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Jan 11, 2017

Federal contractors close out 2016 with affirmative action settlements

Affirmative Action 

The Office of Federal Contract Compliance Programs (OFCCP) recently announced two significant financial settlements that were reached in December 2016 after the agency conducted affirmative action audits of federal contractors:

  • Ameriprise Financial agreed to pay $128,200 in back wages and interest to 20 black employees in unlicensed service professional positions located in Minneapolis, Minnesota. The OFCCP looked at wages for the one-year period of February 19, 2013, through February 18, 2014, and determined that the differences in wages between the black employees and their white coworkers weren’t adequately explained by legitimate factors. Interestingly, however, the agency agreed with the employer’s analysis that showed current wages were fine and therefore no future salary adjustments were necessary.
  • Hormel Foods Corp. agreed to pay $550,000 in back wages and interest to 403 female job applicants for entry-level production positions at its hog-processing facility in Fremont, Nebraska. The company also agreed to hire 37 of the women, with retroactive seniority. The OFCCP found a significant disparity in the hiring rates of women compared to men, and also determined that the employer failed to keep adequate records of its decisions at each stage of the hiring process. Going forward, the employer promised to establish consistent, job-related disposition codes to use for applicants at each stage of the hiring process.

Tips: The Ameriprise case highlights the benefits of correcting unexplained pay disparities if you discover them, so you can at least fend off liability going forward. Most often, the jobs that pose the greatest risk are salaried positions where managers have discretion to set pay. The Hormel case illustrates why it is important to use descriptive disposition codes to document the stage at which an applicant dropped out of the hiring process, and why. If you use Vigilant to prepare your written affirmative action plans (AAPs), ask your Vigilant affirmative action representative to review your applicant disposition reasons for clarity and job-relatedness.

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