New OFCCP Regs Have Employers on Guard for Discrimination

By Gina Ruiz

Jul. 25, 2007

Employers across the country could receive a troubling piece of news in the mail this summer. The Department of Labor’s Office of Federal Contract Compliance Programs started sending audit notifications, kicking off its official probe into companies’ compliance with the Internet-applicant final rule.

    The mandate, which went into effect in February 2006, set standards in record-keeping practices for all federal contractors and subcontractors that rely on electronic data technologies to fill vacancies. The list of employers is diverse and substantive and includes most of the Fortune 500 as well as small and midsize companies from numerous industries. According to experts, about the only exception would be a hot dog vendor who doesn’t hire anybody.

    Experts also contend that process of online recruiting—not just the end results of who gets hired—will be under the agency’s microscope. The OFCCP’s intent is to discern whether systemic discrimination, whether deliberate or unintended, is unfolding in the workplace. Since electronic data technologies often have powerful filtering tools, such as electronic résumé searches and data screenings that can shape the makeup of an applicant pool, the selection process is a key area of focus for the agency.

    “This is not just about who ultimately got hired,” says Kurt Ronn, founder of HRworks, a national recruitment firm based in Atlanta. “It is also about the manner in which companies constructed the pools of candidates that they considered for a vacancy.”

    The fact that audit notifications were sent a year after the ruling was enacted could signal that the OFCCP is serious when it comes to enforcement, industry experts say.

    “The notifications came on the early side,” Ronn says. “Normally, the OFCCP waits for two years after a ruling has been around so that there is enough rope to hang violators.”

    Experts encourage employers to prepare for a potential audit by understanding the OFCCP’s three primary focuses.

    At the most basic level, the agency will try to determine whether an employer kept a detailed record of the applications they received via electronic data technologies, such as a job board. In addition, the OFCCP will take a critical look at the basic qualifications that a company sets forth for a job vacancy. Finally, the agency will scrutinize the data management technique an employer uses to select the résumés.

Record-keeping requirements
   One of the most important aspects of the Internet-applicant rule is that it finally establishes a formal definition of an online applicant—something government contractors had requested for several years.

    There are several elements that define an online applicant, says Matt Halpern, partner at Jackson Lewis LLP, a national workplace law firm. To begin with, an individual has to express interest in a position using electronic data technologies, such as sending a résumé via the Internet. In addition, a company has to look at the information that was received and evaluate whether the person meets the basic qualifications required for the job. Lastly, the individuals must remain in the running to be considered for the job. If they express any disinterest in the position, they are no longer considered applicants.

    Once a government contractor establishes that an individual fits the definition of an applicant, it is required to keep detailed records. Employers will have to elicit key information from online job applicants such as race, gender and ethnicity. This data will play a critical role helping the agency determine how the employer’s pool of candidates compares with the makeup of the broad workforce.

    The OFCCP will specifically stack up the proportions of minorities and women applicants to the company against the relevant labor force statistics.

    For instance, if an employer has a vacancy for an engineering position and only 2 percent of the total applicant pool is composed of women, the auditor will examine how this figure relates to the broad engineering industry.

    There could be a reasonable explanation for the low percentage of female applicants—perhaps engineering is a profession that attracts few women. If through research, however, the auditor finds that women make up a large percentage of the broad engineering population, the investigation will deepen. The auditor’s goal will be to determine whether any steps in a company’s selection process have an adverse impact on female applicants.

    Government contractors are not the only group being affected by the OFCCP ruling. Talent management vendors across the country must make significant adjustments as well. SilkRoad Technology has had to update its applicant tracking platform, OpenHire.

    “We retooled the system to help recruiters comply with the specific OFCCP reporting requirements,” says Peter Hauschild, manager of implementation services for the Winston-Salem, North Carolina-based company. “The entire ATS community has had to mobilize for this ruling.”

    The revisions to OpenHire mean it can now provide more detailed reports about the ethnicity of applicants. Now more than ever, it’s important for employers to become familiar with the reporting capabilities of the ATS providers, Hauschild says.

    Employers should also be mindful that online applicants can come from a variety of sources—not just job banks, résumé databases or via e-mail. There are six Internet-related technologies and applications that the OFCCP has identified as recruiting tools for online applicants: job banks, résumé databases, e-mail, electronic scanning technology, applicant screeners and applicant tracking systems.

    But this list is bound to change with new technologies coming online. When in doubt, err on the side of caution, Ronn says.

    “If contractors review or accept applications electronically, the new rule applies, even if it’s something they don’t think is likely, such as a fax,” he notes.

    Fax machines can transmit digitized signals that can be sent and received via e-mail, which is why companies need to keep a record of any activity through a fax.

    Auditors will investigate not just the pools of external job candidates, but also the list of internal applicants a company evaluates for a vacancy, which is why records need to be kept on both sets of applicants.

Qualified candidates
   Basic qualifications such as skills, education and experience are the criteria that an employer deems necessary for a candidate to perform a particular job.

    Workforce executives must pay close attention to how basic qualifications are worded, as OFCCP auditors will analyze them for signs of potential discrimination.

    One of the most important points for employers to remember is that basic requirements must be established before any recruiting efforts begin, Halpern says. In addition, the basic qualification standards must be relevant to a position and be objective.

    It is legally acceptable for an employer to request a bachelor’s degree in accounting for a certain position, as it ensures a certain level of education and skills. Making a seemingly innocuous tweak to this wording, however, could draw serious scrutiny from the agency, Ronn explains.

    If an employer went beyond requesting a bachelor’s degree in accounting and asked that the diploma come from an Ivy League school, such standards are considered non-objective. More important, as far as the OFCCP would be concerned, is that it could have an adverse impact on the number of women and minorities who apply for the position.

    It is the type of basic qualification that could raise a red flag for the OFCCP auditors, particularly if they find that a statistical disparity exists in the percentages of women and minorities within the company’s pool of applicants and those figures found in the relevant labor force.

    “Companies are going to have to give some serious consideration to how they word basic qualifications,” Ronn says. “It can make or break their fate during the audit process.”

    Drawing up acceptable basic qualifications, however, will only go so far in keeping a company in compliance. Execution is another key component. Employers must make sure that everyone involved in the recruiting and selection of talent uses the vetted wording for basic qualifications.

    “It is critical for everybody to be on the same page when it comes to language,” Ronn says. “It gets risky when recruiters begin to deviate from the established definition and introduce concepts that may or may not be acceptable.”

    Ronn recommends that companies launch formal training campaigns for recruiters and hiring managers, since they are the ones on the front line. First, they should be informed of the agreed-upon basic standards. They should also be instructed on why it is important to stick to those definitions.

    It is important that the educational initiative extend beyond internal staffers who are responsible for recruiting and hiring. Under the new rule, employers will also be held accountable for the actions of the external staffing and recruiting agencies that they retain to hire talent.

    Besides basic qualification standards, OFCCP auditors will be studying the kinds of online searches that recruiters use to narrow the pool of applicants from the thousands of résumés that they receive. Online searches will be an area of focus because they can shape the composition of an applicant pool.

    Training and education programs in this arena will also play a critical role in keeping employers compliant. Recruiters and hiring managers will have to be educated on how to carry out online searches that are objective and relevant, Ronn says.

    Inserting words such as “Perez” or “Harvard University” during online searches could include or exclude certain groups of candidates—ultimately spelling trouble for an employer.

Data management technique
   Keeping up with the tremendous volume of résumés that pour into companies can be a daunting task. As a result, employers have had to develop data management techniques that help them narrow the number of résumés they receive—from the thousands to maybe a few dozen.

    OFCCP auditors will be taking a critical look at how companies do this. Here too, employers are required to choose their preferred method of data management before any recruiting efforts take place.

    Initially, employers cannot make data management selections by looking at the qualifications of applicants, since that could potentially be considered a biased process. Instead, it will have to be based on other methods, like picking résumés in random order or perhaps by selecting the first 100 résumés that were received. Whatever method they use, it must be race and gender neutral, Ronn explains. After whittling down the stack of résumés to a manageable number, employers can then sift through the applicants’ qualifications to take the necessary next steps.

    The important thing for employers to remember is to have a solid understanding of their recruiting process and to develop a well-defined plan to tackle the new ruling.

    “It is important to plan ahead,” Ronn says. “Being compliant today is trickier than ever.”

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