Several years ago, I wrote an article for The OFCCP Digest
that focused on the inherent flaws in availability analyses. Since that time, the U.S. Department of Labor’s Office of Federal Contract Compliance Programs (OFCCP) has released a myriad of new regulations and has undertaken countless new initiatives. Yet, many federal contractors and subcontractors remain focused on the placement goals that are part of their Executive Order 11246 affirmative action plans and the availability analyses that help them establish these placement goals.
Placement Goals Are NOT the Primary Focus During OFCCP Compliance Reviews
Placement goals for minorities and females are a required element in each affirmative action plan (AAP) that supply and service organizations with federal contracts or subcontracts develop under the Executive Order 11246 regulations. Traditionally, many organizations have spent extensive time and energy on the availability analyses that are an integral part of developing placement goals.
While placement goals may be a required element in Executive Order AAPs, federal contractors and subcontractors need to expend less effort on developing availability analyses and setting placement goals. Instead, they should redeploy their efforts to areas of greater interest to OFCCP. These areas include the following:
- Compensation policies, practices, and decisions, especially where there appear to be disparities in the way in which members of a particular race, ethnicity, or gender are paid
- Hiring practices, especially when there appear to be disparities in regard to the way in which applicants of a particular race, ethnicity, or gender are treated
- Implementation of OFCCP’s regulations regarding protected veterans, including implementation of the outreach requirements and the requirement to list jobs with the Employment Service Delivery System offices
- Implementation of OFCCP’s regulations regarding individuals with disabilities, including implementation of the outreach requirements and the various provisions regarding the use of OFCCP’s mandated survey form
- Implementation of various items connected to OFCCP’s sexual orientation and gender identity regulations and OFCCP’s pay secrecy regulations
”…the sanction for having some type of disparity in regard to compensation or hiring may be a monetary settlement where OFCCP requires that payments be made to a group of applicants or employees…”
While OFCCP may ask about placement goals for minorities and females that were not met during a previous AAP year, the agency typically has less interest in whether these placement goals were met than it does in the areas identified above. It should also be noted that the sanction for failing to meet placement goals is typically a requirement to make greater outreach efforts in subsequent AAP years. Conversely, the sanction for having some type of disparity in regard to compensation or hiring may be a monetary settlement where OFCCP requires that payments be made to a group of applicants or employees who were allegedly victims of discrimination.
Placement goals for minorities and females may no longer be a major focus for OFCCP, but this does not mean that federal contractors and subcontractors can abandon their production of the availability analyses that allow for the creation of placement goals. However, federal contractors and subcontractors should be aware of the many issues associated with availability analyses that create questions about the viability of these analyses.
Problems with Availability Analyses – Census Data
There are a significant number of issues associated with availability analyses that involve the external census data that must be used in these analyses. The census data currently used in federal affirmative action plans is data that was first made available in 2012 from the U.S. Census Bureau. However, this data was not derived from the 2010 decennial census. Instead, this data is a compilation of surveys done from 2006 through 2010 via the American Community Survey (ACS). The ACS is a project of the Census Bureau in which portions of the United States are surveyed every year to gather information on a variety of demographic characteristics of individuals and households. The Census Bureau used ACS survey data from 2006 through 2010 to compile the EEO Tabulation 2006-2010 (often called the 2010 EEO Tabulation).
Like products made available by the Census Bureau after the 1990 and 2000 decennial censuses, the 2010 EEO Tabulation contains data on the race, ethnicity, and gender of individuals within various occupation groupings. These occupation groupings are referred to as census categories. There are 488 census categories included in the 2010 EEO Tabulation. Users of the 2010 EEO Tabulation can find data on the demographics regarding individuals who fall into these census categories for various geographic areas. These areas include the United States as a whole, each state, many metropolitan areas, each county in the United States (though some counties are combined with other counties), and cities and other localities of more than 50,000 residents.
The 2010 EEO Tabulation may sound like a comprehensive picture of employment within the United States, but as previously stated, there are a number of issues associated with the data included in the 2010 EEO Tabulation.
- The 2010 EEO Tabulation includes information about a limited portion of the U.S. population. Less than 10% of the population was asked specific questions about employment when completing forms provided by the American Community Survey, and from these results the Census Bureau extrapolated results for the entire area being surveyed. While this form of statistical extrapolation may work well for a large, relatively homogenous population, it leads to less accurate results when there are a multitude of variables that may affect the data. The 2010 EEO Tabulation itself makes this clear by providing information on the margins of error associated with its data. In some cases, particular census categories for certain geographic areas can have margins of error of 50% or higher.
- As noted above, there are 488 census categories used in the 2010 EEO Tabulation to report on all types of jobs in the United States. Responses from citizens who completed the employment portion of ACS surveys were compiled into one of these 488 categories. While this may seem like a large number of categories, there are actually far too few categories to allow for meaningful analyses. This is evident in areas such as manufacturing, where, for example, census category 7750 (Miscellaneous Assemblers and Fabricators) contains a wide variety of dissimilar jobs that have fundamentally different requirements and demographic patterns. Among professional positions, census category 1430 (Industrial Engineers, Including Health and Safety) includes a wide variety of positions that may or may not require an industrial engineering degree. There are also a significant number of job titles that have no meaningful corollary among the 488 census categories. For example, there is no specific census category for professional employees involved in sales support activities.
- Federal contractors are allowed to select from various geographic areas when determining what census data to use, but there is no concrete way to define what the proper recruitment area is for many jobs. With today’s use of the internet as a recruitment tool, applicants from distant geographic areas may express interest in any job, including entry-level jobs, suggesting that broader geographic areas should be used in availability analyses. However, the fact that candidates from distant geographic areas may be able to express interest in positions does not mean that organizations actually hire from a broad-based area, which would suggest the use of a more limited geographic area in availability analyses.
- Census data is not helpful in those circumstances where a major employer is centered in a small geographical area. It is not unusual for one employer to be dominant within a smaller city or county. When this is the case, census data for that city or county will reflect employment levels at the one large company, creating a situation where goals based on external census data become meaningless.
Problems with Availability Analyses – Internal Feeder Groups
The problems associated with the use of census data in availability analyses are not the only issues associated with availability analyses. There are also a number of serious problems associated with determinations about feeder positions to be used in Factor 2 of the availability analyses.
- Many federal contractors routinely use job groups as feeders for other job groups. While this is a quick and simple way to assess internal feeder pools, it is rare that one job group routinely feeds the positions in another job group. For example, some but not all employees from a Professionals job group may feed positions in a Managers job group.
- Even when federal contractors try to attach individual positions to other positions, the data may give an inaccurate picture of the persons who are proper candidates for open positions. It is not unusual for one or more persons in a job title to be excellent candidates for advancement to another position, while one or more persons in that same job title are unacceptable candidates. A truly accurate availability analysis would show only the best qualified candidates as feeders.
- Every analysis of internal availability is affected by the many changes that occur within an organization in any given year. Positions are eliminated; employees change positions; employees leave and new people are hired. Any of these actions may have a significant effect on the demographics and the proper feeders associated with Factor 2.
- Actual expressions of interest typically are not taken into account when determining feeders for a job group. By failing to consider which qualified employees are not interested in certain jobs, internal availability figures may overstate or understate the actual availability of candidates for particular job groups.
Problems with Availability Analyses – Value Weights and Statistical Tests
Federal contractors can do their absolute best to develop proper statistics for use with Factors 1 and 2 in an availability analysis, and then run into a problem when assigning value weights to these factors. Here are the types of questions associated with assigning value weights:
- Should employers rely on a historic assessment of how positions are filled in determining value weights?
- What if the employer has decided to change its historical approach to filling open positions?
- What if there have been significant changes in the workforce?
- What if there have been significant changes in the qualifications for the positions in any particular job group?
Once value weights have been assigned to the factors used in the availability analysis, federal contractors must then decide what test to use in comparing incumbents in each job group to the estimated percentages of minorities and females who are supposedly available for positions in these job groups. Among the tests that organizations can use for this purpose are the following:
- An “any difference” test, where a placement goal is set if the percentage of minorities or females in a job group is at all lower than the relevant availability percentage
- An 80% test, where a placement goal is set if the percentage of minorities or females in a job group is less than 80% of the relevant availability percentage
- A two standard deviation test, where a placement goal is set if the number of minorities or females in a job group is less than expected under a two standard deviation analysis
In using a two standard deviation test or another test of statistical significance in determining where to set placement goals, a federal contractor is much less likely to have placement goals. However, OFCCP may be concerned about situations where there are a small number of minorities or females in a job group (or, in fact, no minorities or females in a job group) and a test of statistical significance does not suggest that there should be a placement goal. Conversely, federal contractors and subcontractors should be concerned about situations where a test of statistical significance is used and a placement goal is set, as OFCCP may interpret this statistically significant variance as an indicator of discrimination against minorities or females.
Considerations for Federal Contractors
In light of the issues associated with availability analyses, what steps should federal contractors take? First and foremost, federal contractors should treat the preparation of availability analyses as a series of strategic decisions. Contractors should ask the following questions:
- “Have we developed an effective job group structure?” If the job group structure developed for a particular affirmative action plan is ineffective, the availability analysis will, by definition, be inaccurate. Developing job groups should be a strategic process where a federal contractor creates a structure that clearly reflects the organization.
- “Can we defend the data we have included in our availability analyses?” Decisions on which census categories and census areas are used for Factor 1, which internal feeder groups are used for Factor 2, and how final value weights are determined should be supported by information about the nature of the contractor’s positions and data the contractor has collected about these positions.
- “What picture of this organization are we trying to provide to OFCCP?” Availability analyses can be manipulated to increase or decrease the percentage of minorities and females through various legitimate means, including the selection of which test to use in establishing placement goals. Availability analyses that lead to more placement goals in an AAP may demonstrate to OFCCP a contractor’s desire to increase the number of minorities and females in the workforce, and thus may work to the contractor’s benefit. Contractors that are making extensive outreach efforts and that effectively consider minority and female candidates should not be afraid of having placement goals. However, more placement goals may also suggest to OFCCP that the contractor has failed to make sufficient outreach efforts.
- “How are we portraying our availability analyses to other individuals who may review these analyses?” There are multiple audiences that may examine a contractor’s availability analyses. Managers and other employees inside an organization may be skeptical of availability numbers that do not correspond to their experience in finding candidates. Plaintiffs’ lawyers may use availability analyses to suggest that there is some form of discrimination occurring. It is important to be able to explain to each audience what the numbers mean, how they are used, and why availability analyses are inherently flawed.
Ultimately, we return to the point made at the beginning of this article: while many federal contractors believe (and many AAP vendors suggest) that availability analyses and the placement goals derived from these availability analyses are the most important part of any affirmative action plan, they are not. OFCCP is often focused on subjects other than placement goals for minorities and females and efforts made to reach these placement goals. Subjects such as compensation disparities, hiring disparities, veterans issues, and issues concerning individuals with disabilities deserve far more attention from federal contractors and subcontractors than availability analyses and placement goals for minorities and females.
Please note: Nothing in this article is intended as legal advice or as a substitute for any professional advice about your organization’s particular circumstances. All original materials copyright © HR Analytical Services Inc. 2016