OFCCP's FAAP Rule Revision Places More Burdensome Requirements on Contractors

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On July 14, 2011, the Office of Federal Contract Compliance Programs’ (“OFCCP”) proposed rule implementing Executive Order 11246 became final. See 41 C.F.R. 60-2.1(d)(4). The new rule updates the procedures whereby a contractor submits both initial and renewal applications to obtain OFCCP approval for its Functional Affirmative Action Program (“FAAP”). These revisions are the product of a year-long review of the OFCCP approval process. "The FAAP is back and is better than before" claims OFCCP director, Patricia Shiu. Contractors, however, may beg to differ.

Generally, non-construction contractors with more than 50 employees and $50,000 in contracts are required to implement an affirmative action program (“AAP”). The default organizational unit of these programs is based on the physical location where employees are based; however, many contractors, particularly those with multiple establishments, find it more efficient to group their AAPs based on functional or business units. For example, a contractor with an engineering group and a sales group that are each distributed throughout 10 locations nationwide could implement one AAP for the engineers and another for the salesmen, instead of 10 separate programs to provide one for each location. These are referred to as a FAAPs.

In 2002, the OFCCP issued a directive outlining the process whereby a contractor may apply for approval of its FAAP. Directive No. 254, Functional Affirmative Action Program, Mar. 21, 2002. According to OFCCP statistics, 130 FAAP agreements covering more than 1800 functional or business units and approximately 2 million employees were approved under these procedures. In 2010, however, OFCCP suspended all reviews pending revisions to the approval process.

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