25516 Federal Register / Vol. 61, No. 99 / Tuesday, May 21, 1996 / Proposed Rules

DEPARTMENT OF LABOR

Office of Federal Contract Compliance

Programs

41 CFR Parts 60–1 and 60–60

Government Contractors, Affirmative

Action Requirements; Implementation

of Executive Order 11246

AGENCY: Office of Federal Contract

Compliance Programs (OFCCP), ESA,

Labor.

ACTION: Notice of proposed rulemaking.

SUMMARY: This proposal would revise

certain provisions of the current

regulations implementing Executive

Order 11246, as amended, to reduce

burdens on the regulated community

and to improve administration of the

Order. The Executive Order prohibits all

nonexempt 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 and national origin. The

proposed revisions to the regulations on

obligations of contractors and

subcontractors concern record retention,

compliance monitoring, and segregated

facilities. In addition, the proposal

would amend certain provisions of the

regulations to parallel provisions

included in OFCCP’s final rule

implementing Section 503 of the

Rehabilitation Act of 1973, as amended,

which was published in the Federal

Register on May 1, 1996. The proposal

also would transfer some sections of the

regulations on contractor evaluation

procedures for supplies and services to

the regulations on obligations of

contractors and subcontractors and

delete the remainder of the sections.

Finally, this proposal would withdraw

portions of a final rule published on

December 30, 1980 (and subsequently

suspended), and it hereby withdraws a

proposed rule published on August 25,

1981 (and supplemented on April 23,

1982).

DATES: To be assured of consideration,

comments must be in writing and must

be received on or before July 22, 1996.

ADDRESSES: Comments should be sent to

Joe N. Kennedy, Deputy Director,

OFCCP, Room C–3325, 200 Constitution

Avenue, N.W., Washington, DC 20210.

As a convenience to commenters,

OFCCP will accept public comments

transmitted by facsimile (FAX) machine.

The telephone number of the FAX

receiver is 202–219–6195. To assure

access to the FAX equipment, only

public comments of six or fewer pages

will be accepted via FAX transmittal.

Receipts of FAX transmittals will not be

acknowledged, except that the sender

may request confirmation of receipt by

calling OFCCP at 202–219–9430 (voice),

1–800–326–2577 (TDD).

FOR FURTHER INFORMATION CONTACT: Joe

N. Kennedy, Deputy Director, OFCCP,

Room C–3325, 200 Constitution

Avenue, N.W., Washington, DC 20210.

Telephone 202–219–9475 (voice), 1–

800–326–2577 (TDD). Copies of this

NPRM, including copies in alternate

formats, may be obtained by calling

202–219–9430 (voice), 1–800–326–2577

(TDD). The alternate formats available

are large print, electronic file on

computer disk and audio-tape.

SUPPLEMENTARY INFORMATION:

Background

OFCCP’s regulations at 41 CFR

chapter 60 implementing Executive

Order 11246, as amended (30 FR 12319,

September 28, 1965) have not

undergone substantive revision since

the 1970s. 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

a notice of proposed rulemaking

(NPRM) published on that same date (46

FR 42968; supplemented at 47 FR

17770, April 23, 1982). OFCCP has

taken no further action on the August

25, 1981, proposal, or consequently on

the 1980 stayed final rule.

Both the 1980 final rule and the 1981

proposal addressed 41 CFR part 60–1.

The changes they would have made to

41 CFR part 60–1 have been considered

in developing today’s NPRM and, where

pertinent, are discussed in the Sectionby-Section analysis below. To avoid

conflict with today’s NPRM, OFCCP

proposes to withdraw part 60–1 of the

1980 final rule, and hereby withdraws

the 1981 and 1982 NPRMs in their

entirety.

As discussed in the Section-bySection analysis, today’s NPRM

proposes changes to 41 CFR part 60–1

provisions concerning record retention,

compliance monitoring, and segregated

facilities. In addition, to ensure

consistency in OFCCP programs, today’s

NPRM proposes conforming certain part

60–1 provisions to parallel provisions

revised by OFCCP’s final rule

implementing Section 503 of the

Rehabilitation Act of 1973, as amended

(61 FR 19336; May 1, 1996). These

proposed conforming changes would

affect several definitions and, for

example, some aspects of enforcement.

Finally, today’s NPRM proposes the

deletion of most sections of part 60–60

from the regulations and the transfer of

a few sections to part 60–1. The deleted

sections describe OFCCP’s traditional

compliance review process and the

transferred sections relate to

preservation of confidentiality of data

submitted by contractors, the timeframe

within which a contractor must submit

an affirmative action program and

supporting documents and

authorization for agreements concerning

nationwide AAP formats. Similar

deletions and transfers were contained

in the 1980 final rule and the 1981

proposal.

Section-by-Section Analysis

Section 60–1.3 Definitions

The proposal adds one new definition

for compliance evaluation and revises

several others to render them consistent

with the definitions included in

OFCCP’s Section 503 final rule.

‘‘Compliance Evaluation.’’ The

proposal adds a new definition of the

term ‘‘compliance evaluation’’ to reflect

OFCCP’s authority to conduct a variety

or range of activities to assess a

contractor’s compliance status.

Previously OFCCP generally has

conducted a full compliance review of

a contractor, assessing all its

employment practices, whenever it

reviewed a contractor’s status. As

discussed in more detail in the

preamble discussion of § 60–1.20, the

proposal would allow OFCCP to use any

one or a combination of actions to

examine a contractor’s compliance with

one or more of the Executive Order

11246 requirements. Thus, the proposal

would allow OFCCP to streamline the

review process for many contractors.

The proposal also would allow OFCCP

to focus its investigatory resources

where they are needed, while

conducting some level of review of a

broader segment of the contractor

universe.

‘‘Contract.’’ The current regulation

defines the term ‘‘contract’’ as ‘‘any

Government contract or any federally

assisted construction contract.’’ The

proposal adds the word ‘‘subcontract’’

to this definition (‘‘any Government

contract or subcontract or any federally

assisted construction contract or

subcontract’’) to eliminate the need to

reference ‘‘subcontract’’ each time

‘‘contract’’ is referenced in the body of

the regulation. Accordingly, the

proposal generally references the term

‘‘subcontract’’ only when necessary to
Federal Register / Vol. 61, No. 99 / Tuesday, May 21, 1996 / Proposed Rules 25517

the context. This same change would

have been made by the 1980 final rule.

‘‘Deputy Assistant Secretary.’’ The

Director of OFCCP recently was

redesignated the Deputy Assistant

Secretary for Federal Contract

Compliance Programs. The proposal,

therefore, substitutes a definition of

‘‘Deputy Assistant Secretary,’’ for the

definition of ‘‘Director’’ in the current

regulations, and makes this title change

throughout the proposal. To ensure

internal consistency, OFCCP intends to

issue a rule making a corresponding

universal change to its regulations

before publishing the final rule resulting

from this proposal.

‘‘Government Contract.’’ The

proposed definition of ‘‘Government

contract’’ is revised to clarify that

covered contracts include those under

which the Government is a seller of

goods or services, as well as those under

which it is a purchaser. This change

reflects OFCCP’s long-standing

interpretation of the scope of the

Executive Order, upheld in Crown

Central Petroleum Corp. v. Kleppe (424

F. Supp. 744 (D. Md. 1976)), that sales

by the Government result in covered

contracts. Hence, the proposal

substitutes a reference to contracts for

the ‘‘purchase, sale or use of personal

property or nonpersonal services’’ and a

definition of the term ‘‘personal

property’’ for the existing reference to

the ‘‘furnishing’’ of supplies or services,

or for the use of real or personal

property, including lease arrangements.

‘‘Rules, regulations and relevant

orders of the Secretary of Labor.’’ A rule

published on May 3, 1996 (61 Fed. Reg.

19982) amended the definition of

‘‘Secretary’’ to include a ‘‘designee’’ of

the Secretary of Labor. The definition of

‘‘rules, regulations and relevant orders

of the Secretary of Labor’’ in the current

regulations, which makes reference to

the designee of the Secretary, therefore

is no longer necessary and is omitted in

this proposal.

‘‘Subcontract.’’ The proposal

conforms the current definition of

‘‘subcontract’’ to the proposed

definition of ‘‘Government contract’’

above; that is, as revised, the proposed

definition references agreements for the

‘‘purchase, sale or use’’ of personal

property or nonpersonal services.

‘‘United States.’’ OFCCP proposes to

revise the current definition of ‘‘United

States’’ by deleting the Panama Canal

Zone (which was ceded back to Panama

under the terms of the Panama Canal

Treaty) and by specifying the

possessions and territories of the United

States as: the Virgin Islands, Guam,

American Samoa, the Commonwealth of

the Northern Mariana Islands, and Wake

Island.

Section 60–1.8 Segregated Facilities

Today’s proposal would revise § 60–

1.8, which currently sets out a general

prohibition regarding the maintenance

of segregated facilities (paragraph (a))

and a certification requirement

regarding compliance with that

obligation (paragraph (b)).

Specifically, under paragraph (a) of

§ 60–1.8, nonexempt contractors and

subcontractors must ensure that

facilities they provide to their

employees are not segregated on the

basis of race, color, religion or national

origin. Further, paragraph (a) states that

this obligation extends to all contracts

containing the equal opportunity clause,

regardless of the amount of the contract.

Paragraph (b) of the regulation

provides that, prior to the award of a

Government contract or federally

assisted construction contract, each

contracting agency or applicant for

Federal financial assistance involving a

construction contract shall require the

prospective prime contractor to submit

a certification that it does not and will

not maintain segregated employee

facilities. Paragraph (b) also requires

prime contractors and subcontractors,

prior to the award of subcontracts, to

obtain such a certification from their

prospective subcontractors.

This proposal would conform § 60–

1.8 with the Executive Order’s general

nondiscrimination requirements, by

adding sex to the list of bases upon

which segregation is prohibited, with

the proviso that separate or single-user

restrooms and necessary dressing or

sleeping areas shall be provided to

assure privacy between the sexes. The

proposal also would make a number of

stylistic changes to existing paragraph

(a).

OFCCP proposes to withdraw the

written certification requirement

(paragraph (b) of the current regulation).

The certification requirement originally

was incorporated into the Executive

Order regulations in 1967 (see 32 FR

7439, May 19, 1967). At that time,

segregation in employee facilities,

especially on the basis of race, was not

uncommon. The certification

requirement was intended in large part

to put contractors on notice that such

segregation was unlawful and would not

be tolerated. In the intervening 28 years,

as a result of civil rights law

enforcement and other factors,

employers have become aware that

segregation in employee facilities is

unlawful. Indeed, such segregation has

been significantly reduced. Because

today’s proposal would retain and

strengthen the basic prohibition

regarding segregated facilities, which

OFCCP will continue to monitor

through compliance investigations, the

proposed withdrawal of the certification

requirement will not reduce protections

afforded to workers.

Withdrawing the certification

requirement will significantly reduce

compliance burdens on contractors. The

Government lets approximately 350,000

prime contracts each year. If it is

assumed that each prime contract

results in an average of four

subcontracts, and that it takes about

one-half hour to prepare and submit the

written certification, eliminating the

certification requirement would reduce

compliance burdens on the contractor

community by roughly 875,000 hours.

This estimate may significantly

understate the savings; many

contractors annually solicit the

certification from all of their prospective

vendors rather than limiting their

request to those firms that actually are

subcontractors on Federal projects.

The 1980 final rule, and the 1981

proposal, would have made similar

revisions to the segregated facilities

regulation.

Section 60–1.12 Record Retention

OFCCP’s primary Executive Order

recordkeeping and record retention

regulations are contained in 41 CFR 60–

1.40 and 60–4.3, and parts 60–2 and 60–

3 (the Uniform Guidelines on Employee

Selection Procedures, hereafter UGESP).

The regulations require certain

contractors to develop, implement and

maintain a written affirmative action

program (AAP) for each of their

establishments; to compile the results of

the program; to update the program

annually; and to provide the program

and supporting documentation to

OFCCP upon request; to maintain data

on applicants, selection and referral

procedures and, as applicable, adverse

impact and evidence of validity; and, if

engaged in Federal or federally assisted

construction, to compile and maintain

data on employees and applicants for

construction jobs. Although retention of

relevant records is implicit in the

requirement to analyze selection

decision data, prepare an annual

update, and provide supporting

documentation, the Executive Order

regulations, with one exception, do not

expressly prescribe a record retention

period. That exception is the

requirement under the UGESP to keep

certain adverse impact data for two

years after the adverse impact has been

eliminated.

Paragraph (a) of the proposal amends

this obligation in several ways: First it
25518 Federal Register / Vol. 61, No. 99 / Tuesday, May 21, 1996 / Proposed Rules

makes the record retention obligation

applicable to any personnel or

employment record made or kept by the

contractor, and sets out a listing of

examples of the types of records that

must be retained. This provision

conforms to the analogous requirement

under Title VII of the Civil Rights Act

of 1964. (Thus, contractors with 15 or

more employees, i.e., those that are

covered by Title VII of the Civil Rights

Act, already are required to comply with

this requirement. The only contractors

that will be newly covered by this

requirement are those that have

Government contracts subject to the

Executive Order’s regulations (e.g.,

those with contracts that exceed

$10,000) and that have fewer than 15

employees. This group of contractors

consists almost entirely of small

construction contractors.)

Second, proposed paragraph (a)

stipulates that the required record

retention period is two years. It is

OFCCP’s practice to review the

contractor’s employment practices

dating back two years prior to the

initiation of a compliance evaluation

and to assess liability for discriminatory

practices dating back two years.

Proposed paragraph (a) requires smaller

contractors (those that have fewer than

150 employees or that do not have a

Government contract of at least

$150,000) to retain records for a

minimum of one year, rather than two

years. Most contractors are covered by

the one year record retention period

imposed by Title VII. OFCCP is

proposing a shorter record retention

period for smaller contractors as a

method of reducing regulatory burden

on such contractors. This proposal is

consistent with a provision included in

OFCCP’s Section 503 final rule.

Third, proposed paragraph (a)

requires that when a contractor has been

notified that a complaint has been filed,

that a compliance evaluation has been

initiated or that an enforcement action

has been commenced, the contractor

shall preserve all relevant personnel

records until the final disposition of the

action. This provision conforms to the

corresponding record retention

requirement under Title VII. The

purpose of this requirement is

obvious—to ensure that OFCCP can

obtain all relevant documents during a

compliance investigation or

enforcement action.

Proposed paragraph (b) provides that

a contractor establishment required to

develop a written affirmative action

program (AAP) shall maintain its

current AAP and its AAP for the

preceding AAP year, along with

documentation of good faith efforts

taken under the AAPs. Such

documentation might reflect, for

example, the contractor’s outreach and

recruitment efforts undertaken to

increase its pool of female or minority

applicants, or training programs

instituted to enhance the skills and

talents of incumbent employees to

increase the pool of those eligible for

promotion. This provision is intended

to ensure that the AAPs are available to

OFCCP during a compliance evaluation.

Proposed paragraph (c) provides that

the failure to preserve the records

required by proposed paragraphs (a) and

(b) constitutes noncompliance with the

Order. Additionally, proposed

paragraph (c), in a provision that is not

paralleled in the current regulations,

states that where a contractor has

destroyed or failed to preserve required

records, there may be a presumption

that such records would have been

unfavorable to the contractor. However,

this presumption will not apply where

a contractor demonstrates that the

destruction or failure to preserve

records resulted from circumstances

beyond the contractor’s control (e.g.,

fires, floods, tornados, or other natural

disasters). This provision is consistent

with EEOC’s practice under Title VII, as

set forth at § 632.3(b)(2)(ii) of EEOC’s

Compliance Manual. The intent of this

provision is to deter contractors from

deliberate attempts to frustrate OFCCP’s

compliance monitoring and

enforcement efforts by destroying or

failing to preserve records. The adverse

inference established by paragraph (c)

would be used by OFCCP in both

investigations of compliance and in

enforcement litigation.

Proposed paragraph (d), which is not

paralleled in the current regulations,

would clarify that the contractor is

obligated to preserve only those records

which are created or kept on or after the

effective date of the regulations.

The proposed regulation has been

carefully drafted to comport with

requirements under Title VII of the Civil

Rights Act of 1964, the Age

Discrimination in Employment Act

(ADEA), the Americans with Disabilities

Act (ADA) and the requirement

included in OFCCP’s final rule

implementing Section 503 of the

Rehabilitation Act of 1973, as amended.

The Title VII, ADEA, and ADA

regulations contain record retention

requirements for similar records that

vary from one to three years. The vast

majority of Federal contractors already

are subject to one or more of these

statutes and thus already are required to

maintain the records described in this

proposed regulation.

Section 60–1.20 Compliance

Evaluations

The proposal would revise paragraphs

(a) and (d) of this section, which

respectively address compliance

reviews in general, and preaward

clearance requirements.

In the current regulations, paragraph

(a) describes the purpose of a

compliance review of a contractor’s

implementation of its

nondiscrimination and affirmative

action obligations, provides that the

review shall consist of a comprehensive

analysis of all relevant practices, and

provides that recommendations for

appropriate sanctions shall be made.

The proposal specifically authorizes

OFCCP’s use of additional methods to

evaluate a contractor’s compliance with

the regulations. The proposal specifies

that the compliance evaluation methods

available to OFCCP, other than the full

compliance review, may include a range

of activities designed to focus, for

example, on the contractor’s written

affirmative action plan; the accuracy of

data submitted for review at desk audit;

or on one component or organizational

unit of the contractor’s workforce. Thus,

the proposal would allow OFCCP to

streamline the review process in many

cases.

The proposal also would revise

paragraph (d), which currently requires

OFCCP to conduct a preaward

compliance review of contractors being

considered for contracts of $1 million or

more. The preaward provision has been

a component of OFCCP’s regulatory

procedures since 1968. The intent of the

preaward clearance provision is to

prevent the award of large dollar

contracts to contractors which are either

in noncompliance or unwilling to

comply with the EEO clause of the

contract.

Specifically, § 60–1.20(d) requires the

awarding agency to obtain clearance

from OFCCP prior to awarding Federal

supply/ service contracts of $1 million

or more. OFCCP must certify that a

Federal contractor/prospective

contractor is in compliance before the

award of a contract.

The concept of preaward compliance

reviews was premised on three

assumptions: (1) Contracts of a sizable

dollar amount tend to generate

expanded hiring, promotion and

upgrading opportunities; (2) the conduct

of a compliance review immediately

prior to the award is the most efficient

way of ensuring that those employment

opportunities be used to address the

consequences of any past job

discrimination; and (3) contractors tend

to be more amenable to achieving
Federal Register / Vol. 61, No. 99 / Tuesday, May 21, 1996 / Proposed Rules 25519

compliance across-the-board when it is

an immediate condition of the contract.

Although these assumptions generally

are still correct, the preaward review

has not been a successful compliance

mechanism for the past 15 years.

OFCCP has been severely hampered

in its efforts to plan and carry out

compliance reviews because of the

regulatory and other requirements

associated with preaward requests.

OFCCP recognized the shortcomings of

the preaward process as early as 1979

and attempted to modify the provision

in the 1980 final rule. The 1981

proposal would have eliminated the

requirements for preaward clearance.

The ineffectiveness of the preaward

provision also was identified and cited

in 1985 and 1988 reports of the

Department of Labor Inspector General.

Several factors contribute to the

difficulties with the preaward process,

including: insufficient staff and budget

to process the large volume of preaward

requests—approximately 27,625

preaward requests were received in FY

’93; the short time available within

which to conduct preaward reviews;

and court rulings that require a hearing

before OFCCP may declare a contractor

ineligible for contracts. See e.g., Illinois

Tool Works v. Marshall, 601 F.2d 943

(7th Cir. 1979).

In addition, some contracting agencies

have expressed concerns about the

traditional preaward process. OFCCP

has held consultations with various

contracting agencies during the past

year and has adopted a number of

administrative reforms as a result. Those

reforms relate to its interactions with

the contracting agencies during the

preaward process, and they were

implemented in order to ensure that the

process is as streamlined as possible.

Those consultations are ongoing and

OFCCP will continue to work with the

contracting agencies to improve the

process.

Based on the foregoing concerns with

the current preaward provision, OFCCP

considered a number of options

including the complete elimination of

the preaward provision, an increase in

the dollar amount of the preaward

contract threshold, and the replacement

of the preaward review with a

postaward review. OFCCP decided to

promulgate this proposal which

modifies the provision by making the

preaward compliance review optional.

Thus, preaward reviews will be

conducted if OFCCP determines that a

review would constitute the best use of

its limited resources. OFCCP may

consider factors such as whether the

contract is likely to generate significant

employment opportunities, whether the

contractor has held a covered Federal

contract before, whether the contractor

has been reviewed before and, if so,

whether prior reviews have revealed

noncompliance at the same or other

establishments, the length of time that

has passed since a prior review, and the

EEO–1 profile of the contractor. It is

difficult to describe more precisely the

factors OFCCP will use, because they

may change over time as economic

conditions change. For example, in

recent years the most growth in

employment opportunities has occurred

in small businesses and that growth has

occurred in the service sector of the

economy. Because these facts may

change in future years, they are not

specified as factors OFCCP will consider

when deciding whether to conduct a

preaward review. By making the

preaward review optional, the proposal

allows OFCCP the necessary flexibility

and latitude in establishing the agency’s

enforcement priorities, rather than

continuing to allow those priorities to

be dictated by the incoming preaward

requests. OFCCP invites commenters to

address whether it should make

preaward reviews optional, or should

retain such reviews as mandatory.

This proposal provides, as does the

current regulation, that OFCCP will

provide an awarding agency with its

conclusions regarding clearance for an

award. However, the proposal requires

that OFCCP inform an awarding agency

within 15 days of its intention to

conduct a preaward review. If OFCCP

does not inform an awarding agency

within that period of its intention to

conduct a preaward review, clearance

shall be presumed and the agency is

authorized to proceed with the award. If

OFCCP informs an awarding agency of

its intention to conduct a preaward

review, OFCCP shall be allowed an

additional 20 days after the date that it

so informs the agency to provide its

conclusions. If OFCCP does not provide

an awarding agency with its conclusions

within that period, clearance shall be

presumed and the agency is authorized

to proceed with the award. This

proposal ensures that the preaward

review process will not contribute to

any unnecessary delay in the

procurement process.

This proposal continues the threshold

for preaward notification at $1 million.

However, OFCCP invites commenters to

address whether the existing threshold

should be changed or retained, in light

of the dual goals of streamlining the

procurement process and ensuring that

OFCCP has the information necessary to

allow it to evaluate the compliance

status of companies that may be

awarded new Government contracts. In

addition, OFCCP invites commenters to

address the option of moving from

preaward reviews to a system under

which OFCCP reviews would be

performed concurrent with the

awarding of a Federal contract.

Finally, as discussed under the

heading of part 60–60 below, the

proposal moves provisions now

contained in part 60–60 that relate to

confidentiality of data, timely

submission of documents to OFCCP,

and nationwide AAP formats to this

section.

Section 60–1.26 Enforcement

Proceedings

The proposal revises and restructures

for clarity § 60–1.26, which details

Executive Order enforcement

procedures. With the exception of the

provision relating to calculating interest,

this proposal is not intended to make

substantive changes to this section.

Proposed subsection (a) contains general

provisions applicable to both

administrative and judicial

enforcement. Proposed subsection (b)

addresses administrative enforcement

procedures, and proposed subsections

(c) and (d) cover judicial enforcement

proceedings, which are handled by the

Department of Justice.

The proposal also makes several

specific changes to this section that are

consistent with provisions included in

OFCCP’s Section 503 final rule at 41

CFR 60–741.65(a)(1). First, it clarifies in

subsection (a)(2) that OFCCP may seek

relief for victims of discrimination

identified either during a compliance

evaluation or a complaint investigation

whether or not such individuals have

filed a complaint with OFCCP. OFCCP

has long maintained that such a

limitation on available relief clearly is

inconsistent with the Order. OFCCP’s

position recently was upheld in a case

under Section 503, OFCCP v.

Commonwealth Aluminum, 82–OFC–6

(Assistant Secretary for Employment

Standards, February 10, 1994), Federal

court review pending sub nom.

Commonwealth Aluminum Corporation

v. United States (WD Ky., No. 94–0071–

O(C)).

Second, the proposal states, also in

subsection (a)(2), that interest on back

pay shall be compounded quarterly at

the percentage rate established by the

Internal Revenue Service for the

underpayment of taxes. This provision

would reverse the ruling of the

Department of Labor’s Assistant

Secretary for Employment Standards in

OFCCP v. Washington Metropolitan

Area Transit Authority, 84–OFC–8

(orders dated August 23 and November

17, 1989), that simple interest, rather
25520 Federal Register / Vol. 61, No. 99 / Tuesday, May 21, 1996 / Proposed Rules

than compounded interest, should be

used in the calculation of back pay

awards under Section 503. That Section

503 ruling, which relied upon the

Department’s regulations (at 29 CFR part

20) implementing Section 11 of the Debt

Collection Act of 1982 (31 U.S.C. 3717),

could be construed as applicable also to

relief under the Executive Order.

OFCCP had a longstanding policy of

requiring that interest on back pay

awards under the Executive Order be

compounded; such policy is consistent

with the case law under Title VII of the

Civil Rights Act of 1964. OFCCP

believes that it must reinstate this policy

to ensure that victims of discrimination

obtain complete ‘‘make whole’’ relief.

Third, the proposal provides in

subsection (b)(1) that administrative

enforcement proceedings also may be

instituted where OFCCP determines that

referral for formal enforcement (rather

than settlement) is appropriate. Fourth,

the proposal specifies in subsection

(b)(1) that the administrative

enforcement referral will be made to the

Solicitor of Labor.

The proposal states that the rules of

evidence set out in the hearing rules

applicable to the Department’s

Administrative Law Judges shall also

apply to hearings conducted under 41

CFR part 60–30. These rules, which

were issued in 1990, are generally

applicable to the Department’s formal

adversarial adjudications. Consistent

with a requirement included in

OFCCP’s Section 503 final rule, the

proposal also requires that the

Department’s Final Administrative

Order in an Executive Order case be

issued within one year from the date of

the Administrative Law Judge’s

recommended decision, or the

submission of the parties’ exceptions

and responses to exceptions to such

decision (if any), whichever is later.

OFCCP believes that this time limit is

needed to ensure that aggrieved

individuals obtain expeditious relief

and that contractors are assured of

closure of the administrative

proceedings.

Section 60–1.27 Sanctions

The current sanction regulation

provides only that the sanctions

authorized by section 209 of the

Executive Order may be exercised by or

with the approval of the Director of

OFCCP. The 1980 final rule and the

1981 proposal deleted the current

sanction regulation as a separate

provision, and they both generally

merged the sanction regulation with the

regulation pertaining to enforcement

proceedings. The regulation pertaining

to enforcement proceedings currently is

set forth at § 60–1.26. In the 1980 final

rule the combined sanctions and

enforcement proceedings regulation

appeared at § 60–1.29, and in the 1981

proposal the combined regulation

appeared at § 60–1.68.

The proposal adds a new paragraph

specifically addressing the sanction of

debarment. Paragraph (b) of the

proposal provides for a fixed term

debarment for a period of six months or

more, as well as indefinite term

debarment. The Secretary already has

ordered the imposition of a fixed term

debarment in OFCCP v. Disposable

Safety Wear, 92–OFC–11 (Decision and

Final Administrative Order of the

Secretary of Labor, September 29, 1992).

See also OFCCP v. Blaine Construction

Co., 94–OFC–4 (Decision and Final

Administrative Order of the ALJ, March

9, 1994); OFCCP v. KRT Drywall/

Acoustical, 94–OFC–14 (Order of the

ALJ, August 18, 1994); OFCCP v. State

Construction of Southeast Wisconsin,

94–0FC–18 (Orders of the ALJ, August

31 and September 8, 1994). The

proposal simply provides contractors

with greater notice that a fixed term

debarment of six months or more may

be imposed in some cases instead of an

indefinite term debarment. OFCCP

believes that the use of fixed period

debarments will serve as a more

effective deterrent and encourage

compliance among the recalcitrant

contractors who repeatedly break their

promises of future compliance with

respect to affirmative action and

recordkeeping and retention

requirements. OFCCP has found that the

current practice of reinstating the

contractor upon its simple

demonstration of compliance is

insufficient to ensure voluntary

compliance. Under the current

procedure the contractor may be

reinstated immediately without

incurring any economic loss for a

violation of an affirmative action

requirement (e.g., a contractor which

has failed to develop an AAP can

simply do so to be eligible for

reinstatement). A fixed term debarment

establishes a trial period during which

a contractor can demonstrate its

commitment and ability to establish

personnel practices that will ensure

continued compliance with the

requirements of the Executive Order.

Thus, in a Final Administrative Order,

the Adminstrative Review Board could

order a company to take specific action

to come into compliance and to submit

periodic reports to OFCCP regarding its

compliance status during the fixed term

debarment period. A fixed term

debarment scheme will strengthen the

Executive Order program by deterring

contractors from engaging in violations

based upon ‘‘a cold weighing of the

costs and benefits of noncompliance.’’

Janik Paving & Construction v. Brock,

828 F.2d 84 (2d Cir. 1987). Where fixed

term debarment is ordered, in lieu of an

indefinite term debarment, the length of

the debarment period will be

determined on a case-by-case basis,

depending upon factors such as the

nature and severity of the violations. A

contractor debarred for a fixed term will

not be automatically reinstated upon the

conclusion of the fixed term debarment

period. In making his or her

determination as to whether

reinstatement of such a contractor is

appropriate, the Deputy Assistant

Secretary shall consider whether the

contractor has demonstrated that it has

established and will carry out

employment policies and practices in

compliance with the Executive Order. If

the contractor failed to comply with the

Department’s Final Administrative

Order, it would not be eligible for

reinstatement at the conclusion of the

fixed term debarment period.

Section 60–1.30 Notification of

Agencies

Consistent with a regulation in

OFCCP’s Section 503 final rule, the

proposal would delete the requirement

that OFCCP distribute a list of debarred

contractors to all executive departments

and agencies, and substitute a

requirement that the Deputy Assistant

Secretary ensure that the heads of

agencies are notified of debarments.

Accordingly, the section would be

renamed ‘‘Notification of agencies’’

instead of ‘‘Contract ineligibility list.’’

The General Services Administration

now publishes a listing of debarred

contractors, and it would be redundant

for OFCCP to issue a separate list.

The 1980 final rule would have

required that OFCCP promptly notify

the Comptroller General of the United

States regarding contract cancellations

and debarments. Further, that section of

the final rule would have required that

OFCCP take appropriate steps to notify

prime contractors of the debarred

contractor’s ineligibility for

subcontracts. Notice now is provided

adequately by the General Services

Administration’s list of debarred

contractors.

Section 60–1.31 Reinstatement of

Ineligible Prime Contractors and

Subcontractors

The proposal would revise this

section to make it consistent with

proposed § 60–1.27(b), which authorizes

debarment either for an indefinite
Federal Register / Vol. 61, No. 99 / Tuesday, May 21, 1996 / Proposed Rules 25521

period or for a fixed period of not less

than six months. Accordingly, the

proposal provides that a contractor

debarred for an indefinite period may

request reinstatement at any time, and

that a contractor debarred for a fixed

period may request reinstatement after

the expiration of the fixed period. In

either type of debarment, the contractor,

as under the current regulations, would

be required to show that it has

established and will carry out

employment practices in compliance

with the Executive Order.

Further, the proposal would adopt

some of the 1980 final rule’s

reinstatement procedures. For instance,

similar to the 1980 final rule, the

proposal specifies that the contractor

may be subject to a compliance

evaluation before a final determination

is made on the reinstatement request.

The 1980 final rule would have

established some additional detailed

procedures that OFCCP, upon

reconsideration, does not believe need

to be incorporated into the regulations.

Section 60–1.32 Intimidation and

Interference

Currently, the regulations provide that

the sanctions and penalties contained

therein may be exercised against any

contractor which fails to ensure that no

person intimidates, threatens, coerces or

discriminates against any individual

because he or she files a complaint or

otherwise participates in compliance

activity under the Executive Order or a

similar Federal, state or local law. The

proposal contains a similar prohibition

but specifies that the contractor itself

shall not engage in such activities and

shall ensure that all persons under its

control do not do so, and adds that the

prohibition applies to harassment.

Further, the proposal states that the

prohibition applies to an individual’s

opposition to any practice that is

unlawful under the Order or similar

Federal, state or local laws, and to the

exercise of any other right protected by

the Order. The proposal is consistent

with a provision included in OFCCP’s

Section 503 final rule, and it is

substantially similar to the counterpart

provision in the 1980 final rule (§ 60–

1.28). The intent of the proposal is to

incorporate strengthened provisions that

ensure that individuals fully enjoy all

rights protected under the Order, the

regulations and comparable Federal,

state and local laws without the threat

of harassment or intimidation.

Section 60–1.34 Violation of a

Conciliation Agreement or Letter of

Commitment

The proposal contains a clarification

that in enforcement proceedings related

to violation of a conciliation agreement,

OFCCP is not required to present proof

of the underlying violations resolved by

the agreement. This provision, which

reflects OFCCP’s current practice and

which is consistent with OFCCP’s

Section 503 final rule, is to remove any

doubt that OFCCP need not litigate

claims that have already been resolved

through the agreement.

Section 60–1.42 Notices to be Posted

Technical corrections are made to the

wording of the poster regarding the

jurisdictional coverage of Title VII and

the address of EEOC.

Section 60–1.43 Access to Records and

Site of Employment

Consistent with a provision included

in OFCCP’s Section 503 final rule, the

proposal specifies that computerized

records are among the records to which

the contractor shall permit OFCCP

access for inspection and copying. In

addition, the proposal specifies that

contractors must permit OFCCP access

to their premises for the purpose of

conducting compliance evaluations and

complaint investigations (the current

regulation mentions only compliance

reviews). Further, the proposal revises

the list of uses which can be made of

information OFCCP obtains from a

contractor, to include the administration

of other laws that are enforced, in whole

or in part, by OFCCP.

Part 60–60—Contractor Evaluation

Procedures for Contractors for Supplies

and Services

Part 60–60 is to be deleted. Most of

part 60–60 is properly characterized as

internal operating procedures. A

number of the procedures have been

incorporated into OFCCP’s Federal

Contract Compliance Manual, and the

provisions regarding confidentiality of

data furnished to OFCCP by contractors

are proposed to be incorporated into

part 60–1. Specifically, provisions

currently found at §§ 60–60.2(a), 60–

60.3(a)(3), 60–60.3(d) and 60–60.4(a–d)

will be incorporated into § 60–1.20 with

minor changes. The 1980 final rule, and

the 1981 proposal, would have made

similar revisions to part 60–60.

Regulatory Procedures

Executive Order 12866

The Department is issuing this

proposed rule in conformance with

Executive Order 12866. This proposal

has been determined to be significant

for purposes of Executive Order 12866

and therefore has been reviewed by

OMB. This proposal does not meet the

criteria of Section 3(f)(1) of Executive

Order 12866 and therefore the

information enumerated in Section

6(a)(3)(C) of that Order is not required.

In accordance with section 6 of

Executive Order 12866, an assessment

of the potential costs and benefits of the

proposal has been made. Potential costs

and benefits of record retention and

certification proposals are discussed

below in the sections on the Regulatory

Flexibility Act and the Paperwork

Reduction Act. As noted therein, this

proposal would significantly reduce the

compliance burden on the contractor

community by eliminating the

segregated facilities certification

requirement. OFCCP anticipates

publishing an additional proposal

relating to 41 CFR part 60–2 and the

requirements of written affirmative

action programs that would, if adopted,

further reduce the burdens on

contractors. OFCCP’s goal in proposing

regulatory changes is to streamline its

existing regulations and to reinvent its

current processes in order make both

contractor compliance and agency

enforcement more efficient and cost

effective. Therefore, OFCCP invites

comments on additional ways to reduce

compliance burdens such as simplified

compliance procedures for small

contractors.

Regulatory Flexibility Act

The proposed rule, if promulgated,

will not have a significant economic

impact on a substantial number of small

business entities. A requirement that

records be maintained for one to two

years (depending upon contractor size)

might result in a slight additional

storage burden for some small entities;

conversely, small entities and other

contractors would benefit from the

elimination of the segregated facilities

certification. Therefore, a regulatory

flexibility analysis under the Regulatory

Flexibility Act is not required.

Paperwork Reduction Act

The proposed rule would slightly

revise information collection

requirements currently approved by

OMB under the Paperwork Reduction

Act (44 U.S.C. 3501, et seq.).

As previously stated, withdrawing the

certification requirement will

significantly reduce compliance

burdens on contractors. The

Government lets approximately 350,000

prime contracts each year. If it is

assumed that each prime contract

results in an average of four
25522 Federal Register / Vol. 61, No. 99 / Tuesday, May 21, 1996 / Proposed Rules

subcontracts, and that it takes about

one-half hour to prepare and submit the

written certification, eliminating the

certification requirement would reduce

compliance burdens on the contractor

community by roughly 875,000 hours.

This estimate may significantly

understate the savings; many

contractors annually solicit the

certification from all of their prospective

vendors rather than limiting their

request to those firms that actually are

subcontractors on Federal projects.

Although for contractors with 150 or

more employees and a contract of

$150,000 or more this proposal extends

to two years the current obligations such

contractors already have under Title VII

and the ADA to retain records for one

year, there will be only a minimal

increase in burden imposed on

contractors as a result of this change. A

similar conclusion was reached by

EEOC in 1991 when it doubled its

existing six-month retention period

under Title VII to one year—an

obligation that applies to a significantly

larger universe of employers than does

the obligation under the Executive

Order. See 56 FR 35753 (July 26, 1991).

Employers, especially larger ones, are

increasingly maintaining electronic

records. Where this is the case,

compliance with the requirement will

impose little or no additional burden. In

many cases, additional storage space

would be needed only for applications

of persons not hired (which generally

are not cost effective to record and store

electronically).

In addition, the proposal makes this

retention obligation applicable to a

broader range of records than was

previously required by the Executive

Order regulations. However, this

proposal would conform the obligation

to the analogous requirement under

EEOC’s regulations (29 CFR 1602.14)

issued pursuant to Title VII and the

ADA.

OFCCP solicits comments concerning

the proposed revisions to the collections

of information contained in this

proposed rule. OFCCP solicits

comments to: (i) Evaluate whether the

proposed collection of information is

necessary for the proper performance of

the functions of the agency, including

whether the information will have

practical utility; (ii) evaluate the

accuracy of the agency’s estimate of the

burden of the proposed collection of

information, including the validity of

the methodology and assumptions used;

(iii) enhance the quality, utility, and

clarity of the information to be

collected; and (iv) minimize 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.

The revised collections of information

contained in this proposed rule have

been submitted to OMB for review

under section 3507(d) of the Paperwork

Reduction Act of 1995. Written

comments on these proposed

information collection revisions may

also be sent to the Office of Information

and Regulatory Affairs, Office of

Management and Budget, Attention:

Desk Officer for Employment Standards,

Washington, D.C. 20503.

Unfunded Mandates Reform Act

The proposed rule, if promulgated,

will not include any Federal mandate

that may result in the expenditure by

state, local and tribal governments in

the aggregate, or by the private sector, of

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

List of Subjects

41 CFR Part 60–1

Administrative practice and

procedure, Civil rights, Employment,

Equal employment opportunity,

Government contracts, Government

procurement, Investigations, Reporting

and recordkeeping requirements.

41 CFR Part 60–60

Equal employment opportunity,

Government procurement, Reporting

and recordkeeping requirements.

Signed at Washington, D.C., this 10th day

of May, 1996.

Robert B. Reich,

Secretary of Labor.

Bernard E. Anderson,

Assistant Secretary for Employment

Standards.

Shirley J. Wilcher,

Deputy Assistant Secretary for Federal

Contract Compliance.

Accordingly, part 60–1 of the rule

amending 41 CFR chapter 60 published

on December 30, 1980 (45 FR 86216),

which was delayed indefinitely at 46 FR

42865, is proposed to be withdrawn; the

proposed rule published on August 25,

1981 (46 FR 42968; supplemented at 47

FR 17770, April 23, 1982) is hereby

withdrawn in its entirety; and under the

authority of Executive Order 11246, as

amended, Title 41 of the Code of

Federal Regulations, chapter 60, is

proposed to be amended as follows:

60–1—[AMENDED]

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. 12086.

2. Section 60–1.3 is amended by

removing the definitions of Director and

Rules, regulations, and relevant orders

of the Secretary of Labor, by revising the

definitions of Contract, Government

contract, Subcontract and United States,

and by adding, in alphabetical order, the

definitions of Compliance evaluation

and Deputy Assistant Secretary to read

as follows:

§ 60–1.3 Definitions.

* * * * *

Compliance evaluation means any

one or combination of actions OFCCP

may take to examine a Federal

contractor or subcontractor’s

compliance with one or more of the

Executive Order 11246 requirements.

* * * * *

Contract means any Government

contract or subcontract or any federally

assisted construction contract or

subcontract.

* * * * *

Deputy Assistant Secretary means the

Deputy Assistant Secretary for Federal

Contract Compliance Programs, United

States Department of Labor, or his or her

designee.

* * * * *

Government contract means any

agreement or modification thereof

between any contracting agency and any

person for the purchase, sale or use of

personal property or nonpersonal

services. The term ‘‘personal property,’’

as used in this section, includes

supplies, and contracts for the use of

real property (such as lease

arrangements), unless the contract for

the use of real property itself constitutes

real property (such as easements). The

term ‘‘nonpersonal services’’ as used in

this section includes, but is not limited

to, the following services: Utilities,

construction, transportation, research,

insurance, and fund depository. The

term Government contract does not

include:

(1) Agreements in which the parties

stand in the relationship of employer

and employee; and

(2) Federally assisted construction

contracts.

* * * * *

Subcontract means any agreement or

arrangement between a contractor and

any person (in which the parties do not

stand in the relationship of an employer

and an employee):

(1) For the purchase, sale or use of

personal property or nonpersonal

services which, in whole or in part, is

necessary to the performance of any one

or more contracts; or
Federal Register / Vol. 61, No. 99 / Tuesday, May 21, 1996 / Proposed Rules 25523

(2) Under which any portion of the

contractor’s obligation under any one of

more contracts is performed, undertaken

or assumed.

* * * * *

United States, as used herein, shall

include the several States, the District of

Columbia, the Virgin Islands, the

Commonwealth of Puerto Rico, Guam,

American Samoa, the Commonwealth of

the Northern Mariana Islands, and Wake

Island.

3. Section 60–1.8 is revised to read as

follows:

§ 60–1.8 Segregated facilities.

To comply with its obligations under

the Order, a contractor must ensure that

facilities provided for employees are

provided in such a manner that

segregation on the basis of race, color,

religion, sex or national origin cannot

result. The contractor may neither

require such segregated use by written

or oral policies nor tolerate such use by

employee custom. The contractor’s

obligation extends further to ensuring

that its employees are not assigned to

perform their services at any location,

under the contractor’s control, where

the facilities are segregated. This

obligation extends to all contracts

containing the equal opportunity clause

regardless of the amount of the contract.

The term ‘‘facilities,’’ as used in this

section, means waiting rooms, work

areas, restaurants and other eating areas,

time clocks, restrooms, wash rooms,

locker rooms, and other storage or

dressing areas, parking lots, drinking

fountains, recreation or entertainment

areas, transportation, and housing

provided for employees: Provided, That

separate or single-user restrooms and

necessary dressing or sleeping areas

shall be provided to assure privacy

between the sexes.

4. A new § 60–1.12 is added to

subpart A 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

applicant 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 a written

affirmative action program (AAP) shall

maintain its current AAP and

documentation of good faith effort, and

shall preserve its AAP and

documentation of good faith effort for

the immediately preceding AAP year,

unless it was not then covered by the

written AAP requirement.

(c) Failure to preserve records. Failure

to preserve complete and accurate

records as required by paragraphs (a)

and (b) 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

circumstances that are outside of the

contractor’s control.

(d) The requirements of this section

shall apply only to records made or kept

on or after [30 days after date of

publication of final rule].

5. In § 60–1.20, the section heading

and paragraphs (a) and (d) are revised

and paragraphs (e), (f) and (g) are added

to read as follows:

§ 60–1.20 Compliance evaluations.

(a) OFCCP may conduct compliance

evaluations to determine if the prime

contractor or subcontractor maintains

nondiscriminatory hiring and

employment practices and is taking

affirmative action to ensure that

applicants are employed and that

employees are placed, trained,

upgraded, promoted, and otherwise

treated during employment without

regard to race, color, religion, sex, or

national origin. A compliance

evaluation may consist of any one of the

following or any combination thereof:

(1) A compliance review, which

consists of comprehensive analysis and

evaluation of each aspect of the

aforementioned practices, policies, and

conditions resulting therefrom;

(2) An off-site review of records,

which could consist of a full desk audit,

a review of the contractor’s affirmative

action plan or parts thereof, or a review

of particular records such as personnel

activity data;

(3) A compliance check, where

OFCCP ascertains whether or not the

contractor has maintained records

consistent with § 60–1.12 and/or has

developed an AAP consistent with § 60–

1.40; or

(4) A focused review, where OFCCP

restricts its on-site review to one or

more components of the contractor’s

organization or one or more aspects of

the contractor’s employment practices.

* * * * *

(d) Preaward compliance evaluations.

Each agency shall include in the

invitation for bids for each formally

advertised nonconstruction contract or

state at the outset of negotiations for

each negotiated contract, that if the

award, when let, should exceed the

amount of $1 million or more, the

prospective contractor and its known

first-tier subcontractors with

subcontracts of $1 million or more may

be subject to a compliance evaluation

before the award of the contract. The

awarding agency will notify OFCCP and

request appropriate action and findings
25524 Federal Register / Vol. 61, No. 99 / Tuesday, May 21, 1996 / Proposed Rules

in accordance with this subsection.

Within 15 days of the notice OFCCP

will inform the awarding agency of its

intention to conduct a preaward review.

If OFCCP does not inform the awarding

agency within that period of its

intention to conduct a preaward review,

clearance shall be presumed and the

awarding agency is authorized to

proceed with the award. If OFCCP

informs the awarding agency of its

intention to conduct a preaward review,

OFCCP shall be allowed an additional

20 days after the date that it so informs

the awarding agency to provide its

conclusions. If OFCCP does not provide

the awarding agency with its

conclusions within that period,

clearance shall be presumed and the

awarding agency is authorized to

proceed with the award.

(e) Each prime contractor or

subcontractor with 50 or more

employees and a contract of $50,000 or

more is required to develop a written

affirmative action program for each of

its establishments (§ 60–1.40). If a

contractor fails to submit an affirmative

action program and supporting

documents, including the workforce

analysis, within 15 days of a request, the

enforcement procedures specified in

§ 60–1.26(b) shall be applicable.

Contractors may reach agreement with

OFCCP on nationwide AAP formats or

on frequency of updating statistics.

(f) Confidentiality and relevancy of

information. If the contractor is

concerned with the confidentiality of

such information as lists of employee

names, reasons for termination, or pay

data, then alphabetic or numeric coding

or the use of an index of pay and pay

ranges, consistent with the ranges

assigned to each job group, are

acceptable for desk audit purposes. The

contractor must provide full access to

all relevant data on-site as required by

§ 60–1.43. Where necessary, the

compliance officer may take information

made available during the on-site

evaluation off-site for further analysis.

An off-site analysis should be

conducted where issues have arisen

concerning deficiencies or an apparent

violation which, in the judgment of the

compliance officer, should be more

thoroughly analyzed off-site before a

determination of compliance is made.

The contractor must provide all data

determined by the compliance officer to

be necessary for off-site analysis. Such

data may only be coded if the contractor

makes the code available to the

compliance officer. If the contractor

believes that particular information

which is to be taken off-site is not

relevant to compliance with the

Executive Order, the contractor may

request a ruling by the OFCCP District/

Area Director. The OFCCP District/Area

Director shall issue a ruling promptly.

The contractor may appeal that ruling to

the OFCCP Regional Director within 10

days of receipt. The Regional Director

shall issue a final ruling promptly.

Pending a final ruling, such information

may not be copied by OFCCP and access

to the information shall be limited to the

compliance officer and personnel

involved in the determination of

relevancy. Data determined to be not

relevant to the investigation will be

returned to the contractor immediately.

(g) Public access to information. The

disclosure of information obtained from

a contractor will be evaluated pursuant

to the public inspection and copying

provisions of the Freedom of

Information Act, 5 U.S.C. 552, and the

Department of Labor’s implementing

regulations at 29 CFR part 70.

6. Section 60–1.26 is revised to read

as follows:

§ 60–1.26 Enforcement proceedings.

(a) General. (1) Violations of the

Order, the equal opportunity clause, the

regulations in this chapter, or applicable

construction industry equal

employment opportunity requirements,

may result in the institution of

administrative or judicial enforcement

proceedings. Violations may be found

based upon, inter alia, any of the

following:

(i) The results of a complaint

investigation;

(ii) The results of a compliance

review;

(iii) The results of a compliance

evaluation;

(iv) Analysis of an affirmative action

program;

(v) The results of an on-site review of

the contractor’s compliance with the

Order and its implementing regulations;

(vi) A contractor’s refusal to submit an

affirmative action program;

(vii) A contractor’s refusal to allow an

on-site compliance evaluation to be

conducted;

(viii) A contractor’s refusal to

establish, maintain and supply records

or other information as required by the

regulations in this chapter or applicable

construction industry requirements;

(ix) A contractor’s alteration or

falsification of records and information

required to be maintained by the

regulations in this chapter; or

(x) Any substantial or material

violation or the threat of a substantial or

material violation of the contractual

provisions of the Order, or of the rules

or regulations in this chapter.

(2) OFCCP may seek back pay and

other make whole relief for victims of

discrimination identified during a

complaint investigation or compliance

evaluation. Such individuals need not

have filed a complaint as a prerequisite

to OFCCP seeking such relief on their

behalf. Interest on back pay shall be

calculated from the date of the loss and

compounded quarterly at the percentage

rate established by the Internal Revenue

Service for the underpayment of taxes.

(b) Administrative enforcement. (1)

OFCCP may refer matters to the

Solicitor of Labor with a

recommendation for the institution of

administrative enforcement

proceedings, which may be brought to

enjoin violations, to seek appropriate

relief, and to impose appropriate

sanctions. The referral may be made

when violations have not been corrected

in accordance with the conciliation

procedures in this chapter, or when

OFCCP determines that referral for

consideration of formal enforcement

(rather than settlement) is appropriate.

However, 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.

(2) Administrative enforcement

proceedings shall be conducted under

the control and supervision of the

Solicitor of Labor and under the Rules

of Practice for Administrative

Proceedings to Enforce Equal

Opportunity under Executive Order

11246 contained in part 60–30 of this

chapter and the Rules of Evidence set

out in the Rules of Practice and

Procedure for Administrative Hearings

Before the Office of Administrative Law

Judges contained in 29 CFR part 18,

subpart B: Provided, That a Final

Administrative Order shall be issued

within one year from the date of the

issuance of the recommended findings,

conclusions and decision of the

Administrative Law Judge, or the

submission of any exceptions and

responses to exceptions to such decision

(if any), whichever is later.

(c) Referrals to the Department of

Justice. (1) The Deputy Assistant

Secretary may refer matters to the

Department of Justice with a

recommendation for the institution of

judicial enforcement proceedings. There

are no procedural prerequisites to a

referral to the Department of Justice.

Such referrals may be accomplished

without proceeding through the

conciliation procedures in this chapter,
Federal Register / Vol. 61, No. 99 / Tuesday, May 21, 1996 / Proposed Rules 25525

and a referral may be made at any stage

in the procedures under this chapter.

(2) Whenever a matter has been

referred to the Department of Justice for

consideration of judicial enforcement,

the Attorney General may bring a civil

action in the appropriate district court

of the United States requesting a

temporary restraining order, preliminary

or permanent injunction (including

relief against noncontractors, including

labor unions, who seek to thwart the

implementation of the Order and

regulations), and an order for such

additional sanctions or relief, including

back pay, deemed necessary or

appropriate to ensure the full enjoyment

of the rights secured by the Order, or

any of the above in this paragraph (c)(2).

(3) The Attorney General is

authorized to conduct such

investigation of the facts as he/she may

deem necessary or appropriate to carry

out his/her responsibilities under the

regulations in this chapter.

(4) Prior to the institution of any

judicial proceedings, the Attorney

General, on behalf of the Deputy

Assistant Secretary, is authorized to

make reasonable efforts to secure

compliance with the contract provisions

of the Order. The Attorney General may

do so by providing the contractor and

any other respondent with reasonable

notice of his/her findings, his/her intent

to file suit, and the actions he/she

believes necessary to obtain compliance

with the contract provisions of the

Order without contested litigation, and

by offering the contractor and any other

respondent a reasonable opportunity for

conference and conciliation, in an effort

to obtain such compliance without

contested litigation.

(5) As used in the regulations in this

part, the Attorney General shall mean

the Attorney General, the Assistant

Attorney General for Civil Rights, or any

other person authorized by regulations

or practice to act for the Attorney

General with respect to the enforcement

of equal employment opportunity laws,

orders and regulations generally, or in a

particular matter or case.

(6) The Deputy Assistant Secretary or

his/her designee, and representatives of

the Attorney General may consult from

time to time to determine what

investigations should be conducted to

determine whether contractors or

groups of contractors or other persons

may be engaged in patterns or practices

in violation of the Executive Order or

these regulations, or of resistance to or

interference with the full enjoyment of

any of the rights secured by them,

warranting judicial proceedings.

(d) Initiation of lawsuits by the

Attorney General without referral from

the Deputy Assistant Secretary. In

addition to initiating lawsuits upon

referral under this section, the Attorney

General may, subject to approval by the

Deputy Assistant Secretary, initiate

independent investigations of

contractors which he/she has reason to

believe may be in violation of the Order

or the rules and regulations issued

pursuant thereto. If, upon completion of

such an investigation, the Attorney

General determines that the contractor

has in fact violated the Order or the

rules and regulations issued thereunder,

he/she shall make reasonable efforts to

secure compliance with the contract

provisions of the Order. He/she may do

so by providing the contractor and any

other respondent with reasonable notice

of the Department of Justice’s findings,

its intent to file suit, and the actions that

the Attorney General believes are

necessary to obtain compliance with the

contract provisions of the Order without

contested litigation, and by offering the

contractor and any other respondent a

reasonable opportunity for conference

and conciliation in an effort to obtain

such compliance without contested

litigation. If these efforts are

unsuccessful, the Attorney General may,

upon approval by the Deputy Assistant

Secretary, bring a civil action in the

appropriate district court of the United

States requesting a temporary

restraining order, preliminary or

permanent injunction, and an order for

such additional sanctions or equitable

relief, including back pay, deemed

necessary or appropriate to ensure the

full enjoyment of the rights secured by

the Order or any of the above in this

paragraph (d).

(e) To the extent applicable, this

section and part 60–30 of this chapter

shall govern proceedings resulting from

any Deputy Assistant Secretary’s

determinations under § 60–2.2(b) of this

chapter.

7. Section 60–1.27 is revised to read

as follows:

§ 60–1.27 Sanctions.

(a) General. The sanctions described

in subsections (1), (5), and (6) of Section

209(a) of the Order may be exercised

only by or with the approval of the

Deputy Assistant Secretary. Referral of

any matter arising under the Order to

the Department of Justice or to the Equal

Employment Opportunity Commission

shall be made by the Deputy Assistant

Secretary.

(b) Debarment. A contractor may be

debarred from receiving future contracts

or modifications or extensions of

existing contracts, subject to

reinstatement pursuant to § 60–1.31, for

any violation of Executive Order 11246

or the implementing rules, regulations

and orders of the Secretary of Labor.

Debarment may be imposed for an

indefinite term or for a fixed minimum

period of at least six months.

8. Section 60–1.30 is revised to read

as follows:

§ 60–1.30 Notification of agencies.

The Deputy Assistant Secretary shall

ensure that the heads of all agencies are

notified of any debarments taken against

any contractor.

9. Section 60–1.31 is revised to read

as follows:

§ 60–1.31 Reinstatement of ineligible

prime contractors and subcontractors.

A prime contractor or subcontractor

debarred from further contracts for an

indefinite period under the Order may

request reinstatement in a letter filed

with the Deputy Assistant Secretary at

any time after the effective date of the

debarment; a prime contractor or

subcontractor debarred for a fixed

period may make such a request upon

the expiration of the fixed debarment

period. In connection with the

reinstatement proceedings, all debarred

contractors shall be required to show

that they have established and will carry

out employment policies and practices

in compliance with the Order and

implementing regulations. Before

reaching a decision, the Deputy

Assistant Secretary may conduct a

compliance evaluation of the contractor

and may require the contractor to

supply additional information regarding

the request for reinstatement. The

Deputy Assistant Secretary shall issue a

written decision on the request.

10. Section 60–1.32 is revised to read

as follows:

§ 60–1.32 Intimidation and interference.

(a) The contractor, subcontractor or

applicant shall not harass, intimidate,

threaten, coerce, or discriminate against

any individual because the individual

has engaged in or may engage in any of

the following activities:

(1) Filing a complaint;

(2) Assisting or participating in any

manner in an investigation, compliance

evaluation, hearing, or any other activity

related to the administration of the

Order or any other Federal, state or local

law requiring equal opportunity;

(3) Opposing any act or practice made

unlawful by the Order or any other

Federal, state or local law requiring

equal opportunity; or

(4) Exercising any other right

protected by the Order.

(b) The contractor, subcontractor or

applicant shall ensure that all persons

under its control do not engage in such
25526 Federal Register / Vol. 61, No. 99 / Tuesday, May 21, 1996 / Proposed Rules

harassment, intimidation, threats,

coercion or discrimination. The

sanctions and penalties contained in

this part may be exercised by OFCCP

against any contractor, subcontractor or

applicant who violates this obligation.

11. In § 60–1.34, paragraph (a)(4) is

added to read as follows:

§ 60–1.34 Violation of a conciliation

agreement or letter of commitment.

(a) * * *

(4) In any proceeding involving an

alleged violation of a conciliation

agreement OFCCP may seek

enforcement of the agreement itself and

shall not be required to present proof of

the underlying violations resolved by

the agreement.

* * * * *

12. Section 60–1.42 is amended by

revising paragraph (a) to read as follows:

§ 60–1.42 Notices to be posted.

(a) Unless alternative notices are

prescribed by the Deputy Assistant

Secretary, the notices which prime

contractors and subcontractors are

required to post by paragraphs (1) and

(3) of the equal opportunity clause in

§ 60–1.4 will contain the following

language and be provided by the

contracting or administering agencies:

EQUAL EMPLOYMENT OPPORTUNITY IS

THE LAW—DISCRIMINATION IS

PROHIBITED BY THE CIVIL RIGHTS ACT

OF 1964 AND BY EXECUTIVE ORDER No.

11246

Title VII of the Civil Rights Act of 1964–

Administered by:

THE EQUAL EMPLOYMENT

OPPORTUNITY COMMISSION

Prohibits discrimination because of Race,

Color, Religion, Sex, or National Origin by

Employers with 15 or more employees, by

Labor Organizations, by Employment

Agencies, and by Apprenticeship or Training

Programs.

ANY PERSON

Who believes he or she has been

discriminated against

SHOULD CONTACT

THE EQUAL EMPLOYMENT

OPPORTUNITY COMMISSION

1801 L Street N.W., Washington, D.C.

20507

Executive Order No. 11246–Administered

by:

THE OFFICE OF FEDERAL CONTRACT

COMPLIANCE PROGRAMS

Prohibits discrimination because of Race,

Color, Religion, Sex, or National Origin, and

requires affirmative action to ensure equality

of opportunity in all aspects of employment.

By all Federal Government Contractors and

Subcontractors, and by Contractors

Performing Work Under a Federally Assisted

Construction Contract, regardless of the

number of employees in either case.

ANY PERSON

Who believes he or she has been

discriminated against

SHOULD CONTACT

THE OFFICE OF FEDERAL CONTRACT

COMPLIANCE PROGRAMS

U.S. Department of Labor, Washington,

D.C. 20210

* * * * *

13. Section 60–1.43 is revised to read

as follows:

§ 60–1.43 Access to records and site of

employment.

Each prime contractor and

subcontractor shall permit access during

normal business hours to its premises

for the purpose of conducting on-site

compliance evaluations and complaint

investigations. Each contractor shall

permit the inspecting and copying of

such books and accounts and records,

including computerized records, and

other material as may be relevant to the

matter under investigation and pertinent

to compliance with the Order, and the

rules and regulations promulgated

pursuant thereto by the agency, or the

Deputy Assistant Secretary. Information

obtained in this manner shall be used

only in connection with the

administration of the Order, the Civil

Rights Act of 1964 (as amended), and

any other law that is or may be enforced

in whole or in part by OFCCP.

PART 60–60—[REMOVED]

14. Part 60–60 is removed.

[FR Doc. 96–12687 Filed 5–20–96; 8:45 am]

BILLING CODE 4510–27–P