- Posted by Russ Samson
Recently has our firm has received calls from some financial institutions seemingly panicked by information posted on the Internet regarding their affirmative action obligations. One article on the subject asserted:
As you may know, a financial institution that serves as a depository of government funds in any amount, or who [sic] acts as an issuing or paying agent for U.S. Savings Bonds and Notes, is required to prepare and put into place Affirmative Action Programs (AAP’s) pursuant to Executive Order 11246 . . .
In actuality, the regulations – specifically 41 CFR § 60-2.1(b)(1) – say:
Each nonconstruction [i.e., a “supply or service”] contractor must develop and maintain a written affirmative action program for each of its establishments if it has 50 or more employees and:
(iii) Serves as a depository of Government funds in any amount; or
(iv) Is a financial institution which is an issuing and paying agent for U.S. savings bonds and savings notes in any amount. [Emphasis added.]
The first threshold, then, for the requirement of developing and implementing an affirmative action plan under Executive Order 11246 is that an organization has 50 or more employees (based on body count rather than "full-time equivalents") – even if that organization is a financial institution.
On Wednesday, December 22, 2010, the National Labor Relations Board published a Notice of Proposed Rulemaking (“NPRM”) in the Federal Register. The NLRB announced it is considering the adoption of a rule that would require all employers – unionized or not – which are subject to the National Labor Relations Act to post a notice informing employees of their rights under the NLRA. In that NPRM, the Board majority stated that it had “carefully reviewed the content of the notice required under the Department of Labor’s final rule, . . . and has tentatively concluded that that notice explains employee rights accurately and effectively without going into excessive or confusing detail. The Board therefore finds it unnecessary, for purposes of this proposed rulemaking, to modify the language of the notice in the Department of Labor’s final rule.”
On January 20, 2009, President Obama signed Executive Order 13496. That Order established a requirement that virtually all federal government contractors and subcontractors post a notice “of such size and in such form, and containing such content as the Secretary of Labor shall prescribe.” Under EO 13496, the notice is to be posted “in conspicuous places in and about its plants and offices where employees covered by the National Labor Relations Act engage in activities relating to the performance of the contract, including all places where notices to employees are customarily posted both physically and electronically.”
On May 20, 2010, the Office of Labor-Management Standards of the U.S. Department of Labor published its “final” rules under EO 13496. The regulations are in question and answer format. In its materials entitled “Executive Order 13496 Frequently Asked Questions,” the DOL’s Office of Federal Contract Compliance Programs (“OFCCP”) responds to its own question as to whether EO 13496 is applicable to a bank or other financial institution if it obtains Federal deposit insurance, acts as an issuing and paying agent for U.S. saving bonds and notes, or is a Federal fund depository by stating:
A bank or other financial institution is a covered contractor if it has an arrangement that meets the definition of a “government contract.” In general, OFCCP interprets “government contract” under Executive Order 13496 as it has under Executive Order 11246. Thus, a bank or other financial institution that obtains Federal deposit insurance, acts as an issuing and paying agent for U.S. savings bonds and notes, or is a Federal fund depository is a government contractor for purposes of both EO 11246 and EO 13496. In addition, these entities may be covered contractors if they have any other arrangement that meets the definition of a “government contract” under the regulations. Such entities are subject to EO 13496 to the same extent as are other Federal contractors.
Unlike the “affirmative action program” obligations which kick in only if an organization has 50 or more employees, it appears from the OFCCP materials that it is not going to be concerned with the value of the insurance or the sales volume of bonds and notes. So, if you are a financial institution, is your 11x17 “EO 13496” poster physically posted? The Notice can be obtained (in English, Spanish, Mandarin Chinese, Hmong, Laotian and Vietnamese versions) online at http://www.dol.gov/olms/regs/compliance/EO13496.htm.
The Executive Order also requires “electronic posting.” Covered contractors or subcontractors that customarily electronically post notices to employees about terms and conditions of employment on an internal or external web site must “post the required notice electronically” in addition to posting the required “paper” notice. The DOL instructs precisely how to satisfy that obligation in multiple languages. One must “display prominently” a link to the Notice of Employee Rights Under Federal Labor Laws Poster. The website goes on to specify exactly what the text for the link must be (in English, Spanish, Mandarin Chinese, Hmong, Laotian, and Vietnamese).
If you are a financial institution subject to the requirement for the development and implementation of an Affirmative Action Program, you are no doubt aware that for the last several years, a significant component of an AAP has been a requirement for the entity to examine and monitor not only its employment decisions but also its compensation system. On June 16, 2006, OFCCP published in the Federal Register two final guidance documents related to identifying compensation discrimination under EO11246: ‘Interpreting Nondiscrimination Requirements of Executive Order 11246 with respect to Systemic Compensation Discrimination” (Standards) and “Voluntary Guidelines for Self-Evaluation of Compensation Practices for Compliance with Executive Order 11246 with respect to Systemic Compensation Discrimination” (Voluntary Guidelines). On January 3, 2011, the OFCCP published in the Federal Register a “Notice of Proposed Rescission” of these two “guidance” documents.
In explaining this proposal to do away with these materials, the OFCCP stated that the standards “significantly limit OFCCP’s ability to identify compensation discrimination by imposing overly narrow investigation procedures that go beyond what would be required under Title VII principles in litigation. . . . In short, we now believe the Standards significantly undermine OFCCP’s ability to vigorously investigate and identify compensation discrimination.” [Emphasis added.]
While I am taking it out of context, I am reminded of an admonition of one of my favorite high school teachers: “A word to the wise is sufficient.”
For more information, please contact attorney Russ Samson at rsamson@dickinsonlaw.com / 515-246-4548.
