follow the Regulations.

Because enforcement efforts are increasing, contractor and subcontractors working on public projects should become familiar with the Regulations so that they are fully prepared to respond to a DOL audit.