With the calendar flipped to April, federal contractors and other private employers should take note of approaching deadlines and substantive changes that could significantly impact their legal compliance. Effective April 1, 2024, the Department of Labor's Office of Federal Contract Compliance Programs (OFCCP) opened its third annual contractor portal for the 2024 certification period. Over the next three months, all qualifying contractors and subcontractors must register and certify their Affirmative Action Plans (AAP), or risk increasing the chances of being selected for an OFCCP audit. Just one day earlier, on March 31, OFCCP lowered the protected veteran hiring benchmark, reflecting a decade-long downward trend in setting aspirational goals for veteran hiring. Finally, federal contractors, large businesses and California employers should prepare to file their 2023 EEO-1 and California pay data reports, which have taken on heightened significance in light of recent federal court decisions downplaying the confidential nature of this information.
Contractor Portal Officially Opens
Beginning April 1 and through a July 1 deadline, covered government contractors and subcontractors will be able to access the agency's contractor portal to register and certify that they are meeting their requirements to develop and maintain annual AAPs pursuant to Executive Order 11246, Section 503 of the Rehabilitation Act of 1973 and the Vietnam Era Veterans' Readjustment Assistance Act of 1974 (VEVRAA). By certifying, contractors confirm that they currently meet their AAP obligations as of the date of certification. Contractors with a plan year beginning on July 2 or later will certify their 2023 AAPs. On the other hand, contractors with an AAP year beginning at any time in 2024 prior to when they certify must have already developed their 2024 AAPs in order to certify compliance. In this regard, there may be strategic implications of the contractor's filing date, particularly if the contractor makes significant changes to AAP structure or composition in 2024, as their certified plans potentially will be subject to audit when OFCCP publishes its next Corporate Scheduling Announcement List. Contractors should also be aware that while certification will not exempt federal contractors from being selected for compliance audit by OFCCP, untimely certification (or a failure to certify entirely) will increase the likelihood of selection.
OFCCP Sets New Hiring Benchmark for Protected Veterans
Effective as of March 31, 2024, the national protected veteran hiring benchmark sits at 5.2 percent, down from last year's 5.4 percent benchmark. This percentage serves only as an aspirational goal for federal contractors to target in hiring and is ultimately used to assess the effectiveness of their outreach and recruitment efforts of protected veterans. Qualifying contractors can choose either to adopt the national average or develop their own individualized hiring benchmark using the five-factor method developed by OFCCP.
Notably, this decrease continues the agency's steady lowering of the hiring benchmark ever since it was first established in 2014. As the U.S. military moves further away from recent active combat deployments, and the availability of protected veterans entering the job market shrinks, contractors can anticipate this downward trend to continue, but should not let up in their efforts to comply with their veterans outreach and recruitment obligations.
EEO-1 and California Pay Data Reporting Deadlines Are Approaching
April 30, 2024, marks the first day that government contractors with at least 50 employees, and most private employers with 100 or more employees, can file their 2023 EEO-1 Component 1 reports, consisting of workforce demographic data, separated by job category, sex and race or ethnicity. Notably, the reporting structure has changed somewhat, and the EEOC has published a new instruction booklet covering various subjects and questions. Covered employers should familiarize themselves with these new requirements in advance of the filing period and take steps to file early in the relatively brief period instead of waiting until the June 4 deadline to file.
California employers should circle an additional date on their calendars – May 8, 2024, which marks the final day businesses can file their California pay data reports. California businesses with at least 100 employees are required to file a report with the California Civil Rights Department (CRD) disclosing pay data, organized similarly to Component 1 EEO-1 reports. The reporting requirements have undergone several alterations for the current filing period, including changes to the reporting template, new guidance on remote employees and clarifications on reporting "unknown" races, ethnicities and genders. For a complete list of amendments, the CRD posted a list of frequently asked questions to the state's website.
What This Means for Employers
Federal Contractor Certification: To avoid missing the July 1, 2024, deadline and inadvertently increasing the likelihood of an audit, contractors are encouraged to certify well in advance of July 1 where the certification date won't materially impact the nature of the certification. However, contractors with an option to report different AAP plan years should think strategically about certification timing, particularly if there were material changes in the contractor's AAP structure or plan composition.
Veterans Hiring Benchmark: Although the protected veterans hiring benchmark has decreased yet again, protected veteran outreach and recruitment, and contractors' documentation of those efforts, remains a focus in OFCCP audits. Contractors must not mistake the lower benchmark for a license to neglect their veterans outreach and recruitment efforts.
EEO-1 and California Pay Data Reporting: After years of unpredictable extensions and delays, the filing period for 2023 EEO-1 reports is fast approaching, as is the final day for California employers to submit their pay data reports. In light of material changes to both reports that are new for this reporting cycle, covered employers should take steps promptly to familiarize themselves with the new requirements and file as early as is practical.
For More Information
If you have any questions about this Alert, please contact Christopher D. Durham, Zev L. Grumet-Morris, any of the attorneys in our Employment, Labor, Benefits and Immigration Practice Group or the attorney in the firm with whom you are regularly in contact.
Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. For more information, please see the firm's full disclaimer.
