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The Applicant Manager Blog

Why Not Having an OFCCP Compliance Solution Could Be Devastating

Posted by Edna Nakamoto on Jul 16, 2019 11:05:00 AM

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The Office of Federal Contract Compliance Programs (OFCCP) is a division of the U.S. Department of Labor. If you have a government contract, you’re likely already familiar with it. Its role is to ensure that employers who work with the government are compliant with laws against discrimination; its purpose is to protect employees, or potential employees, from being excluded from being hired or receiving raises based on things like race, color, religion, gender, and age.

OFCCP Financial Remedies

Though the OFCCP doesn’t impose penalties or fines directly, it can force employers to correct the offense by paying remedies earned from things like wage discrimination or discrimination in hiring. While this may not sound terribly consequential, these remedies can add up significantly, especially since an employer is held accountable per infraction.

Where this can really begin to add up is in the case of entry-level hiring. Oftentimes, higher-level, harder-to-fill positions are given careful attention when it comes to the job posting and interview process, while the roles that are filled regularly are oftentimes handled less carefully, simply because doing so has become routine. Therein lies the problem: Entry-level positions requiring low minimum qualifications are sometimes at risk. It’s important that you have a strict, clear, and written hiring process surrounding each and every position within your organization, along with a job description that clearly outlines expectations and requirements.

If your company is put in the position of having to prove why someone was not hired, or not given a raise, and is unable to produce documentation and clear processes, you could face serious consequences as it relates to paying out financial remedies.

Laws Enforced by the EEOC

Even if you’re not a government contractor, you’re still held accountable by the Equal Employment Opportunity Commission (EEOC). EEOC regulations are similar to those of the OFCCP, which makes it illegal to discriminate against candidates or employees based on:

  • Race 
  • Color
  • Religion
  • Sex (this includes things like gender or gender identity, sexual orientation, pregnancy)
  • National origin
  • Age (40 or older)
  • Disability
  • Genetic disorder

The consequences for discrimination can be financially devasting for an employer. As of 2016, the maximum penalty for violating a posting requirement is $515, more than double its original penalty of $210. This applies to private employers, state and local governments, and educational institutions employing 15 or more individuals, as well as to federal contractors and subcontractors.

EEOC Tagline in Job Postings

Federal contractors are required to include the EEO taglines in all of their job postings. If you are not a federal contractor, it is still good practice to do the same, since this will help establish that your business is an equal-opportunity employer. If you’re unsure of how that should look within your organization, look to your employer branding guidelines to determine verbiage If it is an intentional goal for your organization to be inclusive, consider calling that out in your tagline. Regardless of what you decide, at a minimum, your job postings must include an EEOC tagline that lets applicants know you’re compliant.

OFCCP and Record Keeping

Should you be approached by the OFCCP in response to a potential violation of compliance, it’s important to be as transparent as possible. This means providing access to all of your records, including candidate and interview documentation relevant to the hiring process, as well as any documentation regarding compensation practices, such as how you assess internal equity, determine raises, and give merit-based increases.

Decisions made regarding hiring, promotions, and wage increases should be well documented. Furthermore, each practice regarding these decisions should have well-defined, written guidelines that are consistently adhered to. If you don’t already have these processes well outlined, it’s important to do so as soon as possible. Additionally, it’s important to ensure that each person involved in hiring and wage increases is well trained on these processes, and aware of the severity of non-compliance.

One of the best ways for employers to be transparent about their EEO practices is through EEO reporting. Having an ATS tool that makes it possible to seamlessly and confidentially collect data and run reports leaves little room for error.

Breaches Impact Your Consumer and Employer Brand

It isn’t just direct penalties that are a problem, though. Consider that companies spend a lot of time, effort and money on crafting a consumer brand, and often just as much energy goes in to developing an employer brand, either directly or by default. Some of the ways an employer brand is developed is by the products or services themselves, current employees who vouch for what a great place it is to work, and the work of recruiting and marketing to sell the advantages of the organization. Building these brands can take years. All of this can be swept away quickly if word of a discrimination violation spreads.

The negative publicity from discriminating, even unintentionally, will be a serious black mark on your organization’s reputation. Failing to comply with OFCCP or EEOC regulations could be devastating for your business and its brand in the eyes of the public and other prospective hires; it will take a long time to rebuild trust.

The ATS Advantage

An ATS can help you avoid non-compliance. To quote a previous OFCCP blog post: An applicant tracking system (ATS) can help you effortlessly collect and confidentially store EEO, Disability, and VETS data to conform with the OFCCP's March 2014 specifications and easily generate OFCCP reports and applicant flow logs as needed.

As an employer, it’s critical that compliance with OFCCP and EEOC regulations are adhered to. Even the most well-meaning organizations with the best of intentions can be at risk if they are lacking structure and processes surrounding these guidelines. An ATS ensures that with each candidate, and with each employee, you are using consistent practices, no matter who is involved in the hiring process. This virtually eliminates questions about whether or not someone was treated differently for any reason at all. Remember that being consistent breeds integrity.

For more information about how an ATS system can have a significant impact on your hiring practices, contact TAM today to request a demo.

Edna Nakamoto

Written by Edna Nakamoto