Affirmative Action and Construction Companies

By: Bill Osterndorf

Affirmative action is typically not a major focus for construction companies. With the difficulty of finding qualified workers, finishing complex projects, and dealing with a myriad of government regulations, affirmative action laws and requirements tend to be a low priority. Yet, construction companies will need to give additional attention to affirmative action efforts as governmental units increase their scrutiny of construction companies. 

What Does It Mean to Be an Affirmative Action Employer? 

There are many misconceptions about the effect of affirmative action laws on employers. For example, some employers have heard that they must hire or retain lesser qualified employees in order to meet affirmative action requirements. Other employers believe that they must establish quotas in order to meet these requirements. 

As a general rule, affirmative action laws require two things: 

• Employers must ensure that they provide equal employment opportunity to all applicants and employees 

• Employers must take action to ensure that certain classes of applicants and employees are able to become part of and remain in the workforce 

Employers that set quotas or hire less qualified persons are actively violating affirmative action laws. Instead, employers subject to affirmative action requirements must monitor personnel policies and practices to ensure that groups that have been traditionally disadvantaged are provided with employment opportunities. 

Which Construction Companies Must Meet Affirmative Action Requirements? 

As a general rule, only companies that do business with some unit of government are required to meet affirmative action obligations. When construction companies take money from the federal government, state government, or local units of government, they must meet the specific requirements of these jurisdictions. 

The federal affirmative action laws associated with construction companies may apply to general contractors as well as subcontractors depending on the dollars involved, the type of project, and the number of persons a construction company employs. The federal affirmative action laws have thresholds as found in the following  chart. 

Construction companies that receive all of their federal funds through federally-assisted projects are not subject to the affirmative action laws covering individuals with disabilities and veterans. A federally-assisted project is a project where the primary contracting agent is not the federal government even though the project included a certain number of federal dollars. Major road-building projects controlled by state governments are a prime example of federally-assisted construction projects. 

Meeting Federal Affirmative Action Requirements 

Affirmative action requirements for construction companies are generally focused on the employees who may be found at construction sites. Among these employees are tradespersons, apprentices, laborers, and construction supervisors. The federal government has little interest in the senior managers, professional employees, or clerical employees that construction companies may have at their offices. This is because the federal affirmative action laws were written to remedy discrimination that historically had occurred on construction sites. 

Construction companies subject to the federal affirmative action laws must make efforts to ensure that opportunities are provided for minorities and women. If a construction company is involved in a project that is directly controlled by the federal government, then the company must also ensure that opportunities are provided for certain classes of veterans, and individuals with disabilities.  

For a construction company that has combined federal contracts or subcontracts of $10,000 or less, there are a limited number of actions the company must take. These actions include the following: 

• Prevent discrimination against employees or applicants on the basis of race/ethnicity, sex, religion, sexual orientation, gender identity, color, or national origin
• Include an equal opportunity tag line in all job advertisements 
• Inform unions of the company’s obligations to provide equal employment opportunity 
• Allow applicants and employees to discuss compensation with each other 

For a construction company that has a single federal contract or subcontract of more than $10,000, there are additional actions the company must take. These actions include the following: 

• Track information regarding pay and hours worked for each individual construction trade at each construction site to ensure that efforts are made to meet participation goals for minorities and females set by the federal government.
• Document that the company is meeting a variety of requirements regarding recruitment, selection, training, and other personnel practices. There are 16 specifications found in the federal affirmative action regulations under Executive Order 11246. 

General contractors must also notify the U.S. Department of Labor’s Office of Federal Contract Compliance Programs (OFCCP) about subcontractors that are receiving more than $10,000 in federal funding. Subcontractors must also make this notification if they award any lower-tier subcontract over $10,000. 

For a construction company that is involved in projects other than federally-assisted projects, there are actions that the company must take involving individuals with disabilities and covered veterans. Actions when a construction company meets the basic requirements threshold shown above include the following: 

• Prevent discrimination against individuals with disabilities and covered veterans
• Provide reasonable accommodation for applicants and employees who are individuals with disabilities 
• Include formal notices to subcontractors regarding their affirmative action obligations 
• Contact the state employment service office about job openings (when the thresholds regarding VEVRAA are met) 

A construction company that meets the thresholds to take additional actions regarding individuals with disabilities and covered veterans must also do the following: 

• Collect data from applicants and employees regarding disability and veteran status
• Prepare various statistical analyses regarding selection of candidates for open positions 
• Prepare formal affirmative action plans for individuals with disabilities and covered veterans 
• Develop an equal employment opportunity policy statement that covers individuals with disabilities and covered veterans 

In addition, construction companies that hold a single federal contract of $150,000 or more (regardless of the number of employees) must file a VETS-4212 report on an annual basis. 

Summary 

The federal government and other units of government have laws requiring construction companies to take affirmative action when these companies receive government funding. “Affirmative action” in this context does not mean setting quotas or hiring unqualified persons. It means making efforts to ensure that all applicants and employees have access to employment opportunities, regardless of characteristics such as race/ethnicity, sex, disability status, or veteran status. 

The federal government’s affirmative action laws regarding construction companies are focused on ensuring that opportunities are provided for individuals interested in working on construction sites. These laws require the creation of policies, the collection of data, and the development of personnel practices to ensure that equal opportunity is provided. The specific requirements applicable to a construction company depend on the type of federal funding involved, the employee population at the company, and the level of federal funding.