OFCCP's Proposed Rules Recommending Benchmarks for Hiring Veterans

by Art Gutman Ph.D., Professor, Florida Institute of Technology

Under a proposed rule by the OFCCP on April 26, 2011 federal contractors would be required for the first time to establish annual benchmarks for hiring veterans. In an interview on April 28, 2011, DCI president David Cohen told SHRM Online that he expects that the OFCCP would use referral and hiring ratios as evidence of discrimination in hiring by contractors. According to Cohen, the benchmarks would be expressed as the percentage of total hires who are protected veterans, and would apply to contractors with 50 or more employees and contracts of $100,000 or more (under 60-300). The basis for suit would be the Vietnam Era Veterans’ Readjustment Assistance Act of 1974 (VEVRAA), as amended, which requires each federal contractor with a federal contract of $100,000 or more to take affirmative action to hire and advance in employment qualified Armed Forces Service Medal veterans, disabled veterans, recently separated veterans and other protected veterans.

According to Cohen, the proposed rule would require federal contractors to solicit veterans’ status at the pre-offer stage to identify “protected veterans”. Questions relating to disabilities are prohibited in accordance with the ADA’s proscription of questions relating to medical or psychological issues at the pre-offer stage.

To establish benchmarks, contractors would have to consult several sources of information, including:

  • The percentage of veterans in the civilian labor force, tabulated by the Bureau of Labor Statistics and to be published on OFCCP’s website.

  • The raw number of veterans who were participants in the state employment service in the state where the contractor’s establishment is located, which will be published on OFCCP’s website

  • The referral, applicant and hiring ratios required by the proposed rule.

  • The contractor’s recent assessments of the effectiveness of its external outreach and recruitment efforts, as required by the proposed rule.

  • Any other factors, including but not limited to the nature of the contractor’s job openings and/or its location, which would tend to affect the availability of qualified protected veterans.

According to Cohen, the OFCCP concedes that there is no census data for contractors to ascertain things such as percentage by area that are protected veterans, so the agency “wants you to do a lot of legwork to create data.”

The proposed rule would require federal contractors to document and maintain the following information:

  • For referral data, the total number of referrals, the number of priority referrals of protected veterans and the referral ratio of referred protected veterans to total referrals.

  • For applicant data, the total number of applicants, the number of applicants who are known protected veterans and the applicant ratio of protected veteran applicants to total applicants.

  • For hiring data, the total number of people hired, the number of protected veterans hired and the hiring ratio of protected veteran hires to total hires.

  • The total number of job openings, the number of jobs that are filled and the job fill ratio of job openings to job openings filled.

Under the proposed regulations, contractors are required to document these measurements annually and maintain records of them for five years. The measurements would provide contractors and the OFCCP with important information that does not currently exist. And the measurements would help contractors evaluate and tailor their recruitment and outreach efforts and establish hiring benchmarks, it noted.

Additionally, federal contractor will be required to provide the state employment service with the following additional information each year:

  • Its status as a federal contractor.

  • The contact information for the contractor hiring official at each location in the state.

  • The contractor’s request for priority referrals of protected veterans for job openings at all its locations in the state.

  • “Requiring the federal contractor to provide this additional information will facilitate the priority referral process,” the OFCCP stated.

  • The contractor would be required to provide the state employment service with the contact information for any outside job-search companies the contractor uses.

To evaluate recruitment efforts, contractors will be required to review their outreach and recruitment efforts for the prior 12 months and evaluate how effective they are in these efforts. Contractors will have some flexibility in the recruitment process. However, Cohen expects that the OFCCP will want to know how many protected veteran candidates are identified in each effort.
Additionally, the proposed rule requires documentation relating to the two years prior to the most recent 12-month interval.

According to Cohen, these benchmark rules “seem kind of arbitrary” because contractors could establish benchmarks they are comfortable with, and the proposed rule has no penalties for failure to meet goals. Nevertheless, Cohen is worried that OFCCP compliance officer might confuse affirmative action, which requires enhanced recruitment and outreach efforts, with actual discrimination, which requires evidence that contractors are excluding applicants based on their veteran status. According to Cohen, the OFCCP already is already looking at hiring rates of veterans, particularly when jobs have not been posted with state employment offices. Indeed, Cohen gave on example of one conciliation agreement in 2010 in which the OFCCP said that discriminated against protected veterans in its hiring practices due to the fact that they did not post its jobs with the state employment office. More specifically, the conciliation agreement stated that the contractor had in fact hired one veteran out of the one that applied but that didn’t take into account the veterans that “could have applied”. Meaning the OFCCP contacted the state and identified 79 veterans (note that this doesn’t mean that they were protected veterans under VEVRAA) and said that the “true” hiring ratio is one out of 80 or 1.25%. OFCCP then applied an adverse inference theory of discrimination and concluded that the contractor had in fact discriminated against all 79 veterans that were registered in the state employment office database even though they never expressed interest in the company. The contractor agreed to pay approximately $50,000 to the group of 79.

Stay tuned for more information.

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