The ramifications of non-compliant AAPs can be costly
Every year, the OFCCP selects an assortment of federal contractors and subcontractors to be randomly audited. The agency also conducts audits in response to employee complaints, and prior to federal contract awards of $10 million or more.
It’s not enough to just have a plan on file—the government requires your AAP be implemented. If your AAP fails to meet compliance or your efforts are determined to not meet requirements, you may be ordered to pay lost wages to applicants and employees. These payments can be significant, including an example from this year where an employer agreed to pay $2.5M to settle pay discrimination allegations.
This is just one of many audits that can have a serious financial impact on employers. Even more significant, employers who don’t toe the line can be debarred from all federal contracts.
Periodically during the year, the OFCCP selects an assortment of federal contractors and subcontractors to be randomly audited. From the time the notice of a random audit arrives on your CEO’s desk, you have only 30 days to submit a fully compliant AAP along with an abundance of supporting information.
Why you want to be prepared for an affirmative action audit
If you already have your AAP in place...
You can use the 30-day notice period before a random audit to carefully review all your data again, write necessary explanations, and gather your supporting information. If you’re starting from scratch, those 30 days turn into a mad fire drill.
If you don't have a current written AAP in place...
Without a current AAP, you don’t know how you’re doing in your affirmative action efforts so you don’t have the opportunity to take appropriate corrective measures. By the time the audit letter arrives, it’s too late to do much more than damage control.
If you manage to put together an AAP in 30 days...
One of the required reports in an AAP includes a review of how you did in the annual percentage placement goals that you set in the previous year’s plan. So even if you scramble to throw together an AAP in 30 days, you’ll have to admit to the agency that you didn’t keep up with your obligations. This starts the audit on the wrong foot, and means that you’re guaranteed to be cited for a recordkeeping violation.
Prepare, prepare, prepare
During the audit, in addition to reviewing and questioning your data, the OFCCP may scour your employment records, interview managers and employees, and contact rejected applicants. Some audits are resolved in a few weeks, while others can drag on for a year or longer. If the agency finds evidence of discrimination, it may order you to:
- Give “back pay” to affected employees or applicants (this is the amount of wages the agency calculates the individuals would have earned if you hadn’t discriminated against them)
- Pay interest (compounded quarterly) on that back pay
- Change your personnel policies and practices
- Send detailed reports to the agency for a specified period of time (typically two years)
What happens if my company fails to have an AAP?
Employers who refuse to cooperate are subject to being debarred from working on federal contracts and subcontracts. Check out the OFCCP’s website for more examples of why it’s so important to maintain a current affirmative action plan and have the right processes in place.
To learn more about Vigilant’s affirmative action plans for employers, Contact Us. You can also check out our blog for Affirmative Action updates.