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Big changes coming in affirmative action

Effective March 2014, new rules hit banks with over 50 employees

Latest rules bring the most radical changes to banks’ obligations to create and maintain affirmative action plans since Executive Order 11246 was signed into law in 1965. See the end of this Human Element blog for information about a helpful ABA telephone briefing. Latest rules bring the most radical changes to banks’ obligations to create and maintain affirmative action plans since Executive Order 11246 was signed into law in 1965. See the end of this Human Element blog for information about a helpful ABA telephone briefing.

The Office of Federal Contract Compliance Programs (OFCCP) issued regulations on Aug.  27, 2013, which require federal contractors to establish annual goals and benchmarks for hiring military veterans and individuals with disabilities, much as they currently do for women and minorities. “Contractors” includes FDIC-insured banks with more than 50 employees. 

The new rules greatly increase the outreach and recordkeeping burden for banks with Affirmative Action Programs.

These changes take effect while some are questioning whether banks should even be subject to the Executive Order.

Since 1965, several of the bases for classifying banks as federal contractors (for example, the sale of U.S. savings bonds) have disappeared, leaving only the “contract” with the FDIC. However, the OFCCP is steadfast in its enforcement efforts, so banks are advised to start planning for implementation of both new rules immediately.

Two protected classes share common ground

While the Final Rule for veterans protected under the Vietnam Era Veterans’ Readjustment Assistance Act (VEVRAA) differs slightly from the Final Rule for individuals with disabilities under Section 503 of the Rehabilitation Act, they share many features.

Here are some highlights:

Effective Date: Both rules go into effect March 24, 2014. Subject banks must bring their written plans into compliance by the start of the next Plan Year after the effective date. For example, banks with calendar year AAPs will need to comply by Jan. 1, 2015. However the recordkeeping provisions are immediately effective on March 24, 2014.

Definitions: Veterans covered are those already protected by VEVRAA and all “active duty wartime or campaign badge veterans.” The final rule under Section 503 borrows the expansive definitions of disability, impairment, etc., used in the Americans with Disabilities Amendments Act of 2009 (ADAA).

Self-Identification: Applicants must be invited to self-identify as protected veterans or individuals with disabilities at the pre-offer stage, at the same point that gender and race data are collected. Employers may screen out internet applicants who do not meet basic qualifications for the job before the invitation to self-identify. Post-offer, veterans should be further invited to state which specific category (categories listed in the VETS-100 form) they belong to.

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In addition, current employees must be given the opportunity to self-identify on a regular basis.

Outreach: Banks should document their outreach and recruitment efforts to attract veterans and individuals with disabilities. These records must be kept for three years. In addition, banks must conduct an annual evaluation of the effectiveness of their efforts to increase their veteran hires.

Job listing, solicitations, and advertisements: The veterans’ regulation mandates the listing of all job openings with the state’s employment services delivery system (ESDS). Solicitations and advertisements should contain an updated “EEO/AAP employer” paragraph referring to veterans and individuals with disabilities, and there is now mandated language to be used in contracts and subcontracts citing the EO clause.

Recordkeeping: There is a three-year document retention period

Benchmarks and goals

The most fundamental change in the new rules is the requirement that banks track:

• The number of veteran and disabled applicants

• The total number of applicants

• The number of job openings and jobs filled

• The number of veteran and disabled hires

• The total number of hires

From this and other data, banks will be able to assess whether they have met the benchmark for veteran hires and the goal for individuals with disabilities. The difference between “benchmark” and “goal” is unclear, but OFCCP insists on this terminology.

There are two alternate methods for establishing the benchmark for veteran hires. Banks can either take the percentage of veterans in the national civilian labor force (currently 8%) or they can establish an individual benchmark using five factors. Those five factors include: the percentage of veterans in the state’s labor force; the number of veterans in the state ESDS’ database; application and hiring ratios in the previous Plan Year; the assessment of outreach efforts; and any other special factors (for example, proximity of a military base).

The Section 503 regulation mandates “an aspirational utilization goal” for individuals with disabilities of 7% of the bank’s total workforce.

OFCCP insists that failure to meet the benchmark or the goal will carry no penalty; compliance evaluations will focus on the bank’s good faith efforts to identify and remedy any barriers to equal employment.

Don’t delay

Next March will be here before you know it.

Now is the time to educate managers about these new obligations, and draft the procedures necessary for compliance.

ELC is participating in an ABA Telephone Briefing on Oct. 9 on the new regulations. We’ll go into them in much greater depth than I can here. ABA will offer recordings of the briefing after the live event.

Marian Exall

Marian Exall ( recently retired after a long career as an employment lawyer and HR professional with more than 25 years' experience advising banks and other employers on compliance issues. She was a principal and co-founder of Employment Law Compliance, Inc. which provides HR compliance solutions to banks. For more information on this or other employment compliance topics, please call Employment Law Compliance at 866-801-6302 or go to

Now retired from blogging as well, Marian also writes fiction. Her latest novel is a mystery called A Slippery Slope. For more information and to order, go to

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