On March 24, two new rules went into effect for federal contractors with affirmative action obligations, including banks with more than 50 employees. One rule deals with hiring veterans; the other, the employment of individuals with disabilities.
Employment Law Compliance has received considerable feedback from our community bank clients, as they struggle to implement these sweeping new regulations. In this blog, I will share their frustrations, as well as the lessons learned from the early months of compliance.
The Office of Federal Contract Compliance Programs must also be receiving plenty of feedback. OFCCP recently issued yet more FAQs to address contractors’ confusion about employee self-identification as a veteran or disabled; the definition of “jobs filled”; hiring benchmarks for veterans; and utilization analysis for the disabled, amongst other topics. You can read the complete FAQs here: FAQ1 FAQ 2
Fears surrounding employee survey
Contractors must conduct a one-time survey of the workforce during the first Affirmative Action Plan Year that begins after March 24, 2014, to give current employees an opportunity to self-identify as an individual with a disability. OFCCP has mandated the form that must be used for this inquiry. You can review the form here.
Some banks have gotten a head start on this task. They report a significant amount of suspicion from workers that the information they provide will somehow be used against them. After all, it’s a “government form,” they reason. In spite of clear language to the contrary, the belief that employee responses will be shared with the government prevails.
Lessons learned: Communication is key!
Banks need to stress that:
• Completing the survey is completely voluntary.
• The purpose of the survey is to support the bank’s Affirmative Action efforts towards individuals with disabilities.
• Responses are used for statistical purposes only and individual responses are not shared with the government or any other outsider.
Before the form goes out, the bank should brief managers thoroughly on how to respond to employees’ concerns.
Ambiguity about definition of “disabled”
For the purposes of the new AAP rule, OFCCP has adopted the definition of “disabled” contained in the Americans With Disabilities Amendments Act of 2009. This is a very broad definition.
Banks sharing their early experiences with the self-identification survey say that employees frequently have questions about whether their particular health condition qualifies as a “disability.” And they are asking their managers for advice.
This is dangerous. Personal health information is confidential. If the employee’s medical condition has no effect on her ability to perform the job, the manager does not need this information. However, once a manager is aware of the information, the bank may risk a disability discrimination claim if subsequent adverse action is taken against the employee.
Get HR involved early! Train managers to refer any inquiries about whether an employee is or is not disabled to the experts in HR.
Early returns show high rate of disability
While by no means a scientific survey, among our clients we find that between 11% and 18% of employees are self-identifying as disabled in the survey. This is good news, as the new regulations establish a nationwide utilization goal of only 7% in each job group. (Banks with fewer than 100 employees have a goal of 7% for the workforce as a whole.)
So it looks like many community banks will be able to meet the utilization goal, and can therefore relax about increasing outreach efforts to recruit individuals with disabilities.
State employment services out of the loop
Switching gears now to look at efforts to comply with the new AAP regulation on hiring veterans…
The rule requires contractors—concurrent with the first job opening that occurs after the effective date of March 24—to notify their local state employment service of their federal contractor status, and request “priority referrals” of protected veterans, as well as to provide other information.
Banks around the country that have complied with this requirement have been met with a blank stare.
Apparently, OFCCP’s education and awareness efforts regarding veteran hiring have not reached the sharp end of state employment service delivery systems.
To the frustration of banks attempting in good faith to meet the 6% veteran hiring benchmark set by OFCCP, some of these state offices have told banks simply not to bother with the notification.
They are not equipped or prepared to make veteran referrals.
Lesson Learned: Investigate other veteran outreach channels now
Because there may be a disconnect between banking job skills and the qualifications of many veterans, the 6% benchmark for hiring might be difficult to reach. Start evaluating possibilities for outreach to veterans immediately, without waiting until you analyze hiring data at the end of the plan year.
Here are some suggestions:
• Department of Veterans Affairs Regional Office
• Veterans’ counselors on college campuses
• Contacts with national veteran groups
• Department of Defense Transition Assistance Program
• Other employer resources in the National Resource Directory
Vendors resist mandatory language in contracts
Another requirement that went into effect on March 24 was the inclusion of mandatory language referring to the bank’s affirmative action obligations towards veterans and individuals with disabilities in all contracts with vendors, suppliers, and service providers above a certain dollar value.
The mandatory clause regarding veterans must be included in contracts worth $100,000 or more; the clause regarding individuals with disabilities, in contracts worth $10,000 or more.
Even suppliers who deal exclusively with the banking industry are having a hard time with this.
Many use standard template contracts or purchase orders which they are reluctant to customize, especially to add language that they fear may expose them to ill-defined additional obligations.
Banks risk losing long-term relationships with contract partners reluctant to accept this burden.
What’s a bank to do?
As long as OFCCP insists that federal insurance makes banks federal contractors, all banks with more than 50 employees must comply with these new obligations.
And be forewarned: Additional Executive Orders aimed at federal contractors are in the pipeline. You’ll see more as the President attempts to lead the charge on minimum wage, sexual orientation discrimination, FLSA exempt/non-exempt classification, and other labor issues.
The federal contractor label may have increasingly serious consequences for banks going forward.