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A Guide to Compliance for Government Contractors Working with Temp Agencies and Staffing Firms
Presented by: David J. Goldstein Michael Childers
Introduction
• The Increased Importance of “Alternative” Hiring and Employment Models – Placement agencies that recruit and hire individuals to
be employed by the agencies’ customers – Professional Employment Organizations – Staffing agencies that themselves employ individuals to
perform work for the agencies’ customers • Perhaps involving Joint employer issues • Perhaps involving temp to hire arrangements
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Introduction
• Increased OFCCP Regulation of the Hiring Process – VEVRAA Job listing requirements – Outreach requirements – Applicant tracking requirements
• Internet Applicant Rule • Web-based application processes
• Greater Scrutiny of Contractor/Agency Arrangements as Part of OFCCP Audits
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Examples of Recent OFCCP Audit Information Requests
• Copies of job postings used by [AGENCY] to advertise hourly job openings for [CONTRACTOR].
• A copy of the application(s) and any form(s) used by [AGENCY] in the application and recruitment process to document applicant activity for the positions advertised by [AGENCY] for [CONTRACTOR] in the timeframe listed above.
• A sample of written or electronic communication from [AGENCY] to [CONTRACTOR] that detailed applicant activity, consideration, and hiring recommendations for hourly positions.
• Any job related requirements, basic and/or preferred qualifications and job descriptions provided by [CONTRACTOR] to [AGENCY] for use of recruiting, screening, and selecting applicants for consideration for filling an hourly position for [CONTRACTOR].
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Case Study: Contractor Liability for Agency Applicant Tracking Deficiencies
• Contractor enters into an agreement with a staffing agency which is to supply the contractor with temporary and temporary to permanent workers
• The agency has an applicant tracking system • When the contractor is selected for a compliance review,
the agency cooperates with the OFCCP, responding to multiple requests for documents and information
Findings of Fact
• The Agency’s Records • Although records were maintained for individuals that successfully
completed the phone screen and in-person interview, records were not maintained for individuals with basic qualifications that did not satisfactorily pass the phone screen
• Agency’s documentation of interviews was not consistent • Interview notes were not always retained • Applications were missing for some individuals
The Alleged Violations
• Contractor failed “to collect and maintain personnel and employment records in accordance with the requirements of 41 CFR 60-1.12(a) and 41 CFR Part 60-3.”
• Contractor failed to conduct an accurate adverse impact analysis on the total selection process in accordance with the requirements of 41 CFR 60-3.4 and 41 CFR 60-3.15A in that its “failure to maintain records did not allow for an accurate adverse impact analysis of its total selection procedure and the individual components of the selection process on an annual basis.”
OFCCP’s Legal Argument
• “As set forth in 41 CFR 60-3.1 0, OPCCP's position is that a contractor's reliance on employment agencies, does not relieve it of its responsibility to provide equal employment opportunity to all applicants or of its obligations under the Uniform Guidelines to collect and maintain records.”
The Proposed Remedy
• Contractor must ensure that its records are collected and maintained in accordance with the requirements of 41 CPR 60-1.12(a) and Part 60-3
• Contractor must conduct at least annually an adverse impact analysis of the total selection process in accordance with the Uniform Guidelines
• If adverse impact is identified in the total selection process, [Contractor] must evaluate each individual component of the selection process for adverse impact. If adverse impact is found to exist in any of the individual components of the selection process, [Contractor] must validate each such component in accordance with the Uniform Guidelines on Employee Selection Procedures or utilize selection procedures which do not result in adverse impact
• Contractor’s analyses must include all components of the selection process; including components that are performed for contractor, in whole or in part, by a third party
Remedy: Agency Arrangements
• Using a staffing firm does not relieve contractor of its responsibility to provide equal employment opportunity as required by the Executive Order pursuant to 41 C.F.R. 60-3.10. If contractor uses a staffing firm or employment agency to fill positions during the reporting period: – Contractor will monitor at least semiannually the race, gender and ethnicity
of individuals referred by each staffing firm or employment agency – If contractor finds that the race, gender and ethnicity of the individuals
referred by any staffing firm or employment agency is not consistent with what would be expected based on external availability in the relevant labor market, Contractor will notify the staffing firm or employment agency of its findings and request a more appropriately diverse pool of referrals or an explanation from the staffing firm or employment agency of why an appropriately diverse pool is not available
– Contractor will review and revise its arrangement with the staffing firm or employment agency or take other appropriate corrective action
Agenda and Goals
• Define the Universe of Placement/Staffing Arrangements
• Outline Best Practices Applicable to Each Arrangement
• Provide Practical Advice for Compliance • Touch on relevant independent contractor and joint
employer issues, but not in a definitive way
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The Traditional Hiring Process
• Create posting • List job with State Employment Delivery System • Engage in outreach • Document database searches as required • Retain expressions of interest to the extent required • Track applicants and document disposition at each stage of
the hiring process • All applicants must be invited to self-identify as to race/
ethnicity, sex, veteran status, and disability • Assess testing results and validate tests when required
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The Agency as Agent
• Contractor delegates hiring tasks to a third party – The third party may be acting on only that Contractor’s
behalf – OR, the third party may be acting on behalf of multiple
clients
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Ensuring that Delegated Obligations are Fulfilled
• Formal written contracts with agencies are essential • Topics to Cover include
– Listing openings with SEDSs – Outreach – Invitations to self-identify – Testing – Recordkeeping and retention – Contractor access to records upon request
• For auditing • For responding to OFCCP requests
– Indemnification – Flow-down clauses
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Listing Openings (41 CFR §60-300.5)
• Contractors must list all job openings with the local employment service delivery system where the opening occurs
• Providing information on employment openings to a privately run job service or exchange will satisfy the contractor's listing obligation if the privately run job service or exchange provides the information to the appropriate employment service delivery system in any manner and format that the employment service delivery system permits which will allow that system to provide priority referral of protected veterans
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Outreach
• Notice of Expectations and Obligations – Statutory obligations – Contractual obligations
• Assistance – Regarding recruitment resources and strategies
• Audit – Diversity of agency workforce or referrals – Adverse impact
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Invitations to self-identify
• “Agent” Agencies • “Non-Agent” Agencies • Other Situations
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Recordkeeping and retention
• Notice of Expectations and Obligations – Statutory obligations – Contractual obligations
• Assistance • Audit
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Indemnification
• Sources of Liabilities – Agency recordkeeping violations – Other types of violations
• Types of Liabilities – Monetary damages – Costs of remedial measures
• Outreach • Training
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The Agency as Federal Contractor
• In some instances, an agency’s contract to provide workers may subject the agency to OFCCP jurisdiction. – Illustration:
• Medic-i, Inc. enters into a covered federal contract with the VA to transport veterans between medical facilities.
• Medic-i provides the ambulances and other vehicles to transport the veterans, but then enters into a subcontract with a staffing agency to provide the workers to drive the vehicles.
• What are the obligations applicable to each entity?
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Union Hiring Halls
• In certain circumstances, primarily in the construction industry, contractors rely on unions to provide them with labor
• Under U.S. labor law, it seems unlikely that a union could ever be considered to be acting as a contractor’s agent
• However, a union certainly could be viewed as a covered subcontractor subject to OFCCP’s rules regarding outreach and recordkeeping
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Temp to Hire Arrangements
• Two Primary Models – Temporary workers are employed by the contractor
(“employee temps”) – Temporary workers are not employed by the contractor
(“non-employee temps”)
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Temp to Hire: Employee Temps
• Initial hire must be treated like any other new hire – SEDS listing, outreach, applicant tracking, etc. – For IRA purposes, the applicant pool is the pool of all
applicants from which the agency and/or contractor selected the temps
• Conversion to permanent status is treated as either a competitive or non-competitive promotion depending on the circumstances – No listing required
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Temp to Hire: Non-Employee Temps
• Initial Placement – Listing, outreaching, recordkeeping obligations (if any) rest
with the staffing agency • Conversion to permanent status must be treated as an
external hire. – Opening must be listed by the contractor – invitation to self-id, recordkeeping etc. is the contractor’s
obligation – Is there an outreach obligation?
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Who is an Employee?
Contractor
Staffing Agency
Employee
• Joint Employment – The DOL Wage & Hour Division
has taken the position that the legal presumption under the FLSA is that workers of temporary staffing agencies are joint employees of both the staffing agency and the contractor
Joint Employment Test
• Three Part Test for Joint Employment – Do the staffing agency and contractor share the
employee’s services? – Do the staffing agency and the contractor both control
the employee’s labor or movement? – Is the staffing agency acting in the contractor’s interest?
Wage and Hour Division Regulations 29 CFR 791.2 “Joint Employment”
OFCCP Compliance : Hiring
No
OFCCP obligations, if any, are the
responsibility of the agency that will employ the
worker
Yes
Responsibility for compliance should be allocated
contractually
No
Yes
Will you be
employing the
worker?
You have full responsibility for
all obligations
Will employment be joint with
another entity?
Status of worker
Independent contractor
No OFCCP related
obligations
Agency Employee
HIRING OBLIGATIONS
¯ Listing with SEDS ¯ Outreach ¯ Invitation to Self-Identify
¯ Recordkeeping
OFCCP Compliance: Temp to Perm
No
Yes Do you employ
the worker?
Is the conversion a competitive
process?
Yes
• Listing with SEDS not required ð Not an external process • Self-ID should have been previously requested ð already employed Outreach is particularly important when initially hiring for the temp positions because they form the pool from which the “permanent” hires will be made Recommend internal posting/ application process so as to create a clearly defined applicant pool
No
External candidates
also considered ?
No
Yes
• Listing with SEDS required ð This is an external process • Outreach required • Invitation to self-identify required • Recordkeeping required Follow all posting/ application, tracking processes
Generally best to treat the initial process by which the temp was hired gets treated as a step in a total hiring process that ends in an offer of “permanent” employment.
Therefore, the process of hiring the temp must begin by listing the opening with a SEDS, outreach, an invitation to self-identify, and appropriate recordkeeping.
Is the conversion a competitive
process?
No
Yes The conversion
has to be an external hire
Questions?
Thank You!
David J. Goldstein Minneapolis
(612) 313-7611 [email protected]
Michael Childers Washington, D.C. (202) 789-3420
