OFCCP Ups Its Enforcement of Banks’ Affirmative Action Obligations

Kelli Lieurance

Kelli Lieurance

by Kelli P. Lieurance, Partner, Baird Holm LLP

The Office of Federal Contract Compliance Programs (OFCCP), a division of the Department of Labor (DOL), has stepped up its enforcement efforts related to affirmative action, meaning that financial institutions can no longer ignore their obligations.

What is Required?

Generally, a financial institution that serves as a depository of government funds in any amount is required to prepare and put into place Affirmative Action Programs (AAPs) pursuant to Executive Order 11246, just as are financial institutions with 50 or more employees and federal contracts or subcontracts of at least $50,000.  With that said, the OFCCP takes the position that financial institutions that participate in FDIC or NCUA programs are also “federal contractors” and, therefore, subject to its jurisdiction.  Consequently, because most financial institutions with 50 or more employees either participate in FDIC or NCUA programs, serve as a depository for government funds, or hold other federal contracts in excess of $50,000, most financial institutions will have affirmative action obligations.

As part of the affirmative action requirements, employers must track the gender, race, disability, and veteran status of each individual who applies for a particular job, as well as analyze other employment practices, such as transfers, promotions, and terminations, to ensure their practices reflect race- and gender-neutral employment processes.  The OFCCP has focused intently on these employment practices and held that ignorance of the requirement to maintain the data is not an excuse for non-compliance.

Bank of America

It can happen to you!  In 2010, an Administrative Law Judge (ALJ) ruled that Bank of America discriminated against African-American job applicants for entry-level positions in Charlotte, North Carolina, in 1993, and from 2002 to 2005.  In September 2013, the ALJ (finally) determined the penalties for such discrimination and ordered Bank of America to pay 1,147 African-American job applicants $2,181,593 in back wages and interest.  The ruling further ordered the Bank to extend job offers, with appropriate seniority, to 10 class members as positions become available.

New Final Rules For the Employment of Veterans
and Individuals with Disabilities

In addition, on August 27, 2013, the OFCCP announced a Final Rule that makes changes to the regulations implementing Section 503 of the Rehabilitation Act of 1973 (Section 503), and the Vietnam Era Veterans’ Readjustment Assistance Act (VEVRAA).  This is a significant change for federal contractors, as previously, contractors did not have to perform statistical analyses of its employment practices as it related to veterans and individuals with disabilities.  The Final Rules change that.

These new rules go into effect on March 24, 2014.  After that time, the OFCCP will surely be looking to make examples of contractors who fail to comply with the new Final Rules.  Consequently, it is even more important to take steps toward compliance than ever before.

Don’t Ignore Your Obligations!

While most financial institutions are accustomed to heavy regulation, many have grown complacent with regard to affirmative action compliance because such obligations do not require annual submission to any governing authority.  However, just because your organization has not received a compliance review letter does not mean that you will not receive one in the future.

We will discuss the OFCCP’s enforcement efforts, as well as other legal developments effecting financial institutions, in more detail at the 2014 IBA Human Resources Conference on April 15, 2014.

Kelli P. Lieurance, Partner at Baird Holm LLP in Omaha will be presenting at the 2014 IBA Human Resources Conference on April 15-16.

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