Obligations of Federal Contractors and Subcontractors; Notice of Employee Rights Concerning Payment of Union Dues or Fees; Final Rule [Rules and Regulations] [03/29/2004]

	U.S. Department of Labor Employment Standards Administration

www.dol.gov/esa

Search / A to Z Index

May 13, 2008 DOL Home > ESA

ESA Final Rule

Government Contractors, Affirmative Action Requirements; Final Rule [11/13/2000]

[PDF Version]

Volume 165, Number 219, Page 68021-68047

[[Page 68021]]

-----------------------------------------------------------------------

Part III

Department of Labor

-----------------------------------------------------------------------

Office of Federal Contract Compliance Programs

-----------------------------------------------------------------------

41 CFR Parts 60-1 and 60-2

Government Contractors, Affirmative Action Requirements; Final Rule

[[Page 68022]]

-----------------------------------------------------------------------

DEPARTMENT OF LABOR

Office of Federal Contract Compliance Programs

41 CFR Parts 60-1, 60-2

RIN 1215-AA01

Government Contractors, Affirmative Action Requirements

AGENCY: Office of Federal Contract Compliance Programs (OFCCP), ESA,
Labor.

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: The Office of Federal Contract Compliance Programs (OFCCP) is
revising certain regulations implementing Executive Order 11246, as
amended. The Executive Order prohibits Government contractors and
subcontractors, and Federally assisted construction contractors and
subcontractors, from discriminating in employment, and requires these
contractors to take affirmative action to ensure that employees and
applicants are treated without regard to race, color, religion, sex, or
national origin. The final rule will refocus, revise, and restructure
41 CFR part 60-2, the regulations that establish the requirements for
affirmative action programs, and related sections in 41 CFR part 60-1.
The rule will refocus the regulatory emphasis from the development of a
document that complies with highly prescriptive standards, to a
performance based standard that effectively implements an affirmative
action program into the overall management plan of the contractor. The
rule also will introduce a new tool, the Equal Opportunity Survey, that
will aid contractors in assessing their pay and other personnel
practices, while increasing the efficiency and effectiveness of program
monitoring. OFCCP is encouraging contractors to file the Survey
electronically.
The rule will help fulfill the Administration's Equal Pay
Initiative to provide contractors with the necessary tools to assess
and improve their pay policies. The rule also will help fulfill the
Department's goal of increasing the number of Federal contractors
brought into compliance. A means to fulfill that goal is for OFCCP to
more effectively monitor the pay practices of Federal contractors.
In addition, the final rule revising and restructuring the
regulations relating to affirmative action programs is part of OFCCP's
continuing efforts to meet the objectives of the Reinventing Government
Initiative. These objectives include obtaining input from those most
directly affected by the regulations, reducing paperwork and compliance
burdens wherever possible, more effectively focusing Government
resources where most needed in order to administer the law most
efficiently, making the regulations easier to understand by
streamlining and simplifying them and writing them in plain language,
and updating the regulations to accommodate modern organizational
structures and to take advantage of new technologies.

EFFECTIVE DATES: These regulations are effective December 13, 2000.

FOR FURTHER INFORMATION CONTACT: James I. Melvin, Director, Division of
Policy, Planning and Program Development, OFCCP, Room C-3325, 200
Constitution Avenue, NW., Washington, DC 20210. Telephone (202) 693-
0102 (voice), (202) 693-1308 (TTY). Copies of this rule in alternative
formats may be obtained by calling (202) 693-0102 (voice) or (202) 693-
1308 (TTY). The alternative formats available are large print,
electronic file on computer disk, and audiotape. The rule also is
available on the Internet at. http://www.dol.gov/dol/esa.

SUPPLEMENTARY INFORMATION:

Current Regulations and Rulemaking History

Executive Order 11246, as amended, requires that Federal Government
contractors and subcontractors ``take affirmative action to ensure that
applicants are employed, and that employees are treated during
employment, without regard to their race, color, religion, sex, or
national origin.'' Affirmative action under Executive Order 11246, as
amended, connotes more than passive nondiscrimination; it requires that
contractors take affirmative steps to identify and eliminate
impediments to equal employment opportunity.
The history, principles and concepts underlying the current
blueprint for affirmative action under Executive Order 11246, as
amended, were recounted in the notice of proposed rulemaking (NPRM), 65
FR 26088, published on May 4, 2000, and readers interested in that
background information may refer to that discussion.
The current regulations require Federal Government nonconstruction
contractors and subcontractors with 50 or more employees and a contract
of $50,000 or more to prepare and implement a written Affirmative
Action Program (AAP) for each of their establishments. The basic
elements of the AAP are discussed in more detail in the Section-by-
Section Analysis which follows.
On May 4, 2000, OFCCP published a proposed rule, 65 FR 26088, to
revise specific regulations found at 41 CFR parts 60-1 and 60-2. The
comment period closed on July 3, 2000. A total of 187 comments were
received within the comment period from five contractor advocacy
organizations; 137 labor, civil rights, and women's advocacy
organizations and their individual members; four law firms that advise
or represent contractors or contractor advocacy organizations; 14
contractors; 17 consulting firms; 9 civil rights and affirmative action
officials of state and local governments and institutions of higher
learning; and one Member of Congress. All the comments were reviewed
and carefully considered in the development of this final rule.
The final rule revises the regulations at 41 CFR part 60-2, which
address the content of AAPs. The rule also makes a corresponding
revision of Sec. 60-1.12, which covers records that must be retained,
and Sec. 60-1.40, which covers who must develop and maintain an AAP.
The rule also performs several ``housekeeping'' functions with
respect to the part 60-2 regulations. A final rule was published on
December 30, 1980 (45 FR 86215; corrected at 46 FR 7332, January 23,
1981), but was stayed in accordance with Executive Order 12291 on
January 28, 1981 (46 FR 9084). This rule later was stayed indefinitely
on August 25, 1981 (46 FR 42865), pending action on an NPRM published
on that same date (46 FR 42968; supplemented at 47 FR 17770, April 23,
1982). No further action on the August 25, 1981, proposal, or
consequently on the 1980 stayed final rule, has been taken. Both the
1980 final rule and the 1981 proposal addressed 41 CFR part 60-2. To
avoid conflict with the rule published today, OFCCP hereby withdraws
part 60-2 of the 1980 final rule. Additionally, consistent with the
President's 1998 ``Plain Language'' Memorandum, OFCCP has replaced the
word ``shall'' with ``must'' or ``will'' as appropriate to the context.

Overview of the Final Rule

The final rule, for the most part, adopts the revisions that were
proposed in the May 4 NPRM. However, some of the proposed provisions
have been modified in response to the public comments. The changes
between the NPRM and the final rule are explained in detail in the
Section-by-Section Analysis.

[[Page 68023]]

The discussion which follows identifies the significant comments
received in response to the NPRM, provides OFCCP's responses to those
comments, and explains any resulting changes to the proposed revisions.

Section-by-Section Analysis of Comments and Revisions

Section 60-1.12 Record Retention

OFCCP published a final rule revising 41 CFR part 60-1 on August
19, 1997. The proposed rule published on May 4, 2000 would further
amend the record retention provisions in Sec. 60-1.12 to harmonize them
with the proposed changes to part 60-2. Specifically, the NPRM would
amend paragraph (b) to eliminate the modifier ``written'' from a
contractor's current requirement to develop a written affirmative
action program. Furthermore, the proposal called for a new paragraph
(c) that would codify in this part a longstanding regulatory obligation
for contractors to be able to identify their employees and, where
possible, applicants by gender, race, and ethnicity. Existing paragraph
(a) would remain unchanged, while paragraphs (c) and (d) would be
redesignated as paragraphs (d) and (e) respectively, with the first
sentence of the newly designated paragraph (d) reflecting the addition
of new paragraph (c).

Section 60-1.12(b) Affirmative Action Programs

In response to a number of comments, OFCCP has decided not to
remove the modifier ``written'' from the phrase ``written affirmative
action program.'' See further discussion under Sec. 60-1.40 below.

Section 60-1.12(c)

The NPRM proposed a new paragraph (c) that would require that the
contractor be able to identify the gender, race, and ethnicity of each
employee, and where possible, the gender, race, and ethnicity of each
applicant in any records the contractor maintains pursuant to this
section. In addition, the contractor would be required to supply this
information to OFCCP upon request. This provision is necessary for
OFCCP to verify EEO data.
The agency received fifteen comments pertaining to paragraph (c),
which fit into several categories. Most prominently, three consultants
and two law firms sought a clear definition of which job seekers
contractors must track as ``applicants.'' More narrowly, a contractor
objected to tracking as job applicants those persons it perceives as
lacking requisite skills. Still another contractor hoped that the
``where possible'' language in the proposal indicated OFCCP has not
definitively resolved the applicant issue, but rather intends to pursue
a flexible approach that reflects modern realities.
Three contractors, three consultants, and a law firm representing
an employer association expressed their view that it is an undue burden
to obtain demographic data for prospective employees, especially
unsolicited applicants. Another commenter, an organization representing
contractors, agreed that this practice is burdensome, but also observed
that collection of such demographic information for employee and
applicant records is already required. In actuality, all employers with
fifteen or more employees, including Federal contractors, have been
covered by the Uniform Guidelines on Employee Selection Procedures
since 1978.
The agency wishes to make clear that it is not revising the meaning
of ``applicant'' in the final rule. OFCCP and other Federal civil
rights agencies have adhered to the same definition since Question and
Answer 15 was published in the Federal Register in 1979 (see ``Adoption
of Questions and Answers to Clarify and Provide a Common Interpretation
of the Uniform Guidelines on Employee Selection Procedures,'' 44 F.R.
11996, 11998 (March 2, 1979)). On the other hand, the final rule
recognizes that some job applicants refuse to divulge demographic
information to identify themselves. Therefore, OFCCP wishes to be
reasonable through inclusion of the ``where possible'' phrase referring
to applicants in Sec. 60-1.12(c)(1)(ii).
A consultant and a law firm representing a business association
expressed concern about marking the actual records of employees and
applicants with demographic information. As one of them noted, such a
requirement would be contrary to normal equal employment opportunity
procedures. OFCCP agrees and does not intend for contractors to place
gender, race, and ethnicity information directly on the employment
records of their employees or job candidates. Thus, for sake of
clarity, in the final rule the agency substitutes the preposition
``for'' for ``in,'' which appeared in the proposed rule. Therefore,
Sec. 60-1.12(c)(1) now reads: ``For any record the contractor maintains
pursuant to this section, the contractor must be able to identify: (i)
The gender, race, and ethnicity of each employee; and (ii) where
possible, the gender, race, and ethnicity of each applicant.''
Consistent with the Uniform Guidelines on Employee Selection Procedures
(UGESP), the burden is on the contractor to demonstrate that every
reasonable effort has been made to identify the gender, race, and
ethnicity of the applicant. In the case of electronic applications, the
contractor may use an electronic tear-off sheet.
Each of the remaining categories of comments on proposed Sec. 60-
1.12(c) came from just one or two commenters. A consultant wondered
whether a contractor could be found in violation if an employee or job
applicant refused to provide demographic information. In a similar
vein, the same commenter wanted to know whether a contractor could
justifiably discipline such a person. In fact, such concerns are
groundless because a contractor's invitation to an employee or
applicant to self-identify his or her gender, race, and ethnicity
should always make plain that the provision of such information is
voluntary. Consequently, OFCCP would not hold a contractor responsible
for an employee or applicant's refusal to self-identify.
One contractor requested more guidance on how to collect applicant
data. Such detailed ``how-to'' information does not belong in the
regulation itself. However, the agency does offer some guidance here in
today's preamble. Specifically, while self-identification is the most
reliable and the preferred method for compiling information about a
person's race, sex, and ethnicity, such as through use of a ``tear off
sheet,'' other alternatives are likewise acceptable. Some contractors
send a short form or post card requesting demographic information from
applicants who respond to job advertisements in newspapers, electronic
job posting services, or other places. Although self-identification is
the preferred method, visual observation also can be an acceptable
method for identifying demographic data, although it may not be
reliable in every instance. Methods for collecting data on gender,
race, and ethnicity are also discussed in Question and Answer 88 in the
``Adoption of Questions and Answers to Clarify and Provide a Common
Interpretation of the Uniform Guidelines on Employee Selection
Procedures,'' 44 FR 11996, 12008 (March 2, 1979).
Two other commenters urged delaying implementation of Sec. 60-
1.12(c) until 2002, arguing that collection of race and ethnicity
information is not required until then. In fact, OMB published a Notice
stating that ``Federal programs should adopt the standards [for race
and ethnicity classification] as soon as possible, but not later than
January 1, 2003,'' 62 FR 58781, 58782

[[Page 68024]]

(October 30, 1997). As per these requirements, OFCCP is adopting the
new standards as soon as possible.
Finally, a contractor asserted that the proposal at Sec. 60-
1.12(c)(2) to require contractors to supply demographic information to
OFCCP upon request would violate the attorney-client privilege. In
fact, contractor personnel prepare most such documentation without the
involvement of legal counsel. Even when they do not, it is clear that
an enforcement agency must have access to pertinent records in order to
carry out its lawful duties.
Accordingly, except as noted above, Sec. 60-1.12(c) is adopted as
proposed.

Section 60-1.40 Affirmative Action Programs

OFCCP proposed several modifications to Sec. 60-1.40. The proposal
retained in paragraph (a) current standards for those who must develop
and maintain an affirmative action program, removed from paragraph (a)
references to ``written'' affirmative action program, and deleted the
remainder of paragraph (a), as well as all of paragraphs (b) and (c).
Several commenters strongly encouraged the retention of the
designation ``written'' affirmative action programs. One commenter
asserted, in part, that ``the `written' AAP provides a structure on
which to build and subsequently evidence a company's affirmative action
efforts.'' Another commenter asserted that the ``written AAP is
essential to adequate discussions of: the nature of an organization,
the methodology used to develop goals, identify problem areas, good
faith efforts; and to aid in the development of a Program Summary.''
OFCCP believes that these comments have merit. Consequently, OFCCP has
decided to retain the reference to ``written'' affirmative action
program in paragraph (a) of this section. ``Written'' also is
reinserted into Sec. 60-2.1 and inserted into Sec. 60-2.2 for clarity.
A ``written'' AAP may include electronic maintenance of the AAP. A
contractor may maintain its AAP in electronic format if all of its
employees who are permitted or required to have access to the AAP have
equal access to the electronic version of the AAP. If some of a
contractor's employees lack access to an electronic version of the AAP,
the contractor also must provide access to a hard (paper) copy of the
AAP.
The retention of the current language ``written'' by no means
vitiates the spirit of the proposed language that affirmative action is
more than a paper exercise and that it be an indelible aspect of the
entire corporate enterprise or business process. Pursuant to these
regulatory changes, OFCCP will focus its resources on the action
undertaken to promote equal employment opportunity, rather than on the
technical compliance.
One commenter, noting what it characterized as ``the magnitude of
the systems and other changes that will be required,'' recommended that
the new regulations apply only to AAPs created or updated after January
1, 2002, or after one full AAP year has elapsed after the new
requirements become effective. The new regulations impose very few, if
any, new requirements other than the Equal Opportunity Survey.
Therefore, contractors will not need to make substantial changes to
their AAPs in order to comply with the revised regulations.
Nevertheless, a contractor that has prepared an AAP under the old
regulations may maintain that AAP without penalty for the duration of
the AAP year even if that AAP year overlaps with the effective date of
the regulations.
In addition, in order to avoid confusion OFCCP has inserted into
Secs. 60-1.40(a)(1) and 60-2.1(a), the phrase ``(supply and service)''
after the term ``nonconstruction.'' Finally, OFCCP has revised slightly
the structure of paragraph (a) to conform to Federal Register format
requirements; no change of substance is intended by the revision.

Part 60-2

Subpart A--General

Section 60-2.1 Scope and application

Existing Sec. 60-2.1 describes the purpose and scope of the
regulations contained in 41 CFR part 60-2. Current paragraph (a)
specifies which contractors are required to develop AAPs and provides a
general overview of the regulations contained in part 60-2. Paragraph
(b) of the current regulation states that relief, including back pay
where appropriate, must be provided for an affected class in all
conciliation agreements entered into to resolve violations uncovered
during a compliance review. Paragraph (b) also states that an
``affected class'' problem must be remedied in order for a contractor
to be considered in compliance, and indicates that a contractor may be
subject to the enforcement procedures set forth in Sec. 60-2.2 for its
failure to remedy past discrimination.
Consistent with the goals of streamlining and simplifying the
regulations, the rule revises and restructures Sec. 60-2.1. The rule
revises paragraph (a) by limiting the language to a brief description
of the scope of the regulations contained in Part 60-2. No comments
were received on this provision. The final rule adopts paragraph (a) as
proposed.
The final rule deletes as redundant the contents of paragraph (b)
of current Sec. 60-2.1, because the requirement that conciliation
agreements include provisions for back pay and other remedies also is
set forth in Sec. 60-1.33. The removal of the back pay and affected
class language from paragraph (b), however, is not intended to affect
OFCCP's ability to recover back pay or other affirmative relief for
victims of discrimination.
The final rule also deletes the historical reference to ``Revised
Order No. 4,'' the predecessor to the current Part 60-2, as it would
not be appropriate or necessary in light of the changes to be made to
part 60-2.
Paragraph (b) of the new Sec. 60-2.1 specifies who must develop an
AAP; it repeats the standards found in Sec. 60-1.40, because recitation
of the scope of coverage is important for completeness in both parts of
the regulation. OFCCP has written the requirements in a list form for
the reader's ease of understanding. As OFCCP did in Sec. 60-1.40, OFCCP
has revised slightly the structure of paragraph (b) to conform to
Federal Register format requirements; no change of substance is
intended by the revision.
Several commenters recommended that in the final rule this
provision not be limited to full-time employees only. OFCCP did not
intend for this provision to be read as including only full time
employees. Some of the confusion concerning the provision may have
arisen because the Equal Opportunity (EO) Survey form requested
information about full time employees only. The request for information
about full-time employees in the Survey was not intended to signal any
change in OFCCP's requirement for reporting part-time, temporary and
full time employees in written AAPs now or in the future.
The new Sec. 60-2.1 provision does not make reference to particular
categories of employees but rather refers generally to ``employees.''
The term ``employees'' is broad enough to include part-time, temporary
and full time employees. Therefore, the final rule adopts paragraph (b)
of the proposal without change.
The final rule adds a paragraph (c) that specifies that the
contractor must develop AAPs within 120 days from the commencement of
the contract. This requirement was previously set out in 41 CFR
Sec. 60-1.40(c). Since Part 60-2

[[Page 68025]]

addresses the requirements of AAPs, it appears more appropriate to
include information specifying when the obligation to develop AAPs
begins as part of part 60-2. One commenter, a law firm representing a
business group, recommended that the final rule specify when the next
AAP is to be in place. OFCCP has consistently held that the new AAP
should be developed and in effect on the date that the old AAP expires.
OFCCP believes that the AAP should be an ongoing management tool and
not just an exercise to be performed annually. The provision is carried
forward in the final rule as proposed.
The final rule contains a paragraph (d) describing who is included
in affirmative action programs. Subparagraph (2) provides three options
for contractors with fewer than 50 employees at a particular
establishment to account for those employees for AAP purposes.
Subparagraph (3) is designed to clarify that the AAP at the
establishment that makes the selection decision is the appropriate
establishment for inclusion of their selectees. This is particularly
important for corporate headquarters AAPs, since selection decisions
are likely to be made at corporate headquarters for employees who are
assigned to other establishments within the corporation. This reflects
OFCCP's ``corporate initiative'' (53 FR 24830, June 28, 1988).
Several commenters recommended that OFCCP permit contractors to
develop their AAPs based on how their businesses actually are
organized. Specifically these commenters asked to be allowed to prepare
a single workforce analysis (and AAP) based on a business function or a
line of business, without regard to the geographic locations of the
establishments and employees (sometimes referred to as a ``functional''
AAP).
In response to these commenters, OFCCP has added a subparagraph 4
to the final rule. This provision reads as follows:

(4) Contractors may reach agreement with OFCCP on the
development and use of affirmative action plans based on functional
or business units. The Deputy Assistant Secretary, or his or her
designee, must approve such agreements. Agreements allowing the use
of functional or business unit affirmative action programs cannot be
construed to limit or restrict how the OFCCP structures its
compliance evaluations.

The purpose of this provision is to permit contractors to negotiate
with OFCCP, subject to the approval of the Deputy Assistant Secretary,
for permission to use affirmative action programs organized along
business or functional lines. Some contractors have indicated that they
would prefer a functional affirmative action program because it would
allow them to better manage their equal employment opportunity programs
and to hold the appropriate managers accountable for the performance of
that program. This provision provides a mechanism by which the
contractor can achieve these efficiencies. The provision also makes it
clear that while OFCCP is willing to negotiate the structure of the
contractor's affirmative action program, it is not offering to
negotiate how the agency will conduct its compliance evaluations. Thus,
while a contractor may receive permission to use functional or business
unit affirmative action programs, OFCCP could still conduct an
evaluation of a facility at a single geographic location. OFCCP hopes
to have procedures for handling requests for functional AAPs in place
before the effective date of the regulations. When the procedures are
completed, OFCCP will post them on its Web site and/or include them in
its Federal Contract Compliance Manual (FCCM).
At the suggestion of one commenter, the final rule substitutes
``work'' for the reference to ``perform their normal and customary
duties'' in paragraph (d)(1). This change is necessary to clarify that
``work'' is the consistent meaning that OFCCP desires to convey
throughout this provision. The proposed language implied a different
meaning. Thus, the final rule provides, in relevant part, ``Employees
who work at locations other than that of the manager to whom they
report, must be included in the affirmative action program of their
manager.''
Paragraph (e) of the proposed regulation explains how to identify
employees who are included in AAPs at establishments other than where
they are located. AAPs created according to paragraphs (d)(1) through
(3) must identify these employees according to paragraph (e). Paragraph
(d)(4) is not included in the requirements of paragraph (e) because the
reporting formats for ``functional'' AAPs will be addressed on a case-
by-case basis as part of the approval process.
One commenter, a law firm, suggested that the requirement to
annotate where the employees are located would present an additional
burden. As noted in the NPRM, the purpose of the proposed subparagraph
was to clarify that the AAP at the establishment where the selection
decision is made is the appropriate establishment for inclusion of
their selectees. OFCCP does not agree that this requirement creates
additional burden; it simply clarifies the agency's current policy and
practice. Paragraph (e) of the proposal is adopted in the final rule as
proposed.
Several commenters stated that OFCCP's use of more than one term
when referring to a contractor's ``establishment'' or ``location'' was
inconsistent or confusing. OFCCP agrees that using one term is clearer.
Therefore, the final rule replaces the term ``location'' with
``establishment'' whenever ``location'' was used as a synonym for
``establishment.'' OFCCP replaced ``location'' with ``establishment''
in Secs. 2.1 and 2.30.

Section 60-2.2 Agency Action

Paragraph (a) deals with agency approval of AAPs. In the NPRM,
OFCCP proposed revising paragraph (a) for clarity. One proposed change
was to state that a contractor's AAP would be deemed to be accepted by
the Government ``at the time OFCCP notifies the contractor of the
completion of the compliance evaluation or other action''; the existing
provision says that the AAP is deemed accepted ``at the time the
appropriate OFCCP * * * office has accepted such plan. * * *'' A
commenter expressed concern that the change in paragraph (a) resulted
in a change in the acceptance requirements. That is not the case. OFCCP
has not changed the acceptance date requirements in paragraph (a). The
only changes were for clarity.
OFCCP proposed in the NPRM to delete paragraphs (c) and (d) of the
current Sec. 60-2.2 which address show cause notices and other
enforcement procedures for a contractor's failure to develop an AAP as
prescribed in the regulations. OFCCP stated that since these subjects
are addressed in Secs. 60-1.26 and 60-1.28 there was no reason to
repeat them in Sec. 60-2.2.
Four commenters representing the interests of contractors objected
to the deletion of these paragraphs. They expressed concern that the
deletion of these paragraphs eliminates contractors' due process
protections and the procedural safeguards of the show cause notice
(SCN) process. They stated that without the SCN procedure, OFCCP could
proceed directly to enforcement without offering contractors the
opportunity to cure apparent violations.
OFCCP is persuaded that the proposed deletion may not have the
limited impact originally contemplated by the agency. Therefore, the
final rule restores the provisions in paragraphs (c) and (d) of
Sec. 60-2.2 with a minor change; paragraph (c)(1) has been modified to
reflect the existing exceptions in Sec. 60-1.26(b)(1) to the general
rule that a show cause notice will be issued whenever

[[Page 68026]]

administrative enforcement is contemplated.
The existing exceptions in Sec. 1.26(b)(1) are as follows:

* * * if a contractor refuses to submit an affirmative action
program, or refuses to supply records or other requested
information, or refuses to allow OFCCP access to its premises for an
on-site review, and if conciliation efforts under this chapter are
unsuccessful, OFCCP may immediately refer the matter to the
Solicitor, notwithstanding other requirements of this chapter.

Subpart B--Purpose and Contents of Affirmative Action Programs

Section 60-2.10 General Purpose and Contents of Affirmative Action
Programs

A complete rewrite of Sec. 60-2.10 was proposed. The rewrite was
intended to convey that an AAP should be considered a management tool--
an integral part of the way a corporation conducts its business.
Further, the intent of the proposed revision was to encourage self-
evaluation in every aspect of employment by establishing systems to
monitor and examine the contractor's employment decisions and
compensation systems to ensure that they are free of discrimination.
Two commenters opposed portions of this section: One stated the
belief that the proposed section was redundant; and the other asserted
that it was ``not aware of any authority for the OFCCP to dictate or
prescribe the `management approach' or policies of firms that perform
federal contracts.''
One commenter, a civil rights organization, supported the proposal,
stating that ``wholly integrating the monitoring and evaluative
components of the AAP will ensure that contractors are assuming full
responsibility for meaningful compliance as opposed to merely complying
with a paperwork obligation.''
OFCCP continues to believe that this introductory section should
emphasize the philosophy that an affirmative action program is ``more
than a paperwork exercise. * * * Affirmative action, ideally, is a part
of the way the contractor regularly conducts its business.''
Accordingly, Sec. 60-2.10 is adopted as proposed.

Section 60-2.11 Organizational profile

The current Sec. 60-2.11 is entitled ``Required utilization
analysis.'' It contains an introductory paragraph which identifies
broad job areas (EEO-1 categories) in which racial and ethnic
minorities and women are likely to be underutilized, and sets forth in
lettered paragraphs the core contents of a written AAP.
This final rule addresses only paragraph (a) of the current
Sec. 60-2.11, which deals with the workforce analysis. Paragraph (b) of
the current regulations, which addresses the job group analysis, has
been revised and moved to new 60-2.12 discussed below in this preamble.
The introductory paragraph of current Sec. 60-2.11 has been deleted as
outdated and unnecessary.
Paragraph (a) of the current Sec. 60-2.11 provides that a workforce
analysis is a listing of job titles (not job groups) ranked from the
lowest paid to highest paid within each department or similar
organizational unit. The workforce analysis also shows lines of
progression or promotional sequences of jobs, if applicable. If no
lines of progression or usual promotional sequences exist, job titles
are listed by departments, job families or disciplines, in order of
wage rates or salary ranges. For each job title, the workforce analysis
must reflect the wage rate or salary range, and the number of
incumbents by race, ethnicity, and sex. In short, the workforce
analysis is a map pinpointing the location of jobs and incumbent
employees and their relationship to other jobs and employees in the
contractor's workforce.
In the NPRM, OFCCP proposed to ``reengineer'' the workforce
analysis into a shorter, simpler format called an ``organizational
profile.'' In basic terms, the organizational profile was an
organization chart showing each of the organizational units and their
relationships to one another, and the gender, racial, and ethnic
composition of each organizational unit. Unlike the current workforce
analysis, the proposed profile focused only on organizational units and
did not require the identification of individual job titles with the
exception of the supervisor, if any. Likewise, reporting of race, sex,
and salary information by job title would be eliminated using the
organizational profile.
Eleven commenters stated that the organizational profile would be
more burdensome than the workforce analysis. A number of commenters
indicated that most of their companies either did not have an
organizational chart or that if they had such charts, the charts only
reflected the top levels of the organization. Other commenters
indicated that the organizational structure of their companies was so
fluid that charts would become quickly outdated. Many commenters
representing or servicing the contractor community indicated that the
current workforce analysis was not a burden to produce because their
systems are configured to produce the analysis with very little effort.
These commenters also indicated that there are numerous software
products that facilitate the creation of a workforce analysis. Ten
commenters specifically recommended that OFCCP permit contractors the
option of continuing to use the workforce analysis if the contractor
found this less burdensome.
In addition, some commenters, including women's and civil rights
groups and a labor organization, raised concerns that adoption of the
organizational profile, in lieu of the workforce analysis, might result
in the loss of valuable compliance information. Others supported the
organizational profile but cautioned against any further simplification
because of the potential of the loss of important information.
OFCCP proposed the adoption of an organizational profile, in part,
to decrease the burden on contractors. Prior to the publication of the
NPRM, many stakeholders had raised concerns about the workforce
analysis and had indicated that it was burdensome. However, since many
contractors have now indicated that there is very little burden in
preparing a workforce analysis and that there may be more burden for
them in preparing an organizational profile, in this final rule OFCCP
permits contractors to submit either the old style workforce analysis
or an organizational display as the organizational profile. OFCCP
believes that this is responsive to concerns about burden and to
concerns that OFCCP not further simplify the organizational profile.
A number of commenters from the contractor community objected to
the requirement that the proposed organizational profile be presented
as a ``detailed organizational chart or similar graphical
representation.'' Five commenters indicated that the creation of a
graphical representation would be burdensome because they did not have
the software or systems to create such a chart and significant manual
work would be required. In response to these concerns, OFCCP has made
the provision of a ``graphical representation'' optional. The final
rule permits contractors choosing the organizational display to use
``detailed graphical or tabular chart, text, spreadsheet, or similar
presentation of the contractor's organizational structure'' for
displaying the required information.
Following is a sample organizational display. This sample is
provided for illustrative purposes only, and should

[[Page 68027]]

not be construed to represent a required format or template.
BILLING CODE 4510-15-P

[[Page 68028]]

[GRAPHIC] [TIFF OMITTED] TR13NO00.000

BILLING CODE 4510-45-C

[[Page 68029]]

Under the final rule, the organizational display would still not
require the itemization of individual job titles, or the reporting of
gender, race, ethnicity, and salary information by job title. Thus, the
volume of the organizational display should be less than the volume of
a workforce analysis (which often is one of the largest sections of the
AAP).
Some commenters requested that OFCCP specify that it intends for
the organizational profile to reflect the organization down to the
level of the first line supervisor. It is OFCCP's intent that each
organizational unit and all subordinate units, including the first-line
supervisor level be accounted for in the organizational profile. OFCCP
believes that the language of Sec. 60-2.11 accomplishes this.
Some commenters questioned the usefulness of the proposed
organizational profile. Contractors who feel it would be more helpful
for their self-audit and affirmative action purposes to continue to
develop a workforce analysis are at liberty to do so under the final
rule. However, for those contractors electing to submit an
organizational display, OFCCP believes that the display will provide a
representation of where minorities and women may be underrepresented or
concentrated, which permits preliminary review for potential
discrimination and the need for affirmative action. This representation
will be useful to many contractors engaging in self-analysis, and it is
useful to OFCCP's compliance evaluation process. By introducing the
flexibility to continue using the current workforce analysis or to
adopt an organizational display that is not necessarily a graphic
representation, OFCCP allows contractors to elect the method that is
most meaningful for the particular contractor.
As noted in the NPRM, in subsection (c)(4), the minority group
designations conform to the designations of minorities currently used
in the EEO-1 report. OFCCP intends the racial and ethnic designations
used in the regulations at 41 CFR Chapter 60, to be consistent with the
revised standards set forth by OMB. OFCCP will coordinate any changes
in these designations with the Equal Employment Opportunity Commission
(EEOC) so that record keeping and reporting requirements for both
agencies are compatible.

Section 60-2.12 Job Group Analysis

The NPRM would provide much greater guidance and clarification on
how to structure job groups than is contained in the current regulation
at Sec. 60-2.11(b). Many commenters supported the majority of the
proposal but added specific recommendations, especially for paragraph
(e).

Section 60-2.12(a) Purpose

Job group analysis is the first step in comparing the
representation of minorities and women in the contractor's workforce
with the estimated availability of qualified minorities and women who
could be employed. When the representation of minorities or women
within a job group is less than their availability by some identifiable
measure (see discussion of Sec. 60-2.16, below) the contractor must
establish goals.
No comments were received regarding proposed paragraph (a) and it
is adopted without change.

Section 60-2.12(b)

The reason for combining job titles is to organize the workforce
into manageable size groups to facilitate analysis, while still
maintaining elements of commonality among the jobs grouped together.
The jobs included in a job group must have three elements in common,
i.e., similar job duties, similar compensation, and similar
opportunities for advancement within the contractor's workforce.
Contractors have considerable discretion in determining which jobs to
combine, but the resulting job groups must contain jobs with the
requisite common elements. If the job groups are inappropriately drawn,
the availability and utilization analyses based on those job groups
will be flawed.
As was noted in the NPRM, some view the current instruction to
combine jobs by similar content, wage rates, and opportunities as too
general to provide clear, consistent guidance. Therefore, as proposed,
paragraph (b) of the final rule describes similarity of content and
similarity of opportunities, the two criteria most open to divergent
interpretations. This rule states ``similarity of content refers to the
duties and responsibilities of the job titles which make up the job
group.'' In addition, it provides that ``similarity of opportunities
refers to training, transfers, promotions, pay, mobility, and other
career enhancement opportunities offered by the jobs within the job
group.'' One commenter desired an explanation of similar wage rates.
However, OFCCP believes ``wage rates'' to be a generally understood
term. Moreover, the degree of similarity in wage rates appropriate for
job group formation varies depending upon the size of a contractor's
workforce and the structure of its compensation system.
Two other comments were received concerning paragraph (b). One
explicitly expressed support for OFCCP's traditional method of job
group formation based on similarity of jobs' content, wage rates, and
opportunities, an approach that is continued in this final rule. The
other commenter wanted the regulation to state that contractors have
discretion in forming their job groups. However, such a provision is
unnecessary, since contractors themselves decide which job titles are
appropriately grouped to produce job groups, given the three regulatory
parameters. Paragraph (b) is adopted as proposed.

Section 60-2.12(c)

Paragraph (c) of the final rule provides that a contractor's job
group analysis must include a list of the job titles comprising each
job group, a requirement that OFCCP's experience demonstrates most
contractors already incorporate into their affirmative action programs.
No comments were received on this provision.
Paragraph (c) also would reflect the provisions of Secs. 60-2.1(d)
and (e) relating to jobs located at another establishment.
Specifically, new Sec. 60-2.1(d) requires inclusion of each employee in
the affirmative action program of the establishment at which he or she
works, with exceptions made for employees who normally work at
establishments other than that of the manager to whom they report,
employees at establishments with fewer than 50 employees, and employees
for whom selection decisions are made at a higher level establishment.
Then, for identification purposes, Sec. 60-2.1(e) requires contractors
to annotate their affirmative action programs to indicate when
employees are included in affirmative action programs for
establishments other than where they are physically located. Five
commenters objected to having to annotate the job group analysis as too
burdensome. Most contractors would have to make only a small number of
annotations. Without notations showing who is accountable for personnel
actions affecting particular employees, or which affirmative action
programs cover specific workers, it is difficult for designated
contractor official(s) to adequately monitor progress or address
problem areas. Similarly, OFCCP needs the ability to easily identify
where responsibility lies for each of a contractor's employees in order
to carry out its regulatory obligations during compliance evaluations.
For these reasons, paragraph (c) is adopted in the final rule without
change.

[[Page 68030]]

Section 60-2.12(d)

The NPRM proposed in Sec. 60-2.12(d) that all jobs located at an
establishment must be included in that establishment's job group
analysis, except as provided in Sec. 60-2.1(d). Just two commenters
opposed the proposal, on the grounds that it would be too restrictive
by preventing contractors from forming ``functional'' job groups across
establishments. The discussion of functional AAPs in the preamble
discussion of Sec. 60-2.1 above addresses this issue. OFCCP adopts
Sec. 60-2.12(d) without change in the final rule.

Section 60-2.12(e) Smaller Employers

As a way of reducing unnecessary burden, the final rule makes
explicit that a contractor with fewer than 150 employees may choose to
utilize EEO-1 categories as job groups. The agency considers job
grouping by EEO-1 category to be simpler both for smaller employers and
for OFCCP.
Most commenters welcomed this regulatory revision for reducing the
burden on smaller contractors when preparing their affirmative action
programs. However, some felt the revision carried risks by going too
far, while a few maintained the change should apply to a wider group of
contractors.
Five commenters wrote that this proposal should go further. For
example, a law firm and a contractor wanted to extend the optional use
of EEO-1 categories to small establishments of larger employers.
Another law firm would have OFCCP expand the option so as to grant it
to any contractor with no more than fifty employees in an EEO-1
category. Finally, a municipality and a consultant recommended widening
the option so that all contractors, regardless of size, could choose to
use EEO-1 categories as job groups.
These recommendations are problematic. The agency is concerned with
reducing burden on smaller employers, which lack the financial and
human resources larger contractors possess. However, inappropriate
mingling of many highly disparate jobs in large EEO-1 category-based
job groups would likely occur for larger employers. Such mingling risks
ignoring potentially vast differences in job content, wage rates and
opportunities.
Here is an example of what happens if a larger contractor uses EEO-
1 categories for job groups: Contractor Y has 450 employees. Of the 450
employees, 300 are classified as EEO-1 Professional. The breakdown is
as follows:

----------------------------------------------------------------------------------------------------------------
Total
number of Number of Females Number of Minorities
employees females (percent) minorities (percent)
----------------------------------------------------------------------------------------------------------------
Accountants.................................... 25 10 40 5 20
Financial Analysts............................. 25 5 20 5 20
Human Resource Specialists..................... 50 40 80 10 20
Computer Programmers........................... 100 30 30 50 50
Electrical Engineers........................... 50 10 20 20 40
Systems Analysts............................... 50 5 10 10 20
----------------------------------------------------------------------------------------------------------------

A job group analysis by content, wage rate, and opportunities would
look something like this: (Job Groups are in bold with Job Titles
underneath)

Accountants Financial analysts Human resource specialists
Accountant I Jr. Financial analyst Staffing specialists.
Accountant II Sr. Financial analyst Benefits specialists.
Accountant III .................................... Payroll specialists.

Computer programmers Electrical engineers Systems analysts
Computer programmer I Electrical engineer I Jr. Systems analyst.
Computer Programmer II Electrical Engineer II Sr. Systems analyst.
Computer programmer III Electrical engineer III ....................................

If jobs are grouped by EEO-1 category, all professional jobs go
into one Job Group as follows: (Job Groups are in bold with Job Titles
underneath)

Professionals
Accountant I
Accountant II
Accountant III
Computer Programmer I
Computer Programmer II
Computer Programmer III
Electrical Engineer I
Electrical Engineer II
Electrical Engineer III
Jr. Systems Analyst
Sr. Systems Analyst
Jr. Financial Analyst
Sr. Financial Analyst
Staffing Specialists
Benefits Specialists
Payroll Specialists

The problem with using EEO-1 categories for job groups becomes
clear when the percentages of employees, availability, and utilization
data are examined:
A job group analysis using content, wage rates, and opportunities
looks like this:

--------------------------------------------------------------------------------------------------------------------------------------------------------
Total Female Females Minority
Job group number of Percent of availability underutilized? Percent of availability Minorities
employees females (percent) minorities (percent) underutilized?
--------------------------------------------------------------------------------------------------------------------------------------------------------
Accountants.......................................... 25 40 24 N 20 28 Y
Financial Analysts................................... 25 20 32 Y 20 16 N
Human Resource Specialists........................... 50 80 54 N 20 30 Y
Computer Programmers................................. 100 30 30 N 50 65 Y
Electrical Engineers................................. 50 20 28 Y 40 40 N
Systems Analysts..................................... 50 10 10 N 20 36 Y
--------------------------------------------------------------------------------------------------------------------------------------------------------

[[Page 68031]]

EEO-1 based grouping looks like this:

EEO-1-based grouping masks the utilization problems in six areas:
Female utilization problems in Financial Analysts and
Electrical Engineers.
Minority utilization problems in Accountants, Human
Resource Specialists, Computer Programmers, and Systems Analysts.
With EEO-1 based grouping:
There do not appear to be any utilization problems among
female professionals, which is incorrect. Grouping all female
professionals together masks the utilization problems and the need to
set goals for female Financial Analysts and Electrical Engineers.
There appear to be utilization problems among all minority
professionals, which is incorrect. Grouping all minority professionals
together makes it unlikely that the contractor will focus affirmative
action efforts on the four job areas in which utilization problems
actually occur.
Five commenters urged OFCCP to limit its burden reduction proposal
to contractors with total workforces of 100 or fewer employees, instead
of 150. The 150 threshold is consistent with the threshold for smaller
employers in the record keeping provisions of part 60-1. Two women's
organizations and a labor organization were concerned that allowing
larger employers to use EEO-1 categories would sacrifice ``meaningful
data, (given that) proper job groupings are central to the aims of 60-2
and vital to the mission of OFCCP.'' Two consultants were more specific
about their worries, fearing that even smaller employers could mask
discrimination. One pointed out that a smaller contractor might easily
have two or three levels of management in its officials and managers
job group. For example, a chief executive officer, a chief financial
officer, and a vice president could be joined with a director of the
mailroom, hiding potential race or gender discrimination.
While these concerns may be valid in some instances, they must be
balanced with the goal of reducing contractors' burdens whenever
possible without undue sacrifice to the agency's ability to enforce its
mission. Section 60-2.12(e) is adopted as proposed.

Section 2.13 Placement of Incumbents in Job Groups

No comments were received on this section. It is adopted without
change.

Section 60-2.14 Determining availability

(Current Sec. 60-2.14 entitled ``Program summary'' is found at Sec. 60-
2.31.)
Section 60-2.14 in the final rule, contains the guidelines for
determining availability and replaces the current regulations at
Secs. 60-2.11(b)(1) and (2). The purpose of the availability analysis
is to determine the representation of minorities and women among those
qualified (or readily qualifiable) for employment for each job group in
the contractor's workforce. Availability is the yardstick against which
the actual utilization of minorities or women in the contractor's job
group is measured.
In the current rule, the contractor is required to compute
availability, separately for minorities and for women, for each job
group. In determining availability, the contractor considers each of
eight factors listed in the regulations. The factors are similar, but
not identical, for minorities and women. Although contractors are
required to consider all eight factors, they are not required to
utilize each factor in determining the final availability estimate.
Only the factors that are relevant to the actual availability of
workers for the job group in question are to be used. Most contractors
actually use only a few of the eight factors to compute the final
availability estimates.
The ``eight-factor analysis'' for determining availability is one
of the most frequently criticized elements of the Executive Order 11246
program. Common complaints among contractors are that the requirements
are unnecessarily complex and not sufficiently focused. As proposed in
the NPRM, this section simplifies the availability computations by
reducing the number of factors from eight to two. These two factors are
the same for minorities and for women.
Under this final rule, as under the current regulation, the
contractor is required to compute availability, separately for
minorities and for women, for each job group.
Fourteen commenters specifically supported the proposed reduction
from eight factors to two. The proposed rule was equally popular among
contractors, contractor associations, consultants, and civil rights and
women's organizations.
One commenter association recommended that a reasonableness
standard be included in the definition of ``trainable'' described in
the second of the two factors. This commenter noted that the current
regulation contains such a standard. Without this limitation, the
commenter was concerned that the calculation of availability would be
rendered impractical.
The inclusion of individuals who are ``trainable'' is intended to
address the recommendations of civil rights and women's groups that the
availability computation include consideration of training
opportunities. It is a refinement of the requirement in the previous
regulations (Secs. 60-2.11(b)(1)(viii) and (b)(2)(viii)) that the
contractor consider the degree of training which it is reasonably able
to undertake as a means of making all job classes available to
minorities and to women.
In response to this comment, OFCCP has revised the final rule to
restore a reasonableness standard regarding the concept of ``trainable
employees.'' OFCCP believes that this modification will make it easier
for contractors to calculate ``trainable employees'' while achieving
the goal of requiring contractors to consider this pool of available
workers.
The final rule now provides at Sec. 60-2.14(c) that the two factors
to be considered in determining availability are:
(1) The percentage of minorities or women with requisite skills in
the reasonable recruitment area. The reasonable recruitment area is
defined as the geographical area from which the contractor usually
seeks or reasonably could seek workers to fill the positions in
question.
(2) The percentage of minorities or women among those promotable,
transferable, and trainable within the contractor's organization.
Trainable refers to those employees within the contractor's
organization who could, with appropriate training which the contractor
is reasonably able to provide,

[[Page 68032]]

become promotable or transferable during the AAP year.
Contractors would be required to determine the percentages in
Sec. 60-2.14(c)(2), by undertaking one or both of the following steps:
1. Determine which job groups are ``feeder pools'' for the job
group in question. The feeder pools are job groups from which
individuals are promoted.
2. Ascertain which employees could be promoted or transferred with
appropriate training which the contractor is reasonably able to
provide.

Example #1: a contractor has a job group of Engineering
Managers. Over the past year, all individuals who have been promoted
into the Engineering Managers job group have been promoted from only
two other job groups: Chemical Engineering Project Leaders and
Petroleum Engineering Project Leaders. The Chemical Engineering
Project Leaders job group has 100 incumbents, of whom 20 are
minority and 25 are female. The Petroleum Engineering Project Leader
job group also has 100 incumbents, of whom 15 are minority and 20
are female. The ``feeder pool'' availability is the total number of
minority or female incumbents divided by the total number of
incumbents for the two job groups.

------------------------------------------------------------------------
Total Minority Female
Job Group Incumbents Incumbents Incumbents
------------------------------------------------------------------------
Chem.E PL..................... 100 20 25
Pet.E PL...................... 100 15 20
------------------------------------------------------------------------

Minority Availability (20+15)/(100+100)=17.5%
Female Availability (25+20)/(100+100)=22.5%

Example #2: A contractor has a job group of Entry Level
Managers. This contractor has a management training program. A
review of the training program shows that of the 200 employees in
the program last year, 100 completed the program and are eligible
for Entry Level Manager positions this AAP year. Of those 100 who
completed the program, 45 are minority and 40 are female. The
availability in this example is the percentage of minorities or
females that completed the training program.

----------------------------------------------------------------------------------------------------------------
Minorities Females Minority Female
Total individuals eligible for promotion eligibile for eligible for availability availability
promotion promotion (percent) (percent)
----------------------------------------------------------------------------------------------------------------
100............................................. 45 40 45 40
----------------------------------------------------------------------------------------------------------------

OFCCP's experience has shown that these factors are the ones most
contractors use to compute availability estimates. Taken together, they
reflect contractors' assertions of who is qualified and available for
employment.
Section 60-2.14(e) requires a contractor to define its reasonable
recruitment area so as not to exclude minorities and women, and to
develop a brief written rationale for selection of that recruitment
area. On occasion, defining the recruitment area in a slightly
different way can significantly enlarge or reduce the proportion of
minorities or women with requisite skills available for employment. In
such a case, the contractor is required to assure that the recruitment
area chosen will not have the effect of excluding minorities or women.
Three commenters, a contractor and two consultants, expressed
concern about the prohibition against drawing the reasonable
recruitment area in a way that has the effect of excluding minorities
or women. One noted that even if such exclusion is unintentional,
contractors will be found in violation. Accordingly, the commenters
recommended adding the term ``unreasonably'' or ``intentionally'' in
front of the word ``excluding.'' OFCCP does not agree that this change
is necessary or desirable. The objective of this section of the
regulations is to have the contractor compute, as accurately as
possible, the availability of minorities and women for employment.
Accurate computation of availability is essential to the entire goal
setting process. Improper drawing of the reasonable recruitment area
has the effect of misstating availability. The effect is the same,
whether the improper drawing is intentional or inadvertent, and it
cannot be accepted. If a contractor is found in violation for
unintentionally drawing its recruitment area in a way that excludes
minorities or women, it will be given ample opportunity to correct the
error before the conclusion of the compliance evaluation.
Section 60-2.14(f) requires that contractors define the pool of
promotable, transferable, and trainable employees in such a way as not
to exclude minorities or women, and to develop a brief documented
rationale for the selection of the pool. One commenter recommended a
clarification that this subsection will not be interpreted to mean that
contractors will be found in violation for defining feeder groups in a
way that unintentionally has the effect of excluding minorities or
women. For reason similar to that discussed above, OFCCP declines to
add this clarification.
Further, Sec. 60-2.14(d) requires that the contractor use the most
current and discrete statistical data to conduct its availability
analyses. This is addressed in Section 2G05(e) and Appendix 2B of the
FCCM. Examples of such information include census data, data from local
job service offices, and data from colleges and other training
institutions. One commenter asserted that it is difficult to identify
the most current statistical data in practice because few contractors
have access to data more current than the decennial census. Sections
2G04 and 2G05 of the FCCM provide guidance on other sources of
availability data. Moreover, decennial census data or some variant
thereof often will satisfy the requirement to use the most current
information ``available.'' Another commenter asserted that determining
availability is laborious for large, national companies that hire from
the top educational institutions across the nation for professional
ranks. OFCCP disagrees as to the difficulty of this task. Data on
college and university graduates are readily available in private
publications, from the U.S. Department of Education, and from the
schools themselves.
When a job group is composed of job titles with different
availability rates, Sec. 60-2.14(g) requires the contractor to compute
a composite availability estimate. The composite availability figure
would represent a weighted

[[Page 68033]]

average of the availability estimates for all the job titles in the job
group.
The composite weighted average availability is computed by
determining the percentage of total job group incumbents represented by
the incumbents in each job title, multiplying each incumbent percentage
by the corresponding availability for that job title, and summing the
results.
The computation is illustrated by the following job group of
professionals with a total of 80 incumbents:

------------------------------------------------------------------------
Number of Availability
Job Title incumbents (percent)
------------------------------------------------------------------------
Accountant.............................. 20 35
Auditor................................. 40 20
Analyst................................. 20 15
------------------------------------------------------------------------

1. Accountant=20/80 incumbents, or .25 Auditor=40/80 incumbents, or .5
Analyst=20/80 incumbents, or .25
2. Accountant=.25 x .35=.0875 Auditor=.5 x .20=.1 Analyst=.25 x
.15=.0375
3. Composite Availability=.0875+.1+.0375=.225 or 22.5%.
A comment from a law firm representing a business association urged
OFCCP to delete the composite availability requirement entirely, or to
at least clarify it to provide that determining availability for each
job title is not required when a contractor uses ``appropriate census
data that encompasses a broader range of job titles and/or occupational
categories.'' The basis for the request was the commenter's assertion
that ``census data already encompasses a range of job titles'' and
``already represents ``composite'' availability data when applied to a
specific job group.'' OFCCP does not object, per se, to the use of
aggregated census data in lieu of the job title by job title
computation of composite availability, when the aggregated data truly
represent composite availability data for the job group in question.
However, in order for the use of aggregated census data to be
acceptable, there must be a close match between the actual jobs
included in the census data and those in the contractor's job group.
Additionally, so as to remain true to the concept of weighted
averaging, the percentage representation of each job in the census
group must closely match the percentage representation of the
corresponding job in the contractor's job group.
In the NPRM, OFCCP requested comments concerning whether
contractors should be required to compute availability separately for
individual minority subgroups as a general rule. Five commenters--two
law firms, a contractor, a contractor representative, and an individual
consultant-- expressed opposition to computing availability separately
for individual minority subgroups. One of these commenters expressed
concern that it would cause confusion in that employees or applicants
could identify themselves with multiple ethnic or racial
characteristics. A law firm indicated that it would create rivalry
between minority subgroups.
One commenter, a consultant, noted examples where it may be
beneficial to calculate minority subgroups. This commenter stated that
using total minorities allows the masking of discrimination against
specific minority subgroups. This commenter indicated this practice of
discriminating against minority subgroups could be self-perpetuating
because management hires new employees as a result of referrals from
current employees, with the effect of excluding other groups.
The regulation retains the requirement that contractors determine
the availability of total minorities. The language in the proposal,
which does not require calculating availability separately by
individual minority subgroup, was not modified and has been adopted in
the final rule.

Section 60-2.15 Comparing incumbency to availability

(Current Sec. 60-2.15 entitled ``Compliance status'' was revised
and moved to Sec. 60-2.35, discussed below in the preamble.)
Section 60-2.15 addresses an aspect of the current regulations that
is referred to as the ``utilization analysis,'' and replaces one
portion of the current Sec. 60-2.11(b). Section 60-2.15(a) requires the
contractor to compare the representation of minorities and women in
each job group with their representation among those available to be
employed in that group. During compliance reviews, OFCCP typically
finds that more minorities and women are available for employment in
particular occupations and job groups than are actually employed in
those positions. If the availability for a job group is greater than
incumbency, and the difference is of a sufficient magnitude, the
contractor must establish a goal.
The current regulation refers to the difference between
availability and incumbency as ``underutilization,'' defined as
``having fewer minorities or women in a particular job group than would
reasonably be expected by their availability.'' When this condition
exists, the contractor must establish a goal. As noted in the preamble
to the NPRM, OFCCP traditionally has permitted contractors to identify
underutilization using a variety of methods, including: The ``any
difference'' rule, i.e., whether any difference exists between the
availability of minorities or women for employment in a job group and
the number of such persons actually employed in the job group; the
``one person'' rule, i.e., whether the difference between availability
and the actual employment of minorities or women equals one person or
more; the ``80 percent rule,'' i.e., whether actual employment of
minorities or women is less than 80 percent of their availability; and
a ``two standard deviations'' analysis, i.e., whether the difference
between availability and the actual employment of minorities or women
exceeds the two standard deviations test of statistical significance.
Seven commenters addressed the standards for comparing incumbency
to availability. Five of the seven commenters--two organizations
representing women, a consultant, an association and a labor
organization-- advocated that OFCCP adopt some variation of the ``any
difference'' standard across the board. They argued that contractors
should be required to set placement goals for women and minorities
whenever analysis demonstrates any difference between availability and
utilization. They indicated that allowing contractors to choose the
standard by which they will be evaluated introduces unnecessary
inconsistency to the process, resulting in similarly situated
establishments being held to different measures in assessing their
employment of women and minorities. Another civil rights

[[Page 68034]]

membership organization commented that contractors should be required
to set placement goals whenever analysis reveals a difference of one
person between availability and utilization. One commenter, a
consultant, stated that the proposal does not address the
``inappropriate nature'' of using the standard deviation approach when
either the job groups or availability are too small. The commenter
further stated that OFCCP continues to avoid implementing a regulation
regarding determination of underutilization.
Conversely, two commenters, both law firms, recommended that OFCCP
continue to permit contractors flexibility, arguing that the various
acceptable methods be included in the regulatory text.
On balance, OFCCP believes that retaining the current practice of
permitting various methods for determining availability is the
appropriate approach to take. OFCCP further believes that the proposed
wording of Sec. 60-2.15 is sufficient to suggest to the contractor
community when there exists the need to establish a goal. Therefore,
the provision, Sec. 60-2.15(b), is adopted without change.
Finally, current Sec. 60-2.11(b) specifies that the AAP shall
contain ``(a)n analysis of all major job groups'' for which
underutilization determinations will be made (emphasis added). The
regulations do not define ``major,'' nor do they distinguish major job
groups from other job groups. Most contractors have treated all job
groups as major, and have conducted the analyses for each. In the NPRM
OFCCP proposed to discontinue the use of the word ``major,'' thereby
requiring that contractors determine availability, compare incumbency
to availability, and set placement goals (where comparison of
availability to incumbency indicates a need to do so) for all job
groups.
In the preamble of the NPRM, OFCCP expressly solicited comments on
the proposal to drop the word ``major'' in reference to job groups.
OFCCP received a comment from a law firm representing a business
association objecting to the proposal to drop the term major. This
commenter stated this change would ``make little practical difference
to large contractors'' but would ``negatively impact small
contractors.'' This commenter further stated that small contractors,
``relied on the current language to reasonably conclude they need not
assess utilization of those job groups that are too small to permit
meaningful analysis.'' This commenter concluded that the deletion of
``major'' would ``only add work, but no additional value, to a small
contractor's AAP.'' OFCCP believes that this concern becomes less of an
issue inasmuch as Sec. 60-2.12 allows smaller contractors to use EEO-1
categories as their job groups.
In contrast, another association commented that it anticipated no
added burden because contractors already have a practice of treating
all job groups as ``major'' and stated that contractors already perform
these analyses on each job group. A labor organization commented that
requiring that underutilization analysis be performed for each job
group rather than just ``major'' job groups is a sound step, consistent
with the program's goals of promoting equal opportunity.
This section is adopted as proposed in the NPRM. This language
assures that no one is excluded when comparing incumbency to
availability because of the size of the job group.

Section 60-2.16 Placement Goals

The earlier sections of the final rule require a Federal contractor
to analyze its workforce and evaluate its employment practices for the
purpose of identifying and correcting gender-, race-, and ethnicity-
based obstacles to equal employment opportunity. Where the need for
corrective action is revealed, the AAP must include outreach and other
steps precisely tailored to eliminate the barriers disclosed, and
placement goals to target and measure the effectiveness of efforts
directed towards achieving that result. In the preamble to the NPRM,
OFCCP provided a brief history of how it has addressed the question of
goals and how the regulatory provisions requiring goals fits into that
history.
Section 60-2.16(a) sets out the purpose of placement goals. It
explains that goals ``serve as objectives or targets reasonably
attainable by every good faith effort.'' It also explains that goals
are used to measure progress toward equal employment opportunity.
One contractor association commented that in its view there was no
meaningful distinction between the use of goals and the use of quotas.
The commenter stated, ``OFCCP requires contractors to pursue a race-
based or gender-based hiring and promotion system.'' The commenter
suggested that goals could only be justified by a demonstration that
they are needed to remedy specifically identified past discrimination.
Absent evidence of such demonstration, the commenter suggests that
there is no ``compelling governmental interest'' that would justify the
setting of goals and that to do so would violate the equal protection
clause of the U.S. Constitution. The commenter cites a number of court
decisions to support its position.
OFCCP disagrees with this commenter. OFCCP does not require
contractors to pursue a race- or gender-based hiring and promotion
system. As noted in the NPRM, what OFCCP requires is that contractors
engage in outreach and other efforts to broaden the pool of qualified
candidates to include minorities and women. Contrary to the suggestion
made by the commenter, goals are not a device to achieve proportional
or equal results; rather the goal setting process is used to target and
measure the effectiveness of affirmative action efforts to eradicate
and prevent barriers to equal employment opportunity. OFCCP's position
with respect to goals is explained more fully in an OFCCP
Administrative Notice entitled ``Numerical Goals under Executive Order
11246,'' which was issued in December 1995.
A contractor association questioned whether the first sentence of
Sec. 2.16(b) was necessary, since Sec. 60-2.15 discusses when a goal
must be set and Sec. 60-2.16(c) establishes the level at which a goal
must be set. Another commenter requested clarification of terms in this
same sentence. In response to these comments, OFCCP has deleted the
first sentence of Sec. 60-2.16(b) in the final rule.
Another commenter urged OFCCP to ``state loud and clear, that there
is no presumption of discrimination'' based on the fact that a
contractor is required under the regulations to set a goal. OFCCP
believes that the statement at Sec. 60-2.16(b) that ``A contractor's
determination under Sec. 2.15 that a placement goal is required
constitutes neither a finding nor an admission of discrimination'' is a
very ``loud and clear'' statement of this point.
Commenters, generally, raised no concerns about Sec. 60-2.16(c).
This provision is adopted without change in the final rule.
Two commenters representing a number of contractors raised a
concern about the statement at Sec. 60-2.16(d) that ``In the event of a
substantial disparity in the utilization of a particular minority
group, a contractor may be required to establish separate goals for
those groups.'' The commenter was concerned because the term
``substantial disparity'' is not defined and feared that the
requirement ``will have the practical result of producing quotas and
will, no doubt pit one minority group against another.''
As indicated in Sec. 60-2.16(d), setting a single goal for all
minorities is expected

[[Page 68035]]

to continue to be the norm for most contractors. The purpose of the
additional language concerning substantial disparities for a particular
group is intended to address specific situations where a particular
minority group, or men and women of a particular minority group, are
substantially underutilized. This approach is taken directly from
OFCCP's current regulations at Sec. 60-2.12(l). In appropriate
circumstances, OFCCP will continue to require separate goals for
particular minority groups or by gender within minority groups. It is
not intended to represent a change. Therefore, OFCCP has not changed
this language in the final rule.

Section 60-2.17 Additional Required Elements of Affirmative Action
Programs

The preceding sections of the regulations have focused primarily on
the diagnostic component of written AAPs--the statistical analyses of
the contractor's workforce to identify equal employment opportunity
problems. However, meaningful affirmative action also requires that the
contractor develop and carry out action-oriented programs to eliminate
the identified problems, and establish procedures for monitoring its
employment activities to determine whether the AAP is effective.
The existing regulations address the action-oriented and evaluative
components of AAPs in a section designated ``Additional required
ingredients of affirmative action programs.'' That provision appears at
Sec. 60-2.13 in the existing regulations. OFCCP has eliminated a number
of elements that no longer need to be specifically and separately set
forth in regulatory form. The remaining provisions have been moved to
Sec. 60-2.17 and are now named ``Additional required elements of
affirmative action programs.'' Although OFCCP has eliminated these
provisions from the mandatory requirements of the AAP, the contractor
may voluntarily choose and is encouraged to retain these elements in
its program.
In the final rule, OFCCP has deleted, as specific required
elements, the following items:

Sec. 60-2.13(a)--reaffirmation of the contractor's EEO policy in all
personnel matters;
Sec. 60-2.13(b)--formal internal and external dissemination of the
contractor's EEO policy;
Sec. 60-2.13(e)--establishment of goals and objectives by
organizational units and job groups, including timetables for
completion;
Sec. 60-2.13(i)--active support of local and national community action
programs and community service programs; and
Sec. 60-2.13(j)--consideration of minorities and women not currently in
the workforce having requisite skills.

In addition, OFCCP has deleted existing Sec. 60-2.13(h)--compliance
of personnel policies and practices with the Sex Discrimination
Guidelines (41 CFR part 60-20). The Sex Discrimination Guidelines are
an independent regulatory requirement to which contractors are subject,
regardless of whether the Guidelines are mentioned as ``additional
required elements.'' Eliminating redundancy by not referencing the
Guidelines in Sec. 60-2.17, therefore, in no way affects the
contractor's obligation to comply with the Guidelines nor OFCCP's
commitment to enforcing the Guidelines.
OFCCP has retained four of the original 10 ``additional required
ingredients.'' OFCCP believes that these remaining items capture the
essence of effective affirmative action, including subsuming many
aspects of the specific ``ingredients'' that were deleted. They should
energize and encourage contractors to improve upon and eliminate any
weaknesses in their equal employment opportunity performance. The
following elements in the existing Sec. 60-2.13 are retained in the new
Sec. 60-2.17:

Sec. 60-2.13(c)--establishment of responsibilities for implementation
of the contractor's AAP (codified as Sec. 60-2.17(a));
Sec. 60-2.13(d)--identification of problem areas by organizational
units and job groups (codified as Sec. 60-2.17(b));
Sec. 60-2.13(f)--development and execution of action-oriented programs
designed to eliminate problems and further designed to attain
established goals and objectives (codified as Sec. 60-2.17(c)); and
Sec. 60-2.13(g)--design and implementation of internal audit and
reporting systems to measure effectiveness of the total program
(codified as Sec. 60-2.17(d)).

OFCCP proposed to modify the provision in Sec. 60-2.13(c) of the
existing regulations (Sec. 60-2.17(a) of this rule) concerning the
``establishment of responsibilities for implementation of the
contractor's affirmative action program.'' This modification is derived
from Sec. 60-2.22(a) of the existing regulations, which recommends, but
does not require, that the contractor assign an executive as director
or manager of company equal opportunity programs and give that person
the management support and staffing to carry out the assignment. The
proposal expressly requires that the contractor provide for the
implementation of the affirmative action program by assigning
responsibility and accountability to a company official. However, the
official is not required to be an executive of the company.
OFCCP received several comments on proposed subsection 60-2.17(a),
the majority of which strongly supported the proposal. Those commenters
stated, for example, that for the affirmative action program to be
effectively implemented, adequate attention and resources must be
devoted to its administration.
One commenter, an organization representing contractors, agreed
that management responsibility and accountability are important factors
in implementing a successful affirmative action program, but noted that
many experienced human resources professionals believe that an
``affirmative action czar'' approach is not particularly effective.
According to the commenter, this is because the czar model ``allows
others in the organization to believe that nondiscrimination and
affirmative action are the czar's responsibility not theirs.''
Therefore, the commenter argued, exactly how accountability and
responsibility are to be accomplished should be left to the contractor.
Another commenter took a different approach, writing, ``The OFCCP fails
to recognize that frequently the person assigned with the
responsibility for equal employment opportunity is often a staff member
who serves in an advisory capacity, without the authority to implement
these changes and therefore cannot be held accountable.''
OFCCP certainly encourages contractors to hold all managers
accountable for equal employment opportunity and affirmative action.
However, OFCCP also feels strongly that a company official must oversee
equal opportunity and affirmative action efforts, and must have the
authority and responsibility to make them effective, lest no-one is
held accountable and responsible.
Finally, a few commenters expressed concern about the last sentence
of subsection (a), which states that the official responsible for equal
employment opportunity must have the authority, resources, support of
and access to top management to ensure effective implementation of the
AAP.

[[Page 68036]]

One wondered how a contractor would demonstrate to the compliance
officer that the designated official has the required authority. OFCCP
is confident that authority would be easily demonstrated by a few
inquiries during the compliance evaluation process. The commenter also
wondered whether, over time, this would lead to more boilerplate in
AAPs designed to prove the necessary authority and access to top
management. OFCCP considers this concern to be highly speculative.
A contractor, a law firm, and several consultants and organizations
representing contractors expressed concerns with proposed subsection
(b). Subsection (b) requires the contractor to perform in-depth
analyses of its total employment process to determine whether and where
impediments to equal employment opportunity exist. Areas to be analyzed
include: (1) The workforce by organizational unit and job group; (2)
personnel activity; (3) compensation systems; (4) selection,
recruitment, referral and other personnel procedures; and (5) other
areas that might impact the success of the affirmative action program.
Many of the comments focused on the requirement to review compensation
systems, with several commenters asserting that OFCCP does not have
authority to enforce equal pay concerns, that analysis of compensation
systems is not required by the current regulations, that compensation
analyses impose an additional burden, or that OFCCP did not specify the
types of analyses it would find acceptable. However, one of the
contract clauses that Executive Order 11246 requires be inserted in all
government contracts requires that the contractor agree not to
discriminate on the basis of race, color, religion, sex or national
origin. Areas in which discrimination expressly is prohibited include
``rates of pay and other forms of compensation.'' Section 202(1). Since
the compensation analysis requirement is not new, it imposes no
additional burden. The question of burden is also discussed in the
Paperwork Reduction Act section below. In addition, contractors have
the ability to choose a type of compensation analysis that will
determine whether there are gender-, race-, or ethnicity-based
disparities.
Commenters also expressed confusion about how the information
gained from the analyses conducted under subsection (b) should be used
by contractors, and how the contractor's actions will be evaluated by
OFCCP. Much of the answer is found in subsection (c), which requires
the contractor to develop and execute action-oriented programs designed
to correct any problem areas identified pursuant to subsection (b), and
to demonstrate that it has made good faith efforts to remove identified
barriers, expand employment opportunities, and produce measurable
results. Of course, if the contractor's analyses disclosed
discrimination, the contractor would be expected to eliminate the
discriminatory practices and provide appropriate remedies.
A few commenters asserted that little or no reduction of the burden
or cost of implementing provisions of the rule would result from the
revisions that were made to Sec. 60-2.17. See discussion of burden
reduction in the section below addressing the Paperwork Reduction Act.

Section 60-2.18 Equal Opportunity Survey

The proposed Sec. 60-2.18 requires that nonconstruction contractor
establishments designated by OFCCP prepare and file an Equal
Opportunity (EO) Survey. The EO Survey contains information about
personnel activities, compensation and tenure data and specific
information about the contractor's affirmative action programs.
Virtually every commenter addressed the EO Survey. There were two
general categories of comments: (1) comments on the Survey as a concept
and its utility as an instrument to select contractors for compliance
evaluations, including comments on the burden hours and (2) comments on
the specific format and content of the Survey document.
There were numerous comments from women's and civil rights groups,
labor organizations, and a consultant in favor of the EO Survey as a
useful instrument to select contractors for compliance evaluations.
These comments indicated that it will enhance, strengthen, and improve
enforcement efforts; it will increase contractor accountability; it
will aid in disclosing possible discriminatory personnel and
compensation practices; it will encourage contractor self-audits and
corrective actions; it will aid OFCCP in tailoring its evaluation
activities to those contractors that appear to need the most help; and
it will not be a burden on contractors. However, there were also
numerous comments from contractors, law firms, employer associations,
and consultants that asserted that the EO Survey is not a useful
instrument, or expressed other concerns about the EO Survey.
One commenter asserted that the Administrative Procedure Act
requires that OFCCP subject the actual EO Survey format to notice and
comment rulemaking. OFCCP disagrees. As the Federal agency charged with
enforcing Federal contractor compliance with Executive Order 11246,
OFCCP has ample authority to investigate such compliance by, among
other things, requesting general information relevant to whether a
contractor is fulfilling its affirmative action duties or engaging in
discriminatory employment practices. Section 202(5) of Executive Order
11246, and the regulations promulgated thereunder, mandate as a
condition of each Government contract, that the contractor agree to
furnish all information required by the Executive Order and to permit
the Secretary of Labor access to the contractor's books, records and
accounts for purposes of investigation to ascertain compliance with the
rules, regulations and orders. 41 CFR 60-1.4(a)(5). The requirements of
Sec. 60-1.4(a) with respect to the production of data are not limited
to information sought by OFCCP as part of a compliance evaluation.
Nothing in the Administrative Procedure Act or elsewhere requires OFCCP
to publish for notice and comment an enumeration of, or the format for,
every item it will examine to determine whether contractors are
complying with their contractual obligations. Moreover, OFCCP notes
that public notice and comment on the Survey format were provided under
the Paperwork Reduction Act.
Several comments were related to OFCCP's projection of the burden
hours that it should take contractors to complete the EO Survey. Three
organizations representing contractors surveyed a sample of their
members concerning the length of time it took to complete the EO
Survey. One organization found that the average completion time was 23
hours; the second, 30 hours, and the third stated that 80% of its
sample took longer than 12 hours to complete the EO Survey. Given the
newness of the EO Survey and the requisite learning curve of the
individuals completing the EO Survey, the time required to complete a
contractor establishment's initial EO Survey is undoubtedly greater
than the time that will be required for subsequent EO Survey
submissions. To take this learning curve into account, OFCCP has
increased the estimated time to complete the EO Survey from 12 hours to
21 hours for the first two years the Survey is distributed. See
Paperwork Reduction Act section below.
Several commenters believed OFCCP should explain how the EO Survey
data would be used to select contractors for compliance evaluations.
Another

[[Page 68037]]

commenter indicated that Part C of the EO Survey (which collects
compensation data) is inadequate to help OFCCP select contractors for
compliance evaluations. In actuality, the data in all three components
of the EO Survey--Parts A, B and C--as well as other information, will
be used in the contractor selection process.
Each part of the Survey will provide indicators of potential
compliance problems for which further inquiry may be appropriate. For
example, negative answers to the questions in Part A about the
contractor maintaining AAPs under each of the laws enforced by OFCCP
might suggest the need for follow-up in that area. Likewise, Part C
data that indicate possible disparities in pay between men and women in
particular EEO-1 categories might suggest the need for closer scrutiny
of actual pay practices. The Survey responses do not prove that a
problem exists, but rather are used as an indicator to guide OFCCP
compliance evaluations.
One commenter suggested that construction contractors also be
required to submit the EO Survey. Part 60-2 pertains solely to
contractors with supply and service contracts. The current EO Survey
was intended for nonconstruction contractors. OFCCP will, however,
consider expanding the Survey to cover construction contractors in the
future. It should be noted also that construction companies that have
supply and service contracts, e.g., architectural, engineering, survey
and the like, are subject to part 60-2.
Several other commenters indicated that the Survey was not
appropriate for colleges and universities because they complete the
IPEDS or EEO-6 form rather than the EEO-1 form. Currently OFCCP is not
requiring colleges and universities to complete the Survey and there
are no current plans to expand the EO Survey to include higher
education contractors; however, OFCCP will consider this comment if the
Survey is subsequently expanded to include higher education
contractors.
A recurring concern of contractors is that information submitted to
OFCCP, compensation information being the most frequently cited item,
may be disclosed to competitors or the public under the Freedom of
Information Act (FOIA).
Paragraph (d) states that OFCCP will treat information contained in
the Equal Opportunity Survey as confidential to the maximum extent the
information is exempt from public disclosure under FOIA. OFCCP explains
in paragraph (d) that its practice is not to release data where the
contractor still is in business and where the contractor asserts, and
through the Department of Labor review process it is determined, that
the data are confidential and that disclosure would subject the
contractor to commercial harm. Several comments suggested that neither
regulations nor case law under FOIA is adequate to ensure protection of
information in the EO Survey. However, the more specific the
information is about a particular employer, the more protection it is
afforded under FOIA. Moreover, the Department's FOIA regulations at 29
CFR 70.26 require OFCCP to notify contractors on a case-by-case basis
whenever a FOIA request is made. This notification gives contractors
the opportunity to object to the disclosure of any data they consider
confidential.
Throughout its history OFCCP has routinely collected compensation
information during the course of its compliance evaluations, and OFCCP
is not aware of any instance in which compensation data were disclosed
without the consent of the contractor. It has always been OFCCP's
policy not to release data that is determined to be confidential or has
the potential to subject the contractor to commercial harm if
disclosed, and this policy will be applied to EO Survey data as well.
OFCCP believes that the concerns about the security of EO Survey data
are unfounded.
Paragraph (b) of the NPRM provided that the Survey must be prepared
in accordance with the format specified by the Deputy Assistant
Secretary, but the specific format was not published in the NPRM.
Paragraph (b) further stipulated that the Survey will include
information that will allow for an accurate assessment of contractor
personnel activities, pay practices, and affirmative action
performance.
The NPRM also indicated that the Survey ``may'' include data
elements such as applicants, hires, promotions, terminations, and
compensation by race and gender. In this final rule, this provision is
made mandatory, because these data are essential to OFCCP's analyses of
contractors' personnel and compensation practices.
As use of the EO Survey develops and evolves, the Department may at
some time determine that one or more of the data elements currently
included in the EO Survey should be altered or deleted. In the event
consideration is given to changing a data element requirement, the
following circumstances must exist: (1) the Secretary must clearly
demonstrate through statistical analyses of EO Survey submissions that
the data element in question is no longer of value; and (2) the
Secretary must follow Notice and Comment procedures.
Many comments addressed the content (i.e., format, definitions,
etc.) of the EO Survey form as it is being implemented by OFCCP.
Because Sec. 60-2.18 does not provide for a specific format, OFCCP does
not consider the specific contents of the Survey form now in use to
have been part of the NPRM. Nevertheless, in the interest of full
discussion of the EO Survey, OFCCP addresses those comments below.
During the first implementation phase of the EO Survey, which began
in April 2000, a Survey format, reviewed and approved by OMB, was sent
to approximately 7,000 contractors to complete and submit. While many
of the comments concerning the format were favorable, a number of
comments from law firms, employer associations, consultants and one or
two contractors were critical of the format for a variety of reasons.
Some indicated that the use of EEO-1 categories rather than job groups
renders the data too broad to be meaningful in identifying
noncompliance, as an indicator for potential problems, or as a self-
auditing tool for contractors. Some other commenters said that using
EEO-1 data would require companies to maintain two sets of data: one
set for the AAP based on job groups and one for the EO Survey. On
August 31, 2000, four organizations representing contractors met
pursuant to Executive Order 12866 with OMB and OFCCP to discuss the
Survey. These four organizations asserted that reporting Survey data by
EEO-1 category represented an additional burden, because contractors
usually maintain data by job groups.
OFCCP proposed the use of the nine EEO-1 job categories because (1)
they are well known to Federal contractors, and have been in use for
several decades; (2) many contractors now use the categories as job
groups; (3) the categories are fixed and common across industries and
therefore provide a ready means of comparing employment data from one
contractor to another (this would not be the case with job groups,
whose makeup varies from contractor to contractor); and, (4) job groups
generally do not cross EEO-1 categories, which means that a contractor
could determine EEO-1 category data simply by combining the data from
several job groups. Additionally, OFCCP intends to use the EO Survey
data to identify indicators of potential problems for purposes of
scheduling and focusing compliance evaluations and not as evidence of
discrimination, so detailed data are not necessary. While OFCCP's Equal
Employment Data System (EEDS) is also based on EEO-1 data, the EO

[[Page 68038]]

Survey provides more in-depth data than the EEDS does, thus greatly
increasing OFCCP's ability to predict potential problems when using the
EO Survey as the instrument to select contractors for compliance
evaluations. By the same token, the EO Survey should also be a useful
tool for self-auditing purposes, to enable companies to focus on
specific potential problems that may exist.
In response to the requests that OFCCP permit reporting by job
group, and in the interest of flexibility, OFCCP has decided to allow
contractors the option of submitting personnel activity and
compensation data either by job group or by EEO-1 category. Contractors
may submit EO Survey data by job group only under these circumstances:
(1) Contractors must submit both personnel activity and
compensation data by job groups.
(2) Contractors may submit EO Survey data by job groups only via
the Internet.
(3) Contractors must identify the EEO-1 category to which each job
group belongs.
(4) Contractors may not submit a job group that crosses EEO-1
category lines.
One consultant asserted that the 30-day timeframe for completion of
the Survey did not allow contractors sufficient time, and extensions
beyond the May 31, 2000, due date were not granted. OFCCP will take
this comment under advisement when determining the due date for future
EO Survey submissions.
Several commenters expressed concern over the fact that the EO
Survey does not allow for the reporting of data on part-time employees.
Some commenters felt that this lack of data would impair OFCCP's
ability to identify areas of potential discrimination. One commenter
asserted that since many women and minorities are part-time employees,
excluding them on the Survey underrepresents the number of women and
minorities employed by contractors. Others objected to the exclusion of
part-time employees as it was inconsistent with their Affirmative
Action Program reporting systems.
OFCCP recognizes that excluding part-time employees from the EO
Survey may restrict the Survey's effectiveness as a predictor of
potential problems in the area of part-time employment. As a practical
matter, including data on part-time incumbency and compensation would
have increased the size of the EO Survey by several pages. OFCCP
intends to use the EO Survey data as merely an indicator of potential
problems and not as evidence of discrimination, so areas of potential
discrimination concerning part-time employees can and will still be
investigated during compliance evaluations.
Several commenters complained that the definition of ``applicant''
contained in the EO Survey instructions is ambiguous, and were
concerned with how contractors could obtain race/gender information.
The definition of applicant contained in the EO Survey is the same
definition OFCCP and other civil rights agencies have relied upon for
more than 20 years. It is taken from and is consistent with the Uniform
Guidelines on Employee Selection Procedures (refer to Question and
Answer No. 15, Adoption of Questions and Answers to Clarify and Provide
a Common Interpretation of the Uniform Guidelines on Employee Selection
Procedures (Qs and As), 44 FR 11996, 11998 (March 2, 1979)). With
regard to obtaining race and gender information for reporting on the EO
Survey, OFCCP notes that this is not a new requirement nor an
additional burden, as contractors have had an affirmative obligation to
ascertain the race and gender of their applicants, where possible, for
as long as OFCCP has enforced Executive Order 11246. It is also
consistent with Sec. 60-3.4 of the Uniform Guidelines on Employee
Selection Procedures.
Several commenters stated that they had problems with the
definition of ``promotion'' used in the EO Survey, as it differed from
the definition they used. The definition is consistent with previous
guidance issued by OFCCP, as it was taken verbatim from the Glossary in
Chapter 1 of OFCCP's FCCM. Promotions are to be captured within EEO-1
categories as well as from one EEO-1 category to a higher category
(e.g., from Professionals to Officials and Managers). To offer an
alternative definition in the EO Survey would only create confusion and
possibly additional burden on contractors.
One commenter said that the definition of ``hire'' needed
clarification. OFCCP did not include a definition of ``hire'' in the
most recent EO Survey, as it was found during cognitive testing that
the word was well understood and no definition was necessary. OFCCP
recognizes that while there may be slight variations in the way hires
are reported (i.e., the date the employee accepts the position, the
date the employee first reports for work, etc.) from contractor to
contractor, the variations are acceptable as long as the contractor is
internally consistent. OFCCP does not see the need for a restrictive
definition of this term.
A number of comments addressed the compensation data requested by
the EO Survey. Many commenters supported requesting compensation data,
because of the role of compensation in employment discrimination. Other
commenters were not in favor of including compensation data. One such
commenter indicated that the EO Survey fails to identify compensation
discrimination. Another indicated that the contractor should be allowed
to explain all the factors that influence compensation. One commenter
noted that tenure is not a good indicator of compensation
discrimination. Another stated that the EO Survey erroneously assumes
that tenure with a company is the only important pay variable. Still
another commenter was of the opinion that only tenure within the
position currently held was relevant to compensation analysis. Another
indicated that salary data should be aggregated to protect the
confidentiality of individual salary data.
OFCCP believes that compensation data must be used in identifying
potential problems as early in the process as possible and it,
therefore, intends to retain compensation data in the EO Survey.
Furthermore, the compensation data are used only as an indicator, a
reason for further inquiry, not as evidence of discrimination.
Therefore, OFCCP has decided to retain ``tenure'' in future versions of
the EO Survey, and tenure is included as a required data element in
Sec. 2.18(b). If a compliance evaluation is scheduled and compensation
is a focus area, the contractor will have the opportunity to explain
all the additional factors that influence compensation.
Finally, the compensation information requested in the EO Survey is
aggregated by gender and minority/non-minority status within each EEO-1
category and does not contain identifying information on individuals.
In the preamble to the NPRM OFCCP stated that it contemplated
sending the Survey to no fewer than half of all nonconstruction
contractor establishments each year; the most likely scenario was
described as contractors submitting the Survey biennially, with
approximately one half of all establishments submitting the Survey each
year. OFCCP also stated that it was considering whether to codify this
one half floor as part of the final rule. Several commenters, including
women's organizations and labor unions, felt that codification of the
number of Surveys was critical to the success of the project. OFCCP has
decided that sending the Survey to half of all nonconstruction
contractor establishments each year is the only way to ensure that the
Survey will

[[Page 68039]]

continue to be a credible evaluation tool. Therefore, OFCCP will send
the Survey to half of all nonconstruction contractor establishments
each year. The final rule states that ``OFCCP will designate a
substantial portion of all nonconstruction contractor establishments to
prepare and file and Equal Opportunity Survey.'' OFCCP interprets ``a
substantial portion'' to mean half of all nonconstruction contractor
establishments. Interpreting ``substantial portion'' as ``half''
enhances OFCCP's ability to achieve the three stated objectives of the
Survey:
(1) To increase compliance with equal opportunity requirements by
improving contractor self-awareness and encourage self-evaluations.
(2) To improve the deployment of scarce federal government
resources toward contractors most likely to be out of compliance.
(3) To increase agency efficiency by building on the tiered-review
process already accomplished by OFCCP's regulatory reform efforts,
thereby allowing better resource allocation.
Proposed paragraph (c) described how, when, and where contractors
must file the Equal Opportunity Survey. The NPRM stated that
contractors are encouraged to file the EO Survey in electronic format.
Since ``electronic format'' may refer either to the means of
transmission or the form in which the data are sent, OFCCP has
clarified paragraph (c) to state that contractors are encouraged to
submit the EO Survey via the Internet. Internet submission will greatly
expedite OFCCP's receipt and analysis of submitted data. Contractors
also may mail or fax the EO Survey to OFCCP. For clarification,
paragraph (c) now states that the fax telephone number will be
indicated in the EO Survey instructions. Two commenters suggested that
the EO Survey due dates should be staggered. Staggered filing/
submission dates are currently under consideration by OFCCP.
After considering all the comments received, the final rule adopts
the EO Survey as a regulatory instrument. Certain issues such as the
submission date and the time allowed for completion of the Survey are
not part of this rule and will be addressed at a later date.

Section 60-2.30 Corporate Management Compliance Evaluations

This new section draws upon OFCCP's experience in conducting glass-
ceiling reviews, addressing several issues that are unique to the
corporate management environment.
Paragraph (a) briefly explains that the purpose of Corporate
Management Compliance Evaluations is to ascertain whether individuals
are encountering artificial barriers to advancement into mid-level and
senior corporate management positions.
Paragraph (b) provided that OFCCP may expand the scope of a
Corporate Management Compliance Evaluation beyond a company's
headquarters establishment, if during the course of a compliance
evaluation it comes to OFCCP's attention that compliance problems exist
at other locations outside the corporate headquarters.
A number of commenters endorsed this section. Other commenters
endorsed or did not oppose the general concept of codifying Corporate
Management Evaluations, even as they expressed concerns about a
particular portion of the proposal.
Several commenters, including a law firm, consultants, and
organizations representing contractors, stated concern about paragraph
(b) of the proposal. They felt that the provision would give OFCCP
unlimited authority to expand the scope of Corporate Management
Evaluations beyond corporate headquarters to any and all facilities
within a corporation. OFCCP's purpose in looking beyond corporate
headquarters is to examine ``glass ceiling'' barriers to promotional
opportunities that are found at facilities outside the headquarters.
For example, OFCCP may wish to analyze ``feeder pools'' at lower-level
establishments from which selections for management positions at the
headquarters establishment are made. See, generally, FCCM Section 5A04.
It is not OFCCP's policy or practice to routinely expand corporate
management compliance evaluations into broad-ranging reviews of
subordinate facilities, or to audit for issues outside the scope of the
glass ceiling. However, if in the course of pursuing a corporate
management evaluation at a subordinate establishment, the agency learns
of other practices or conditions that may violate the Executive Order
(racially discriminatory graffiti in a restroom, for example), OFCCP
believes that it has the right and the obligation to investigate those
practices or conditions.
In the preamble to the NPRM, OFCCP asked for comments on whether to
incorporate into the regulatory text a number of approaches that the
agency has found to be particularly effective in addressing glass-
ceiling problems. The comments were about equally divided between
including the material in the regulations and including it in
subregulatory guidance. Upon consideration, OFCCP finds persuasive the
argument that inclusion in the regulations would be inconsistent with
the objective of simplifying and streamlining the rules. OFCCP
encourages contractors to seek guidance on eliminating barriers to the
executive suite from publications on the subject of the glass ceiling,
including OFCCP's 1997 report on the glass ceiling.

Section 60-2.31 Program Summary

OFCCP proposed to redesignate the current regulation at Sec. 60-
2.14 (Program Summary) as Sec. 60-2.31, and to make one technical
change to substitute the title ``Deputy Assistant Secretary'' for
``Director.'' OFCCP stated that it would replace the program summary
requirement at some point in the future should the summary be found to
be duplicative of the Equal Opportunity Survey. Comments were not
sought on this simple redesignation. The changes have been adopted.

Section 60-2.32 Affirmative action records

This regulation adds a provision specifying that the contractor
must make relevant records, including records maintained pursuant to
Secs. 60-1.12 and 2.10, available to OFCCP on request. This provision
is derived from the last sentence of Sec. 60-1.40(c) of the current
regulations. It is designed to ensure that OFCCP will have access to
the records it needs to ascertain a contractor's compliance with its
obligations under part 60-2.
Six organizations representing the interests of organized labor,
women, minorities, and affirmative action officers characterized the
proposal as reasonable and stated that it will aid OFCCP in enforcing
the requirements of Executive Order 11246.
On the other hand, one contractor and two consultants representing
the interests of contractors were concerned that OFCCP would: request
attorney-client privileged material; seek records and information
``outside'' the compliance evaluation process thereby potentially
violating the Fourth Amendment to the Constitution; and, not protect
contractors' secret data and confidential information.
There is no foundation for these concerns. Because OFCCP most
commonly requests only the AAP and supporting documentation that are
developed by the contractor pursuant to its contractual obligations,
OFCCP does not usually request documents that would be subject to the
attorney-client privilege. In fact, contractor personnel prepare most
such documentation without the involvement of legal

[[Page 68040]]

counsel. Even when they involve legal counsel, it is clear that an
enforcement agency must have access to pertinent records in order to
carry out its lawful duties. OFCCP does not request material
``outside'' the compliance evaluation process other than to investigate
complaints of alleged violations of the regulations. The
confidentiality of contractors' information is protected by the
requirements of the Trade Secrets Act and the Freedom of Information
Act, and the Department's regulations implementing the FOIA.
The final rule adopts the proposal without change.

Section 60-2.33 Preemption

In the NPRM OFCCP stated its intent to move this provision from
Sec. 60-2.31 in the current regulation to Sec. 60-2.33 without
alteration, except for several technical wording changes. Notice and
comment were not required, and comments were not solicited. The final
rule adopts Sec. 60-2.33 without change.

Section 60-2.34 Supersedure

OFCCP proposed to move this provision from Sec. 60-2.32 in the
current regulation to Sec. 60-2.34, and to omit as outdated and
unnecessary the second and third sentences of the current regulation.
No comments were submitted.
The final rule adopts Sec. 60-2.34 without change.

Section 60-2.35 Compliance Status

OFCCP proposed to expand upon and restructure a provision that
appears at Sec. 60-2.15 of the current regulations.
One commenter, a law firm, objected to a proposed sentence
providing that the contractor's compliance status will be determined by
analysis of statistical data and other non-statistical information that
would indicate whether employees and applicants are being treated
without regard to their race, color, religion, sex, or national origin.
The commenter felt that ``OFCCP's current approach to `statistical
analyses' in the investigation or compliance process * * * does not
provide for a reliable means to measure compliance status.'' The
commenter referred to the ``median analysis'' OFCCP uses at the
investigative stage to examine pay equity issues. OFCCP disagrees with
the commenter's view. Median analysis is a valid tool for the first
step of the investigative process and may demonstrate the need for
further inquiry. The final rule adopts Sec. 60-2.35 as proposed.

Regulatory Procedures

Executive Order 12866

The Department is issuing this final rule in conformance with
Executive Order 12866. This rule has been determined to be
nonsignificant for purposes of Executive Order 12866. In the NPRM,
OFCCP stated that the proposed changes to the regulations in this NPRM
would decrease the total estimated annualized cost to contractors of
developing, updating, and maintaining an AAP by $147,950,698 and that
the estimated average cost savings per establishment of developing,
updating, and maintaining an AAP would be $1378, therefore making this
regulation significant for purposes of Executive Order 12866.
Upon reviewing the comments to the NPRM concerning burden hours for
the EO Survey and AAP, OFCCP has determined that this initial estimated
decrease was too high. In the final rule, OFCCP is taking into account
the reduction of the decrease in burden hours. Therefore, the changes
to the regulations in this final rule will decrease the total estimated
annualized cost to contractors of developing, updating, and maintaining
an AAP by $89,357,163. The estimated average cost savings per
establishment of developing, updating, and maintaining an AAP is $831.
See Paperwork Reduction Act section below.

Congressional Review Act

In view of the revised cost savings as discussed above, this
regulation is not a major rule for purposes of the Congressional Review
Act.

Executive Order 13132

OFCCP has reviewed this rule in accordance with Executive Order
13132 regarding federalism, and has determined that it does not have
``federalism implications.'' The rule does not ``have substantial
direct effects on the States, on the relationship between the national
government and the States, or on the distribution of power and
responsibilities among the various levels of government.''