26088 Federal Register / Vol. 65, No. 87 / Thursday, May 4, 2000 / Proposed Rules

DEPARTMENT OF LABOR

Office of Federal Contract Compliance

Programs

41 CFR Parts 60–1 and 60–2

RIN 1215–AA01

Government Contractors; Affirmative

Action Requirements

AGENCY: Office of Federal Contract

Compliance Programs (OFCCP), ESA,

Labor.

ACTION: Notice of proposed rulemaking.

SUMMARY: The Office of Federal Contract

Compliance Programs (OFCCP) is

proposing to revise 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. Today’s

proposal would 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 proposal would

refocus the regulatory emphasis from

the development of a written 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 proposal also would

introduce a new tool that would aid

contractors in assessing their pay and

other personnel practices, while

increasing the efficiency and

effectiveness of program monitoring.

This tool, the Equal Opportunity

Survey, would be primarily submitted

electronically.

The proposal would help fulfill the

Administration’s Equal Pay Initiative to

provide contractors with the necessary

tools to assess and improve their pay

policies. The proposal also would 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, today’s proposal to revise

and restructure 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.

DATES: To be assured of consideration,

comments must be in writing and must

be received on or before July 3, 2000.

ADDRESSES: Comments should be sent to

James I. Melvin, Director, Division of

Policy, Planning and Program

Development, OFCCP, Room C–3325,

200 Constitution Avenue, N.W.,

Washington, D.C. 20210.

As a convenience to commenters,

public comments transmitted by

facsimile (FAX) machine will be

accepted. The telephone number of the

FAX receiver is (202) 693–1304. To

assure access to the FAX equipment,

only public comments of six or fewer

pages will be accepted via FAX

transmittal. Receipts of FAX

transmittals will not be acknowledged,

except that the sender may request

confirmation of receipt by calling (202)

693–0102 (voice), (202) 693–1308

(TTY).

FOR FURTHER INFORMATION CONTACT:

James I. Melvin, Director, Division of

Policy, Planning and Program

Development, OFCCP, Room C–3325,

200 Constitution Avenue, N.W.,

Washington, D.C. 20210. Telephone

(202) 693–0102 (voice), (202) 693–1308

(TTY). Copies of this proposed 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

proposed rule also is available on the

Internet at http://www.dol.gov/dol/esa.

SUPPLEMENTARY INFORMATION:

Background

a. History of the Part 60–2 Regulations

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 principles and concepts

underlying the current blueprint for

affirmative action under Executive

Order 11246, as amended, have their

origins in Plans for Progress (PfP),

conceived and successfully

implemented in 1961 by a group of 300

leading corporations committed to

achieving equal employment

opportunity through voluntary

affirmative action. Each company

adopted a ‘‘plan for progress’’ for the

corporation as a whole and for each of

its individual establishments. These

plans for progress, as a management tool

for achieving equal employment

opportunity, were the precursors to the

current written affirmative action

programs (AAPs).

In July 1969, after having successfully

tested this model over an eight-year

period, PfP merged with the National

Alliance of Business, and turned its

focus to youth employment. Seven

months later, on February 7, 1970, the

Office of Federal Contract Compliance

incorporated PfP’s Guidelines on

Affirmative Action as the centerpiece of

its affirmative action program

regulations applicable to larger Federal

nonconstruction contractors. These

regulations—41 CFR Part 60–2—have

served as reasonable and successful

tools that aid in breaking down barriers

to equal employment opportunity for

women and minorities without

impinging upon the rights and

reasonable expectations of other

members of the workforce.

b. Overview of the Affirmative Action

Program

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 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, but an overview is

provided here for ease of understanding.

Under the current regulations, the

written AAP must contain several

elements. One element of the AAP is a

‘‘workforce analysis,’’ which essentially

is a snapshot of all employment at the

establishment. The snapshot shows all

the job titles, arranged by department or

other organizational unit, and reveals

the number of employees in each job by

gender, race, and ethnicity. Examination

of the employment patterns documented

in the workforce analysis is intended to

Federal Register / Vol. 65, No. 87 / Thursday, May 4, 2000 / Proposed Rules 26089

alert the contractor to potential

problems of discrimination and

inadequate affirmative action.

The current written AAP also must

contain a multi-step analysis to identify

whether minorities or women are being

employed at a rate that would be

expected based upon their availability

for employment. This analysis is

focused on contractor-defined ‘‘job

groups,’’ which consist of one or a group

of jobs that are similar in content, wage

rates, and opportunities. The contractor

utilizes census and other available

demographic data to conduct a

prescribed ‘‘eight factor analysis,’’ to

calculate the number of qualified

women and minorities that should be

available in the labor market to work in

each job group. The contractor then

compares the number of minorities and

women it actually employs in each job

group against the calculated

‘‘availability’’ for that group to

determine whether minorities and

women are being employed at a rate

reasonably expected given their

availability to work in those jobs. If so,

the analysis is concluded. If women and

minorities are being employed at a rate

lower than reasonably would be

expected given their availability to work

in those jobs, the contractor determines

that ‘‘underutilization’’ exists.

Underutilization means that the

representation of minorities or women

in a specific job group is less than

reasonably would be expected given the

availability of candidates.

If these analyses show

underutilization in certain job groups,

the contractor must analyze its policies,

practices, and procedures to determine

possible causes, and take corrective

action that is designed to overcome the

underutilization. For example, the AAP

would include outreach and other

affirmative steps precisely tailored to

eliminate barriers to equal employment

opportunity, and, when necessary, goals

and organizational objectives to measure

success toward achieving that result.

In addition to the quantitative

analyses, the current AAP contains an

explanation of the nondiscrimination

and equal opportunity policies the

contractor has established, the methods

elected to implement and disseminate

those policies, and the recruitment and

community outreach programs

implemented. The contractor is

instructed to identify various problem

areas in the AAP together with plans for

appropriate solutions.

The affirmative action measures

prescribed by the regulations, including

the establishment of goals, are intended

to implement Executive Order 11246

that contractors ‘‘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.’’ These requirements are rooted

in many significant governmental

interests, including: that Federal funds

may not be used to support

discrimination (e.g., Cannon v.

University of Chicago, 441 U.S. 677

(1979)); that the Federal Government

may rightfully fix the terms upon which

it will make needed purchases,

including that it may expect more of

Government contractors than is

expected of employers generally (e.g.,

Perkins v. Lukens Steel Co., 310 U.S.

113 (1940)); and that the Federal

Government’s suppliers should not

increase the costs of Government work

and delay programs by excluding from

the labor pool available minority and

female workers (Contractors Association

of Eastern Pennsylvania v. Secretary of

Labor, 442 F2d 159 (3d Cir. 1971), cert.

denied, 404 U.S. 854 (1971)).

The goals component of the AAP was

not designed for, nor may it properly or

lawfully be interpreted as, permitting or

requiring unlawful preferential

treatment or quotas with respect to

persons of any race, color, religion, sex,

or national origin. The regulations

specifically prohibit employment

discrimination based on these factors,

and affirmative action goals may not be

used to impose a quota or preference

based on race, color, religion, sex, or

national origin.

The policy and practice of the agency

is to measure the compliance of the

contractor by evaluating the steps the

contractor took to analyze its policies,

practices, and procedures, and the good

faith efforts the contractor has

undertaken to overcome any

underutilization found and to meet the

goals established to correct

underutilization. Under that policy and

practice, moreover, a contractor will not

be charged with a violation of the

Executive Order solely because the goals

were not met.

c. The Proposed Revision

The basic structure of the Part 60–2

written AAP regulations has remained

essentially unchanged since the

regulations first were promulgated in

1970. Feedback over the years, from the

regulated community of contractors,

from groups representing minorities and

women, and from OFCCP field staff,

suggested that portions of the

regulations should be improved. For

instance, contractors and some OFCCP

staff as well, long have been critical of

the eight factors that must be considered

in determining the ‘‘availability’’ of

minorities and women for employment

in the contractor’s workplace. In

addition, the workforce analysis

requirement has received its share of

criticism as being the most expensive

and time consuming portion of the AAP,

while also being an analytical tool out

of touch with the changing nature of the

workforce. Therefore, under the

umbrella of Executive Order 12866 and

the Clinton Administration’s

Reinventing Government Initiative, a

regulatory team was appointed several

years ago to review the Part 60–2

regulations.

The regulatory team began work with

a number of objectives. These included

eliminating outdated, duplicative and

unnecessary provisions; eliminating

unnecessary compliance burdens by

reducing paperwork, providing more

flexibility to contractors, and seeking

greater consistency between compliance

requirements and standard business

practices; improving the quality and

effectiveness of contractors’ affirmative

action efforts, and the rate of voluntary

compliance; making it easier for

contractors to understand and comply

with the regulations by simplifying the

requirements and stating them as clearly

as possible; enhancing the ability of

OFCCP personnel to monitor

compliance in a time of smaller

Government and diminishing resources;

and reducing unnecessary friction

between contractors and OFCCP

compliance officers.

More recently, an additional objective

of the proposed revision has been to

advance the Department of Labor’s goal

of pay equity; that is, ensuring that

employees are compensated equally for

performing equal work. Today working

women earn just 76.5 cents on the dollar

compared to men. Black women earn 64

cents on the dollar compared to White

men, and Hispanic women earn only 55

cents. The pay disparity exists even

after accounting for differences in jobs,

education, and experience. This NPRM

encourages contractors to analyze their

own compensation packages to ensure

that all their employees are being paid

fairly.

As is prescribed by Executive Order

12866, and in accordance with the

established rulemaking practices of

OFCCP, prior to drafting this notice of

proposed rulemaking (NPRM) OFCCP

engaged in extensive consultations with

its stakeholders regarding the regulatory

requirements for the AAP. In the fall of

1994, officials in OFCCP invited

contractors, civil rights groups, and

women’s rights groups to participate in

roundtable discussions as to whether

and to what extent the required contents

of the AAP should be changed. Front

26090 Federal Register / Vol. 65, No. 87 / Thursday, May 4, 2000 / Proposed Rules

line staff in regional and district offices

of OFCCP also submitted

recommendations for changing the

regulatory requirements for the AAP. As

a result of these preliminary discussions

and recommendations, the agency

identified a number of issues desirable

to address through regulatory reforms.

In the Spring of 1995, OFCCP officials

convened a series of public meetings

with the agency’s stakeholders to elicit

their recommendations for clarifying

and simplifying the regulations at 41

CFR Part 60–2. Several hundred

representatives from the contractor, civil

rights, and women’s rights communities

attended these ‘‘partnership’’ meetings,

which were held in Dallas, Pittsburgh,

San Diego, and Chicago. In addition,

during this consultation process,

interested parties submitted written

comments and suggestions for revising

the regulatory requirements for the

AAP. Thus, over an 18 month period

OFCCP engaged in broad consultations

that focused on changing the regulatory

requirements for the AAP. Further

stakeholder meetings, at which elements

of the regulatory package were

discussed, have been held over the past

year.

OFCCP analyzed the comments and

recommendations that were received.

Then OFCCP thoroughly examined and

pilot-tested the available options for

effecting the desired changes in the

regulations. Based on this analysis,

OFCCP drafted the NPRM being

published today.

This is the second step in revising the

basic regulations implementing

Executive Order 11246, as amended.

First, on August 19, 1997, OFCCP

published (62 FR 44174) revisions to the

regulations at 41 CFR Part 60–1, which

eliminated a certification requirement,

clarified sanction authority, streamlined

the compliance evaluation process, and

made several other changes. Those

revisions are improving agency

efficiency and enforcement

effectiveness, while reducing burdens

on contractors.

Today’s proposal covers the

regulations at 41 CFR Part 60–2, which

address the content of AAPs. We also

propose a corresponding revision of

§ 60–1.12, which covers records that

must be retained, and § 60–1.40, which

covers who must develop and maintain

an AAP.

This proposal represents a significant

departure from OFCCP’s existing

approach to implementing Government

contractor nondiscrimination and

affirmative action obligations under

Executive Order 11246. After drafting

and considering several alternative

revisions of Part 60–2 we opted in favor

of this new direction, which we believe

will greatly benefit the interests of

contractors, minorities and women, and

OFCCP itself. Our proposed new

approach to the nondiscrimination and

affirmative action regulations is based

upon the following principles:

• Contractor workplaces should be

free of discrimination.

• Contractors should have greater

freedom to design their AAPs around

their unique business structure and

needs.

• OFCCP would like to place greater

focus on contractors’ actual

nondiscrimination and affirmative

action activities, and less focus on itemby-item review of whether contractor

AAPs meet detailed technical standards.

• OFCCP can do a better job of

enforcing the Executive Order if it has

detailed and up-to-date data up-front

about the contractor’s hiring and

advancement of minorities and women

and its affirmative action performance.

• The regulatory requirements should

lead to heightened awareness by

contractor officials of each

establishment’s equal employment

opportunity and affirmative action

performance.

• Heightened awareness of

performance, coupled with increased

compliance presence by OFCCP, should

dramatically improve the level of

compliance.

Accordingly, as we outline in more

detail in the Section-by-Section

Analysis below, the proposal contains a

number of new approaches.

We propose to greatly reduce the

number of elements required to be

included in contractor AAPs. Beyond

the required elements, contractors

would include in their AAPs those

elements and actions that they

considered necessary and appropriate to

carry out the nondiscrimination and

affirmative action commitments of their

Government contracts.

We propose to make it easier for

contractors to prepare the remaining

required elements of an AAP in two

ways. First, we have sought to

streamline requirements, for example,

by proposing that contractors consider

only two availability factors instead of

the current eight. Second, we have

sought to enhance contractor

understanding of the rules by stating the

requirements in clear terms, and by

providing in the preamble explanations

and illustrations of how the

requirements are intended to be applied.

As the proposal makes clear, an AAP

consists of a diagnostic component

through which the contractor analyzes

its workforce to determine whether

there are problems of underutilization

that need to be addressed, an actionoriented programs component through

which the contractor takes steps to

address the identified problems, and an

evaluative component through which

the contractor establishes and uses

internal auditing and reporting systems

to ensure that the diagnostic and actionoriented components of the AAP are

effective.

Under the proposed regulations, an

AAP is effective when the diagnostic

component is accurately identifying

problem areas, and when good faith

efforts are being actively undertaken

through action-oriented programs to

effectively address those areas.

Together, these components would form

the cornerstone of the new AAP.

To help OFCCP better monitor

compliance, and to further the objective

of contractor self-analysis, we propose a

new Equal Opportunity Survey, to be

submitted by a subset of

nonconstruction establishments each

year. The Survey would provide OFCCP

with the data necessary to more

effectively identify contractor

establishments that may have problems

with their Executive Order 11246

obligations, and to select those

contractors for further evaluation under

OFCCP’s new compliance evaluation

procedures.

Finally, the proposal 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 NPRM

published today, OFCCP proposes to

withdraw Part 60–2 of the 1980 final

rule, and hereby withdraws the 1981

and 1982 NPRMs in their entirety.

Additionally, consistent with the

President’s 1998 ‘‘Plain Language’’

Memorandum, we have replaced the

word ‘‘shall’’ with ‘‘must’’ or ‘‘will’’ as

appropriate to the context.

Section-by-Section Analysis

Section 60–1.12 Record Retention

OFCCP published a final rule revising

41 CFR Part 60–1 on August 19, 1997.

The revision proposed today would

Federal Register / Vol. 65, No. 87 / Thursday, May 4, 2000 / Proposed Rules 26091

further amend the record retention

provisions in § 60–1.12 to harmonize

them with the proposed changes to Part

60–2.

Current paragraph (b) recites that

contractors subject to the ‘‘written’’

affirmative action program (AAP)

requirement shall maintain and preserve

their current and immediately prior

AAPs and documentation of good faith

effort. Consistent with today’s proposed

changes to Part 60–2, which deemphasize the written nature of the

AAPs, we propose to remove the

modifier ‘‘written’’ from this section.

Paragraphs (c) and (d) would be

redesignated as paragraphs (d) and (e)

respectively, and the first sentence of

the newly designated paragraph (d)

would reflect the addition of a new

paragraph (c). The new paragraph (c)

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. Although not

expressly stated in the regulations,

OFCCP traditionally has required

contractors to maintain and submit

upon request information about the

gender, race, and ethnicity of their

applicants and employees. See, for

example, OFCCP’s Federal Contract

Compliance Manual at Section 2H01

and Figure 2–2. Methods for collecting

data on gender, race, and ethnicity are

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 F.R. 11996, 12008

(March 2, 1979).

Section 60–1.40 Affirmative Action

Programs

Current § 60–1.40 describes at

paragraph (a) which contractors are

required to develop ‘‘written’’ AAPs.

Paragraph (a) also discusses the

importance of identification of problem

areas and the evaluation of

opportunities for the utilization of

minority employees. Finally, paragraph

(a) requires that AAPs contain specific

steps for addressing identified

problems, and a table of job

classifications detailing jobs, duties,

rates of pay, and other pertinent

information. Paragraph (b) of the current

regulation describes utilization

evaluations, and paragraph (c) describes

when AAPs are to be developed and

how they are to be maintained. Current

paragraph (c) also indicates that the

required information pertaining to the

AAP is to be made available to

representatives of the Director of

OFCCP.

We propose several modifications to

§ 60–1.40. The proposal retains in

paragraph (a) current standards for who

must develop and maintain an AAP,

although the standards are slightly

edited for clarity. Additionally, as we

proposed for § 60–1.12(b), we would

remove from paragraph (a) references to

‘‘written’’ AAPs.

The remainder of existing paragraph

(a), as well as all of current paragraphs

(b) and (c), would be removed from this

section. Much of the material is

outdated, in that it references only

employment problems relating to

minorities, and not those relating to

women. As appropriate, we have

updated the material and incorporated it

into Part 60–2 with the rest of the

regulatory material relating to contents

of AAPs.

In addition, to further consolidate

requirements relating to AAPs in Part

60–2, specific information as to when

the obligation to develop and maintain

an AAP arises, which is addressed in

current paragraph (c), has been

significantly abbreviated and moved to

proposed § 60–2.1(c). Finally, we are

proposing a new paragraph (b), which

directs construction and

nonconstruction contractors to the

regulations that establish the affirmative

action requirements applicable to each.

Part 60–2

Subpart A—General

Section 60–2.1 Scope and Application

Existing § 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

§ 60–2.2 for its failure to remedy past

discrimination.

Consistent with the goals of

streamlining and simplifying the

regulations, the proposal would revise

and restructure § 60–2.1. The proposal

would revise paragraph (a) by limiting

the language to a brief description of the

scope of the regulations contained in

Part 60–2.

The proposal would delete as

redundant the contents of paragraph (b)

of current § 60–2.1, because the

requirement that conciliation

agreements include provisions for back

pay and other remedies also is set forth

in § 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 proposal also would delete 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 proposed to be made to Part

60–2.

Paragraph (b) in proposed § 60–2.1

would specify who must develop an

AAP; it would repeat the standards

found in § 60–1.40, because recitation of

the scope of coverage is important for

completeness in both parts of the

regulation.

The proposal would add a paragraph

(c) that specifies that AAPs must be

developed by the contractor within 120

days from the commencement of the

contract. This requirement was

previously set out in 41 CFR 60–1.40(c).

Since Part 60–2 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.

The proposal would add a paragraph

(d) describing who is included in

affirmative action programs. Proposed

subparagraph (2) provides three options

for contractors with fewer than 50

employees at a particular establishment

to account for those employees for AAP

purposes. Proposed 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).

Paragraph (e) of the proposed regulation

explains how to identify employees who

26092 Federal Register / Vol. 65, No. 87 / Thursday, May 4, 2000 / Proposed Rules

are included in AAPs at establishments

other than where they are located.

Section 60–2.2 Agency Action

Paragraph (a) of existing § 60–2.2

deals with agency approval of AAPs.

The entire paragraph would be revised

for clarity, and a few technical changes

(such as substituting ‘‘Deputy Assistant

Secretary’’ for ‘‘Director’’) would be

made as well. No substantive change is

intended.

Paragraph (b) of existing § 60–2.2

deals with responsibility

determinations. A few technical changes

similar to those in paragraph (a) would

be made, but no substantive changes are

proposed for paragraph (b) at this time.

Pursuant to the authority set forth in 5

U.S.C. 552(b)(3)(A), which allows

Federal agencies to alter ‘‘rules of

agency organization, procedure, or

practice’’ without notice and comment,

OFCCP is not accepting comments on

paragraph (b).

Paragraphs (c) and (d) of the current

§ 60–2.2 address show cause notices and

other enforcement procedures for a

contractor’s failure to develop an AAP

as prescribed in the regulations.

Consistent with the goals of

streamlining and simplifying the

regulations, the proposal would delete

as superfluous paragraphs (c) and (d)

because the subjects are also addressed

in §§ 60–1.26 and 60–1.28.

Subpart B—Purpose and Contents of

Affirmative Action Programs

Section 60–2.10 General Purpose and

Contents of Affirmative Action

Programs

The current § 60–2.10 describes an

AAP as a set of specific and resultoriented procedures to which a

contractor commits itself to apply every

good faith effort. It generally describes

the contents of AAPs and states that the

good faith efforts must be directed to

correct the deficiencies and achieve

prompt and full utilization of minorities

and women.

A complete rewrite of § 60–2.10 is

proposed. The rewrite is intended to

convey that an AAP should be

considered a management tool—an

integral part of the way a corporation

conducts its business. The proposed

revision emphasizes the philosophy

OFCCP intends to convey throughout

the regulation, that affirmative action is

not to be a mere paperwork exercise but

rather a dynamic part of the contractor’s

management approach. Paragraph (a) of

proposed § 2.10 states that the premise

underlying AAPs is that absent

discrimination, a contractor’s workforce

would be expected to generally reflect

the available qualified labor force. The

proposed revision explains that, in

addition to identifying and correcting

underutilization, AAPs also are

intended to institutionalize the

contractor’s commitment to equality in

every aspect of employment. AAPs

institutionalize the contractor’s

commitment to equality by establishing

procedures to monitor and examine the

contractor’s employment decisions and

compensation systems. AAPs establish

these procedures to ensure that the

contractor’s employment decisions and

compensation systems are free of

discrimination.

Paragraph (b) of proposed § 60–2.10

outlines the required elements of an

AAP. Contractors, thus, at the outset,

can get a general sense of what is

required for an AAP. It may also prove

useful when a contractor is checking to

see if all of the required AAP elements

have been addressed in its AAP.

Finally, the proposal would add a

paragraph (c) requiring that contractors

maintain and make available to OFCCP

documentation of their compliance with

§§ 60–2.11 through 2.17.

Section 60–2.11 Organizational Profile

The current § 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 or women are likely to be

underutilized, and sets forth in lettered

paragraphs the core contents of a

written AAP. Proposed § 60–2.11 would

address only paragraph (a) of the current

regulation, which deals with the

workforce analysis. Paragraph (b) of the

current regulation, which addresses the

job group analysis, would be revised

and moved to new § 60–2.12 discussed

below in this preamble. The

introductory paragraph of current § 60–

2.11 would be deleted as outdated and

unnecessary.

Paragraph (a) of current § 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 the 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.

During the consultation process,

several contractor representatives

criticized the current workforce analysis

regulation. Some felt that the

requirement to present a hierarchical

array of jobs by job title and by pay for

departments or organizational units,

along with lines of progression, is too

burdensome. These contractor

representatives recommended that the

workforce analysis be eliminated as a

required element of the AAP.

Other contractor representatives

contended that the current regulation

does not permit contractors to capture

the structural characteristics of today’s

workforces, and that in many instances

contractors develop ‘‘artificial’’

workforce analyses solely for the

purpose of complying with the

regulations. Specifically, they asserted

that the current regulation does not

recognize the increasing use of the fluid

team structure (e.g., a multi-disciplinary

team drawn from several components of

an organization to work for a limited

time on a project), does not allow

contractors to indicate that a job is part

of a chain of command outside of the

establishment (e.g., sales personnel who

report directly to a sales manager in

another office), and is not meaningful

when small numbers of employees work

at remote locations (e.g., small branch

banks). These critics of the current

workforce analysis urged OFCCP to

revise the regulations to permit

contractors to base their workforce

analyses on how their businesses

actually are organized, using data that

are readily available and compiled to

meet other business needs. To that end,

they urged removal of the current

geographical restriction that the

workforce analysis (indeed the entire

AAP) cover a single establishment, and

revision of the workforce analysis

regulation so as to permit contractors to:

(1) Include several small locations in

one workforce analysis (and

corresponding AAP; this sometimes is

referred to as a ‘‘consolidated’’ AAP); (2)

prepare a workforce analysis (and AAP)

for a group or groups within a single

establishment; or (3) 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).

Other contractor representatives were

satisfied with the current workforce

analysis requirement. Some observed

that ‘‘wholesale changes’’ in the AAP

format could be costly for those

Federal Register / Vol. 65, No. 87 / Thursday, May 4, 2000 / Proposed Rules 26093

contractors that have been developing

the AAP for many years in accordance

with the current regulatory

requirements.

A central function of the workforce

analysis, and any substitute, is to

provide a picture of a contractor’s

organizational structure. The picture

enables an individual reviewing equal

employment opportunity at the

establishment to understand how the

establishment functions. Adding gender,

race, and ethnicity to the picture

provides a graphic 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 graphic

representation is useful to contractors

engaging in self analysis, and it is useful

to OFCCP’s compliance officers. OFCCP

believes that the concept is well worth

retaining.

In response to the concerns discussed

above, however, OFCCP has attempted

to ‘‘reengineer’’ the workforce analysis

into a shorter, simpler format which we

propose to call an ‘‘organizational

profile.’’ The organizational profile is

described in proposed § 60–2.11(b)(1).

In basic terms, the organizational profile

is an organization chart for the

establishment, showing each of the

organizational units and their

relationships to one another, and the

gender, race, and ethnic composition of

each organizational unit. Unlike the

current workforce analysis, the profile

would focus only on organizational

units; it would 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.

In drafting the proposed rule we have

attempted to avoid a minutely itemized

prescription for the organizational

profile. Thus, we specify only that the

profile is ‘‘a detailed organizational

chart or similar graphical presentation

of the contractor’s organizational

structure,’’ and that it must identify:

each organizational unit; the job title,

gender, race, and ethnicity of the unit

supervisor; and the gender, race, and

ethnic composition of the total

employees in each unit. Our intent is

that the profile be presented in a visual,

rather than narrative, format, and that it

account for all elements of the

establishment’s workforce.

Beyond those basic requirements,

however, the proposal leaves

contractors substantial latitude to

present the organizational profile in a

manner that best fits their operational

needs. In most cases, contractors should

be able to use existing organizational

charts as the core for their profiles. The

only additional work required would be

to annotate the charts with information

about supervisors, and with the gender,

race, and ethnic composition of each

unit.

A key definitional question is what is

meant by the term ‘‘organizational

unit.’’ As we set forth in section (b)(2)

of the proposed rule, an organizational

unit is any component that is part of the

contractor’s corporate structure. In a

more traditional organization, an

organizational unit might be a

department, division, section, branch,

group, or similar unit. Typically, such a

unit would be headed by a supervisor.

In a less traditional organization, an

organizational unit might be a project

team, job family, or similar unit. Such

a unit might not have a direct

supervisor.

Following is a sample organizational

profile. This sample is provided for

illustrative purposes only, and should

not be construed to represent a required

format or template.

26094 Federal Register / Vol. 65, No. 87 / Thursday, May 4, 2000 / Proposed Rules

In OFCCP’s estimation the proposed

organizational profile simplifies and

improves upon the existing workforce

analysis. The proposed rule’s focus on

actual organizational units, and

particularly the notion that the core of

Federal Register / Vol. 65, No. 87 / Thursday, May 4, 2000 / Proposed Rules 26095

the organizational profile can be the

contractor’s actual organizational chart,

should result in the profile being more

accurate, more useful, easier for

contractors to produce, and significantly

shorter, than the workforce analysis it

would replace. These changes should

benefit both contractors and OFCCP.

During the consultations it was

asserted that the current regulations do

not provide contractors the flexibility to

report on their organizations as they

actually exist, and that this results in

contractors creating special report

formats solely for AAP purposes.

Because the proposed rule permits,

indeed encourages, the use of existing

organizational structures and

organizational charts, the asserted

practice of creating special report

formats should diminish, thus reducing

contractor burden. In turn, if the

organizational profile more closely

reflects the actual organization of the

establishment, it should be a more

useful and reliable analytical tool.

Finally, as noted above, under the

proposal the organizational profile

would not require the itemization of

individual job titles, or the reporting of

gender, race, ethnicity, and salary

information by job title. This will

greatly reduce the volume of the

organizational profile, as compared to

the existing workforce analysis (which

often is one of the largest sections of the

AAP).

Regarding the structure of the AAP,

except as provided in 60–2.1(d), OFCCP

decided not to adopt the

recommendation that would allow for

the development of a ‘‘consolidated’’ or

‘‘functional’’ AAP at this time. Although

some of the concepts may have merit,

they appear to also have shortcomings

that will require lengthy and substantive

consultation among stakeholders.

Finally, in subsection (c)(4), the

minority group designations would be

changed to conform to the designations

of minorities currently used in the EEO–

1 report. At a later date, OFCCP intends

to revisit the racial and ethnic

designations used in the regulations at

41 CFR Chapter 60 to render them

consistent with the revised standards set

forth in OMB’s Statistical Policy

Directive No. 15, Race and Ethnic

Standards for Federal Statistics and

Administrative Reporting (62 FR 58782,

October 30, 1997). OFCCP will

coordinate any changes in these

designations with the Equal

Employment Opportunity Commission

(EEOC) so that recordkeeping and

reporting requirements for both agencies

are compatible.

Section 60–2.12 Job Group Analysis.

[Current § 60–2.12 entitled

‘‘Establishment of goals and timetables’’

would be revised, renamed, and moved

to § 60–2.16 as discussed below in the

preamble.]

Contractors use the job group analysis

for combining job titles in their

workforce. This 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

§ 60–2.16, below) the contractor must

establish goals.

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

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.

The current regulations (§ 60–2.11(b))

define a job group as one or more jobs

having similar content, wage rates and

opportunities. The structure of the job

group analysis in the current regulation

often is criticized by contractors and by

OFCCP compliance staff. Some view the

instruction to combine jobs by similar

content, wage rates and opportunities as

too general to provide clear, consistent

guidance. The result, according to this

appraisal, is inconsistent interpretations

among different OFCCP offices, and

needless disagreements between

contractors and compliance officers

about the grouping of particular jobs.

Others say that the current regulation

does not give larger contractors enough

flexibility to tailor the job group

analysis to the idiosyncrasies of

different organizational structures,

places too much emphasis on tracking

lines of progression, and precludes

compliance officers from making fair

and accurate evaluations of contractor

achievements. Further, critics claim that

for smaller contractors, the existing job

group analysis regulation often results

in the formation of job groups that are

too small to conduct a meaningful

utilization analysis.

Despite the criticisms of the current

job group regulation, contractors and

OFCCP staff have expressed divergent

views on whether it should be revised,

and if so, how. During the consultation

process, some contractor representatives

recommended that OFCCP retain the job

group regulation as it currently exists.

Those who favored keeping the current

regulatory approach observed that the

current approach of contractordeveloped job groups can best

accommodate the diversity in

organizational structures that exists

among contractor establishments.

Other contractor representatives

supported the idea of basing job

grouping on the standard EEO–1

categories, a concept which OFCCP

explored during the consultation

process. The term ‘‘EEO–1 categories’’

refers to nine broad occupational

groupings: officials and managers,

professionals, technicians, sales

workers, office and clerical, craft

workers (skilled), operatives (semiskilled), laborers (unskilled), and

service workers. These groupings are

used in the EEO–1 report (the Employer

Information Report), which most

employers file annually with the Joint

Reporting Committee (an entity

composed of OFCCP and the EEOC).

Proponents of the EEO–1 job grouping

approach observed that most contractors

and employers already are familiar with

the EEO–1 categories and that, in

practice, those categories already serve

as the baseline for most job groups.

They asserted that another advantage of

EEO–1 category job grouping is that, in

many cases, it would address the

problem of job groups with too few

employees to conduct a meaningful

utilization analysis.

Still other contractor representatives

recommended that OFCCP revise the

regulations in a manner that would

allow contractors the option of selecting

either approach—the contractordeveloped job group prescribed by the

current regulations or the EEO–1

category-based job group.

After considerable thought about the

wide range of views described above,

OFCCP has decided to continue the

traditional approach to the job group

analysis, as reflected in current § 60–

2.11(b), for larger employers (contractors

with 150 or more employees).

Accordingly, proposed § 60–2.12(b)

states that jobs at the establishment with

similar content, wage rates, and

opportunities, must be combined to

form job groups. OFCCP is proposing, at

§ 60–2.12(e), that smaller employers

(contractors with fewer than 150

26096 Federal Register / Vol. 65, No. 87 / Thursday, May 4, 2000 / Proposed Rules

employees) may use EEO–1 categories

as job groups.

In response to criticisms that the

current regulations provide inadequate

guidance, the proposed regulation

would further explain the criteria that

the contractor must consider when

determining which jobs to combine into

job groups. Proposed § 60–2.12(b) states

‘‘similarity of job content refers to the

duties and responsibilities of the job

titles which make up the job group.’’

Further, the proposed regulation

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.’’ Although OFCCP’s Federal

Contract Compliance Manual contains

detailed guidance on job group

formation, the agency believes the

expanded regulatory definition will

address many of the issues that arise

when decisions are being made about

job groups.

Once the appropriate job groups are

determined, proposed § 60–2.12(c)

would require the contractor to prepare

a list of the job titles that comprise each

job group. The paragraph also would

reflect the provisions of proposed §§ 60–

2.1(d) and (e) relating to jobs located at

another establishment.

Proposed § 60–2.12(d) would provide

that all jobs located at an establishment

must be included in the establishment’s

job group analysis, except as provided

in § 60–2.1(d).

Finally, as noted above, proposed

§ 60–2.12(e) permits smaller employers

to use EEO–1 categories as job groups.

OFCCP considers job grouping by EEO–

1 category to be simpler both for smaller

employers and for OFCCP than grouping

by similarity of content, wage rates and

opportunities (the scheme found in

§ 60–2.11(b) of the current regulations

and § 60–2.12(b) of this proposal).

Contractors that are smaller employers

tend to have so few employees that to

subdivide them into smaller job groups

than required by the EEO–1 categories

would make goal setting unreliable. We

are expressly soliciting comments on

this issue.

Section 60–2.13 Placement of

Incumbents in Job Groups

[Current § 60–2.13 entitled

‘‘Additional required ingredients of

affirmative action programs’’ would be

revised, renamed, and moved to § 60–

2.17 as is discussed below in the

preamble.]

This proposed new section would

require the contractor to record

separately the percentage of minorities

and women it employs within each job

group. The current regulations (§ 60–

2.11) do not directly address this

procedure. This step may seem obvious,

but it is expressly included here in an

effort to make the process of preparing

an AAP clearer to first-time and

infrequent users of the regulations and

to casual readers.

Section 60–2.14 Determining

Availability

[Current § 60–2.14 entitled ‘‘Program

summary’’ would be moved to § 60–

2.31.]

Proposed § 60–2.14 contains the

guidelines for determining availability

and would replace the regulations that

are currently found at §§ 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.

Under the current regulation, the

contractor is required to compute

availability, separately for minorities

and for women, for each job group. In

determining availability, the contractor

must consider each of eight factors

listed in the regulations. The factors are

similar, but not identical, for minorities

and women. Although the contractor

must consider all eight factors, it is 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

must 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. For instance, critics

suggest that factors such as the minority

population of the labor area surrounding

the facility (factor (1)(i)), the size of the

minority and female unemployment

force in the labor area surrounding the

facility (factors (1)(ii) and (2)(i)), and the

percentage of the minority and female

workforce as compared with the total

workforce in the immediate labor area

(factors (1)(iii) and (2)(ii)), are

inappropriately broad because they do

not focus on the skills needed to

perform the particular jobs in the

contractor’s workplace. Even for jobs for

which no special skill is needed, the

factor on minority population is

criticized because it commingles those

who are ready to work with those who

are under 16 or over 65 years of age,

completely unable to work due to

disability, or otherwise unavailable.

Similarly, consideration of the existence

of training institutions capable of

training persons in the requisite skills

(factors (1)(vii) and (2)(vii)) is said to

focus on those who may be available

several years in the future and not on

those who can work now. Why,

contractors ask, is it necessary to

analyze or consider these factors if it is

improper to use them?

Accordingly, contractors frequently

recommend that the number of factors

be limited to the few most commonly

used. Contractors further suggest that for

ease of application the same availability

factors be used for minorities and for

women. During our consultations,

groups representing minorities and

women were not strongly opposed to

collapsing the list of factors to

concentrate on those that best identify

persons available for employment.

However, the civil rights and women’s

groups felt strongly that the concept of

affirmative action required

consideration of those who reasonably

could be trained for a job, as well as

those who already have the skills.

Today’s proposal would simplify the

availability computations by reducing

the number of factors from eight to two.

The proposed regulation would use the

same factors for minorities and for

women, but availability would be

computed separately for minorities and

women for each job group, as is done

under the current regulations. Under

proposed § 60–2.14(c), the following

factors would be considered in

determining availability:

(1) The percentage of minorities or

women with requisite skills in the

reasonable recruitment area, where

‘‘reasonable recruitment area’’ refers to

the geographical area from which the

contractor usually seeks or reasonably

could seek workers to fill the positions

in question; and

(2) The percentage of minorities or

women among those promotable,

transferable, and trainable within the

contractor’s organization, where

‘‘trainable’’ refers to employees who

could, with appropriate training,

become promotable or transferable

within the AAP year.

To determine the percentages in § 60–

2.14(c)(2), the contractor would

undertake one or both of the following

steps:

• Determine which job groups are

‘‘feeder pools’’ for the job group in

question. The feeder pools are job

Federal Register / Vol. 65, No. 87 / Thursday, May 4, 2000 / Proposed Rules 26097

groups from which individuals are

promoted.

• Ascertain which employees could

be promoted or transferred with

appropriate training.

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

which 20 are minority and 25 are female. The

Petroleum Engineering Project Leader job

group also has 100 incumbents, of which 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.

Job group Total

incumbents

Minority

incumbents

Female

incumbents

Minority

promotables

(in percent)

Female

promotables

(in percent)

Chem.E PL ........................................................................... 100 20 25 20 25

Pet.E PL ............................................................................... 100 15 20 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 who completed the

training program.

Total individuals eligible for promotion

Minorities

eligible for

promotion

Females

eligible for

promotion

Minority

availability

(in percent)

Female

availability

(in percent)

100 ................................................................................................................... 45 40 45 40

Our 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. In addition to

the percentage of minorities or women

in the reasonable recruitment area and

within the contractor’s workforce who

already possess the requisite skills,

proposed § 60–2.14(c) would require the

contractor to consider the percentage of

minorities or women among its

employees who could, with appropriate

training, become promotable or

transferable during the AAP year, when

determining availability. This provision

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 current

regulations (§§ 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.

Proposed § 60–2.14(e) would require a

contractor to define its recruitment area

reasonably 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 would be required

to assure that the recruitment area

chosen would not have the effect of

excluding minorities or women.

Proposed § 60–2.14(f) would require

contractors to 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. This

provision responds to concerns

expressed by civil rights and women’s

groups that a contractor may have

relatively low levels of available

incumbent minorities and women due

to prior discrimination in access to

training and employment opportunities

in general, and, perhaps, within the

contractor’s workforce. When barriers to

equal employment opportunity have

prevented minorities and women from

entering the pipeline to promotional

consideration, contractors must

critically evaluate the criteria they use

to identify candidates. Otherwise,

generations of minority and female

workers, barred from equal

consideration in the past, may continue

to experience the effects of prior

discrimination and lack of affirmative

action.

Further, proposed § 60–2.14(d) would

require contractors to 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 Federal Contract

Compliance Manual. Examples of such

information include census data, data

from local job service offices, and data

from colleges and other training

institutions.

When a job group is composed of job

titles with different availability rates,

proposed § 60–2.14(g) would require the

contractor to compute a composite

availability estimate. The composite

availability figure would represent a

weighted 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:

Job title Number

incumbents

Availability

(in 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 × .35 = .0875

Auditor = .5 × .20 = .1

Analyst = .25 × .15 = .0375

3. Composite Availability = .0875 + .1

+ .0375 = .225 or 22.5%

26098 Federal Register / Vol. 65, No. 87 / Thursday, May 4, 2000 / Proposed Rules

The proposed regulation would retain

the requirement that contractors

determine the availability of total

minorities. OFCCP requests comments

on whether the regulation should be

changed to require the contractor to

compute availability for individual

minority subgroups and invites

commenters to address the following

questions:

1. Should contractors be required to

compute availability separately for

individual minority subgroups as a

general rule?

2. Should contractors be required to

compute availability for individual

minority subgroups only when the

minority subgroup represents a

specified percentage of the population

in the immediate labor area?

3. How large must the minority

subgroup population be before the

contractor is required to compute the

separate availability for minority

subgroups?

Section 60–2.15 Comparing

Incumbency to Availability

[Current § 60–2.15 entitled

‘‘Compliance status’’ would be revised

and moved to § 60–2.35, discussed

below in the preamble.]

Proposed § 60–2.15 addresses an

aspect of the existing regulations that is

referred to as the ‘‘utilization analysis,’’

and would replace one portion of

existing § 60–2.11(b). Proposed § 60–

2.15(a) would require 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. Indeed, OFCCP Regional

Directors report that virtually every

AAP reviewed by their offices contains

one or more job groups in which

availability exceeds actual employment.

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,’’

which is 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. Under the current

practice, contractors are permitted 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. We propose

no substantive change from the current

regulation. The proposal, which is

slightly reworded for clarity, appears at

§ 60–2.15(b).

Finally, current § 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.

This approach correctly reflects that no

job groups are so insignificant that

further analysis of them should not be

performed. Any job group of such

insignificance probably should not be

considered a job group at all.

Accordingly, OFCCP proposes to drop

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. OFCCP is soliciting

comments concerning dropping the

word ‘‘major’’ from job groups.

Section 60–2.16 Placement Goals

The procedures outlined in the

preceding sections of this proposed rule

would require a Federal contractor to

analyze its workforce and evaluate its

employment practices for the purpose of

identifying and correcting gender-, raceand 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 1970, when the goals requirement

first was incorporated into the

regulations, the then Office of Federal

Contract Compliance recognized that

some might misunderstand goals to be

quotas which must be achieved, or that

gender-, race-, and ethnicity-based

preferences were permitted or required

in the pursuit of goals. Accordingly, the

Office of Federal Contract Compliance

squarely addressed these issues in the

regulations, stating that: quotas are

expressly forbidden; compliance is

judged by a contractor’s efforts rather

than whether goals have been met; and

goals should not be used to discriminate

against any employee or applicant

because of race, color, religion, sex, or

national origin. (See, for example,

§§ 60–2.12(e), 2.15 and 2.30 of the

current regulations, respectively.)

To further clarify and maintain the

proper focus of affirmative action in the

contract compliance program, OFCCP

periodically issued supplemental

guidance and instructions explaining

the difference between permissible

goals, on the one hand, and unlawful

preferences, on the other. The latest

such guidance is contained in an

OFCCP Administrative Notice entitled

‘‘Numerical Goals under Executive

Order 11246,’’ which was issued in

December 1995. The Administrative

Notice reiterates a number of critical

points about goals, including the

following:

• The goals component of the AAP is

not designed to be, nor may it properly

or lawfully be interpreted as, permitting

unlawful preferential treatment and

quotas with respect to persons of any

race, color, religion, sex, or national

origin.

• Goals are neither quotas, set-asides,

nor a device to achieve proportional

representation 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.

• Goals under Executive Order 11246,

as amended, do not require that any

specific position be filled by a person of

a particular gender, race, or ethnicity;

instead, the requirement is that

contractors engage in outreach and other

efforts to broaden the pool of qualified

candidates to include minorities and

women.

• The use of goals is consistent with

principles of merit, because goals do not

require an employer to hire a person

who does not have the qualifications

needed to perform the job successfully,

hire an unqualified person in preference

to another applicant who is qualified, or

hire a less qualified person in

preference to a more qualified person.

• Goals may not be treated as a

ceiling or a floor for the employment of

members of particular groups.

Federal Register / Vol. 65, No. 87 / Thursday, May 4, 2000 / Proposed Rules 26099

• A contractor’s compliance is

measured by whether it has made good

faith efforts to meet its goals, and failure

to meet goals, by itself, is not a violation

of the Executive Order.

Against this backdrop, OFCCP today

proposes to revise its regulation on the

establishment of goals by contractors.

Goal setting currently is addressed in

§ 60–2.12; today’s proposal would move

the goals provision to § 60–2.16, and

would revise the section to provide

additional clarity on how to set goals

and guidance regarding the use of goals.

The substance of current § 60–2.30 also

is included in this section.

Under the existing regulations, after

determining that there is

underutilization of minorities or women

in a specific job group, the contractor

must establish goals. Existing §§ 60–2.10

and 60–2.12 refer to ‘‘goals and

timetables’’ to which a contractor’s

‘‘good faith efforts’’ must be directed to

correct deficiencies in the utilization of

minorities or women.

The current regulation provides

general guidance regarding the

establishment of goals. For instance,

contractors are required to consider the

availability of minorities or women for

the job group as revealed by the

requisite utilization analysis.

Additionally, the current regulation

provides that ‘‘goals may not be rigid

and inflexible quotas which must be

met, but must be goals reasonably

attainable by means of applying every

good faith effort * * *.’’ However, the

regulation does not further define the

term ‘‘goals,’’ nor explain how they

should be set.

In order to clarify that AAPs

(including goals) involve annual

planning, which accounts for changes in

the contractor’s business, proposed

§ 60–2.16(c) would require the

contractor to establish a ‘‘percentage

annual placement goal’’ for a particular

job group. Thus, under proposed § 60–

2.16, the concept of ‘‘timetables’’ would

not be retained because it implies a

requirement of multi-year or ultimate

goals.

Further, proposed paragraph (c)

would require the contractor to set goals

at a level ‘‘at least equal to the

availability figure’’ derived for

minorities or women for the job group

at issue. Proposed paragraph (c) is not

a new requirement; it is consistent with

OFCCP’s current practice. To illustrate:

If pursuant to § 60–2.14 the contractor

determined that the availability of

women for employment in a particular

job group was 17.3 percent, the

contractor would set a goal to place

women, during the current AAP year, in

(at least) 17.3 percent of the openings in

that job group.

The focus on annual planning and the

concomitant deletion of timetables in

the proposal should not be

misunderstood to mean that a contractor

must fully resolve all differences

between availability and actual

utilization within the current AAP year.

In many cases (for instance, few hiring

opportunities during the year), it would

be mathematically impossible to bridge

that gap in such a short time. More

important, however, is that compliance,

as in the past, always is measured by

good faith effort, and not by the

achievement of a particular numerical

result.

The proposal would considerably

strengthen existing language so as to

reaffirm that goals prescribed by the

regulations implementing Executive

Order 11246, as amended, are not to be

used as quotas which must be achieved

through gender-, race-, or ethnicitybased preferences. Although OFCCP

does not consider it necessary to repeat

verbatim in the regulations the

principles set forth in its December 1995

policy statement, the proposed rule is

intended to reflect those concepts. The

proposed regulation would set forth the

principles that govern the establishment

and use of placement goals. Specifically,

proposed paragraph (e) states that: (1)

Quotas are expressly forbidden and that

goals are neither a floor nor ceiling for

the employment of particular groups; (2)

employment selection decisions must be

made in a nondiscriminatory manner,

and that placement goals do not provide

a contractor justification to extend a

preference to any individual, select an

individual, or to adversely affect an

individual’s employment status, on the

basis of that person’s race, color,

religion, sex, or national origin; (3)

placement goals do not create set-asides

for specific groups, nor are they

intended to achieve proportional

representation or equal results; and (4)

placement goals may not be used to

supersede merit principles.

Proposed paragraph (f) states that

contractors extending an authorized

preference for American Indians living

on or near a reservation, may reflect

such a preference in their placement

goals. This provision appears at § 60–

2.12(j) of the current regulations. We

have added the adjective ‘‘American’’

when referring to Indians.

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 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 current regulations address the

action-oriented and evaluative

components of AAPs in a section

designated ‘‘Additional required

ingredients of affirmative action

programs.’’ The current regulation

appears at § 60–2.13. OFCCP proposes

to eliminate a number of elements that

no longer need to be specifically and

separately set forth in regulatory form.

The remaining provisions would be

moved to § 60–2.17 and would be

renamed ‘‘Additional required elements

of affirmative action programs.’’

Although OFCCP is eliminating these

provisions from the mandatory

requirements of the AAP, the contractor

may voluntarily choose to retain these

elements in its program.

First, OFCCP proposes to delete as

specific required elements the following

items:

§ 60–2.13(a)—reaffirmation of the

contractor’s EEO policy in all

personnel matters;

§ 60–2.13(b)—formal internal and

external dissemination of the

contractor’s EEO policy;

§ 60–2.13(e)—establishment of goals and

objectives by organizational units and

job groups, including timetables for

completion;

§ 60–2.13(i)—active support of local and

national community action programs

and community service programs; and

§ 60–2.13(j)—consideration of

minorities and women not currently

in the workforce having requisite

skills.

Effective affirmative action is not a

rote, or follow-the-numbers, exercise. As

was suggested during the consultation

process, overly prescriptive

requirements sometimes lead to

contractors simply going through the

motions, and not really working to

achieve affirmative action. Instead,

effective affirmative action is intensely

situation specific. The contractor must

assess its individual circumstances—for

example, the types of equal employment

opportunity problems in evidence, how

the problems developed, previous

efforts to address the problems, and the

types of resources available to the

contractor—and devise mechanisms and

programs to address those particular

circumstances.

26100 Federal Register / Vol. 65, No. 87 / Thursday, May 4, 2000 / Proposed Rules

In addition, OFCCP is proposing the

deletion of § 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

proposed § 60–2.17, therefore, would in

no way affect the contractor’s obligation

to comply with the Guidelines nor

OFCCP’s commitment to enforcing the

Guidelines.

The proposed rule would retain four

of the original 10 ‘‘additional required

ingredients.’’ OFCCP intends that these

remaining items capture the essence of

effective affirmative action, including

subsuming many aspects of the specific

‘‘ingredients’’ proposed to be 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 current

§ 60–2.13 would be retained:

§ 60–2.13(c)—establishment of

responsibilities for implementation of

the contractor’s AAP (to be codified as

§ 60–2.17(a));

§ 60–2.13(d)—identification of problems

areas by organizational units and job

groups (to be codified as § 60–2.17(b));

§ 60–2.13(f)—development and

execution of action-oriented programs

designed to eliminate problems and

further designed to attain established

goals and objectives (to be codified as

§ 60–2.17(c)); and

§ 60–2.13(g)—design and

implementation of internal audit and

reporting systems to measure

effectiveness of the total program (to

be codified as § 60–2.17(d)).

The ‘‘required ingredients’’ that

would be retained in the proposed rule

have been rewritten to enhance clarity.

OFCCP is soliciting comments

concerning the proposed deletion and

retention of the additional required

elements of the AAP. In addition,

OFCCP proposes to modify the

provision in § 60–2.13(c) of the current

regulations (proposed § 60–2.17(a))

concerning the ‘‘establishment of

responsibilities for implementation of

the contractor’s affirmative action

program.’’ This proposed modification

is derived from § 60–2.22(a) of the

current 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 revised

provision would expressly require 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 believes that responsibility

and accountability are essential to an

effective affirmative action program.

Affirmative action programs are not selfexecuting; an official in the contractor’s

organization must be responsible for the

development of the affirmative action

program. Moreover, the official must be

held responsible for the program’s

implementation and accountable for

results. Accordingly, OFCCP proposes

to make this provision mandatory.

Section 60–2.18 Equal Opportunity

Survey

Proposed § 60–2.18 would require

that nonconstruction contractor

establishments designated by OFCCP

prepare and file an Equal Opportunity

Survey. The Equal Opportunity Survey

contains information about personnel

activities and compensation concerning

minorities and women, and the

contractor’s affirmative action programs.

Contractors are already required to

maintain information necessary for

completing the Survey, although not in

the precise format called for by the

Survey instrument.

This proposal codifies the Equal

Opportunity Survey which has been

under development since March 1999,

with the assistance of other DOL

agencies. During the initial development

stage there were also discussions with

OMB, and meetings with contractors

and contractor representatives, civil

rights groups, and women’s groups. The

Survey was also field tested beginning

in August 1999.

The data reported in the Survey will

enable OFCCP to more effectively and

efficiently select contractor

establishments that may have possible

problems for compliance evaluations,

thus enhancing the agency’s ability to

focus its enforcement resources on those

establishments most likely to be out of

compliance. In addition, the Survey will

streamline the compliance evaluation

process by enabling OFCCP to obtain

compliance information earlier in the

process. This should also alleviate any

potential undue burden on contractors

under review by allowing more focused

compliance evaluations. Finally, the

Survey requirement is expected to

heighten contractor awareness of each

establishment’s equal employment

opportunity performance, which should

encourage contractors to conduct selfaudits of their performance and to make

any necessary corrections and

improvements in their equal

employment opportunity programs.

OFCCP expects that the heightened

awareness of performance, along with

increased monitoring presence, will

improve the level of compliance.

The proposal establishes as a base

standard that OFCCP will require a

substantial portion of all

nonconstruction contractor

establishments to submit the Survey

each year. At this time, OFCCP

contemplates sending the Survey to no

less than 50% of all nonconstruction

contractor establishments each year,

which is the minimum number we

consider necessary in order for the

Survey to be a credible evaluation

method. Although other models may be

used, the most likely initial scenario is

that OFCCP will require most contractor

establishments to submit the Survey

biennially, with approximately one half

of all establishments submitting the

Survey each year. This approach would

enable OFCCP to obtain at least minimal

information about the entire contractor

universe every two years. Although the

large majority of establishments will be

required to submit the Survey only once

every two years, OFCCP might also

require additional Survey responses in

special situations, including, but are not

limited to: (1) annual follow-up on

establishments that are not selected for

compliance evaluation but whose

survey responses indicate potential

equal employment problems; and (2)

one-time monitoring of all

establishments in a particular industry

that is suspected of having industrywide equal employment problems. We

do not contemplate requiring any

establishment to submit the Survey

more than once in a year. OFCCP is

considering whether to include in the

final rule codification of the ‘‘50% of

nonconstruction establishments’’ floor

mentioned in this Preamble.

Proposed paragraph (b) provides that

the Survey must be prepared in

accordance with the format specified by

the Deputy Assistant Secretary. The

paragraph further stipulates that the

Survey will include information that

will allow for an accurate assessment of

contractor personnel activities, pay

practices, and affirmative action

performance. This may include data

elements such as applicants, hires,

promotions, terminations, and

compensation by race and gender.

Proposed paragraph (c) describes

how, when, and where contractors must

file the Equal Opportunity Survey.

Contractors are encouraged to file the

Federal Register / Vol. 65, No. 87 / Thursday, May 4, 2000 / Proposed Rules 26101

Survey in electronic format. Submission

in electronic format should result in

savings for many contractors. It also will

greatly expedite OFCCP’s receipt and

analysis of submitted data. Contractors

also may mail or fax the Survey to

OFCCP.

A recurring concern of contractors is

that information submitted to OFCCP

may be disclosed to competitors or the

public under the Freedom of

Information Act (FOIA). Proposed

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 proposed

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.

The Equal Opportunity Survey will

require no additional recordkeeping on

the part of a contractor. Current

regulations already require a contractor

to keep the information needed to

complete the EO Survey.

Subpart C—Miscellaneous

Subpart C of the current regulations

contains suggested methods for

implementing the required ingredients

of AAPs. For instance, current § 60–2.21

suggests steps that a contractor may take

to disseminate its equal employment

opportunity policy, both within the

organization and externally. Section 60–

2.22 suggests appropriate

responsibilities for a corporate manager

of equal opportunity programs.

Although the provisions of Subpart C

are intended to be advisory only, they

frequently are confused as being

mandatory. OFCCP is aware also that

conflicts develop between compliance

officers and contractors as to whether

certain portions of Subpart C should be

implemented. Some of the guidance also

has been criticized as being outdated.

The proposal would remove the

contents of current Subpart C from the

regulations. As is discussed above with

respect to proposed § 60–2.17, one goal

of the proposal is to state the essence of

an AAP, without binding contractors

into prescriptive, one-size-fits-all

solutions that may, at times, prove

counterproductive to the objective of

enhancing opportunity. OFCCP

recognizes, however, that much of the

information contained in current

Subpart C is of value to many

contractors. Accordingly, while the

proposal would remove the provisions

from the regulations, the agency intends

to incorporate suggestions for

implementing affirmative action

programs in a technical assistance

manual for contractors.

The proposal would substitute for

current Subpart C, a new Subpart C

containing miscellaneous items. In

current Subpart D (Miscellaneous),

sections 2.31 (Preemption) and 2.32

(Supersedure) would move to proposed

Subpart C in a modified form. The

remainder of current Subpart D would

be eliminated.

Section 60–2.30 Corporate

Management Compliance Evaluations

OFCCP pioneered the concept of

corporate management—or ‘‘glass

ceiling’’—compliance reviews almost

ten years ago. This proposed new

section draws upon OFCCP’s experience

in conducting glass ceiling reviews,

addressing several issues that are

unique to the corporate management

environment.

Proposed paragraph (a) briefly

explains the purpose of corporate

management compliance evaluations—

to ascertain whether individuals are

encountering artificial barriers to

advancement into mid-level and senior

corporate management positions. The

term ‘‘compliance evaluation’’ is used in

the proposed regulation to clarify that

the agency may use any of the methods

authorized under § 60–1.20, i.e.,

compliance review, off-site review of

records, compliance check and focused

review, to investigate the employment

practices at a corporate headquarters

facility.

Proposed paragraph (b) provides 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. This provision codifies

longstanding OFCCP policy and practice

concerning the appropriate scope of

corporate management evaluations. The

basic policy is stated in OFCCP’s

compliance manual, which provides

that corporate management reviews may

include analysis of positions at lowerlevel establishments, i.e., ‘‘feeder pools’’

from which selections for management

positions at the headquarters

establishment may be made. See Federal

Contract Compliance Manual, Section

5A04.

The regulation currently at § 60–2.30

(Use of goals) would be eliminated with

its substance included in proposed

§ 60–2.16 Placement goals.

In addition, OFCCP is considering

including in the regulatory text a

number of approaches we have found to

be particularly effective in addressing

glass ceiling problems. These

approaches are drawn from OFCCP’s

report, ‘‘The Glass Ceiling Initiative: Are

There Cracks in the Ceiling?’’ (June

1997). The approaches are the

following:

(1) commitment of top management to

equal employment opportunity and

affirmative action principles;

(2) development of a system to

identify high potential minority and

female employees and track their

progress;

(3) management development

programs, including early identification

of senior management potential,

developmental assignments, and special

training opportunities;

(4) succession planning, designed to

identify and develop employees with

management or executive potential so

that individuals are trained and

prepared to assume greater

responsibility as opportunities arise;

(5) mentoring programs;

(6) active recruitment at colleges and

universities with predominantly

minority or female enrollment;

(7) monitoring equal employment

opportunity performance and reporting

it to the Chief Executive Officer on a

regular basis to ensure maximum

accountability; and

(8) making equal employment

opportunity performance an evaluation

factor for top level managers.

OFCCP is soliciting comments

concerning whether this list of

approaches should be included in the

regulations or in subregulatory guidance

only.

Section 60–2.31 Program Summary

The regulation currently at § 60–2.14

(Program summary) would be

redesignated at § 60–2.31. In addition,

the regulation would be revised to make

one technical change—to substitute the

title ‘‘Deputy Assistant Secretary’’ for

‘‘Director.’’ Pursuant to the authority set

forth in 5 U.S.C. 552(b)(3)(a), which

allows Federal agencies to alter ‘‘rules of

agency organization, procedure, or

practice’’ without notice and comment,

OFCCP is not accepting comments on

this regulation. OFCCP intends to

replace the program summary

requirements at some point in the future

should it be found to be duplicative of

the Equal Opportunity Survey.

Section 60–2.32 Affirmative Action

Records

The proposed regulation would add a

provision specifying that the contractor

26102 Federal Register / Vol. 65, No. 87 / Thursday, May 4, 2000 / Proposed Rules

must make relevant records, including

records maintained pursuant to §§ 60–

1.12 and 2.10, available to OFCCP on

request. This provision is derived from

the last sentence of § 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.

Section 60–2.33 Preemption

OFCCP intends to move this provision

from § 60–2.31 in the current

regulations to § 60–2.33 without

alteration, except for several technical

wording changes. Pursuant to the

authority set forth in 5 U.S.C.

552(b)(3)(A), which allows Federal

agencies to alter ‘‘rules of agency

organization, procedure, or practice’’

without notice and comment, OFCCP is

not accepting comments on this

regulation.

Section 60–2.34 Supersedure

This provision would be moved from

§ 60–2.32 in the current regulations to

§ 60–2.34. OFCCP proposes to retain the

first sentence of this section essentially

as it appears in the current regulations.

The second sentence, which references

an old version of ‘‘Order No. 4’’ (a

precursor to the part 60–2 regulations),

and the third sentence, which states that

nothing in part 60–2 is intended to

amend parts 60–3 and 60–20, are

omitted as outdated and unnecessary at

this time.

Section 60–2.35 Compliance Status

This section would expand upon and

restructure a provision that appears at

§ 60–2.15 of the current regulations. The

new section would begin, as does the

current rule, with the assurance that no

contractor’s compliance status will be

judged alone by whether the contractor

reaches its goals.

Consistent with the proposal

contained in § 60–2.16 above, we would

remove from this section the existing

reference to ‘‘timetables.’’ We propose to

further reinforce this point by adding a

new sentence that restates OFCCP’s

longstanding position that the

composition of the contractor’s

workforce does not, by itself, serve as

the basis for imposing sanctions.

The remainder of the section would

address, in turn, compliance with

affirmative action and

nondiscrimination obligations. A

sentence on affirmative action

obligations would be similar to the

second sentence of the current

regulation, stating that a contractor’s

compliance status will be determined by

the entirety of its affirmative action

activities and good faith efforts. A

sentence on compliance with

nondiscrimination obligations would

recite that a 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. Examples of nonstatistical

information are collective bargaining

agreements, company policy statements,

and training notices.

Regulatory Procedures

Executive Order 12866

The Department is issuing this

proposed rule in conformance with

Executive Order 12866. This proposal

has been determined to be significant

for purposes of Executive Order 12866

and therefore has been reviewed by the

Office of Management and Budget. This

proposal meets the criteria of Section

3(f)(1) of Executive Order 12866 and

therefore the information enumerated in

Section 6(a)(3)(C) of that Order is

contained in the Paperwork Reduction

Act Section below. The proposed

changes to the regulations in this NPRM

will decrease the total estimated

annualized cost to contractors of

developing, updating, and maintaining

an AAP by $147,950,698. The estimated

average cost savings per establishment

of developing, updating, and

maintaining an AAP is $1378. See

Paperwork Reduction Act section

below.

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.’’

Regulatory Flexibility Act

The proposed rule, if promulgated,

would not have a significant economic

impact on a substantial number of small

business entities.

The proposals to eliminate the

workforce analysis requirement and

instead require an organizational

profile, to allow smaller contractors to

use EEO–1 categories for their job

groups, to reduce the number of factors

that must be considered to determine

the availability of women and

minorities from eight to two, and to

eliminate more than half of the

additional required ingredients of the

documentation of the AAP will reduce

costs associated with these provisions

for all covered contractors. The proposal

to require an Equal Opportunity Survey

will increase costs, but the overall result

of the proposed rule should be a

reduction in the recordkeeping and

reporting burden.

Thus, the Department concludes that

the proposed rule will not have a

significant economic impact on a

substantial number of small entities.

The Secretary has certified to the Chief

Counsel for Advocacy of the Small

Business Administration to this effect.

Therefore, a regulatory flexibility

analysis under the Regulatory

Flexibility Act is not required.

Unfunded Mandates Reform Act

For purposes of the Unfunded

Mandates Reform Act of 1995, as well

as Executive Order 12875, the proposed

rule, if promulgated, will not include

any Federal mandate that may result in

increased expenditures by state, local,

and tribal governments, or increased

expenditures by the private sector, of

$100,000,000 or more in any one year.

Paperwork Reduction Act

This proposed rule contains

information collections which are

subject to review by the Office of

Management and Budget (OMB) under

the Paperwork Reduction Act of 1995.

The proposed rule would revise

regulations which contain information

collection requirements which are

currently approved under OMB No.

1215–0072. The proposal includes a

new requirement, the Equal

Opportunity Survey, which was

reviewed and approved by OMB under

OMB No. 1215–0196. The title and

description of the information

collections are shown below with an

estimate of the effect the revised

requirements would have on the

recordkeeping hours contained in the

approved 1215–0072 on file at OMB.

The six information collections

discussed below relate to Federal

nonconstruction contractor and

subcontractor responsibilities under

Executive Order 11246, as amended,

and its implementing regulations at 41

CFR parts 60–1 and 60–2. Five of these

collections are revisions of current

methods and procedures used in

developing and implementing an AAP.

The sixth collection relates to the

proposed annual Equal Opportunity

Survey. The AAP is updated annually

by the contractor.

OFCCP invites the public to comment

on whether each of the proposed

Federal Register / Vol. 65, No. 87 / Thursday, May 4, 2000 / Proposed Rules 26103

collections of information: (1) Ensures

that the collection of information is

necessary to the proper performance of

the agency, including whether the

information will have practical utility;

(2) estimates the projected burden,

including the validity of the

methodology and assumptions used,

accurately; (3) enhances the quality,

utility, and clarity of the information to

be collected; and (4) minimizes the

burden of the collection of information

on those who are to respond, including

through the use of appropriate

automated, electronic, mechanical, or

other technological collection

techniques or other forms of information

technology (e.g., permitting electronic

submission of responses).

Title: 41 CFR 60–1.12 Record

Retention

Description: The proposed rule would

amend the record retention provisions

in § 60–1.12(c) to add a requirement that

contractors be able to identify the

gender, race, and ethnicity of employees

and applicants in any record the

contractors maintain pursuant to this

section, and submit this information to

OFCCP on request. This proposal, it is

estimated, would increase the burden of

developing, maintaining, and updating

an AAP by 5 percent.

Title: 41 CFR 60–2.11 Organizational

Profile

Description: This proposed rule

would replace the current portion of 41

CFR 60–2.11(a) which describes the

method to be used in developing a

workforce analysis. The current rule

requires a listing of job titles (not job

groups) ranked from the lowest paid to

highest paid within each department or

similar organizational unit and the race

and sex of incumbents. The proposal

would not require listings of job titles,

with the exception of supervisors;

instead, the contractor would include in

its AAP an organizational profile which

shows each of the work units and their

relationships to one another, and the

gender, race, and ethnic composition of

each work unit. In most cases, a

contractor should be able to use its

existing organizational chart as the core

for its organizational profile. This

proposal, it is estimated, would reduce

the burden of developing, maintaining,

and updating an AAP by 20 percent.

Title: 41 CFR 60–2.12 Job Group

Analysis

Description: For larger contractors, the

proposed rule would continue the

current practice of grouping jobs by

similarity of content, wage rates, and

opportunities. Thus, for contractors

with 150 or more employees there

would be no change from the current

regulation. For contractors with fewer

than 150 employees, the proposal

permits the use of the nine occupational

groups used in the EEO–1 report rather

than requiring such contractors to

develop specific job groups. Many of

these contractors are already grouping

their employees this way for the annual

EEO–1 report and the proposal would

relieve them of any additional grouping

analysis. This proposal, it is estimated,

would decrease the burden of

developing, maintaining, and updating

an AAP by 10 percent for smaller

contractors.

Title: 41 CFR 60–2.14 Determining

Availability

Description: This proposed rule

would replace the current portion of 41

CFR 60–2.11(b) which describes the

method of determining the availability

of minorities or women for each job

group. The present method requires the

contractor to assess each of eight factors,

separately for minorities and women, to

determine the availability for each job

group. The proposal would reduce the

number of factors to two. This proposal,

it is estimated, would reduce the burden

of developing, maintaining, and

updating an AAP by 10 percent.

Title: 41 CFR 60–2.17 Additional

Required Elements of Affirmative

Action Programs

Description: The proposed rule would

replace the current 41 CFR 60–2.13

which lists 10 required additional

ingredients of affirmative action

programs. The proposed rule would

retain four of the items, some rewritten

to enhance clarity, and one of which is

modified slightly. OFCCP believes that

these changes would reduce the burden

of developing, maintaining, and

updating an AAP by an estimated 20

percent.

Title: 41 CFR 60–2.18 Equal

Opportunity Survey

Description: This proposal would

require contractors to submit

Affirmative Action Program, Personnel

Activity, and Compensation Data

information to OFCCP. The information

required for the Equal Opportunity

Survey would be drawn from the

records required to be retained by 41

CFR part 60. The Equal Opportunity

Survey would not impose any new

recordkeeping requirements. The Equal

Opportunity Survey was reviewed and

approved by OMB under OMB No.

1215–0196. The format would be

available from OFCCP in electronic

form. The Equal Opportunity Survey

would provide contractors with an

economical means of assessing their

affirmative action efforts and provide

OFCCP with an improved basis for

compliance evaluations. This proposal,

it is estimated, would increase burden

by 12 hours per respondent or 720,000

hours for the current estimate of 60,000

respondents (see Federal Register

Notices 64 FR 54056 (October 5, 1999)

and 65 FR 5689 (February 4, 2000)).

Description of respondents:

Nonconstruction Contractors and

Subcontractors Subject to the

Requirements of 41 CFR 60–1.40

These estimates are an approximation

of the average time expected to be

necessary to accomplish the desired

results. The personnel information

being recorded and included in the AAP

is currently available during the normal

course of business. Estimated operating

and maintenance costs are included

below.

OFCCP seeks comments on these

estimates.

The contractors subject to these

proposed regulations are currently

covered by the approved information

collection request on file with OMB

under No. 1215–0072. That document

represents information collection

requirements for 89,807 establishments

which, on average, expend

approximately 150 hours each on

developing, maintaining, and updating

the AAP.

At this time, OFCCP records indicate

that the number of establishments has

increased from approximately 89,807 to

107,414. Application of the estimated

changes in burden hours discussed

above for §§ 60–1.12, 60–2.11, 60–2.12,

60–2.14, and 60–2.17 results in the

following burden estimates as compared

with the current inventory under 1215–

0072.

26104 Federal Register / Vol. 65, No. 87 / Thursday, May 4, 2000 / Proposed Rules

BURDEN CHANGE SUMMARY

Current

inventory

Current

inventory

adjusted for #

of firms

Revised

estimate Changes

AAP Development ........................................................................................... 161,155 192,750 99,624 ¥93,126

AAP Updating .................................................................................................. 6,658,288 7,963,670 4,391,335 ¥3,572,335

AAP Maintenance ............................................................................................ 6,725,543 8,044,110 4,435,692 ¥3,608,418

Total Recordkeeping Burden .................................................................... 13,544,986 16,200,530 8,926,651 ¥7,273,879

Average hours per respondent ........................................................................ @150 @150 @83

Section 60–2.18 requires contractors

to submit an Equal Opportunity Survey

to OFCCP. The information required for

the Survey would come from the

records contractors are required to

retain by 41 CFR Part 60. The Survey

would not impose any new

recordkeeping requirements. Although

we estimate that this proposal would

increase burden by 12 hours per

respondent, these burden hours are not

included in this NPRM. OFCCP has

already included the Survey burden

hours in a previous submission to OMB.

See Federal Register Notices 64 FR

54056 (October 5, 1999) and 65 FR 5689

(February 4, 2000).

The estimated annualized cost to

respondents is based on Bureau of Labor

Statistics data in the publication

‘‘Employer Costs for Employee

Compensation’’ (USDL: 99–173), which

lists total compensation for executive,

administrative, and managerial as

$35.18 per hour and administrative

support as $16.63 per hour. OFCCP

estimates that 20 percent of the burden

hours will be executive, administrative,

and managerial and 80 percent will be

administrative support. We have

calculated the total estimated

annualized cost as follows:

Executive 7,273,879 × .20 × $35.18 =

$51,179,012

Admin. Supp. 7,273,879 × .80 × $16.63

= $96,771,686

Total annualized cost savings estimate =

$147,950,698

Estimated average cost savings per

establishment is: $147,950,698/

107,414 = $1,378

OFCCP estimates that contractors will

have some operations and maintenance

cost associated with this collection. For

Supply & Service compliance

evaluations, contractors copy their

AAPs and mail the AAPs to OFCCP. We

estimate an average copying cost of 8

cents per page. Under the proposed

regulations, the size of an AAP will

decrease, on average, by 85.5%, from

150 pages to 22 pages. This decrease is

associated with a reduction in burden

hours. The estimated total copying cost

to contractors will be: 22 pages × $.08

× 2762 = $4861. In addition, we estimate

an average mailing cost of $5.00 per

contractor. The total mailing cost for

contractors will be $5 × 2762 = $13,810.

A copy of this proposed rule has been

submitted to OMB for its review and

approval of these information

collections. Interested persons are

requested to send comments regarding

this information collection, including

suggestions for reducing this burden, to

the Office of Information and Regulatory

Affairs, OMB, New Executive Office

Building, 725 17th Street NW, Room

10235, Washington, DC 20503,

Attention: Desk Officer for DOL/ESA.

List of Subjects in 41 CFR Parts 60–1

and 60–2

Civil rights, Discrimination in

employment, Employment, Equal

employment opportunity, Government

contracts, and Labor.

Signed at Washington, DC, this 28th day of

April 2000.

Alexis M. Herman,

Secretary of Labor.

Bernard E. Anderson,

Assistant Secretary for Employment

Standards.

Shirley J. Wilcher,

Deputy Assistant Secretary for Federal

Contract Compliance.

Accordingly, part 60–2 of the rule

amending 41 CFR Chapter 60 published

on December 30, 1980 (45 FR 86216),

which was delayed indefinitely on

August 25, 1981 (46 FR 42865), is

proposed to be withdrawn; the proposed

rule published on August 25, 1981 (46

FR 42968; supplemented at 47 FR

17770, April 23, 1982) is withdrawn in

its entirety; and parts 60–1 and 60–2 of

Title 41 of the Code of Federal

Regulations are proposed to be amended

as follows.

PART 60–1—OBLIGATIONS OF

CONTRACTORS AND

SUBCONTRACTORS

1. The authority citation for part 60–

1 continues to read as follows:

Authority: Sec. 201, E.O. 11246 (30 FR

12319), as amended by E.O. 11375 (32 FR

14303) and E.O. 12086 (43 FR 46501).

1a. In § 60–1.12, paragraph (b) is

revised to read as follows:

§ 60–1.12 Record retention.

* * * * *

(b) Affirmative action programs. A

contractor establishment required under

§ 60–1.40 to develop and maintain an

affirmative action program (AAP) must

maintain its current AAP and

documentation of good faith effort, and

must preserve its AAP and

documentation of good faith effort for

the immediately preceding AAP year,

unless it was not then covered by the

AAP requirement.

* * * * *

2. In § 60–1.12, paragraphs (c) and (d)

are redesignated as paragraphs (d) and

(e), respectively, and the first sentence

of newly redesignated paragraph (d) is

revised to read as follows:

§ 60–1.12 Record retention.

* * * * *

(d) Failure to preserve records. Failure

to preserve complete and accurate

records as required by paragraphs (a)

through (c) of this section constitutes

noncompliance with the contractor’s

obligations under the Executive Order

and this part.* * *

* * * * *

3. In § 60–1.12, a new paragraph (c) is

added to read as follows:

§ 60–1.12 Record retention.

* * * * *

(c)(1) In 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.

(2) The contractor must supply this

information to the Office of Federal

Contract Compliance Programs upon

request.

* * * * *

4. Section 60–1.40 is revised to read

as follows:

Federal Register / Vol. 65, No. 87 / Thursday, May 4, 2000 / Proposed Rules 26105

§ 60–1.40 Affirmative action programs.

(a) Each nonconstruction contractor

that has 50 or more employees and has

a contract of $50,000 or more; or has

Government bills of lading which in any

12-month period, total or can reasonably

be expected to total $50,000 or more; or

serves as a depository of Government

funds in any amount; or is a financial

institution which is an issuing and

paying agent for U.S. savings bonds and

savings notes in any amount, must

develop and maintain an affirmative

action program for each of its

establishments.

Each contractor and subcontractor

must require each nonconstruction

subcontractor that has 50 or more

employees and has a subcontract of

$50,000 or more; or has Government

bills of lading which in any 12-month

period, total or can reasonably be

expected to total $50,000 or more; or

serves as a depository of Government

funds in any amount; or is a financial

institution which is an issuing and

paying agent for U.S. savings bonds and

savings notes in any amount, to develop

and maintain an affirmative action

program for each of its establishments.

(b) Nonconstruction contractors

should refer to part 60–2 of this chapter

for specific affirmative action

requirements. Construction contractors

should refer to part 60–4 of this chapter

for specific affirmative action

requirements.

5. Part 60–2 is revised to read as

follows:

PART 60–2—AFFIRMATIVE ACTION

PROGRAMS

Subpart A—General

Sec.

60–2.1 Scope and application.

60–2.2 Agency action.

Subpart B—Purpose and Contents of

Affirmative Action Programs

60–2.10 General purpose and contents of

affirmative action programs.

60–2.11 Organizational profile.

60–2.12 Job group analysis.

60–2.13 Placement of incumbents in job

groups.

60–2.14 Determining availability.

60–2.15 Comparing incumbency to

availability.

60–2.16 Placement goals.

60–2.17 Additional required elements of

affirmative action programs.

60–2.18 Equal Opportunity Survey.

Subpart C—Miscellaneous

60–2.30 Corporate management compliance

evaluations.

60–2.31 Program summary.

60–2.32 Affirmative action records.

60–2.33 Preemption.

60–2.34 Supersedure.

60–2.35 Compliance status.

Authority: E.O. 11246, 30 FR 12319, and

E.O. 11375, 32 FR 14303, as amended by E.O.

12086, 43 FR 46501.

Subpart A—General

§ 60–2.1 Scope and application.

(a) General. The requirements of this

part apply to nonconstruction

contractors. The regulations prescribe

the contents of affirmative action

programs, standards and procedures for

evaluating the compliance of affirmative

action programs implemented pursuant

to this part, and related matters.

(b) Who must develop affirmative

action programs. Each nonconstruction

contractor that has 50 or more

employees and has a contract of $50,000

or more; or has Government bills of

lading which in any 12-month period,

total or can reasonably be expected to

total $50,000 or more; or serves as a

depository of Government funds in any

amount; or is a financial institution

which is an issuing and paying agent for

U.S. savings bonds and savings notes in

any amount, must develop and maintain

an affirmative action program for each

of its establishments.

Each contractor and subcontractor

must require each nonconstruction

subcontractor that has 50 or more

employees and has a subcontract of

$50,000 or more; or has Government

bills of lading which in any 12-month

period, total or can reasonably be

expected to total $50,000 or more; or

serves as a depository of Government

funds in any amount; or is a financial

institution which is an issuing and

paying agent for U.S. savings bonds and

savings notes in any amount, to develop

and maintain an affirmative action

program for each of its establishments.

(c) When affirmative action programs

must be developed. The affirmative

action programs required under

paragraph (b) of this section must be

developed within 120 days from the

commencement of a contract and must

be updated annually.

(d) Who is included in affirmative

action programs. Contractors subject to

the affirmative action program

requirements must develop and

maintain an affirmative action program

for each of their establishments. Each

employee in the contractor’s workforce

must be included in an affirmative

action program. Each employee must be

included in the affirmative action

program of the establishment at which

he or she works, except that:

(1) Employees who perform their

normal and customary duties at

locations other than that of the manager

to whom they report, must be included

in the affirmative action program of

their manager.

(2) Employees who work at an

establishment where the contractor

employs fewer than 50 employees, may

be included under any of the following

three options: in an affirmative action

program which covers just that

establishment; in the affirmative action

program which covers the location of

the personnel function which supports

the establishment; or, in the affirmative

action program which covers the

location of the official to whom they

report.

(3) Employees for whom selection

decisions are made at a higher level

establishment within the organization

must be included in the affirmative

action program of the establishment

where the selection decision is made.

(e) How to identify employees

included in affirmative action programs

other than where they are located. If

pursuant to paragraph (d) of this section

employees are included in an

affirmative action program for a location

other than the one in which the

employees are located, the

organizational profile and job group

analysis of the affirmative action

program in which the employees are

included must be annotated to identify

the actual location of such employees. If

the establishment at which the

employees actually are located

maintains an affirmative action

program, the organizational profile and

job group analysis of that program must

be annotated to identify the program in

which the employees are included.

§ 60–2.2 Agency action.

(a) Any contractor required by § 60–

2.1 of this chapter to develop and

maintain an affirmative action program

for each of its establishments that has

not complied with that section is not in

full compliance with Executive Order

11246, as amended. When a contractor

is required to submit its affirmative

action program to OFCCP (e.g., for a

compliance evaluation), the affirmative

action program will be deemed to have

been accepted by the Government at the

time OFCCP notifies the contractor of

completion of the compliance

evaluation or other action, unless within

45 days thereafter the Deputy Assistant

Secretary has disapproved such

program.

(b) If, in determining such contractor’s

responsibility for an award of a contract

it comes to the contracting officer’s

attention, through sources within his/

her agency or through the OFCCP or

other Government agencies, that the

contractor does not have an affirmative

action program at each of its

establishments, or has substantially

deviated from such an approved

26106 Federal Register / Vol. 65, No. 87 / Thursday, May 4, 2000 / Proposed Rules

affirmative action program, or has failed

to develop or implement an affirmative

action program which complies with the

regulations in this chapter, the

contracting officer must declare the

contractor/bidder nonresponsible and so

notify the contractor and the Deputy

Assistant Secretary, unless the

contracting officer otherwise

affirmatively determines that the

contractor is able to comply with the

equal employment obligations.

Any contractor/bidder which has

been declared nonresponsible in

accordance with the provisions of this

section may request the Deputy

Assistant Secretary to determine that the

responsibility of the contractor/bidder

raises substantial issues of law or fact to

the extent that a hearing is required.

Such request must set forth the basis

upon which the contractor/bidder seeks

such a determination.

If the Deputy Assistant Secretary, in

his/her sole discretion, determines that

substantial issues of law or fact exist, an

administrative or judicial proceeding

may be commenced in accordance with

the regulations contained in § 60–1.26;

or the Deputy Assistant Secretary may

require the investigation or compliance

evaluation be developed further or

additional conciliation be conducted:

Provided, That during any pre-award

conferences, every effort will be made

through the processes of conciliation,

mediation, and persuasion to develop

an acceptable affirmative action

program meeting the standards and

guidelines set forth in this part so that,

in the performance of the contract, the

contractor is able to meet its equal

employment obligations in accordance

with the equal opportunity clause and

applicable rules, regulations, and

orders: Provided further, That a

contractor/bidder may not be declared

nonresponsible more than twice due to

past noncompliance with the equal

opportunity clause at a particular

establishment or facility without

receiving prior notice and an

opportunity for a hearing.

Subpart B—Purpose and Contents of

Affirmative Action Programs

§ 60–2.10 General purpose and contents of

affirmative action programs.

(a) Purpose. (1) An affirmative action

program is a management tool designed

to ensure equal employment

opportunity. A central premise

underlying affirmative action is that,

absent discrimination, over time a

contractor’s workforce, generally, will

reflect the gender, racial and ethnic

profile of the labor pools from which the

contractor recruits and selects.

Affirmative action programs contain a

diagnostic component which includes a

number of quantitative analyses

designed to evaluate the composition of

the workforce of the contractor and

compare it to the composition of the

relevant labor pools.

Affirmative action programs also

include action-oriented programs. If

women and minorities are not being

employed at a rate to be expected given

their availability in the relevant labor

pool, the contractor’s affirmative action

program includes specific practical

steps designed to address this

underutilization. Effective affirmative

action programs also include internal

auditing and reporting systems as a

means of measuring the contractor’s

progress toward achieving the workforce

that would be expected in the absence

of discrimination.

(2) An affirmative action program also

ensures equal employment opportunity

by institutionalizing the contractor’s

commitment to equality in every aspect

of the employment process. Therefore,

as part of its affirmative action program,

a contractor monitors and examines its

employment decisions and

compensation systems to evaluate the

impact of those systems on women and

minorities.

(3) An affirmative action program is,

thus, more than a paperwork exercise.

An affirmative action program includes

those policies, practices, and procedures

that the contractor implements to ensure

that all qualified applicants and

employees are receiving an equal

opportunity for recruitment, selection,

advancement, and every other term and

privilege associated with employment.

Affirmative action, ideally, is a part of

the way the contractor regularly

conducts its business. OFCCP has found

that when an affirmative action program

is approached from this perspective, as

a powerful management tool, there is a

positive correlation between the

presence of affirmative action and the

absence of discrimination.

(b) Contents of affirmative action

programs. (1) An affirmative action

program must include the following

quantitative analyses:

(i) Organizational profile § 60–2.11;

(ii) Job group analysis § 60–2.12;

(iii) Placement of incumbents in job

groups § 60–2.13;

(iv) Determining availability § 60–

2.14;

(v) Comparing incumbency to

availability § 60–2.15; and

(vi) Placement goals § 60–2.16.

(2) In addition, an affirmative action

program must include the following

components specified in the § 60–2.17

of this part:

(i) Designation of responsibility for

implementation;

(ii) Identification of problem areas;

(iii) Action-oriented programs; and

(iv) Periodic internal audits.

(c) Documentation. Contractors must

maintain and make available to OFCCP

documentation of their compliance with

§§ 60–2.11 through 60–2.17.

§ 60–2.11 Organizational profile.

(a) Purpose. An organizational profile

is a snapshot of the staffing pattern

within an establishment. It is one

method contractors use to determine

whether barriers to equal employment

opportunity exist in their organizations.

The profile provides an overview of the

workforce at the establishment that may

assist in identifying organizational units

where women or minorities are

underrepresented or concentrated.

(b)(1) An organizational profile is a

detailed organizational chart or similar

graphical presentation of the

contractor’s organizational structure.

The profile must identify each

organizational unit in the establishment,

and show the relationship of each

organizational unit to the other

organizational units in the

establishment.

(2) An organizational unit is any

component that is part of the

contractor’s corporate structure. In a

more traditional organization, an

organizational unit might be a

department, division, section, branch,

group or similar component. In a less

traditional organization, an

organizational unit might be a project

team, job family, or similar component.

The term includes an umbrella unit

(such as a department) that contains a

number of subordinate units, and it

separately includes each of the

subordinate units (such as sections or

branches).

(c) For each organizational unit, the

organizational profile must indicate the

following:

(1) The name of the unit;

(2) The job title, gender, race, and

ethnicity of the unit supervisor (if the

unit has a supervisor);

(3) The total number of male and

female incumbents; and

(4) The total number of male and

female incumbents in each of the

following groups: Blacks, Hispanics,

Asians/Pacific Islanders, and American

Indians/Alaskan Natives.

§ 60–2.12 Job group analysis.

(a) Purpose. A job group analysis is a

method of combining job titles within

the contractor’s establishment. This is

the first step in the contractor’s

comparison of the representation of

Federal Register / Vol. 65, No. 87 / Thursday, May 4, 2000 / Proposed Rules 26107

minorities and women in its workforce

with the estimated availability of

minorities and women qualified to be

employed.

(b) In the job group analysis, jobs at

the establishment with similar content,

wage rates, and opportunities, must be

combined to form job groups. Similarity

of content refers to the duties and

responsibilities of the job titles which

make up the job group. Similarity of

opportunities refers to training,

transfers, promotions, pay mobility, and

other career enhancement opportunities

offered by the jobs within the job group.

(c) The job group analysis must

include a list of the job titles that

comprise each job group. If, pursuant to

§§ 60–2.1(d) and (e) the job group

analysis contains jobs that are located at

another establishment, the job group

analysis must be annotated to identify

the actual location of those jobs. If the

establishment at which the jobs actually

are located maintains an affirmative

action program, the job group analysis

of that program must be annotated to

identify the program in which the jobs

are included.

(d) Except as provided in § 60–2.1(d),

all jobs located at an establishment must

be reported in the job group analysis of

that establishment.

(e) Smaller employers. If a contractor

has a total workforce of fewer than 150

employees, the contractor may prepare

a job group analysis that utilizes EEO–

1 categories as job groups. EEO–1

categories refers to the nine

occupational groups used in the

Standard Form 100, the Employer

Information EEO–1 Survey: officials and

managers, professionals, technicians,

sales, office and clerical, craft workers

(skilled), operatives (semiskilled),

laborers (unskilled), and service

workers.

§ 60–2.13 Placement of incumbents in job

groups.

The contractor must separately state

the percentage of minorities and the

percentage of women it employs in each

job group established pursuant to § 60–

2.12.

§ 60–2.14 Determining availability.

(a) Purpose. Availability is an

estimate of the number of qualified

minorities or women available for

employment in a given job group,

expressed as a percentage of all

qualified persons available for

employment in the job group. The

purpose of the availability

determination is to establish a

benchmark against which the

demographic composition of the

contractor’s incumbent workforce can

be compared in order to determine

whether barriers to equal employment

opportunity may exist within particular

job groups.

(b) The contractor must separately

determine the availability of minorities

and women for each job group.

(c) In determining availability, the

contractor must consider at least the

following factors:

(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 provided by

the contractor, become promotable or

transferable during the AAP year.

(d) The contractor must use the most

current and discrete statistical

information available to derive

availability figures. Examples of such

information include census data, data

from local job service offices, and data

from colleges or other training

institutions.

(e) The contractor may not draw its

reasonable recruitment area in such a

way as to have the effect of excluding

minorities or women. For each job

group, the reasonable recruitment area

must be identified, with a brief

explanation of the rationale for selection

of that recruitment area.

(f) The contractor may not define the

pool of promotable, transferable, and

trainable employees in such a way as to

have the effect of excluding minorities

or women. For each job group, the pool

of promotable, transferable, and

trainable employees must be identified

with a brief explanation of the rationale

for the selection of that pool.

(g) Where a job group is composed of

job titles with different availability

rates, a composite availability figure for

the job group must be calculated. The

contractor must separately determine

the availability for each job title within

the job group and must determine the

proportion of job group incumbents

employed in each job title. The

contractor must weight the availability

for each job title by the proportion of job

group incumbents employed in that job

group. The sum of the weighted

availability estimates for all job titles in

the job group must be the composite

availability for the job group.

§ 60–2.15 Comparing incumbency to

availability.

(a) The contractor must compare the

percentage of minorities and women in

each job group determined pursuant to

§ 60–2.13 with the availability for those

job groups determined pursuant to § 60–

2.14.

(b) When the percentage of minorities

or women employed in a particular job

group is less than would reasonably be

expected given their availability

percentage in that particular job group,

the contractor must establish a

placement goal in accordance with § 60–

2.16.

§ 60–2.16 Placement goals.

(a) Purpose. Placement goals serve as

objectives or targets reasonably

attainable by means of applying every

good faith effort to make all aspects of

the entire affirmative action program

work. Placement goals also are used to

measure progress toward achieving

equal employment opportunity.

(b) Placement goals must be designed

to correct any identifiable deficiencies.

A contractor’s determination under

§ 60–2.15 that a placement goal is

required constitutes neither a finding

nor an admission of discrimination.

(c) Where, pursuant to § 60–2.15, a

contractor is required to establish a

placement goal for a particular job

group, the contractor must establish a

percentage annual placement goal at

least equal to the availability figure

derived for women or minorities, as

appropriate, for that job group.

(d) The placement goal-setting process

described above contemplates that

contractors will, where required,

establish a single goal for all minorities.

In the event of a substantial disparity in

the utilization of a particular minority

group or in the utilization of men or

women of a particular minority group,

a contractor may be required to establish

separate goals for those groups.

(e) In establishing placement goals,

the following principles also apply:

(1) Placement goals may not be rigid

and inflexible quotas, which must be

met, nor are they to be considered as

either a ceiling or a floor for the

employment of particular groups.

Quotas are expressly forbidden.

(2) In all employment decisions, the

contractor must make selections in a

nondiscriminatory manner. Placement

goals do not provide the contractor with

a justification to extend a preference to

any individual, select an individual, or

adversely affect an individual’s

employment status, on the basis of that

person’s race, color, religion, sex, or

national origin.

26108 Federal Register / Vol. 65, No. 87 / Thursday, May 4, 2000 / Proposed Rules

(3) Placement goals do not create setasides for specific groups, nor are they

intended to achieve proportional

representation or equal results.

(4) Placement goals may not be used

to supersede merit selection principles.

Affirmative action programs prescribed

by the regulations in this part do not

require a contractor to hire a person

who lacks qualifications to perform the

job successfully, or hire a less qualified

person in preference to a more qualified

one.

(f) A contractor extending a publicly

announced preference for American

Indians as is authorized in 41 CFR 60–

1.5(a)(6) may reflect in its placement

goals the permissive employment

preference for American Indians living

on or near an Indian reservation.

§ 60–2.17 Additional required elements of

affirmative action programs.

In addition to the elements required

by § 60–2.10 through § 60–2.16, an

acceptable affirmative action program

must include the following:

(a) Designation of responsibility. The

contractor must provide for the

implementation of equal employment

opportunity and the affirmative action

program by assigning responsibility and

accountability to an official of the

organization. Depending upon the size

of the contractor, this may be the

official’s sole responsibility. He or she

must have the authority, resources,

support of and access to top

management to ensure the effective

implementation of the affirmative action

program.

(b) Identification of problem areas.

The contractor must perform in-depth

analyses of its total employment process

to determine whether and where

impediments to equal employment

opportunity exist. At a minimum the

contractor must evaluate:

(1) The workforce by organizational

unit and job group to determine whether

there are problems of minority or female

utilization (i.e., employment in the unit

or group), or of minority or female

distribution (i.e., placement in the

different jobs within the unit or group);

(2) Personnel activity (applicant flow,

hires, terminations, promotions, and

other personnel actions) to determine

whether there are selection disparities;

(3) Compensation system(s) to

determine whether there are gender-,

race-, or ethnicity-based disparities;

(4) Selection, recruitment, referral,

and other personnel procedures to

determine whether they result in

disparities in the employment or

advancement of minorities or women;

and

(5) Any other areas that might impact

the success of the affirmative action

program.

(c) Action-oriented programs. The

contractor must develop and execute

action-oriented programs designed to

correct any problem areas identified

pursuant to § 60–2.17(b) and to attain

established goals and objectives. In

order for these action-oriented programs

to be effective, the contractor must

ensure that they consist of more than

following the same procedures which

have previously produced inadequate

results. Furthermore, a contractor must

demonstrate that it has made good faith

efforts to remove identified barriers,

expand employment opportunities, and

produce measurable results.

(d) Internal audit and reporting

system. The contractor must develop

and implement an auditing system that

periodically measures the effectiveness

of its total affirmative action program.

The actions listed below are key to a

successful affirmative action program:

(1) Monitor records of all personnel

activity, including referrals, placements,

transfers, promotions, terminations, and

compensation, at all levels to ensure the

nondiscriminatory policy is carried out;

(2) Require internal reporting on a

scheduled basis as to the degree to

which equal employment opportunity

and organizational objectives are

attained;

(3) Review report results with all

levels of management; and

(4) Advise top management of

program effectiveness and submit

recommendations to improve

unsatisfactory performance.

§ 60–2.18 Equal Opportunity Survey.

(a) Survey requirement. Each year,

OFCCP will designate a substantial

portion of all nonconstruction

contractor establishments to prepare

and file an Equal Opportunity Survey.

OFCCP will notify those establishments

required to prepare and file the Equal

Opportunity Survey. The Survey will

provide OFCCP compliance data early

in the compliance evaluation process,

thus allowing the agency to more

effectively identify contractor

establishments for further evaluation.

The Survey will also provide

contractors with a useful tool for selfevaluation.

(b) Survey format. The Equal

Opportunity Survey must be prepared

in accordance with the format specified

by the Deputy Assistant Secretary. The

Equal Opportunity Survey will include

information that will allow for an

accurate assessment of contractor

personnel activities, pay practices, and

affirmative action performance. This

may include data elements such as

applicants, hires, promotions,

terminations, and compensation by race

and gender.

(c) How, when, and where to file.

Contractors are encouraged to submit

the Equal Opportunity Survey in

electronic format, i.e., a computerized

version prepared in accordance with the

requirements of this section. The Equal

Opportunity Survey may be submitted

in electronic format or via facsimile to

the address indicated in the Survey

instructions. Paper versions of the Equal

Opportunity Survey must be mailed to

the address indicated in the Survey

instructions. The filing deadline will be

specified by the Deputy Assistant

Secretary.

(d) Confidentiality. OFCCP will treat

information contained in the Equal

Opportunity Survey as confidential to

the maximum extent the information is

exempt from public disclosure under

the Freedom of Information Act, 5

U.S.C. 552. It is the practice of OFCCP

not to release data where the contractor

is still in business, and the contractor

indicates, and through the Department

of Labor review process it is

determined, that the data are

confidential and sensitive and that the

release of data would subject the

contractor to commercial harm.

Subpart C—Miscellaneous

§ 60–2.30 Corporate management

compliance evaluations.

(a) Purpose. Corporate Management

Compliance Evaluations are designed to

ascertain whether individuals are

encountering artificial barriers to

advancement into midlevel and senior

corporate management, i.e., glass

ceiling. During Corporate Management

Compliance Evaluations, special

attention is given to those components

of the employment process that affect

advancement into mid- and senior-level

positions.

(b) If, during the course of a Corporate

Management Compliance Evaluation, it

comes to the attention of OFCCP that

problems exist at locations outside the

corporate headquarters, OFCCP may

expand the compliance evaluation

beyond the headquarters establishment.

At its discretion, OFCCP may direct its

attention to and request relevant data for

any and all areas within the corporation

to ensure compliance with Executive

Order 11246.

§ 60–2.31 Program summary.

The affirmative action program must

be summarized and updated annually.

The program summary must be

prepared in a format which will be

Federal Register / Vol. 65, No. 87 / Thursday, May 4, 2000 / Proposed Rules 26109

prescribed by the Deputy Assistant

Secretary and published in the Federal

Register as a notice before becoming

effective. Contractors and

subcontractors must submit the program

summary to OFCCP each year on the

anniversary date of the affirmative

action program.

§ 60–2.32 Affirmative action records.

The contractor must make available to

the Office of Federal Contract

Compliance Programs, upon request,

records maintained pursuant to § 60–

1.12 and written or otherwise

documented portions of AAPs

maintained pursuant to § 60–2.10 for

such purposes as may be appropriate to

the fulfillment of the agency’s

responsibilities under Executive Order

11246.

§ 60–2.33 Preemption.

To the extent that any state or local

laws, regulations or ordinances,

including those that grant special

benefits to persons on account of sex,

are in conflict with Executive Order

11246, as amended, or with the

requirements of this part, they will be

regarded as preempted under the

Executive Order.

§ 60–2.34 Supersedure.

All orders, instructions, regulations,

and memorandums of the Secretary of

Labor, other officials of the Department

of Labor and contracting agencies are

hereby superseded to the extent that

they are inconsistent with this part 60–

2.

§ 60–2.35 Compliance status.

No contractor’s compliance status will

be judged alone by whether it reaches

its goals. The composition of the

contractor’s workforce (i.e., the

employment of minorities or women at

a percentage rate below, or above, the

goal level) does not, by itself, serve as

a basis to impose any of the sanctions

authorized by Executive Order 11246

and the regulations in this chapter. Each

contractor’s compliance with its

affirmative action obligations will be

determined by reviewing the nature and

extent of the contractor’s good faith

affirmative action activities as required

under § 60–2.17, and the

appropriateness of those activities to

identified equal employment

opportunity problems. Each contractor’s

compliance with its nondiscrimination

obligations will be determined by

analysis of statistical data and other

non-statistical information which would

indicate whether employees and

applicants are being treated without

regard to their race, color, religion, sex,

or national origin.

[FR Doc. 00–10991 Filed 5–3–00; 8:45 am]

BILLING CODE 4510–45–P