68022 Federal Register / Vol. 165, No. 219 / Monday, November 13, 2000 / Rules and Regulations

DEPARTMENT OF LABOR

Office of Federal Contract Compliance

Programs

41 CFR Parts 60–1, 60–2

RIN 1215–AA01

Government Contractors, Affirmative

Action Requirements

AGENCY: Office of Federal Contract

Compliance Programs (OFCCP), ESA,

Labor.

ACTION: Final rule.

SUMMARY: The Office of Federal Contract

Compliance Programs (OFCCP) is

revising certain regulations

implementing Executive Order 11246,

as amended. The Executive Order

prohibits Government contractors and

subcontractors, and Federally assisted

construction contractors and

subcontractors, from discriminating in

employment, and requires these

contractors to take affirmative action to

ensure that employees and applicants

are treated without regard to race, color,

religion, sex, or national origin. The

final rule will refocus, revise, and

restructure 41 CFR part 60–2, the

regulations that establish the

requirements for affirmative action

programs, and related sections in 41

CFR part 60–1. The rule will refocus the

regulatory emphasis from the

development of a document that

complies with highly prescriptive

standards, to a performance based

standard that effectively implements an

affirmative action program into the

overall management plan of the

contractor. The rule also will introduce

a new tool, the Equal Opportunity

Survey, that will aid contractors in

assessing their pay and other personnel

practices, while increasing the

efficiency and effectiveness of program

monitoring. OFCCP is encouraging

contractors to file the Survey

electronically.

The rule will help fulfill the

Administration’s Equal Pay Initiative to

provide contractors with the necessary

tools to assess and improve their pay

policies. The rule also will help fulfill

the Department’s goal of increasing the

number of Federal contractors brought

into compliance. A means to fulfill that

goal is for OFCCP to more effectively

monitor the pay practices of Federal

contractors.

In addition, the final rule revising and

restructuring the regulations relating to

affirmative action programs is part of

OFCCP’s continuing efforts to meet the

objectives of the Reinventing

Government Initiative. These objectives

include obtaining input from those most

directly affected by the regulations,

reducing paperwork and compliance

burdens wherever possible, more

effectively focusing Government

resources where most needed in order to

administer the law most efficiently,

making the regulations easier to

understand by streamlining and

simplifying them and writing them in

plain language, and updating the

regulations to accommodate modern

organizational structures and to take

advantage of new technologies.

EFFECTIVE DATES: These regulations are

effective December 13, 2000.

FOR FURTHER INFORMATION CONTACT:

James I. Melvin, Director, Division of

Policy, Planning and Program

Development, OFCCP, Room C–3325,

200 Constitution Avenue, NW.,

Washington, DC 20210. Telephone (202)

693–0102 (voice), (202) 693–1308

(TTY). Copies of this rule in alternative

formats may be obtained by calling (202)

693–0102 (voice) or (202) 693–1308

(TTY). The alternative formats available

are large print, electronic file on

computer disk, and audiotape. The rule

also is available on the Internet at. http:/

/www.dol.gov/dol/esa.

SUPPLEMENTARY INFORMATION:

Current Regulations and Rulemaking

History

Executive Order 11246, as amended,

requires that Federal Government

contractors and subcontractors ‘‘take

affirmative action to ensure that

applicants are employed, and that

employees are treated during

employment, without regard to their

race, color, religion, sex, or national

origin.’’ Affirmative action under

Executive Order 11246, as amended,

connotes more than passive

nondiscrimination; it requires that

contractors take affirmative steps to

identify and eliminate impediments to

equal employment opportunity.

The history, principles and concepts

underlying the current blueprint for

affirmative action under Executive

Order 11246, as amended, were

recounted in the notice of proposed

rulemaking (NPRM), 65 FR 26088,

published on May 4, 2000, and readers

interested in that background

information may refer to that

discussion.

The current regulations require

Federal Government nonconstruction

contractors and subcontractors with 50

or more employees and a contract of

$50,000 or more to prepare and

implement a written Affirmative Action

Program (AAP) for each of their

establishments. The basic elements of

the AAP are discussed in more detail in

the Section-by-Section Analysis which

follows.

On May 4, 2000, OFCCP published a

proposed rule, 65 FR 26088, to revise

specific regulations found at 41 CFR

parts 60–1 and 60–2. The comment

period closed on July 3, 2000. A total of

187 comments were received within the

comment period from five contractor

advocacy organizations; 137 labor, civil

rights, and women’s advocacy

organizations and their individual

members; four law firms that advise or

represent contractors or contractor

advocacy organizations; 14 contractors;

17 consulting firms; 9 civil rights and

affirmative action officials of state and

local governments and institutions of

higher learning; and one Member of

Congress. All the comments were

reviewed and carefully considered in

the development of this final rule.

The final rule revises the regulations

at 41 CFR part 60–2, which address the

content of AAPs. The rule also makes a

corresponding revision of § 60–1.12,

which covers records that must be

retained, and § 60–1.40, which covers

who must develop and maintain an

AAP.

The rule also performs several

‘‘housekeeping’’ functions with respect

to the part 60–2 regulations. A final rule

was published on December 30, 1980

(45 FR 86215; corrected at 46 FR 7332,

January 23, 1981), but was stayed in

accordance with Executive Order 12291

on January 28, 1981 (46 FR 9084). This

rule later was stayed indefinitely on

August 25, 1981 (46 FR 42865), pending

action on an NPRM published on that

same date (46 FR 42968; supplemented

at 47 FR 17770, April 23, 1982). No

further action on the August 25, 1981,

proposal, or consequently on the 1980

stayed final rule, has been taken. Both

the 1980 final rule and the 1981

proposal addressed 41 CFR part 60–2.

To avoid conflict with the rule

published today, OFCCP hereby

withdraws part 60–2 of the 1980 final

rule. Additionally, consistent with the

President’s 1998 ‘‘Plain Language’’

Memorandum, OFCCP has replaced the

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

appropriate to the context.

Overview of the Final Rule

The final rule, for the most part,

adopts the revisions that were proposed

in the May 4 NPRM. However, some of

the proposed provisions have been

modified in response to the public

comments. The changes between the

NPRM and the final rule are explained

in detail in the Section-by-Section

Analysis.

Federal Register / Vol. 165, No. 219 / Monday, November 13, 2000 / Rules and Regulations 68023

The discussion which follows

identifies the significant comments

received in response to the NPRM,

provides OFCCP’s responses to those

comments, and explains any resulting

changes to the proposed revisions.

Section-by-Section Analysis of

Comments and Revisions

Section 60–1.12 Record Retention

OFCCP published a final rule revising

41 CFR part 60–1 on August 19, 1997.

The proposed rule published on May 4,

2000 would further amend the record

retention provisions in § 60–1.12 to

harmonize them with the proposed

changes to part 60–2. Specifically, the

NPRM would amend paragraph (b) to

eliminate the modifier ‘‘written’’ from a

contractor’s current requirement to

develop a written affirmative action

program. Furthermore, the proposal

called for a new paragraph (c) that

would codify in this part a longstanding

regulatory obligation for contractors to

be able to identify their employees and,

where possible, applicants by gender,

race, and ethnicity. Existing paragraph

(a) would remain unchanged, while

paragraphs (c) and (d) would be

redesignated as paragraphs (d) and (e)

respectively, with the first sentence of

the newly designated paragraph (d)

reflecting the addition of new paragraph

(c).

Section 60–1.12(b) Affirmative Action

Programs

In response to a number of comments,

OFCCP has decided not to remove the

modifier ‘‘written’’ from the phrase

‘‘written affirmative action program.’’

See further discussion under § 60–1.40

below.

Section 60–1.12(c)

The NPRM proposed a new paragraph

(c) that would require that the

contractor be able to identify the gender,

race, and ethnicity of each employee,

and where possible, the gender, race,

and ethnicity of each applicant in any

records the contractor maintains

pursuant to this section. In addition, the

contractor would be required to supply

this information to OFCCP upon

request. This provision is necessary for

OFCCP to verify EEO data.

The agency received fifteen comments

pertaining to paragraph (c), which fit

into several categories. Most

prominently, three consultants and two

law firms sought a clear definition of

which job seekers contractors must track

as ‘‘applicants.’’ More narrowly, a

contractor objected to tracking as job

applicants those persons it perceives as

lacking requisite skills. Still another

contractor hoped that the ‘‘where

possible’’ language in the proposal

indicated OFCCP has not definitively

resolved the applicant issue, but rather

intends to pursue a flexible approach

that reflects modern realities.

Three contractors, three consultants,

and a law firm representing an employer

association expressed their view that it

is an undue burden to obtain

demographic data for prospective

employees, especially unsolicited

applicants. Another commenter, an

organization representing contractors,

agreed that this practice is burdensome,

but also observed that collection of such

demographic information for employee

and applicant records is already

required. In actuality, all employers

with fifteen or more employees,

including Federal contractors, have

been covered by the Uniform Guidelines

on Employee Selection Procedures since

1978.

The agency wishes to make clear that

it is not revising the meaning of

‘‘applicant’’ in the final rule. OFCCP

and other Federal civil rights agencies

have adhered to the same definition

since Question and Answer 15 was

published in the Federal Register in

1979 (see ‘‘Adoption of Questions and

Answers to Clarify and Provide a

Common Interpretation of the Uniform

Guidelines on Employee Selection

Procedures,’’ 44 F.R. 11996, 11998

(March 2, 1979)). On the other hand, the

final rule recognizes that some job

applicants refuse to divulge

demographic information to identify

themselves. Therefore, OFCCP wishes to

be reasonable through inclusion of the

‘‘where possible’’ phrase referring to

applicants in § 60–1.12(c)(1)(ii).

A consultant and a law firm

representing a business association

expressed concern about marking the

actual records of employees and

applicants with demographic

information. As one of them noted, such

a requirement would be contrary to

normal equal employment opportunity

procedures. OFCCP agrees and does not

intend for contractors to place gender,

race, and ethnicity information directly

on the employment records of their

employees or job candidates. Thus, for

sake of clarity, in the final rule the

agency substitutes the preposition ‘‘for’’

for ‘‘in,’’ which appeared in the

proposed rule. Therefore, § 60–1.12(c)(1)

now reads: ‘‘For any record the

contractor maintains pursuant to this

section, the contractor must be able to

identify: (i) The gender, race, and

ethnicity of each employee; and (ii)

where possible, the gender, race, and

ethnicity of each applicant.’’ Consistent

with the Uniform Guidelines on

Employee Selection Procedures

(UGESP), the burden is on the

contractor to demonstrate that every

reasonable effort has been made to

identify the gender, race, and ethnicity

of the applicant. In the case of electronic

applications, the contractor may use an

electronic tear-off sheet.

Each of the remaining categories of

comments on proposed § 60–1.12(c)

came from just one or two commenters.

A consultant wondered whether a

contractor could be found in violation if

an employee or job applicant refused to

provide demographic information. In a

similar vein, the same commenter

wanted to know whether a contractor

could justifiably discipline such a

person. In fact, such concerns are

groundless because a contractor’s

invitation to an employee or applicant

to self-identify his or her gender, race,

and ethnicity should always make plain

that the provision of such information is

voluntary. Consequently, OFCCP would

not hold a contractor responsible for an

employee or applicant’s refusal to selfidentify.

One contractor requested more

guidance on how to collect applicant

data. Such detailed ‘‘how-to’’

information does not belong in the

regulation itself. However, the agency

does offer some guidance here in today’s

preamble. Specifically, while selfidentification is the most reliable and

the preferred method for compiling

information about a person’s race, sex,

and ethnicity, such as through use of a

‘‘tear off sheet,’’ other alternatives are

likewise acceptable. Some contractors

send a short form or post card

requesting demographic information

from applicants who respond to job

advertisements in newspapers,

electronic job posting services, or other

places. Although self-identification is

the preferred method, visual observation

also can be an acceptable method for

identifying demographic data, although

it may not be reliable in every instance.

Methods for collecting data on gender,

race, and ethnicity are also discussed in

Question and Answer 88 in the

‘‘Adoption of Questions and Answers to

Clarify and Provide a Common

Interpretation of the Uniform Guidelines

on Employee Selection Procedures,’’ 44

FR 11996, 12008 (March 2, 1979).

Two other commenters urged

delaying implementation of § 60–1.12(c)

until 2002, arguing that collection of

race and ethnicity information is not

required until then. In fact, OMB

published a Notice stating that ‘‘Federal

programs should adopt the standards

[for race and ethnicity classification] as

soon as possible, but not later than

January 1, 2003,’’ 62 FR 58781, 58782

68024 Federal Register / Vol. 165, No. 219 / Monday, November 13, 2000 / Rules and Regulations

(October 30, 1997). As per these

requirements, OFCCP is adopting the

new standards as soon as possible.

Finally, a contractor asserted that the

proposal at § 60–1.12(c)(2) to require

contractors to supply demographic

information to OFCCP upon request

would violate the attorney-client

privilege. In fact, contractor personnel

prepare most such documentation

without the involvement of legal

counsel. Even when they do not, it is

clear that an enforcement agency must

have access to pertinent records in order

to carry out its lawful duties.

Accordingly, except as noted above,

§ 60–1.12(c) is adopted as proposed.

Section 60–1.40 Affirmative Action

Programs

OFCCP proposed several

modifications to § 60–1.40. The

proposal retained in paragraph (a)

current standards for those who must

develop and maintain an affirmative

action program, removed from

paragraph (a) references to ‘‘written’’

affirmative action program, and deleted

the remainder of paragraph (a), as well

as all of paragraphs (b) and (c).

Several commenters strongly

encouraged the retention of the

designation ‘‘written’’ affirmative action

programs. One commenter asserted, in

part, that ‘‘the ‘written’ AAP provides a

structure on which to build and

subsequently evidence a company’s

affirmative action efforts.’’ Another

commenter asserted that the ‘‘written

AAP is essential to adequate discussions

of: the nature of an organization, the

methodology used to develop goals,

identify problem areas, good faith

efforts; and to aid in the development of

a Program Summary.’’ OFCCP believes

that these comments have merit.

Consequently, OFCCP has decided to

retain the reference to ‘‘written’’

affirmative action program in paragraph

(a) of this section. ‘‘Written’’ also is

reinserted into § 60–2.1 and inserted

into § 60–2.2 for clarity. A ‘‘written’’

AAP may include electronic

maintenance of the AAP. A contractor

may maintain its AAP in electronic

format if all of its employees who are

permitted or required to have access to

the AAP have equal access to the

electronic version of the AAP. If some

of a contractor’s employees lack access

to an electronic version of the AAP, the

contractor also must provide access to a

hard (paper) copy of the AAP.

The retention of the current language

‘‘written’’ by no means vitiates the spirit

of the proposed language that

affirmative action is more than a paper

exercise and that it be an indelible

aspect of the entire corporate enterprise

or business process. Pursuant to these

regulatory changes, OFCCP will focus

its resources on the action undertaken to

promote equal employment

opportunity, rather than on the

technical compliance.

One commenter, noting what it

characterized as ‘‘the magnitude of the

systems and other changes that will be

required,’’ recommended that the new

regulations apply only to AAPs created

or updated after January 1, 2002, or after

one full AAP year has elapsed after the

new requirements become effective. The

new regulations impose very few, if any,

new requirements other than the Equal

Opportunity Survey. Therefore,

contractors will not need to make

substantial changes to their AAPs in

order to comply with the revised

regulations. Nevertheless, a contractor

that has prepared an AAP under the old

regulations may maintain that AAP

without penalty for the duration of the

AAP year even if that AAP year overlaps

with the effective date of the

regulations.

In addition, in order to avoid

confusion OFCCP has inserted into

§§ 60–1.40(a)(1) and 60–2.1(a), the

phrase ‘‘(supply and service)’’ after the

term ‘‘nonconstruction.’’ Finally,

OFCCP has revised slightly the structure

of paragraph (a) to conform to Federal

Register format requirements; no change

of substance is intended by the revision.

Part 60–2

Subpart A—General

Section 60–2.1 Scope and application

Existing § 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 rule revises and

restructures § 60–2.1. The rule revises

paragraph (a) by limiting the language to

a brief description of the scope of the

regulations contained in Part 60–2. No

comments were received on this

provision. The final rule adopts

paragraph (a) as proposed.

The final rule deletes as redundant

the contents of paragraph (b) of current

§ 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 final rule also deletes the

historical reference to ‘‘Revised Order

No. 4,’’ the predecessor to the current

Part 60–2, as it would not be

appropriate or necessary in light of the

changes to be made to part 60–2.

Paragraph (b) of the new § 60–2.1

specifies who must develop an AAP; it

repeats the standards found in § 60–

1.40, because recitation of the scope of

coverage is important for completeness

in both parts of the regulation. OFCCP

has written the requirements in a list

form for the reader’s ease of

understanding. As OFCCP did in § 60–

1.40, OFCCP has revised slightly the

structure of paragraph (b) to conform to

Federal Register format requirements;

no change of substance is intended by

the revision.

Several commenters recommended

that in the final rule this provision not

be limited to full-time employees only.

OFCCP did not intend for this provision

to be read as including only full time

employees. Some of the confusion

concerning the provision may have

arisen because the Equal Opportunity

(EO) Survey form requested information

about full time employees only. The

request for information about full-time

employees in the Survey was not

intended to signal any change in

OFCCP’s requirement for reporting parttime, temporary and full time

employees in written AAPs now or in

the future.

The new § 60–2.1 provision does not

make reference to particular categories

of employees but rather refers generally

to ‘‘employees.’’ The term ‘‘employees’’

is broad enough to include part-time,

temporary and full time employees.

Therefore, the final rule adopts

paragraph (b) of the proposal without

change.

The final rule adds a paragraph (c)

that specifies that the contractor must

develop AAPs within 120 days from the

commencement of the contract. This

requirement was previously set out in

41 CFR § 60–1.40(c). Since Part 60–2

Federal Register / Vol. 165, No. 219 / Monday, November 13, 2000 / Rules and Regulations 68025

addresses the requirements of AAPs, it

appears more appropriate to include

information specifying when the

obligation to develop AAPs begins as

part of part 60–2. One commenter, a law

firm representing a business group,

recommended that the final rule specify

when the next AAP is to be in place.

OFCCP has consistently held that the

new AAP should be developed and in

effect on the date that the old AAP

expires. OFCCP believes that the AAP

should be an ongoing management tool

and not just an exercise to be performed

annually. The provision is carried

forward in the final rule as proposed.

The final rule contains a paragraph (d)

describing who is included in

affirmative action programs.

Subparagraph (2) provides three options

for contractors with fewer than 50

employees at a particular establishment

to account for those employees for AAP

purposes. Subparagraph (3) is designed

to clarify that the AAP at the

establishment that makes the selection

decision is the appropriate

establishment for inclusion of their

selectees. This is particularly important

for corporate headquarters AAPs, since

selection decisions are likely to be made

at corporate headquarters for employees

who are assigned to other

establishments within the corporation.

This reflects OFCCP’s ‘‘corporate

initiative’’ (53 FR 24830, June 28, 1988).

Several commenters recommended

that OFCCP permit contractors to

develop their AAPs based on how their

businesses actually are organized.

Specifically these commenters asked to

be allowed to prepare a single workforce

analysis (and AAP) based on a business

function or a line of business, without

regard to the geographic locations of the

establishments and employees

(sometimes referred to as a ‘‘functional’’

AAP).

In response to these commenters,

OFCCP has added a subparagraph 4 to

the final rule. This provision reads as

follows:

(4) Contractors may reach agreement with

OFCCP on the development and use of

affirmative action plans based on functional

or business units. The Deputy Assistant

Secretary, or his or her designee, must

approve such agreements. Agreements

allowing the use of functional or business

unit affirmative action programs cannot be

construed to limit or restrict how the OFCCP

structures its compliance evaluations.

The purpose of this provision is to

permit contractors to negotiate with

OFCCP, subject to the approval of the

Deputy Assistant Secretary, for

permission to use affirmative action

programs organized along business or

functional lines. Some contractors have

indicated that they would prefer a

functional affirmative action program

because it would allow them to better

manage their equal employment

opportunity programs and to hold the

appropriate managers accountable for

the performance of that program. This

provision provides a mechanism by

which the contractor can achieve these

efficiencies. The provision also makes it

clear that while OFCCP is willing to

negotiate the structure of the

contractor’s affirmative action program,

it is not offering to negotiate how the

agency will conduct its compliance

evaluations. Thus, while a contractor

may receive permission to use

functional or business unit affirmative

action programs, OFCCP could still

conduct an evaluation of a facility at a

single geographic location. OFCCP

hopes to have procedures for handling

requests for functional AAPs in place

before the effective date of the

regulations. When the procedures are

completed, OFCCP will post them on its

Web site and/or include them in its

Federal Contract Compliance Manual

(FCCM).

At the suggestion of one commenter,

the final rule substitutes ‘‘work’’ for the

reference to ‘‘perform their normal and

customary duties’’ in paragraph (d)(1).

This change is necessary to clarify that

‘‘work’’ is the consistent meaning that

OFCCP desires to convey throughout

this provision. The proposed language

implied a different meaning. Thus, the

final rule provides, in relevant part,

‘‘Employees who work at locations other

than that of the manager to whom they

report, must be included in the

affirmative action program of their

manager.’’

Paragraph (e) of the proposed

regulation explains how to identify

employees who are included in AAPs at

establishments other than where they

are located. AAPs created according to

paragraphs (d)(1) through (3) must

identify these employees according to

paragraph (e). Paragraph (d)(4) is not

included in the requirements of

paragraph (e) because the reporting

formats for ‘‘functional’’ AAPs will be

addressed on a case-by-case basis as part

of the approval process.

One commenter, a law firm, suggested

that the requirement to annotate where

the employees are located would

present an additional burden. As noted

in the NPRM, the purpose of the

proposed subparagraph was to clarify

that the AAP at the establishment where

the selection decision is made is the

appropriate establishment for inclusion

of their selectees. OFCCP does not agree

that this requirement creates additional

burden; it simply clarifies the agency’s

current policy and practice. Paragraph

(e) of the proposal is adopted in the

final rule as proposed.

Several commenters stated that

OFCCP’s use of more than one term

when referring to a contractor’s

‘‘establishment’’ or ‘‘location’’ was

inconsistent or confusing. OFCCP agrees

that using one term is clearer. Therefore,

the final rule replaces the term

‘‘location’’ with ‘‘establishment’’

whenever ‘‘location’’ was used as a

synonym for ‘‘establishment.’’ OFCCP

replaced ‘‘location’’ with

‘‘establishment’’ in §§ 2.1 and 2.30.

Section 60–2.2 Agency Action

Paragraph (a) deals with agency

approval of AAPs. In the NPRM, OFCCP

proposed revising paragraph (a) for

clarity. One proposed change was to

state that a contractor’s AAP would be

deemed to be accepted by the

Government ‘‘at the time OFCCP

notifies the contractor of the completion

of the compliance evaluation or other

action’’; the existing provision says that

the AAP is deemed accepted ‘‘at the

time the appropriate OFCCP * * *

office has accepted such plan. * * *’’ A

commenter expressed concern that the

change in paragraph (a) resulted in a

change in the acceptance requirements.

That is not the case. OFCCP has not

changed the acceptance date

requirements in paragraph (a). The only

changes were for clarity.

OFCCP proposed in the NPRM to

delete paragraphs (c) and (d) of the

current § 60–2.2 which address show

cause notices and other enforcement

procedures for a contractor’s failure to

develop an AAP as prescribed in the

regulations. OFCCP stated that since

these subjects are addressed in §§ 60–

1.26 and 60–1.28 there was no reason to

repeat them in § 60–2.2.

Four commenters representing the

interests of contractors objected to the

deletion of these paragraphs. They

expressed concern that the deletion of

these paragraphs eliminates contractors’

due process protections and the

procedural safeguards of the show cause

notice (SCN) process. They stated that

without the SCN procedure, OFCCP

could proceed directly to enforcement

without offering contractors the

opportunity to cure apparent violations.

OFCCP is persuaded that the

proposed deletion may not have the

limited impact originally contemplated

by the agency. Therefore, the final rule

restores the provisions in paragraphs (c)

and (d) of § 60–2.2 with a minor change;

paragraph (c)(1) has been modified to

reflect the existing exceptions in § 60–

1.26(b)(1) to the general rule that a show

cause notice will be issued whenever

68026 Federal Register / Vol. 165, No. 219 / Monday, November 13, 2000 / Rules and Regulations

administrative enforcement is

contemplated.

The existing exceptions in § 1.26(b)(1)

are as follows:

* * * if a contractor refuses to submit an

affirmative action program, or refuses to

supply records or other requested

information, or refuses to allow OFCCP

access to its premises for an on-site review,

and if conciliation efforts under this chapter

are unsuccessful, OFCCP may immediately

refer the matter to the Solicitor,

notwithstanding other requirements of this

chapter.

Subpart B—Purpose and Contents of

Affirmative Action Programs

Section 60–2.10 General Purpose and

Contents of Affirmative Action

Programs

A complete rewrite of § 60–2.10 was

proposed. The rewrite was intended to

convey that an AAP should be

considered a management tool—an

integral part of the way a corporation

conducts its business. Further, the

intent of the proposed revision was to

encourage self-evaluation in every

aspect of employment by establishing

systems to monitor and examine the

contractor’s employment decisions and

compensation systems to ensure that

they are free of discrimination.

Two commenters opposed portions of

this section: One stated the belief that

the proposed section was redundant;

and the other asserted that it was ‘‘not

aware of any authority for the OFCCP to

dictate or prescribe the ‘management

approach’ or policies of firms that

perform federal contracts.’’

One commenter, a civil rights

organization, supported the proposal,

stating that ‘‘wholly integrating the

monitoring and evaluative components

of the AAP will ensure that contractors

are assuming full responsibility for

meaningful compliance as opposed to

merely complying with a paperwork

obligation.’’

OFCCP continues to believe that this

introductory section should emphasize

the philosophy that an affirmative

action program is ‘‘more than a

paperwork exercise. * * * Affirmative

action, ideally, is a part of the way the

contractor regularly conducts its

business.’’ Accordingly, § 60–2.10 is

adopted as proposed.

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 and women are likely to be

underutilized, and sets forth in lettered

paragraphs the core contents of a

written AAP.

This final rule addresses only

paragraph (a) of the current § 60–2.11,

which deals with the workforce

analysis. Paragraph (b) of the current

regulations, which addresses the job

group analysis, has been revised and

moved to new 60–2.12 discussed below

in this preamble. The introductory

paragraph of current § 60–2.11 has been

deleted as outdated and unnecessary.

Paragraph (a) of the 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 lines of progression

or promotional sequences of jobs, if

applicable. If no lines of progression or

usual promotional sequences exist, job

titles are listed by departments, job

families or disciplines, in order of wage

rates or salary ranges. For each job title,

the workforce analysis must reflect the

wage rate or salary range, and the

number of incumbents by race,

ethnicity, and sex. In short, the

workforce analysis is a map pinpointing

the location of jobs and incumbent

employees and their relationship to

other jobs and employees in the

contractor’s workforce.

In the NPRM, OFCCP proposed to

‘‘reengineer’’ the workforce analysis into

a shorter, simpler format called an

‘‘organizational profile.’’ In basic terms,

the organizational profile was an

organization chart showing each of the

organizational units and their

relationships to one another, and the

gender, racial, and ethnic composition

of each organizational unit. Unlike the

current workforce analysis, the

proposed profile focused only on

organizational units and did not require

the identification of individual job titles

with the exception of the supervisor, if

any. Likewise, reporting of race, sex,

and salary information by job title

would be eliminated using the

organizational profile.

Eleven commenters stated that the

organizational profile would be more

burdensome than the workforce

analysis. A number of commenters

indicated that most of their companies

either did not have an organizational

chart or that if they had such charts, the

charts only reflected the top levels of

the organization. Other commenters

indicated that the organizational

structure of their companies was so

fluid that charts would become quickly

outdated. Many commenters

representing or servicing the contractor

community indicated that the current

workforce analysis was not a burden to

produce because their systems are

configured to produce the analysis with

very little effort. These commenters also

indicated that there are numerous

software products that facilitate the

creation of a workforce analysis. Ten

commenters specifically recommended

that OFCCP permit contractors the

option of continuing to use the

workforce analysis if the contractor

found this less burdensome.

In addition, some commenters,

including women’s and civil rights

groups and a labor organization, raised

concerns that adoption of the

organizational profile, in lieu of the

workforce analysis, might result in the

loss of valuable compliance

information. Others supported the

organizational profile but cautioned

against any further simplification

because of the potential of the loss of

important information.

OFCCP proposed the adoption of an

organizational profile, in part, to

decrease the burden on contractors.

Prior to the publication of the NPRM,

many stakeholders had raised concerns

about the workforce analysis and had

indicated that it was burdensome.

However, since many contractors have

now indicated that there is very little

burden in preparing a workforce

analysis and that there may be more

burden for them in preparing an

organizational profile, in this final rule

OFCCP permits contractors to submit

either the old style workforce analysis

or an organizational display as the

organizational profile. OFCCP believes

that this is responsive to concerns about

burden and to concerns that OFCCP not

further simplify the organizational

profile.

A number of commenters from the

contractor community objected to the

requirement that the proposed

organizational profile be presented as a

‘‘detailed organizational chart or similar

graphical representation.’’ Five

commenters indicated that the creation

of a graphical representation would be

burdensome because they did not have

the software or systems to create such a

chart and significant manual work

would be required. In response to these

concerns, OFCCP has made the

provision of a ‘‘graphical

representation’’ optional. The final rule

permits contractors choosing the

organizational display to use ‘‘detailed

graphical or tabular chart, text,

spreadsheet, or similar presentation of

the contractor’s organizational

structure’’ for displaying the required

information.

Following is a sample organizational

display. This sample is provided for

illustrative purposes only, and should

Federal Register / Vol. 165, No. 219 / Monday, November 13, 2000 / Rules and Regulations 68027

not be construed to represent a required

format or template.

BILLING CODE 4510–15–P

68028 Federal Register / Vol. 165, No. 219 / Monday, November 13, 2000 / Rules and Regulations

BILLING CODE 4510–45–C

Federal Register / Vol. 165, No. 219 / Monday, November 13, 2000 / Rules and Regulations 68029

Under the final rule, the

organizational display would still not

require the itemization of individual job

titles, or the reporting of gender, race,

ethnicity, and salary information by job

title. Thus, the volume of the

organizational display should be less

than the volume of a workforce analysis

(which often is one of the largest

sections of the AAP).

Some commenters requested that

OFCCP specify that it intends for the

organizational profile to reflect the

organization down to the level of the

first line supervisor. It is OFCCP’s intent

that each organizational unit and all

subordinate units, including the firstline supervisor level be accounted for in

the organizational profile. OFCCP

believes that the language of § 60–2.11

accomplishes this.

Some commenters questioned the

usefulness of the proposed

organizational profile. Contractors who

feel it would be more helpful for their

self-audit and affirmative action

purposes to continue to develop a

workforce analysis are at liberty to do so

under the final rule. However, for those

contractors electing to submit an

organizational display, OFCCP believes

that the display will provide a

representation of where minorities and

women may be underrepresented or

concentrated, which permits

preliminary review for potential

discrimination and the need for

affirmative action. This representation

will be useful to many contractors

engaging in self-analysis, and it is useful

to OFCCP’s compliance evaluation

process. By introducing the flexibility to

continue using the current workforce

analysis or to adopt an organizational

display that is not necessarily a graphic

representation, OFCCP allows

contractors to elect the method that is

most meaningful for the particular

contractor.

As noted in the NPRM, in subsection

(c)(4), the minority group designations

conform to the designations of

minorities currently used in the EEO–1

report. OFCCP intends the racial and

ethnic designations used in the

regulations at 41 CFR Chapter 60, to be

consistent with the revised standards set

forth by OMB. OFCCP will coordinate

any changes in these designations with

the Equal Employment Opportunity

Commission (EEOC) so that record

keeping and reporting requirements for

both agencies are compatible.

Section 60–2.12 Job Group Analysis

The NPRM would provide much

greater guidance and clarification on

how to structure job groups than is

contained in the current regulation at

§ 60–2.11(b). Many commenters

supported the majority of the proposal

but added specific recommendations,

especially for paragraph (e).

Section 60–2.12(a) Purpose

Job group analysis is the first step in

comparing the representation of

minorities and women in the

contractor’s workforce with the

estimated availability of qualified

minorities and women who could be

employed. When the representation of

minorities or women within a job group

is less than their availability by some

identifiable measure (see discussion of

§ 60–2.16, below) the contractor must

establish goals.

No comments were received regarding

proposed paragraph (a) and it is adopted

without change.

Section 60–2.12(b)

The reason for combining job titles is

to organize the workforce into

manageable size groups to facilitate

analysis, while still maintaining

elements of commonality among the

jobs grouped together. The jobs

included in a job group must have three

elements in common, i.e., similar job

duties, similar compensation, and

similar opportunities for advancement

within the contractor’s workforce.

Contractors have considerable

discretion in determining which jobs to

combine, but the resulting job groups

must contain jobs with the requisite

common elements. If the job groups are

inappropriately drawn, the availability

and utilization analyses based on those

job groups will be flawed.

As was noted in the NPRM, some

view the current instruction to combine

jobs by similar content, wage rates, and

opportunities as too general to provide

clear, consistent guidance. Therefore, as

proposed, paragraph (b) of the final rule

describes similarity of content and

similarity of opportunities, the two

criteria most open to divergent

interpretations. This rule states

‘‘similarity of content refers to the

duties and responsibilities of the job

titles which make up the job group.’’ In

addition, it provides that ‘‘similarity of

opportunities refers to training,

transfers, promotions, pay, mobility,

and other career enhancement

opportunities offered by the jobs within

the job group.’’ One commenter desired

an explanation of similar wage rates.

However, OFCCP believes ‘‘wage rates’’

to be a generally understood term.

Moreover, the degree of similarity in

wage rates appropriate for job group

formation varies depending upon the

size of a contractor’s workforce and the

structure of its compensation system.

Two other comments were received

concerning paragraph (b). One explicitly

expressed support for OFCCP’s

traditional method of job group

formation based on similarity of jobs’

content, wage rates, and opportunities,

an approach that is continued in this

final rule. The other commenter wanted

the regulation to state that contractors

have discretion in forming their job

groups. However, such a provision is

unnecessary, since contractors

themselves decide which job titles are

appropriately grouped to produce job

groups, given the three regulatory

parameters. Paragraph (b) is adopted as

proposed.

Section 60–2.12(c)

Paragraph (c) of the final rule

provides that a contractor’s job group

analysis must include a list of the job

titles comprising each job group, a

requirement that OFCCP’s experience

demonstrates most contractors already

incorporate into their affirmative action

programs. No comments were received

on this provision.

Paragraph (c) also would reflect the

provisions of §§ 60–2.1(d) and (e)

relating to jobs located at another

establishment. Specifically, new § 60–

2.1(d) requires inclusion of each

employee in the affirmative action

program of the establishment at which

he or she works, with exceptions made

for employees who normally work at

establishments other than that of the

manager to whom they report,

employees at establishments with fewer

than 50 employees, and employees for

whom selection decisions are made at a

higher level establishment. Then, for

identification purposes, § 60–2.1(e)

requires contractors to annotate their

affirmative action programs to indicate

when employees are included in

affirmative action programs for

establishments other than where they

are physically located. Five commenters

objected to having to annotate the job

group analysis as too burdensome. Most

contractors would have to make only a

small number of annotations. Without

notations showing who is accountable

for personnel actions affecting particular

employees, or which affirmative action

programs cover specific workers, it is

difficult for designated contractor

official(s) to adequately monitor

progress or address problem areas.

Similarly, OFCCP needs the ability to

easily identify where responsibility lies

for each of a contractor’s employees in

order to carry out its regulatory

obligations during compliance

evaluations. For these reasons,

paragraph (c) is adopted in the final rule

without change.

68030 Federal Register / Vol. 165, No. 219 / Monday, November 13, 2000 / Rules and Regulations

Section 60–2.12(d)

The NPRM proposed in § 60–2.12(d)

that all jobs located at an establishment

must be included in that establishment’s

job group analysis, except as provided

in § 60–2.1(d). Just two commenters

opposed the proposal, on the grounds

that it would be too restrictive by

preventing contractors from forming

‘‘functional’’ job groups across

establishments. The discussion of

functional AAPs in the preamble

discussion of § 60–2.1 above addresses

this issue. OFCCP adopts § 60–2.12(d)

without change in the final rule.

Section 60–2.12(e) Smaller Employers

As a way of reducing unnecessary

burden, the final rule makes explicit

that a contractor with fewer than 150

employees may choose to utilize EEO–

1 categories as job groups. The agency

considers job grouping by EEO–1

category to be simpler both for smaller

employers and for OFCCP.

Most commenters welcomed this

regulatory revision for reducing the

burden on smaller contractors when

preparing their affirmative action

programs. However, some felt the

revision carried risks by going too far,

while a few maintained the change

should apply to a wider group of

contractors.

Five commenters wrote that this

proposal should go further. For

example, a law firm and a contractor

wanted to extend the optional use of

EEO–1 categories to small

establishments of larger employers.

Another law firm would have OFCCP

expand the option so as to grant it to

any contractor with no more than fifty

employees in an EEO–1 category.

Finally, a municipality and a consultant

recommended widening the option so

that all contractors, regardless of size,

could choose to use EEO–1 categories as

job groups.

These recommendations are

problematic. The agency is concerned

with reducing burden on smaller

employers, which lack the financial and

human resources larger contractors

possess. However, inappropriate

mingling of many highly disparate jobs

in large EEO–1 category-based job

groups would likely occur for larger

employers. Such mingling risks ignoring

potentially vast differences in job

content, wage rates and opportunities.

Here is an example of what happens

if a larger contractor uses EEO–1

categories for job groups: Contractor Y

has 450 employees. Of the 450

employees, 300 are classified as EEO–1

Professional. The breakdown is as

follows:

Total number of employees

Number of

females

Females

(percent)

Number of

minorities

Minorities

(percent)

Accountants ............................................................................................. 25 10 40 5 20

Financial Analysts .................................................................................... 25 5 20 5 20

Human Resource Specialists ................................................................... 50 40 80 10 20

Computer Programmers .......................................................................... 100 30 30 50 50

Electrical Engineers ................................................................................. 50 10 20 20 40

Systems Analysts ..................................................................................... 50 5 10 10 20

A job group analysis by content, wage

rate, and opportunities would look

something like this: (Job Groups are in

bold with Job Titles underneath)

ACCOUNTANTS FINANCIAL ANALYSTS HUMAN RESOURCE SPECIALISTS

Accountant I Jr. Financial analyst Staffing specialists.

Accountant II Sr. Financial analyst Benefits specialists.

Accountant III Payroll specialists.

Computer programmers Electrical engineers Systems analysts

Computer programmer I Electrical engineer I Jr. Systems analyst.

Computer Programmer II Electrical Engineer II Sr. Systems analyst.

Computer programmer III Electrical engineer III

If jobs are grouped by EEO–1 category,

all professional jobs go into one Job

Group as follows: (Job Groups are in

bold with Job Titles underneath)

Professionals

Accountant I

Accountant II

Accountant III

Computer Programmer I

Computer Programmer II

Computer Programmer III

Electrical Engineer I

Electrical Engineer II

Electrical Engineer III

Jr. Systems Analyst

Sr. Systems Analyst

Jr. Financial Analyst

Sr. Financial Analyst

Staffing Specialists

Benefits Specialists

Payroll Specialists

The problem with using EEO–1

categories for job groups becomes clear

when the percentages of employees,

availability, and utilization data are

examined:

A job group analysis using content,

wage rates, and opportunities looks like

this:

Job group

Total number of employees

Percent of

females

Female

availability

(percent)

Females

underutilized?

Percent of

minorities

Minority

availability

(percent)

Minorities

underutilized?

Accountants ........................................... 25 40 24 N 20 28 Y

Financial Analysts ................................. 25 20 32 Y 20 16 N

Human Resource Specialists ............... 50 80 54 N 20 30 Y

Computer Programmers ........................ 100 30 30 N 50 65 Y

Electrical Engineers ............................... 50 20 28 Y 40 40 N

Systems Analysts .................................. 50 10 10 N 20 36 Y

Federal Register / Vol. 165, No. 219 / Monday, November 13, 2000 / Rules and Regulations 68031

EEO–1 based grouping looks like this:

Job group

Total number of employees

Percent of

females

Female

availability

(percent)

Females

underutilized?

Percent of

minorities

Minority

availability

(percent)

Minorities

underutilized?

Professionals .......................................... 300 33 30 N 33 43 Y

EEO–1-based grouping masks the

utilization problems in six areas:

• Female utilization problems in

Financial Analysts and Electrical

Engineers.

• Minority utilization problems in

Accountants, Human Resource

Specialists, Computer Programmers,

and Systems Analysts.

With EEO–1 based grouping:

• There do not appear to be any

utilization problems among female

professionals, which is incorrect.

Grouping all female professionals

together masks the utilization problems

and the need to set goals for female

Financial Analysts and Electrical

Engineers.

• There appear to be utilization

problems among all minority

professionals, which is incorrect.

Grouping all minority professionals

together makes it unlikely that the

contractor will focus affirmative action

efforts on the four job areas in which

utilization problems actually occur.

Five commenters urged OFCCP to

limit its burden reduction proposal to

contractors with total workforces of 100

or fewer employees, instead of 150. The

150 threshold is consistent with the

threshold for smaller employers in the

record keeping provisions of part 60–1.

Two women’s organizations and a labor

organization were concerned that

allowing larger employers to use EEO–

1 categories would sacrifice

‘‘meaningful data, (given that) proper

job groupings are central to the aims of

60–2 and vital to the mission of

OFCCP.’’ Two consultants were more

specific about their worries, fearing that

even smaller employers could mask

discrimination. One pointed out that a

smaller contractor might easily have two

or three levels of management in its

officials and managers job group. For

example, a chief executive officer, a

chief financial officer, and a vice

president could be joined with a

director of the mailroom, hiding

potential race or gender discrimination.

While these concerns may be valid in

some instances, they must be balanced

with the goal of reducing contractors’

burdens whenever possible without

undue sacrifice to the agency’s ability to

enforce its mission. Section 60–2.12(e)

is adopted as proposed.

Section 2.13 Placement of Incumbents

in Job Groups

No comments were received on this

section. It is adopted without change.

Section 60–2.14 Determining

availability

(Current § 60–2.14 entitled ‘‘Program

summary’’ is found at § 60–2.31.)

Section 60–2.14 in the final rule,

contains the guidelines for determining

availability and replaces the current

regulations 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.

In the current rule, the contractor is

required to compute availability,

separately for minorities and for

women, for each job group. In

determining availability, the contractor

considers each of eight factors listed in

the regulations. The factors are similar,

but not identical, for minorities and

women. Although contractors are

required to consider all eight factors,

they are not required to utilize each

factor in determining the final

availability estimate. Only the factors

that are relevant to the actual

availability of workers for the job group

in question are to be used. Most

contractors actually use only a few of

the eight factors to compute the final

availability estimates.

The ‘‘eight-factor analysis’’ for

determining availability is one of the

most frequently criticized elements of

the Executive Order 11246 program.

Common complaints among contractors

are that the requirements are

unnecessarily complex and not

sufficiently focused. As proposed in the

NPRM, this section simplifies the

availability computations by reducing

the number of factors from eight to two.

These two factors are the same for

minorities and for women.

Under this final rule, as under the

current regulation, the contractor is

required to compute availability,

separately for minorities and for

women, for each job group.

Fourteen commenters specifically

supported the proposed reduction from

eight factors to two. The proposed rule

was equally popular among contractors,

contractor associations, consultants, and

civil rights and women’s organizations.

One commenter association

recommended that a reasonableness

standard be included in the definition of

‘‘trainable’’ described in the second of

the two factors. This commenter noted

that the current regulation contains such

a standard. Without this limitation, the

commenter was concerned that the

calculation of availability would be

rendered impractical.

The inclusion of individuals who are

‘‘trainable’’ is intended to address the

recommendations of civil rights and

women’s groups that the availability

computation include consideration of

training opportunities. It is a refinement

of the requirement in the previous

regulations (§§ 60–2.11(b)(1)(viii) and

(b)(2)(viii)) that the contractor consider

the degree of training which it is

reasonably able to undertake as a means

of making all job classes available to

minorities and to women.

In response to this comment, OFCCP

has revised the final rule to restore a

reasonableness standard regarding the

concept of ‘‘trainable employees.’’

OFCCP believes that this modification

will make it easier for contractors to

calculate ‘‘trainable employees’’ while

achieving the goal of requiring

contractors to consider this pool of

available workers.

The final rule now provides at § 60–

2.14(c) that the two factors to be

considered in determining availability

are:

(1) The percentage of minorities or

women with requisite skills in the

reasonable recruitment area. The

reasonable recruitment area is defined

as the geographical area from which the

contractor usually seeks or reasonably

could seek workers to fill the positions

in question.

(2) The percentage of minorities or

women among those promotable,

transferable, and trainable within the

contractor’s organization. Trainable

refers to those employees within the

contractor’s organization who could,

with appropriate training which the

contractor is reasonably able to provide,

68032 Federal Register / Vol. 165, No. 219 / Monday, November 13, 2000 / Rules and Regulations

become promotable or transferable

during the AAP year.

Contractors would be required to

determine the percentages in § 60–

2.14(c)(2), by undertaking one or both of

the following steps:

1. Determine which job groups are

‘‘feeder pools’’ for the job group in

question. The feeder pools are job

groups from which individuals are

promoted.

2. Ascertain which employees could

be promoted or transferred with

appropriate training which the

contractor is reasonably able to provide.

Example #1: a contractor has a job group

of Engineering Managers. Over the past year,

all individuals who have been promoted into

the Engineering Managers job group have

been promoted from only two other job

groups: Chemical Engineering Project

Leaders and Petroleum Engineering Project

Leaders. The Chemical Engineering Project

Leaders job group has 100 incumbents, of

whom 20 are minority and 25 are female. The

Petroleum Engineering Project Leader job

group also has 100 incumbents, of whom 15

are minority and 20 are female. The ‘‘feeder

pool’’ availability is the total number of

minority or female incumbents divided by

the total number of incumbents for the two

job groups.

Job Group Total Incumbents

Minority IncumbentsFemale Incumbents

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

Pet.E PL ............................................................................................................................................. 100 15 20

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

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

Example #2: A contractor has a job group

of Entry Level Managers. This contractor has

a management training program. A review of

the training program shows that of the 200

employees in the program last year, 100

completed the program and are eligible for

Entry Level Manager positions this AAP year.

Of those 100 who completed the program, 45

are minority and 40 are female. The

availability in this example is the percentage

of minorities or females that completed the

training program.

Total individuals eligible for promotion

Minorities

eligibile for

promotion

Females eligible for promotionMinority availability (percent)Female availability (percent)

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

OFCCP’s experience has shown that

these factors are the ones most

contractors use to compute availability

estimates. Taken together, they reflect

contractors’ assertions of who is

qualified and available for employment.

Section 60–2.14(e) requires a

contractor to define its reasonable

recruitment area so as not to exclude

minorities and women, and to develop

a brief written rationale for selection of

that recruitment area. On occasion,

defining the recruitment area in a

slightly different way can significantly

enlarge or reduce the proportion of

minorities or women with requisite

skills available for employment. In such

a case, the contractor is required to

assure that the recruitment area chosen

will not have the effect of excluding

minorities or women.

Three commenters, a contractor and

two consultants, expressed concern

about the prohibition against drawing

the reasonable recruitment area in a way

that has the effect of excluding

minorities or women. One noted that

even if such exclusion is unintentional,

contractors will be found in violation.

Accordingly, the commenters

recommended adding the term

‘‘unreasonably’’ or ‘‘intentionally’’ in

front of the word ‘‘excluding.’’ OFCCP

does not agree that this change is

necessary or desirable. The objective of

this section of the regulations is to have

the contractor compute, as accurately as

possible, the availability of minorities

and women for employment. Accurate

computation of availability is essential

to the entire goal setting process.

Improper drawing of the reasonable

recruitment area has the effect of

misstating availability. The effect is the

same, whether the improper drawing is

intentional or inadvertent, and it cannot

be accepted. If a contractor is found in

violation for unintentionally drawing its

recruitment area in a way that excludes

minorities or women, it will be given

ample opportunity to correct the error

before the conclusion of the compliance

evaluation.

Section 60–2.14(f) requires that

contractors define the pool of

promotable, transferable, and trainable

employees in such a way as not to

exclude minorities or women, and to

develop a brief documented rationale

for the selection of the pool. One

commenter recommended a clarification

that this subsection will not be

interpreted to mean that contractors will

be found in violation for defining feeder

groups in a way that unintentionally has

the effect of excluding minorities or

women. For reason similar to that

discussed above, OFCCP declines to add

this clarification.

Further, § 60–2.14(d) requires that the

contractor use the most current and

discrete statistical data to conduct its

availability analyses. This is addressed

in Section 2G05(e) and Appendix 2B of

the FCCM. Examples of such

information include census data, data

from local job service offices, and data

from colleges and other training

institutions. One commenter asserted

that it is difficult to identify the most

current statistical data in practice

because few contractors have access to

data more current than the decennial

census. Sections 2G04 and 2G05 of the

FCCM provide guidance on other

sources of availability data. Moreover,

decennial census data or some variant

thereof often will satisfy the

requirement to use the most current

information ‘‘available.’’ Another

commenter asserted that determining

availability is laborious for large,

national companies that hire from the

top educational institutions across the

nation for professional ranks. OFCCP

disagrees as to the difficulty of this task.

Data on college and university graduates

are readily available in private

publications, from the U.S. Department

of Education, and from the schools

themselves.

When a job group is composed of job

titles with different availability rates,

§ 60–2.14(g) requires the contractor to

compute a composite availability

estimate. The composite availability

figure would represent a weighted

Federal Register / Vol. 165, No. 219 / Monday, November 13, 2000 / Rules and Regulations 68033

average of the availability estimates for

all the job titles in the job group.

The composite weighted average

availability is computed by determining

the percentage of total job group

incumbents represented by the

incumbents in each job title,

multiplying each incumbent percentage

by the corresponding availability for

that job title, and summing the results.

The computation is illustrated by the

following job group of professionals

with a total of 80 incumbents:

Job Title Number of incumbents

Availability

(percent)

Accountant ............................................................................................................................................................... 20 35

Auditor ...................................................................................................................................................................... 40 20

Analyst ..................................................................................................................................................................... 20 15

1. Accountant=20/80 incumbents, or .25 Auditor=40/80 incumbents, or .5 Analyst=20/80 incumbents, or .25

2. Accountant=.25 x .35=.0875 Auditor=.5 x .20=.1 Analyst=.25 x .15=.0375

3. Composite Availability=.0875+.1+.0375=.225 or 22.5%.

A comment from a law firm

representing a business association

urged OFCCP to delete the composite

availability requirement entirely, or to at

least clarify it to provide that

determining availability for each job

title is not required when a contractor

uses ‘‘appropriate census data that

encompasses a broader range of job

titles and/or occupational categories.’’

The basis for the request was the

commenter’s assertion that ‘‘census data

already encompasses a range of job

titles’’ and ‘‘already represents

‘‘composite’’ availability data when

applied to a specific job group.’’ OFCCP

does not object, per se, to the use of

aggregated census data in lieu of the job

title by job title computation of

composite availability, when the

aggregated data truly represent

composite availability data for the job

group in question. However, in order for

the use of aggregated census data to be

acceptable, there must be a close match

between the actual jobs included in the

census data and those in the contractor’s

job group. Additionally, so as to remain

true to the concept of weighted

averaging, the percentage representation

of each job in the census group must

closely match the percentage

representation of the corresponding job

in the contractor’s job group.

In the NPRM, OFCCP requested

comments concerning whether

contractors should be required to

compute availability separately for

individual minority subgroups as a

general rule. Five commenters—two law

firms, a contractor, a contractor

representative, and an individual

consultant— expressed opposition to

computing availability separately for

individual minority subgroups. One of

these commenters expressed concern

that it would cause confusion in that

employees or applicants could identify

themselves with multiple ethnic or

racial characteristics. A law firm

indicated that it would create rivalry

between minority subgroups.

One commenter, a consultant, noted

examples where it may be beneficial to

calculate minority subgroups. This

commenter stated that using total

minorities allows the masking of

discrimination against specific minority

subgroups. This commenter indicated

this practice of discriminating against

minority subgroups could be selfperpetuating because management hires

new employees as a result of referrals

from current employees, with the effect

of excluding other groups.

The regulation retains the

requirement that contractors determine

the availability of total minorities. The

language in the proposal, which does

not require calculating availability

separately by individual minority

subgroup, was not modified and has

been adopted in the final rule.

Section 60–2.15 Comparing

incumbency to availability

(Current § 60–2.15 entitled

‘‘Compliance status’’ was revised and

moved to § 60–2.35, discussed below in

the preamble.)

Section 60–2.15 addresses an aspect

of the current regulations that is referred

to as the ‘‘utilization analysis,’’ and

replaces one portion of the current § 60–

2.11(b). Section 60–2.15(a) requires the

contractor to compare the representation

of minorities and women in each job

group with their representation among

those available to be employed in that

group. During compliance reviews,

OFCCP typically finds that more

minorities and women are available for

employment in particular occupations

and job groups than are actually

employed in those positions. If the

availability for a job group is greater

than incumbency, and the difference is

of a sufficient magnitude, the contractor

must establish a goal.

The current regulation refers to the

difference between availability and

incumbency as ‘‘underutilization,’’

defined as ‘‘having fewer minorities or

women in a particular job group than

would reasonably be expected by their

availability.’’ When this condition

exists, the contractor must establish a

goal. As noted in the preamble to the

NPRM, OFCCP traditionally has

permitted contractors to identify

underutilization using a variety of

methods, including: The ‘‘any

difference’’ rule, i.e., whether any

difference exists between the

availability of minorities or women for

employment in a job group and the

number of such persons actually

employed in the job group; the ‘‘one

person’’ rule, i.e., whether the difference

between availability and the actual

employment of minorities or women

equals one person or more; the ‘‘80

percent rule,’’ i.e., whether actual

employment of minorities or women is

less than 80 percent of their availability;

and a ‘‘two standard deviations’’

analysis, i.e., whether the difference

between availability and the actual

employment of minorities or women

exceeds the two standard deviations test

of statistical significance.

Seven commenters addressed the

standards for comparing incumbency to

availability. Five of the seven

commenters—two organizations

representing women, a consultant, an

association and a labor organization—

advocated that OFCCP adopt some

variation of the ‘‘any difference’’

standard across the board. They argued

that contractors should be required to

set placement goals for women and

minorities whenever analysis

demonstrates any difference between

availability and utilization. They

indicated that allowing contractors to

choose the standard by which they will

be evaluated introduces unnecessary

inconsistency to the process, resulting

in similarly situated establishments

being held to different measures in

assessing their employment of women

and minorities. Another civil rights

68034 Federal Register / Vol. 165, No. 219 / Monday, November 13, 2000 / Rules and Regulations

membership organization commented

that contractors should be required to

set placement goals whenever analysis

reveals a difference of one person

between availability and utilization.

One commenter, a consultant, stated

that the proposal does not address the

‘‘inappropriate nature’’ of using the

standard deviation approach when

either the job groups or availability are

too small. The commenter further stated

that OFCCP continues to avoid

implementing a regulation regarding

determination of underutilization.

Conversely, two commenters, both

law firms, recommended that OFCCP

continue to permit contractors

flexibility, arguing that the various

acceptable methods be included in the

regulatory text.

On balance, OFCCP believes that

retaining the current practice of

permitting various methods for

determining availability is the

appropriate approach to take. OFCCP

further believes that the proposed

wording of § 60–2.15 is sufficient to

suggest to the contractor community

when there exists the need to establish

a goal. Therefore, the provision, § 60–

2.15(b), is adopted without change.

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. In

the NPRM OFCCP proposed to

discontinue the use of the word

‘‘major,’’ thereby requiring that

contractors determine availability,

compare incumbency to availability,

and set placement goals (where

comparison of availability to

incumbency indicates a need to do so)

for all job groups.

In the preamble of the NPRM, OFCCP

expressly solicited comments on the

proposal to drop the word ‘‘major’’ in

reference to job groups. OFCCP received

a comment from a law firm representing

a business association objecting to the

proposal to drop the term major. This

commenter stated this change would

‘‘make little practical difference to large

contractors’’ but would ‘‘negatively

impact small contractors.’’ This

commenter further stated that small

contractors, ‘‘relied on the current

language to reasonably conclude they

need not assess utilization of those job

groups that are too small to permit

meaningful analysis.’’ This commenter

concluded that the deletion of ‘‘major’’

would ‘‘only add work, but no

additional value, to a small contractor’s

AAP.’’ OFCCP believes that this concern

becomes less of an issue inasmuch as

§ 60–2.12 allows smaller contractors to

use EEO–1 categories as their job

groups.

In contrast, another association

commented that it anticipated no added

burden because contractors already have

a practice of treating all job groups as

‘‘major’’ and stated that contractors

already perform these analyses on each

job group. A labor organization

commented that requiring that

underutilization analysis be performed

for each job group rather than just

‘‘major’’ job groups is a sound step,

consistent with the program’s goals of

promoting equal opportunity.

This section is adopted as proposed in

the NPRM. This language assures that

no one is excluded when comparing

incumbency to availability because of

the size of the job group.

Section 60–2.16 Placement Goals

The earlier sections of the final rule

require a Federal contractor to analyze

its workforce and evaluate its

employment practices for the purpose of

identifying and correcting gender-, race-

, and ethnicity-based obstacles to equal

employment opportunity. Where the

need for corrective action is revealed,

the AAP must include outreach and

other steps precisely tailored to

eliminate the barriers disclosed, and

placement goals to target and measure

the effectiveness of efforts directed

towards achieving that result. In the

preamble to the NPRM, OFCCP

provided a brief history of how it has

addressed the question of goals and how

the regulatory provisions requiring goals

fits into that history.

Section 60–2.16(a) sets out the

purpose of placement goals. It explains

that goals ‘‘serve as objectives or targets

reasonably attainable by every good

faith effort.’’ It also explains that goals

are used to measure progress toward

equal employment opportunity.

One contractor association

commented that in its view there was no

meaningful distinction between the use

of goals and the use of quotas. The

commenter stated, ‘‘OFCCP requires

contractors to pursue a race-based or

gender-based hiring and promotion

system.’’ The commenter suggested that

goals could only be justified by a

demonstration that they are needed to

remedy specifically identified past

discrimination. Absent evidence of such

demonstration, the commenter suggests

that there is no ‘‘compelling

governmental interest’’ that would

justify the setting of goals and that to do

so would violate the equal protection

clause of the U.S. Constitution. The

commenter cites a number of court

decisions to support its position.

OFCCP disagrees with this

commenter. OFCCP does not require

contractors to pursue a race- or genderbased hiring and promotion system. As

noted in the NPRM, what OFCCP

requires is that contractors engage in

outreach and other efforts to broaden

the pool of qualified candidates to

include minorities and women.

Contrary to the suggestion made by the

commenter, goals are not a device to

achieve proportional or equal results;

rather the goal setting process is used to

target and measure the effectiveness of

affirmative action efforts to eradicate

and prevent barriers to equal

employment opportunity. OFCCP’s

position with respect to goals is

explained more fully in an OFCCP

Administrative Notice entitled

‘‘Numerical Goals under Executive

Order 11246,’’ which was issued in

December 1995.

A contractor association questioned

whether the first sentence of § 2.16(b)

was necessary, since § 60–2.15 discusses

when a goal must be set and § 60–

2.16(c) establishes the level at which a

goal must be set. Another commenter

requested clarification of terms in this

same sentence. In response to these

comments, OFCCP has deleted the first

sentence of § 60–2.16(b) in the final

rule.

Another commenter urged OFCCP to

‘‘state loud and clear, that there is no

presumption of discrimination’’ based

on the fact that a contractor is required

under the regulations to set a goal.

OFCCP believes that the statement at

§ 60–2.16(b) that ‘‘A contractor’s

determination under § 2.15 that a

placement goal is required constitutes

neither a finding nor an admission of

discrimination’’ is a very ‘‘loud and

clear’’ statement of this point.

Commenters, generally, raised no

concerns about § 60–2.16(c). This

provision is adopted without change in

the final rule.

Two commenters representing a

number of contractors raised a concern

about the statement at § 60–2.16(d) that

‘‘In the event of a substantial disparity

in the utilization of a particular

minority group, a contractor may be

required to establish separate goals for

those groups.’’ The commenter was

concerned because the term ‘‘substantial

disparity’’ is not defined and feared that

the requirement ‘‘will have the practical

result of producing quotas and will, no

doubt pit one minority group against

another.’’

As indicated in § 60–2.16(d), setting a

single goal for all minorities is expected

Federal Register / Vol. 165, No. 219 / Monday, November 13, 2000 / Rules and Regulations 68035

to continue to be the norm for most

contractors. The purpose of the

additional language concerning

substantial disparities for a particular

group is intended to address specific

situations where a particular minority

group, or men and women of a

particular minority group, are

substantially underutilized. This

approach is taken directly from

OFCCP’s current regulations at § 60–

2.12(l). In appropriate circumstances,

OFCCP will continue to require separate

goals for particular minority groups or

by gender within minority groups. It is

not intended to represent a change.

Therefore, OFCCP has not changed this

language in the final rule.

Section 60–2.17 Additional Required

Elements of Affirmative Action

Programs

The preceding sections of the

regulations have focused primarily on

the diagnostic component of written

AAPs—the statistical analyses of the

contractor’s workforce to identify equal

employment opportunity problems.

However, meaningful affirmative action

also requires that the contractor develop

and carry out action-oriented programs

to eliminate the identified problems,

and establish procedures for monitoring

its employment activities to determine

whether the AAP is effective.

The existing regulations address the

action-oriented and evaluative

components of AAPs in a section

designated ‘‘Additional required

ingredients of affirmative action

programs.’’ That provision appears at

§ 60–2.13 in the existing regulations.

OFCCP has eliminated a number of

elements that no longer need to be

specifically and separately set forth in

regulatory form. The remaining

provisions have been moved to § 60–

2.17 and are now named ‘‘Additional

required elements of affirmative action

programs.’’ Although OFCCP has

eliminated these provisions from the

mandatory requirements of the AAP, the

contractor may voluntarily choose and

is encouraged to retain these elements

in its program.

In the final rule, OFCCP has deleted,

as specific required elements, the

following items:

§ 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.

In addition, OFCCP has deleted

existing § 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 § 60–

2.17, therefore, in no way affects the

contractor’s obligation to comply with

the Guidelines nor OFCCP’s

commitment to enforcing the

Guidelines.

OFCCP has retained four of the

original 10 ‘‘additional required

ingredients.’’ OFCCP believes that these

remaining items capture the essence of

effective affirmative action, including

subsuming many aspects of the specific

‘‘ingredients’’ that were deleted. They

should energize and encourage

contractors to improve upon and

eliminate any weaknesses in their equal

employment opportunity performance.

The following elements in the existing

§ 60–2.13 are retained in the new § 60–

2.17:

§ 60–2.13(c)—establishment of

responsibilities for implementation

of the contractor’s AAP (codified as

§ 60–2.17(a));

§ 60–2.13(d)—identification of problem

areas by organizational units and

job groups (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 (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

(codified as § 60–2.17(d)).

OFCCP proposed to modify the

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

regulations (§ 60–2.17(a) of this rule)

concerning the ‘‘establishment of

responsibilities for implementation of

the contractor’s affirmative action

program.’’ This modification is derived

from § 60–2.22(a) of the existing

regulations, which recommends, but

does not require, that the contractor

assign an executive as director or

manager of company equal opportunity

programs and give that person the

management support and staffing to

carry out the assignment. The proposal

expressly requires that the contractor

provide for the implementation of the

affirmative action program by assigning

responsibility and accountability to a

company official. However, the official

is not required to be an executive of the

company.

OFCCP received several comments on

proposed subsection 60–2.17(a), the

majority of which strongly supported

the proposal. Those commenters stated,

for example, that for the affirmative

action program to be effectively

implemented, adequate attention and

resources must be devoted to its

administration.

One commenter, an organization

representing contractors, agreed that

management responsibility and

accountability are important factors in

implementing a successful affirmative

action program, but noted that many

experienced human resources

professionals believe that an

‘‘affirmative action czar’’ approach is

not particularly effective. According to

the commenter, this is because the czar

model ‘‘allows others in the

organization to believe that

nondiscrimination and affirmative

action are the czar’s responsibility not

theirs.’’ Therefore, the commenter

argued, exactly how accountability and

responsibility are to be accomplished

should be left to the contractor. Another

commenter took a different approach,

writing, ‘‘The OFCCP fails to recognize

that frequently the person assigned with

the responsibility for equal employment

opportunity is often a staff member who

serves in an advisory capacity, without

the authority to implement these

changes and therefore cannot be held

accountable.’’

OFCCP certainly encourages

contractors to hold all managers

accountable for equal employment

opportunity and affirmative action.

However, OFCCP also feels strongly that

a company official must oversee equal

opportunity and affirmative action

efforts, and must have the authority and

responsibility to make them effective,

lest no-one is held accountable and

responsible.

Finally, a few commenters expressed

concern about the last sentence of

subsection (a), which states that the

official responsible for equal

employment opportunity must have the

authority, resources, support of and

access to top management to ensure

effective implementation of the AAP.

68036 Federal Register / Vol. 165, No. 219 / Monday, November 13, 2000 / Rules and Regulations

One wondered how a contractor would

demonstrate to the compliance officer

that the designated official has the

required authority. OFCCP is confident

that authority would be easily

demonstrated by a few inquiries during

the compliance evaluation process. The

commenter also wondered whether,

over time, this would lead to more

boilerplate in AAPs designed to prove

the necessary authority and access to

top management. OFCCP considers this

concern to be highly speculative.

A contractor, a law firm, and several

consultants and organizations

representing contractors expressed

concerns with proposed subsection (b).

Subsection (b) requires the contractor to

perform in-depth analyses of its total

employment process to determine

whether and where impediments to

equal employment opportunity exist.

Areas to be analyzed include: (1) The

workforce by organizational unit and job

group; (2) personnel activity; (3)

compensation systems; (4) selection,

recruitment, referral and other

personnel procedures; and (5) other

areas that might impact the success of

the affirmative action program. Many of

the comments focused on the

requirement to review compensation

systems, with several commenters

asserting that OFCCP does not have

authority to enforce equal pay concerns,

that analysis of compensation systems is

not required by the current regulations,

that compensation analyses impose an

additional burden, or that OFCCP did

not specify the types of analyses it

would find acceptable. However, one of

the contract clauses that Executive

Order 11246 requires be inserted in all

government contracts requires that the

contractor agree not to discriminate on

the basis of race, color, religion, sex or

national origin. Areas in which

discrimination expressly is prohibited

include ‘‘rates of pay and other forms of

compensation.’’ Section 202(1). Since

the compensation analysis requirement

is not new, it imposes no additional

burden. The question of burden is also

discussed in the Paperwork Reduction

Act section below. In addition,

contractors have the ability to choose a

type of compensation analysis that will

determine whether there are gender-,

race-, or ethnicity-based disparities.

Commenters also expressed confusion

about how the information gained from

the analyses conducted under

subsection (b) should be used by

contractors, and how the contractor’s

actions will be evaluated by OFCCP.

Much of the answer is found in

subsection (c), which requires the

contractor to develop and execute

action-oriented programs designed to

correct any problem areas identified

pursuant to subsection (b), and to

demonstrate that it has made good faith

efforts to remove identified barriers,

expand employment opportunities, and

produce measurable results. Of course,

if the contractor’s analyses disclosed

discrimination, the contractor would be

expected to eliminate the discriminatory

practices and provide appropriate

remedies.

A few commenters asserted that little

or no reduction of the burden or cost of

implementing provisions of the rule

would result from the revisions that

were made to § 60–2.17. See discussion

of burden reduction in the section

below addressing the Paperwork

Reduction Act.

Section 60–2.18 Equal Opportunity

Survey

The proposed § 60–2.18 requires that

nonconstruction contractor

establishments designated by OFCCP

prepare and file an Equal Opportunity

(EO) Survey. The EO Survey contains

information about personnel activities,

compensation and tenure data and

specific information about the

contractor’s affirmative action programs.

Virtually every commenter addressed

the EO Survey. There were two general

categories of comments: (1) comments

on the Survey as a concept and its

utility as an instrument to select

contractors for compliance evaluations,

including comments on the burden

hours and (2) comments on the specific

format and content of the Survey

document.

There were numerous comments from

women’s and civil rights groups, labor

organizations, and a consultant in favor

of the EO Survey as a useful instrument

to select contractors for compliance

evaluations. These comments indicated

that it will enhance, strengthen, and

improve enforcement efforts; it will

increase contractor accountability; it

will aid in disclosing possible

discriminatory personnel and

compensation practices; it will

encourage contractor self-audits and

corrective actions; it will aid OFCCP in

tailoring its evaluation activities to

those contractors that appear to need the

most help; and it will not be a burden

on contractors. However, there were

also numerous comments from

contractors, law firms, employer

associations, and consultants that

asserted that the EO Survey is not a

useful instrument, or expressed other

concerns about the EO Survey.

One commenter asserted that the

Administrative Procedure Act requires

that OFCCP subject the actual EO

Survey format to notice and comment

rulemaking. OFCCP disagrees. As the

Federal agency charged with enforcing

Federal contractor compliance with

Executive Order 11246, OFCCP has

ample authority to investigate such

compliance by, among other things,

requesting general information relevant

to whether a contractor is fulfilling its

affirmative action duties or engaging in

discriminatory employment practices.

Section 202(5) of Executive Order

11246, and the regulations promulgated

thereunder, mandate as a condition of

each Government contract, that the

contractor agree to furnish all

information required by the Executive

Order and to permit the Secretary of

Labor access to the contractor’s books,

records and accounts for purposes of

investigation to ascertain compliance

with the rules, regulations and orders.

41 CFR 60–1.4(a)(5). The requirements

of § 60–1.4(a) with respect to the

production of data are not limited to

information sought by OFCCP as part of

a compliance evaluation. Nothing in the

Administrative Procedure Act or

elsewhere requires OFCCP to publish

for notice and comment an enumeration

of, or the format for, every item it will

examine to determine whether

contractors are complying with their

contractual obligations. Moreover,

OFCCP notes that public notice and

comment on the Survey format were

provided under the Paperwork

Reduction Act.

Several comments were related to

OFCCP’s projection of the burden hours

that it should take contractors to

complete the EO Survey. Three

organizations representing contractors

surveyed a sample of their members

concerning the length of time it took to

complete the EO Survey. One

organization found that the average

completion time was 23 hours; the

second, 30 hours, and the third stated

that 80% of its sample took longer than

12 hours to complete the EO Survey.

Given the newness of the EO Survey

and the requisite learning curve of the

individuals completing the EO Survey,

the time required to complete a

contractor establishment’s initial EO

Survey is undoubtedly greater than the

time that will be required for

subsequent EO Survey submissions. To

take this learning curve into account,

OFCCP has increased the estimated time

to complete the EO Survey from 12

hours to 21 hours for the first two years

the Survey is distributed. See

Paperwork Reduction Act section

below.

Several commenters believed OFCCP

should explain how the EO Survey data

would be used to select contractors for

compliance evaluations. Another

Federal Register / Vol. 165, No. 219 / Monday, November 13, 2000 / Rules and Regulations 68037

commenter indicated that Part C of the

EO Survey (which collects

compensation data) is inadequate to

help OFCCP select contractors for

compliance evaluations. In actuality, the

data in all three components of the EO

Survey—Parts A, B and C—as well as

other information, will be used in the

contractor selection process.

Each part of the Survey will provide

indicators of potential compliance

problems for which further inquiry may

be appropriate. For example, negative

answers to the questions in Part A about

the contractor maintaining AAPs under

each of the laws enforced by OFCCP

might suggest the need for follow-up in

that area. Likewise, Part C data that

indicate possible disparities in pay

between men and women in particular

EEO–1 categories might suggest the

need for closer scrutiny of actual pay

practices. The Survey responses do not

prove that a problem exists, but rather

are used as an indicator to guide OFCCP

compliance evaluations.

One commenter suggested that

construction contractors also be

required to submit the EO Survey. Part

60–2 pertains solely to contractors with

supply and service contracts. The

current EO Survey was intended for

nonconstruction contractors. OFCCP

will, however, consider expanding the

Survey to cover construction contractors

in the future. It should be noted also

that construction companies that have

supply and service contracts, e.g.,

architectural, engineering, survey and

the like, are subject to part 60–2.

Several other commenters indicated

that the Survey was not appropriate for

colleges and universities because they

complete the IPEDS or EEO–6 form

rather than the EEO–1 form. Currently

OFCCP is not requiring colleges and

universities to complete the Survey and

there are no current plans to expand the

EO Survey to include higher education

contractors; however, OFCCP will

consider this comment if the Survey is

subsequently expanded to include

higher education contractors.

A recurring concern of contractors is

that information submitted to OFCCP,

compensation information being the

most frequently cited item, may be

disclosed to competitors or the public

under the Freedom of Information Act

(FOIA).

Paragraph (d) states that OFCCP will

treat information contained in the Equal

Opportunity Survey as confidential to

the maximum extent the information is

exempt from public disclosure under

FOIA. OFCCP explains in paragraph (d)

that its practice is not to release data

where the contractor still is in business

and where the contractor asserts, and

through the Department of Labor review

process it is determined, that the data

are confidential and that disclosure

would subject the contractor to

commercial harm. Several comments

suggested that neither regulations nor

case law under FOIA is adequate to

ensure protection of information in the

EO Survey. However, the more specific

the information is about a particular

employer, the more protection it is

afforded under FOIA. Moreover, the

Department’s FOIA regulations at 29

CFR 70.26 require OFCCP to notify

contractors on a case-by-case basis

whenever a FOIA request is made. This

notification gives contractors the

opportunity to object to the disclosure

of any data they consider confidential.

Throughout its history OFCCP has

routinely collected compensation

information during the course of its

compliance evaluations, and OFCCP is

not aware of any instance in which

compensation data were disclosed

without the consent of the contractor. It

has always been OFCCP’s policy not to

release data that is determined to be

confidential or has the potential to

subject the contractor to commercial

harm if disclosed, and this policy will

be applied to EO Survey data as well.

OFCCP believes that the concerns about

the security of EO Survey data are

unfounded.

Paragraph (b) of the NPRM provided

that the Survey must be prepared in

accordance with the format specified by

the Deputy Assistant Secretary, but the

specific format was not published in the

NPRM. Paragraph (b) further stipulated

that the Survey will include information

that will allow for an accurate

assessment of contractor personnel

activities, pay practices, and affirmative

action performance.

The NPRM also indicated that the

Survey ‘‘may’’ include data elements

such as applicants, hires, promotions,

terminations, and compensation by race

and gender. In this final rule, this

provision is made mandatory, because

these data are essential to OFCCP’s

analyses of contractors’ personnel and

compensation practices.

As use of the EO Survey develops and

evolves, the Department may at some

time determine that one or more of the

data elements currently included in the

EO Survey should be altered or deleted.

In the event consideration is given to

changing a data element requirement,

the following circumstances must exist:

(1) the Secretary must clearly

demonstrate through statistical analyses

of EO Survey submissions that the data

element in question is no longer of

value; and (2) the Secretary must follow

Notice and Comment procedures.

Many comments addressed the

content (i.e., format, definitions, etc.) of

the EO Survey form as it is being

implemented by OFCCP. Because § 60–

2.18 does not provide for a specific

format, OFCCP does not consider the

specific contents of the Survey form

now in use to have been part of the

NPRM. Nevertheless, in the interest of

full discussion of the EO Survey,

OFCCP addresses those comments

below.

During the first implementation phase

of the EO Survey, which began in April

2000, a Survey format, reviewed and

approved by OMB, was sent to

approximately 7,000 contractors to

complete and submit. While many of

the comments concerning the format

were favorable, a number of comments

from law firms, employer associations,

consultants and one or two contractors

were critical of the format for a variety

of reasons. Some indicated that the use

of EEO–1 categories rather than job

groups renders the data too broad to be

meaningful in identifying

noncompliance, as an indicator for

potential problems, or as a self-auditing

tool for contractors. Some other

commenters said that using EEO–1 data

would require companies to maintain

two sets of data: one set for the AAP

based on job groups and one for the EO

Survey. On August 31, 2000, four

organizations representing contractors

met pursuant to Executive Order 12866

with OMB and OFCCP to discuss the

Survey. These four organizations

asserted that reporting Survey data by

EEO–1 category represented an

additional burden, because contractors

usually maintain data by job groups.

OFCCP proposed the use of the nine

EEO–1 job categories because (1) they

are well known to Federal contractors,

and have been in use for several

decades; (2) many contractors now use

the categories as job groups; (3) the

categories are fixed and common across

industries and therefore provide a ready

means of comparing employment data

from one contractor to another (this

would not be the case with job groups,

whose makeup varies from contractor to

contractor); and, (4) job groups generally

do not cross EEO–1 categories, which

means that a contractor could determine

EEO–1 category data simply by

combining the data from several job

groups. Additionally, OFCCP intends to

use the EO Survey data to identify

indicators of potential problems for

purposes of scheduling and focusing

compliance evaluations and not as

evidence of discrimination, so detailed

data are not necessary. While OFCCP’s

Equal Employment Data System (EEDS)

is also based on EEO–1 data, the EO

68038 Federal Register / Vol. 165, No. 219 / Monday, November 13, 2000 / Rules and Regulations

Survey provides more in-depth data

than the EEDS does, thus greatly

increasing OFCCP’s ability to predict

potential problems when using the EO

Survey as the instrument to select

contractors for compliance evaluations.

By the same token, the EO Survey

should also be a useful tool for selfauditing purposes, to enable companies

to focus on specific potential problems

that may exist.

In response to the requests that

OFCCP permit reporting by job group,

and in the interest of flexibility, OFCCP

has decided to allow contractors the

option of submitting personnel activity

and compensation data either by job

group or by EEO–1 category. Contractors

may submit EO Survey data by job

group only under these circumstances:

(1) Contractors must submit both

personnel activity and compensation

data by job groups.

(2) Contractors may submit EO Survey

data by job groups only via the Internet.

(3) Contractors must identify the

EEO–1 category to which each job group

belongs.

(4) Contractors may not submit a job

group that crosses EEO–1 category lines.

One consultant asserted that the 30-

day timeframe for completion of the

Survey did not allow contractors

sufficient time, and extensions beyond

the May 31, 2000, due date were not

granted. OFCCP will take this comment

under advisement when determining

the due date for future EO Survey

submissions.

Several commenters expressed

concern over the fact that the EO Survey

does not allow for the reporting of data

on part-time employees. Some

commenters felt that this lack of data

would impair OFCCP’s ability to

identify areas of potential

discrimination. One commenter asserted

that since many women and minorities

are part-time employees, excluding

them on the Survey underrepresents the

number of women and minorities

employed by contractors. Others

objected to the exclusion of part-time

employees as it was inconsistent with

their Affirmative Action Program

reporting systems.

OFCCP recognizes that excluding

part-time employees from the EO

Survey may restrict the Survey’s

effectiveness as a predictor of potential

problems in the area of part-time

employment. As a practical matter,

including data on part-time incumbency

and compensation would have

increased the size of the EO Survey by

several pages. OFCCP intends to use the

EO Survey data as merely an indicator

of potential problems and not as

evidence of discrimination, so areas of

potential discrimination concerning

part-time employees can and will still

be investigated during compliance

evaluations.

Several commenters complained that

the definition of ‘‘applicant’’ contained

in the EO Survey instructions is

ambiguous, and were concerned with

how contractors could obtain race/

gender information. The definition of

applicant contained in the EO Survey is

the same definition OFCCP and other

civil rights agencies have relied upon

for more than 20 years. It is taken from

and is consistent with the Uniform

Guidelines on Employee Selection

Procedures (refer to Question and

Answer No. 15, Adoption of Questions

and Answers to Clarify and Provide a

Common Interpretation of the Uniform

Guidelines on Employee Selection

Procedures (Qs and As), 44 FR 11996,

11998 (March 2, 1979)). With regard to

obtaining race and gender information

for reporting on the EO Survey, OFCCP

notes that this is not a new requirement

nor an additional burden, as contractors

have had an affirmative obligation to

ascertain the race and gender of their

applicants, where possible, for as long

as OFCCP has enforced Executive Order

11246. It is also consistent with § 60–3.4

of the Uniform Guidelines on Employee

Selection Procedures.

Several commenters stated that they

had problems with the definition of

‘‘promotion’’ used in the EO Survey, as

it differed from the definition they used.

The definition is consistent with

previous guidance issued by OFCCP, as

it was taken verbatim from the Glossary

in Chapter 1 of OFCCP’s FCCM.

Promotions are to be captured within

EEO–1 categories as well as from one

EEO–1 category to a higher category

(e.g., from Professionals to Officials and

Managers). To offer an alternative

definition in the EO Survey would only

create confusion and possibly additional

burden on contractors.

One commenter said that the

definition of ‘‘hire’’ needed clarification.

OFCCP did not include a definition of

‘‘hire’’ in the most recent EO Survey, as

it was found during cognitive testing

that the word was well understood and

no definition was necessary. OFCCP

recognizes that while there may be

slight variations in the way hires are

reported (i.e., the date the employee

accepts the position, the date the

employee first reports for work, etc.)

from contractor to contractor, the

variations are acceptable as long as the

contractor is internally consistent.

OFCCP does not see the need for a

restrictive definition of this term.

A number of comments addressed the

compensation data requested by the EO

Survey. Many commenters supported

requesting compensation data, because

of the role of compensation in

employment discrimination. Other

commenters were not in favor of

including compensation data. One such

commenter indicated that the EO

Survey fails to identify compensation

discrimination. Another indicated that

the contractor should be allowed to

explain all the factors that influence

compensation. One commenter noted

that tenure is not a good indicator of

compensation discrimination. Another

stated that the EO Survey erroneously

assumes that tenure with a company is

the only important pay variable. Still

another commenter was of the opinion

that only tenure within the position

currently held was relevant to

compensation analysis. Another

indicated that salary data should be

aggregated to protect the confidentiality

of individual salary data.

OFCCP believes that compensation

data must be used in identifying

potential problems as early in the

process as possible and it, therefore,

intends to retain compensation data in

the EO Survey. Furthermore, the

compensation data are used only as an

indicator, a reason for further inquiry,

not as evidence of discrimination.

Therefore, OFCCP has decided to retain

‘‘tenure’’ in future versions of the EO

Survey, and tenure is included as a

required data element in § 2.18(b). If a

compliance evaluation is scheduled and

compensation is a focus area, the

contractor will have the opportunity to

explain all the additional factors that

influence compensation.

Finally, the compensation

information requested in the EO Survey

is aggregated by gender and minority/

non-minority status within each EEO–1

category and does not contain

identifying information on individuals.

In the preamble to the NPRM OFCCP

stated that it contemplated sending the

Survey to no fewer than half of all

nonconstruction contractor

establishments each year; the most

likely scenario was described as

contractors submitting the Survey

biennially, with approximately one half

of all establishments submitting the

Survey each year. OFCCP also stated

that it was considering whether to

codify this one half floor as part of the

final rule. Several commenters,

including women’s organizations and

labor unions, felt that codification of the

number of Surveys was critical to the

success of the project. OFCCP has

decided that sending the Survey to half

of all nonconstruction contractor

establishments each year is the only

way to ensure that the Survey will

Federal Register / Vol. 165, No. 219 / Monday, November 13, 2000 / Rules and Regulations 68039

continue to be a credible evaluation

tool. Therefore, OFCCP will send the

Survey to half of all nonconstruction

contractor establishments each year.

The final rule states that ‘‘OFCCP will

designate a substantial portion of all

nonconstruction contractor

establishments to prepare and file and

Equal Opportunity Survey.’’ OFCCP

interprets ‘‘a substantial portion’’ to

mean half of all nonconstruction

contractor establishments. Interpreting

‘‘substantial portion’’ as ‘‘half’’

enhances OFCCP’s ability to achieve the

three stated objectives of the Survey:

(1) To increase compliance with equal

opportunity requirements by improving

contractor self-awareness and encourage

self-evaluations.

(2) To improve the deployment of

scarce federal government resources

toward contractors most likely to be out

of compliance.

(3) To increase agency efficiency by

building on the tiered-review process

already accomplished by OFCCP’s

regulatory reform efforts, thereby

allowing better resource allocation.

Proposed paragraph (c) described

how, when, and where contractors must

file the Equal Opportunity Survey. The

NPRM stated that contractors are

encouraged to file the EO Survey in

electronic format. Since ‘‘electronic

format’’ may refer either to the means of

transmission or the form in which the

data are sent, OFCCP has clarified

paragraph (c) to state that contractors

are encouraged to submit the EO Survey

via the Internet. Internet submission

will greatly expedite OFCCP’s receipt

and analysis of submitted data.

Contractors also may mail or fax the EO

Survey to OFCCP. For clarification,

paragraph (c) now states that the fax

telephone number will be indicated in

the EO Survey instructions. Two

commenters suggested that the EO

Survey due dates should be staggered.

Staggered filing/submission dates are

currently under consideration by

OFCCP.

After considering all the comments

received, the final rule adopts the EO

Survey as a regulatory instrument.

Certain issues such as the submission

date and the time allowed for

completion of the Survey are not part of

this rule and will be addressed at a later

date.

Section 60–2.30 Corporate

Management Compliance Evaluations

This new section draws upon

OFCCP’s experience in conducting

glass-ceiling reviews, addressing several

issues that are unique to the corporate

management environment.

Paragraph (a) briefly explains that the

purpose of Corporate Management

Compliance Evaluations is to ascertain

whether individuals are encountering

artificial barriers to advancement into

mid-level and senior corporate

management positions.

Paragraph (b) provided that OFCCP

may expand the scope of a Corporate

Management Compliance Evaluation

beyond a company’s headquarters

establishment, if during the course of a

compliance evaluation it comes to

OFCCP’s attention that compliance

problems exist at other locations outside

the corporate headquarters.

A number of commenters endorsed

this section. Other commenters

endorsed or did not oppose the general

concept of codifying Corporate

Management Evaluations, even as they

expressed concerns about a particular

portion of the proposal.

Several commenters, including a law

firm, consultants, and organizations

representing contractors, stated concern

about paragraph (b) of the proposal.

They felt that the provision would give

OFCCP unlimited authority to expand

the scope of Corporate Management

Evaluations beyond corporate

headquarters to any and all facilities

within a corporation. OFCCP’s purpose

in looking beyond corporate

headquarters is to examine ‘‘glass

ceiling’’ barriers to promotional

opportunities that are found at facilities

outside the headquarters. For example,

OFCCP may wish to analyze ‘‘feeder

pools’’ at lower-level establishments

from which selections for management

positions at the headquarters

establishment are made. See, generally,

FCCM Section 5A04. It is not OFCCP’s

policy or practice to routinely expand

corporate management compliance

evaluations into broad-ranging reviews

of subordinate facilities, or to audit for

issues outside the scope of the glass

ceiling. However, if in the course of

pursuing a corporate management

evaluation at a subordinate

establishment, the agency learns of

other practices or conditions that may

violate the Executive Order (racially

discriminatory graffiti in a restroom, for

example), OFCCP believes that it has the

right and the obligation to investigate

those practices or conditions.

In the preamble to the NPRM, OFCCP

asked for comments on whether to

incorporate into the regulatory text a

number of approaches that the agency

has found to be particularly effective in

addressing glass-ceiling problems. The

comments were about equally divided

between including the material in the

regulations and including it in

subregulatory guidance. Upon

consideration, OFCCP finds persuasive

the argument that inclusion in the

regulations would be inconsistent with

the objective of simplifying and

streamlining the rules. OFCCP

encourages contractors to seek guidance

on eliminating barriers to the executive

suite from publications on the subject of

the glass ceiling, including OFCCP’s

1997 report on the glass ceiling.

Section 60–2.31 Program Summary

OFCCP proposed to redesignate the

current regulation at § 60–2.14 (Program

Summary) as § 60–2.31, and to make

one technical change to substitute the

title ‘‘Deputy Assistant Secretary’’ for

‘‘Director.’’ OFCCP stated that it would

replace the program summary

requirement at some point in the future

should the summary be found to be

duplicative of the Equal Opportunity

Survey. Comments were not sought on

this simple redesignation. The changes

have been adopted.

Section 60–2.32 Affirmative action

records

This regulation adds a provision

specifying that the contractor must

make relevant records, including

records maintained pursuant to §§ 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.

Six organizations representing the

interests of organized labor, women,

minorities, and affirmative action

officers characterized the proposal as

reasonable and stated that it will aid

OFCCP in enforcing the requirements of

Executive Order 11246.

On the other hand, one contractor and

two consultants representing the

interests of contractors were concerned

that OFCCP would: request attorneyclient privileged material; seek records

and information ‘‘outside’’ the

compliance evaluation process thereby

potentially violating the Fourth

Amendment to the Constitution; and,

not protect contractors’ secret data and

confidential information.

There is no foundation for these

concerns. Because OFCCP most

commonly requests only the AAP and

supporting documentation that are

developed by the contractor pursuant to

its contractual obligations, OFCCP does

not usually request documents that

would be subject to the attorney-client

privilege. In fact, contractor personnel

prepare most such documentation

without the involvement of legal

68040 Federal Register / Vol. 165, No. 219 / Monday, November 13, 2000 / Rules and Regulations

counsel. Even when they involve legal

counsel, it is clear that an enforcement

agency must have access to pertinent

records in order to carry out its lawful

duties. OFCCP does not request material

‘‘outside’’ the compliance evaluation

process other than to investigate

complaints of alleged violations of the

regulations. The confidentiality of

contractors’ information is protected by

the requirements of the Trade Secrets

Act and the Freedom of Information

Act, and the Department’s regulations

implementing the FOIA.

The final rule adopts the proposal

without change.

Section 60–2.33 Preemption

In the NPRM OFCCP stated its intent

to move this provision from § 60–2.31 in

the current regulation to § 60–2.33

without alteration, except for several

technical wording changes. Notice and

comment were not required, and

comments were not solicited. The final

rule adopts § 60–2.33 without change.

Section 60–2.34 Supersedure

OFCCP proposed to move this

provision from § 60–2.32 in the current

regulation to § 60–2.34, and to omit as

outdated and unnecessary the second

and third sentences of the current

regulation. No comments were

submitted.

The final rule adopts § 60–2.34

without change.

Section 60–2.35 Compliance Status

OFCCP proposed to expand upon and

restructure a provision that appears at

§ 60–2.15 of the current regulations.

One commenter, a law firm, objected

to a proposed sentence providing that

the contractor’s compliance status will

be determined by analysis of statistical

data and other non-statistical

information that would indicate

whether employees and applicants are

being treated without regard to their

race, color, religion, sex, or national

origin. The commenter felt that

‘‘OFCCP’s current approach to

‘statistical analyses’ in the investigation

or compliance process * * * does not

provide for a reliable means to measure

compliance status.’’ The commenter

referred to the ‘‘median analysis’’

OFCCP uses at the investigative stage to

examine pay equity issues. OFCCP

disagrees with the commenter’s view.

Median analysis is a valid tool for the

first step of the investigative process

and may demonstrate the need for

further inquiry. The final rule adopts

§ 60–2.35 as proposed.

Regulatory Procedures

Executive Order 12866

The Department is issuing this final

rule in conformance with Executive

Order 12866. This rule has been

determined to be nonsignificant for

purposes of Executive Order 12866. In

the NPRM, OFCCP stated that the

proposed changes to the regulations in

this NPRM would decrease the total

estimated annualized cost to contractors

of developing, updating, and

maintaining an AAP by $147,950,698

and that the estimated average cost

savings per establishment of developing,

updating, and maintaining an AAP

would be $1378, therefore making this

regulation significant for purposes of

Executive Order 12866.

Upon reviewing the comments to the

NPRM concerning burden hours for the

EO Survey and AAP, OFCCP has

determined that this initial estimated

decrease was too high. In the final rule,

OFCCP is taking into account the

reduction of the decrease in burden

hours. Therefore, the changes to the

regulations in this final rule will

decrease the total estimated annualized

cost to contractors of developing,

updating, and maintaining an AAP by

$89,357,163. The estimated average cost

savings per establishment of developing,

updating, and maintaining an AAP is

$831. See Paperwork Reduction Act

section below.

Congressional Review Act

In view of the revised cost savings as

discussed above, this regulation is not a

major rule for purposes of the

Congressional Review Act.

Executive Order 13132

OFCCP has reviewed this rule in

accordance with Executive Order 13132

regarding federalism, and has

determined that it does not have

‘‘federalism implications.’’ The rule

does not ‘‘have substantial direct effects

on the States, on the relationship

between the national government and

the States, or on the distribution of

power and responsibilities among the

various levels of government.’’

Regulatory Flexibility Act

The rule will not have a significant

economic impact on a substantial

number of small business entities.

Permitting contractors to prepare

either a traditional workforce analysis or

the new-style organizational profile,

allowing smaller contractors to use

EEO–1 categories for their job groups,

reducing the number of factors that

must be considered to determine the

availability of women and minorities

from eight to two, and eliminating more

than half of the additional required

ingredients of the documentation of the

AAP, will reduce costs associated with

these provisions for all affected

contractors. The Equal Opportunity

Survey requirement will increase costs,

but the overall result of the rule should

be a reduction in the recordkeeping and

reporting burden.

Thus, the Department concludes that

the 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 13132, the rule does

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 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 rule revises

regulations which contain information

collection requirements (ICR) which are

currently approved under OMB No.

1215–0072. The rule codifies a new

requirement, the Equal Opportunity

Survey, which was reviewed and

approved by OMB under OMB No.

1215–0196. The EO Survey burden is

being adjusted to 21 hours. That ICR is

being adjusted in conjunction with this

final rule.

The information collections affected

by this final rule were identified in the

NPRM. Those collections and their

predicted effect on the recordkeeping

hours contained in the approved 1215–

0072 on file at OMB are summarized as

follows:

• 60–1.12 Record Retention—5

percent increase

• 60–2.11 Organizational Profile—

20 percent decrease

• 60–2.12 Job Group Analysis—10

percent decrease for contractors with

fewer than 150 employees

• 60–2.14 Determining

Availability—10 percent decrease

• 60–2.17 Additional Required

Elements of Affirmative Action

Programs—20 percent decrease

Federal Register / Vol. 165, No. 219 / Monday, November 13, 2000 / Rules and Regulations 68041

OFCCP invited the public to comment

on whether each of the proposed

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).

There were no responses that

specifically addressed the issues listed

above. However, a significant number of

commenters representing the contractor

community expressed opinions about

the burdens associated with the

organizational profile requirement in

their comments on the regulatory

provision. They indicated that the

current workforce analysis, for most

contractors, is a computer generated

product that is easily updated from data

routinely stored for other purposes.

Furthermore, it was indicated that, for

many contractors, creating an

organizational profile may prove to be

time consuming and costly because it is

not something they currently do. There

appears to be general agreement that

moving from the work force analysis to

the organizational profile will not result

in the 20 percent burden reduction that

OFCCP estimated in the NPRM. Upon

further consideration, OFCCP agrees

that the original estimate may be too

high. In its final ICR submission to

OMB, OFCCP is revising the

organizational profile burden reduction

from 20% to 10%. In the absence of

experience data, we estimate 50% of the

contractors will use the organizational

profile, resulting in a reduction in the

estimated burden savings from 20% to

10%.

A few commenters also argued that

OFCCP overstated the expected cost

savings from the changes in the

‘‘Additional required elements’’ section

of the rule (§ 60–2.17), primarily based

upon their notion that the ‘‘required

elements’’ being retained impose new

burdens. Contrary to the commenters’

beliefs, virtually everything required of

contractors under the new § 60–2.17

already is required of contractors under

existing regulations. Notably, no

commenter disputed the basic

proposition that the reduction in the

number of required elements would

reduce burdens. Further, OFCCP

believes that the commenters disputing

the size of the cost saving underestimate

the efforts contractors should be making

under the existing regulations.

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.

BURDEN CHANGE SUMMARY

Current inventory

Current inventory adjusted

for number of

firms

Revised

estimate Changes

AAP Development ........................................................................................... 161,155 192,750 118,903 ¥73,847

AAP Updating .................................................................................................. 6,658,288 7,963,670 5,268,677 ¥2,694,993

AAP Maintenance ............................................................................................ 6,725,543 8,044,110 5,321,896 ¥2,722,214

Total Recordkeeping Burden .................................................................... 13,544,986 16,200,530 10,709,476 ¥5,491,054

Average hours per respondent ........................................................................ @150 @150 @99

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. We

estimate that this proposal would

increase burden by 21 hours per

respondent, for a total increased burden

of 1,050,000 hours.

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 for the Survey, 25 percent

of the burden hours will be executive,

administrative, and managerial and 75

percent will be administrative support.

OFCCP has calculated the total

estimated annualized cost of the Survey

as follows:

Executive 1,050,000 × .25 × $35.18 =

$9,234,750

Admin. Supp. 1,050,000 × .75 × $16.63

= $13,096,125

Total annualized cost estimate =

$22,330,875

For §§ 60–1.12, 60–2.11, 60–2.12, 60–

2.14, and 60–2.17 concerning AAP

development, maintenance, and

updating, OFCCP estimates that 20

percent of the burden hours will be

executive, administrative, and

managerial and 80 percent will be

administrative support. OFCCP has

calculated the total estimated

annualized cost savings as follows:

Executive 5,491,054 × .20 × $35.18 =

$38,635,056

Admin. Supp. 5,491,054 × .80 × $16.63

= $73,052,982

Total annualized cost savings estimate =

$111,688,038

Total annualized cost savings estimate

of sect;§ 60–1.12, 60–2.11, 60–2.12,

60–2.14, and 60–2.17 =

$111,688,038

Total annualized cost estimate of EO

Survey = $22,330,875

Total annualized cost savings estimate =

$89,357,163

Estimated average cost savings per

respondent = $831

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.

68042 Federal Register / Vol. 165, No. 219 / Monday, November 13, 2000 / Rules and Regulations

Signed at Washington, DC, this 3rd day of

November, 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

hereby withdrawn; and Parts 60–1 and

60–2 of Title 41 of the Code of Federal

Regulations are 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).

2. Section 1.12 is revised to read as

follows:

§ 60–1.12 Record retention.

(a) General requirements. Any

personnel or employment record made

or kept by the contractor shall be

preserved by the contractor for a period

of not less than two years from the date

of the making of the record or the

personnel action involved, whichever

occurs later. However, if the contractor

has fewer than 150 employees or does

not have a Government contract of at

least $150,000, the minimum record

retention period shall be one year from

the date of the making of the record or

the personnel action involved,

whichever occurs later. Such records

include, but are not necessarily limited

to, records pertaining to hiring,

assignment, promotion, demotion,

transfer, lay off or termination, rates of

pay or other terms of compensation, and

selection for training or apprenticeship,

and other records having to do with

requests for reasonable accommodation,

the results of any physical examination,

job advertisements and postings,

applications and resumes, tests and test

results, and interview notes. In the case

of involuntary termination of an

employee, the personnel records of the

individual terminated shall be kept for

a period of not less than two years from

the date of the termination, except that

contractors that have fewer than 150

employees or that do not have a

Government contract of at least

$150,000 shall keep such records for a

period of not less than one year from the

date of the termination. Where the

contractor has received notice that a

complaint of discrimination has been

filed, that a compliance evaluation has

been initiated, or that an enforcement

action has been commenced, the

contractor shall preserve all personnel

records relevant to the complaint,

compliance evaluation or enforcement

action until final disposition of the

complaint, compliance evaluation or

enforcement action. The term

‘‘personnel records relevant to the

complaint,’’ for example, would include

personnel or employment records

relating to the complainant and to all

other employees holding positions

similar to that held or sought by the

complainant and application forms or

test papers submitted by unsuccessful

applicants and by all other candidates

for the same position as that for which

the complainant unsuccessfully applied.

Where a compliance evaluation has

been initiated, all personnel and

employment records described above

are relevant until OFCCP makes a final

disposition of the evaluation.

(b) Affirmative action programs. A

contractor establishment required under

§ 60–1.40 to develop and maintain a

written 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.

(c) Contractor identification of record.

(1) For any record the contractor

maintains pursuant to this section, the

contractor must be able to identify:

(i) The gender, race, and ethnicity of

each employee; and

(ii) where possible, the gender, race,

and ethnicity of each applicant.

(2) The contractor must supply this

information to the Office of Federal

Contract Compliance Programs upon

request.

(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. Where the contractor has

destroyed or failed to preserve records

as required by this section, there may be

a presumption that the information

destroyed or not preserved would have

been unfavorable to the contractor:

Provided, That this presumption shall

not apply where the contractor shows

that the destruction or failure to

preserve records results from the

circumstances that are outside of the

contractor’s control.

(e) Applicability. The requirements of

this section shall apply only to records

made or kept on or after December 22,

1997.

3. Section 60–1.40 is revised to read

as follows:

§ 60–1.40 Affirmative action programs.

(a)(1) Each nonconstruction (supply

and service) contractor must develop

and maintain a written affirmative

action program for each of its

establishments, if it has 50 or more

employees and:

(i) Has a contract of $50,000 or more;

or

(ii) Has Government bills of lading

which in any 12-month period, total or

can reasonably be expected to total

$50,000 or more; or

(iii) Serves as a depository of

Government funds in any amount; or

(iv) Is a financial institution which is

an issuing and paying agent for U.S.

savings bonds and savings notes in any

amount.

(2) Each contractor and subcontractor

must require each nonconstruction

subcontractor to develop and maintain a

written affirmative action program for

each of its establishments if it has 50 or

more employees and:

(i) Has a subcontract of $50,000 or

more; or

(ii) Has Government bills of lading

which in any 12-month period, total or

can reasonably be expected to total

$50,000 or more; or

(iii) Serves as a depository of

Government funds in any amount; or

(iv) Is a financial institution which is

an issuing and paying agent for U.S.

savings bonds and savings notes in any

amount.

(b) Nonconstruction contractors

should refer to Part 60–2 for specific

affirmative action requirements.

Construction contractors should refer to

Part 60–4 for specific affirmative action

requirements.

PART 60–2—AFFIRMATIVE ACTION

PROGRAMS

4. Part 60–2 is revised to read as

follows:

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.

Federal Register / Vol. 165, No. 219 / Monday, November 13, 2000 / Rules and Regulations 68043

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 (supply

and service) 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.

(1) Each nonconstruction contractor

must develop and maintain a written

affirmative action program for each of

its establishments if it has 50 or more

employees and:

(i) Has a contract of $50,000 or more;

or

(ii) Has Government bills of lading

which in any 12-month period, total or

can reasonably be expected to total

$50,000 or more; or

(iii) Serves as a depository of

Government funds in any amount; or

(iv) Is a financial institution which is

an issuing and paying agent for U.S.

savings bonds and savings notes in any

amount.

(2) Each contractor and subcontractor

must require each nonconstruction

subcontractor to develop and maintain a

written affirmative action program for

each of its establishments if it has 50 or

more employees and:

(i) Has a subcontract of $50,000 or

more; or

(ii) Has Government bills of lading

which in any 12-month period, total or

can reasonably be expected to total

$50,000 or more; or

(iii) Serves as a depository of

Government funds in any amount; or

(iv) Is a financial institution which is

an issuing and paying agent for U.S.

savings bonds and savings notes in any

amount.

(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 a written 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 work at

establishments 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.

(4) If a contractor wishes to establish

an affirmative action program other than

by establishment, the contractor may

reach agreement with OFCCP on the

development and use of affirmative

action programs based on functional or

business units. The Deputy Assistant

Secretary, or his or her designee, must

approve such agreements. Agreements

allowing the use of functional or

business unit affirmative action

programs cannot be construed to limit

or restrict how the OFCCP structures its

compliance evaluations.

(e) How to identify employees

included in affirmative action programs

other than where they are located. If

pursuant to paragraphs (d)(1) through

(3) of this section employees are

included in an affirmative action

program for an establishment 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 to develop and maintain a written

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

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

68044 Federal Register / Vol. 165, No. 219 / Monday, November 13, 2000 / Rules and Regulations

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.

(c)(1) Immediately upon finding that a

contractor has no affirmative action

program, or has deviated substantially

from an approved affirmative action

program, or has failed to develop or

implement an affirmative action

program which complies with the

requirements of the regulations in this

chapter, that fact shall be recorded in

the investigation file. Except as

provided in § 60–1.26(b)(1), whenever

administrative enforcement is

contemplated, the notice to the

contractor shall be issued giving the

contractor 30 days to show cause why

enforcement proceedings under section

209(a) of Executive Order 11246, as

amended, should not be instituted. The

notice to show cause should contain:

(i) An itemization of the sections of

the Executive Order and of the

regulations with which the contractor

has been found in apparent violation,

and a summary of the conditions,

practices, facts, or circumstances which

give rise to each apparent violation;

(ii) The corrective actions necessary to

achieve compliance or, as may be

appropriate, the concepts and principles

of an acceptable remedy and/or the

corrective action results anticipated;

(iii) A request for a written response

to the findings, including commitments

to corrective action or the presentation

of opposing facts and evidence; and

(iv) A suggested date for the

conciliation conference.

(2) If the contractor fails to show good

cause for its failure or fails to remedy

that failure by developing and

implementing an acceptable affirmative

action program within 30 days, the case

file shall be processed for enforcement

proceedings pursuant to § 60–1.26 of

this chapter. If an administrative

complaint is filed, the contractor shall

have 20 days to request a hearing. If a

request for hearing has not been

received within 20 days from the filing

of the administrative complaint, the

matter shall proceed in accordance with

part 60–30 of this chapter.

(3) During the ‘‘show cause’’ period of

30 days, every effort will be made

through conciliation, mediation, and

persuasion to resolve the deficiencies

which led to the determination of

nonresponsibility. If satisfactory

adjustments designed to bring the

contractor into compliance are not

concluded, the case shall be processed

for enforcement proceedings pursuant to

§ 60–1.26 of this chapter.

(d) During the ‘‘show cause’’ period

and formal proceedings, each

contracting agency must continue to

determine the contractor’s responsibility

in considering whether or not to award

a new or additional contract.

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 depiction 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. The

contractor must use either the

organizational display or the workforce

analysis as its organizational profile:

(b) Organizational display. (1) An

organizational display is a detailed

graphical or tabular chart, text,

spreadsheet or similar presentation of

the contractor’s organizational structure.

The organizational display must

Federal Register / Vol. 165, No. 219 / Monday, November 13, 2000 / Rules and Regulations 68045

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).

(3) For each organizational unit, the

organizational display must indicate the

following:

(i) The name of the unit;

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

ethnicity of the unit supervisor (if the

unit has a supervisor);

(iii) The total number of male and

female incumbents; and

(iv) the total number of male and

female incumbents in each of the

following groups: Blacks, Hispanics,

Asians/Pacific Islanders, and American

Indians/Alaskan Natives.

(c) Workforce analysis. (1) A

workforce analysis is a listing of each

job title as appears in applicable

collective bargaining agreements or

payroll records ranked from the lowest

paid to the highest paid within each

department or other similar

organizational unit including

departmental or unit supervision.

(2) If there are separate work units or

lines of progression within a

department, a separate list must be

provided for each such work unit, or

line, including unit supervisors. For

lines of progression there must be

indicated the order of jobs in the line

through which an employee could move

to the top of the line.

(3) Where there are no formal

progression lines or usual promotional

sequences, job titles should be listed by

department, job families, or disciplines,

in order of wage rates or salary ranges.

(4) For each job title, the total number

of incumbents, the total number of male

and female incumbents, and the total

number of male and female incumbents

in each of the following groups must be

given: Blacks, Hispanics, Asians/Pacific

Islanders, and American Indians/

Alaskan Natives. The wage rate or salary

range for each job title must be given.

All job titles, including all managerial

job titles, must be listed.

§ 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

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 which the

contractor is reasonably able to provide,

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

68046 Federal Register / Vol. 165, No. 219 / Monday, November 13, 2000 / Rules and Regulations

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) 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.

(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

Federal Register / Vol. 165, No. 219 / Monday, November 13, 2000 / Rules and Regulations 68047

information that will allow for an

accurate assessment of contractor

personnel activities, pay practices, and

affirmative action performance. At a

minimum, this will include such data

elements as applicants, hires,

promotions, terminations,

compensation, and tenure by race and

gender. As use of the EO Survey

develops and evolves, the Department

may at some time determine that one or

more of the data elements currently

included in the EO Survey should be

altered or deleted. In the event

consideration is given to changing a

data element requirement, the following

circumstances must exist:

(1) The Secretary must clearly

demonstrate through statistical analyses

of EO Survey submissions that the data

element in question is no longer of

value; and

(2) The Secretary must follow Notice

and Comment procedures.

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

Contractors are encouraged to submit

the Equal Opportunity Survey via the

Internet. The Equal Opportunity Survey

may also be submitted via facsimile to

the telephone number 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 mid-level 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 establishments 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

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 of this chapter 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. 00–28693 Filed 11–9–00; 8:45 am]

BILLING CODE 4510–45–P