Crossing the Compliance Threshold When You Pass 50 Employees

By Bridget Pulivarti, Government Contracting Practice Director, Helios HR

Crossing the threshold of 50 employees brings a new layer of challenges to federal compliance and auditing for government contractors. The most cumbersome to manage are affirmative action programs (AAPs), which are established to protect specific classes of employees, including minorities and females (EO11246), the disabled (section 503 of the Rehabilitation Act), and veterans (VEVRAA). These programs are audited by the Office of Federal Contract Compliance Programs (OFCCP). The process can be overwhelming at first, but with good processes and systems in place, organizations can have successful compliance audits.

With the addition of 1,200 auditors to the OFCCP over the past year, the number of audits performed has increased greatly. Contractors must operate under the assumption of “when I get audited” versus “if I get audited”. There are many things organizations can do to ensure audit readiness. Affirmative action is not about quotas or a quota system; but about making good faith efforts to attract, hire, promote and train individuals covered by the program.

Helios has worked with clients building AAP’s and working through audits with great success. Recently one client just completed their first audit and was complimented by the auditors for having a strong program. The process included both a desk audit and an onsite review. Employees were selected and interviewed by the auditors as well. Much of the successful outcome is attributed to the client following the recommended framework for documentation. By having the appropriate recordkeeping process in place this client mitigated their risks for any adverse impact found in their hiring and promotion practices which can amount to two years of back pay to each person impacted-- including applicants.

The most problematic areas discovered in audits are related to compensation, applicant tracking and poor documentation. Most issues are unintentional on behalf of the contractor; however affirmative action programs require contractors to monitor these programs and maintain proper records.

In order to ensure compliance, compensation decisions for employees should be made utilizing a consistent methodology. By having a solid pay grade structure, organizations can more easily avoid pay disparity and discrimination issues. If discrimination or pay disparity is discovered during an audit, contractors can be required to provide back pay for up to two years.

Applicant tracking tends to be the most laborious task with affirmative action, and is also one of the most important. All applicants must be given the opportunity to voluntarily self-identify their race, gender and ethnicity at the time of application. Ideally, this process is best handled utilizing an applicant tracking system to maintain the data in an efficient manner. All applicants should have a referral source and disposition that explains their status in the recruiting process. When candidates are removed from consideration, the disposition states the reason and at what stage they were removed from the process. While this documentation is required, it will also help you navigate any potential discrimination issues should they arise. Demonstrating these practices to an auditor through documentation will help ensure a successful outcome.

Bridget Pulivarti is the Practice Director of Government Contracting for Helios HR. She can be reached at bpulivarti@helioshr.com.