John Caravella’s Article on Affirmative Action for Contractors

John Caravella’s Article on Affirmative Action for Contractors to be Featured in Nassau County Bar Association’s “The Nassau Lawyer” Publication

In January 2021, The Nassau Lawyer will publish an article written by Mr. Caravella, regarding protected classes and anti-discrimination laws within New York State. Business Owners and Contractors are encouraged to stay informed of these issues and reform efforts. To obtain a copy of this topic article, please visit www.nassaubar.org, or please scroll down below.

Primer on Affirmative Action for Construction Contractors

By John Caravella

 All businesses must avoid discriminating against members of protected classes when making employment decisions, but federal contractors, including construction contractors, must also take affirmative steps to ensure that they hire and promote members of protected classes. As discussed below, these affirmative action requirements derive from several discrete legal authorities and carry a range of undesirable sanctions for violators. Moreover, recent changes in antidiscrimination law suggest a growing tension between affirmative action and color- and gender-blindness that may further complicate matters for construction contractors in the future. While the laws discussed herein apply to all federal contractors, provisions vary between construction and non-construction contractors. This article focuses on affirmative action as it pertains to construction contractors in particular.

There are three primary sources of affirmative action requirements: Executive Order 11246; the Rehabilitation Act of 1973; and the Vietnam Era Veterans’ Readjustment Assistance Act of 1974 (the “VEVRAA”). Executive Order 11246, as amended, applies to equal opportunity regardless of race, color, religion, sex, sexual orientation, gender identity, or national origin and requires federal contractors to take affirmative action to ensure that applicants are employed, and employees are treated during employment, without regard to the foregoing classes.[i] The Rehabilitation Act of 1973 requires federal contractors to take affirmative action to employ and advance in employment qualified individuals with disabilities.[ii] The VEVRAA requires federal contractors to take affirmative action to employ and advance in employment qualified covered veterans, including disabled veterans and recently separated veterans.[iii]

The three schemes of affirmative action requirements affect construction contractors differently and impose different requirements. Executive Order 11246’s coverage spans all construction contracts with the federal government and its agencies, and all contracts undertaken with federal funds, where the contract sum is at least $10,000.00.[iv] Relevant exceptions include contracts for work to be performed outside the United States by workers from outside the United States and contractors giving hiring preference to Native American Indians with respect to projects on or near Native American Indian reservations.[v] Given the narrow field of applicable exemptions, essentially all construction contracts with federal authorities will be subject to equal opportunity and affirmative action requirements as to race, color, religion, sex, sexual orientation, gender identity, or national origin.

Where Executive Order 11246 applies, the contractor must initially maintain personnel records for up to two years from the date of making the record or the personnel action involved, including not only documentation as to employees but also job applications, postings, and submissions from applicants.[vi] The contractor must be able to identify the gender, race, and ethnicity of employees and applicants in connection with these records.[vii] While construction contractors are not required to develop a written affirmative action plan under Executive Order 11246 and its regulations,[viii] they must take affirmative actions including the following:

  • Making employment opportunities known to minority and female recruitment sources;
  • Reviewing equal employment opportunity policies with all minority and female employees;
  • Specifically directing recruitment efforts to minority, female, and community organizations, schools with minority and female students, and minority and female recruitment and training organizations;
  • Encouraging present minority and female employees to recruit other minorities and women; and
  • Annually evaluating all minority and female employees for promotional opportunities and encouraging minority and female employees to seek or prepare for such opportunities through training.[ix]

Much like Executive Order 11246, the Rehabilitation Act applies to construction contracts where the contract sum is more than $10,000, including subcontracts where the project owner is the federal government or one of its agencies.[x] There is also a similar exclusion for employment activities outside the United States.[xi] Unlike Executive Order 11246, however, the Rehabilitation Act imposes greater requirements, in the form of a written affirmative action plan, where the above criteria are met and where the employer has more than 50 employees and a covered contract for least $50,000.[xii]

Under the Rehabilitation Act and its regulations, there is a similar two-year record-keeping requirement concerning personnel actions, with the same abbreviated period for smaller employers.[xiii] Above and beyond that, however, the regulations require contractors to expressly invite applicants and employees to self-identify as a person with a disability.[xiv] Where the size of the employer and contract necessitate a written affirmative action plan, its requirements include:

  • Ensuring that personnel practices allow for the consideration of applicants and employees with disabilities for hiring or promotion;
  • Ensuring that physical and mental job requirements that might screen out persons with disabilities are related to the job in question and born of business necessity;
  • Addressing performance problems of individuals with known disabilities by inquiring whether the problem is related to the disability and whether the individual requires a reasonable accommodation;
  • Specifically recruiting qualified individuals with disabilities, such as by sharing job openings with a state developmental services office or a private organization that specializes in training and placement of individuals with disabilities; and
  • Maintaining records of hiring activities with respect to individuals with disabilities for three years.[xv]

As opposed to Executive Order 11246 and the Rehabilitation Act, VEVRAA has its own, distinct application. Construction contracts with the federal government and its agencies of more than $150,000 are subject to VEVRAA.[xvi] Like the laws discussed above, VEVRAA applies only to employment activities within the United States, [xvii] and like the Rehabilitation Act, the requirement for a written affirmative action plan only applies to contractors with more than 50 employees.[xviii]

VEVRAA requires substantially similar actions to those under the Rehabilitation Act but for the fact that they apply to covered veterans rather than individuals with disabilities. The two-year record-keeping requirements for general personnel records are the same, with the same reduced record-keeping requirement for smaller employers.[xix] Contractors must invite applicants and employees to self-identify as covered veterans,[xx] and where required, an affirmative action plan must ensure that personnel processes permit advancement, direct outreach efforts to appropriate agencies, and maintain hiring records for three years, albeit geared toward protected veterans in this instance.[xxi] Additionally, contractors must list employment opportunities with employment service delivery systems so qualified covered veterans may be referred,[xxii] and finally, contractors must set benchmarks for hiring qualified covered veterans, which may be calculated in alternative ways, and retain records concerning their setting of benchmarks for three years.[xxiii]

While the foregoing laws concern employment actions vis a vis minority groups, contractors must nevertheless avoid giving the impression of hostility to what might be considered “majority” groups. Recently, President Donald J. Trump signed into law Executive Order 13950, which contains several provisions relevant to affirmative action programs and applicable to federal construction contracts. With respect to all federal construction contracts except those exempt from Executive Order 11246, contractors are forbidden from using “any workplace training that inculcates in [their] employees any form of race or sex stereotyping or any form of race or sex scapegoating[.]”[xxiv] Race or sex stereotyping is defined as “ascribing character traits, moral and ethical codes, privileges, status, or beliefs to a race or sex, or to an individual because of his or her race or sex.”[xxv] Race or sex scapegoating is defined as “assigning fault, blame, or bias to a race or sex, or to members of a race or sex, or to an individual because of his or her race or sex.”[xxvi]

Executive Order 13950 might seem like it is at odds with a statutory and regulatory scheme geared toward affording advancement opportunities for minority workers, but these provisions can be reconciled. Executive Order 13950 does not mandate treatment of workers regardless of race or sex, which would of course preclude affirmative action. Rather, it requires neutrality in training, which cannot assign any particular characteristics, including fault for the necessity of affirmative action laws, to any race or gender. Ultimately, both as a matter of compliance with Executive Order 13950 and avoiding workplace conflict, construction contractors should discuss race and sex discrimination and affirmative action only in terms of the employer’s obligation without offering any opinions on whether—or why—such measures are proper or necessary.

Noncompliance, whether with Executive Order 13950, Executive Order 11246, the Rehabilitation Act, or VEVRAA, carries a series of penalties. Under all of these laws, a construction contract may be cancelled, suspended, or terminated in the event of a violation, and the contractor may be debarred from being awarded federal contracts.[xxvii] Other potential penalties include backpay to employees with interest and injunctions against further violations,[xxviii] as well as the withholding of progress payments.[xxix] Earlier this year, the Department of Labor’s Office of Federal Contract Compliance Programs, which enforces the affirmative action laws, resolved a complaint against federal construction subcontractor EnviroVantage Inc. for failing to hire 12 eligible female workers, resulting in the contractor paying $100,000 in back wages and interest and agreeing to hire 12 eligible female workers as positions became open.[xxx] The resolution of a complaint for Fort Myer Construction Corp.’s violations, including violating the affirmative action laws by failing to hire qualified female and African American applicants, involved a payment of $900,000 and a commitment to offer positions to 7 qualified women and 30 qualified African Americans as positions become available.[xxxi]

Under the threat of the foregoing sanctions, construction contractors must walk a proverbial tightrope to comply with affirmative action requirements. Although the introduction of Executive Order 13950 does not outright contradict those requirements, it suggests the idea of a departure from affirmative action that may or may not take off. Ultimately, this field of law continues to evolve, and navigating it successfully will continue to require extraordinary tact on the part of construction contractors and their attorneys

John Caravella, Esq. is a construction attorney and formerly practicing project architect at The Law Office of John Caravella, P.C., representing architects, engineers, contractors, subcontractors, and owners in all phases of contract preparation, litigation, and arbitration across New York and Florida. He also serves as an arbitrator to the American Arbitration Association Construction Industry Panel. Mr. Caravella can be reached by email at [email protected] or by telephone at (516) 462-7051.

[i] Exec. Order No. 11,246, 30 Fed. Reg. 12319 (Sep. 24, 1965); as amended by Exec. Order No. 11,375, 32 Fed. Reg. 14303 (Oct. 13, 1967); Exec. Order No. 12068, 43 Fed. Reg. 46501 (Oct. 5, 1978); Exec. Order No. 13,665, 79 Fed. Reg. 20749 (Apr. 8, 2014); and Exec. Order No. 13,672, 79 Fed. Reg. 42971 (Jul. 21, 2014).

[ii] 29 U.S.C. § 793(a).

[iii] 38 U.S.C. § 4212(1).

[iv] 41 C.F.R. § 60-1.5(a)(1); 41 C.F.R. § 60-4.1.

[v] 41 C.F.R. § 60-1.5(a)(3) and (7).

[vi] 41 C.F.R. § 60-1.12(a). The time period is one year from the date of making the record or the personnel action involved if the contractor has fewer than 150 employees or its contract sum is less than $150,000.

[vii] 41 C.F.R. § 60-1.12(c).

[viii] 41 C.F.R. § 60-2.1(b).

[ix] 41 C.F.R. § 60-4.3(a).

[x] 29 U.S.C. § 793(a).

[xi] 41 CFR § 60-741.4.

[xii] 41 CFR § 60-741.40.

[xiii] 41 CFR § 60-741.80.

[xiv] 41 CFR § 60-741.42.

[xv] 41 CFR § 60-741.44.

[xvi] 38 U.S.C. § 4212. The figure of $150,000 is adjusted from $100,000 in the original VEVRAA to account for inflation per 48 CFR § 1.109.

[xvii] 41 CFR § 60-300.4.

[xviii] 41 CFR § 60-300.40(a). The regulations specify that the affirmative action plan requirement also applies only where  the contractor has a contract in excess of $100,000, but this is presently redundant, given the current threshold dollar amount for VEVRAA to apply at all.

[xix] 41 CFR § 60-300.80(a).

[xx] 41 CFR § 60-300.42.

[xxi] 41 CFR § 60-300.44.

[xxii] 38 U.S.C. § 4212.

[xxiii] 41 CFR § 60-300.45.

[xxiv] Exec. Order No. 13950, 85 Fed. Reg. 60683 (Sep. 22, 2020).

[xxv] Id.

[xxvi] Id.

[xxvii] Id.; Executive Order 11246 Secs. 207(7), 209; 41 CFR § 60-1-27(b); 41 CFR § 60-300.66; 41 CFR § 60-741.66(a).

[xxviii] 41 CFR § 60-1-26(2); 41 CFR § 60-300.65 (a)(1).

[xxix] 41 CFR § 60-300.66.

[xxx] U.S. Department of Labor. New Hampshire Federal Construction Subcontractor Enters Agreement to Settle Hiring Discrimination Found by U.S. Department of Labor.  https://bit.ly/3oujX1E.

[xxxi] U.S. Department of Labor. Fort Myer Construction Will Pay $900K to Settle Discrimination and Harassment Case Involving 371 Women and Minorities, https://bit.ly/3oIlYaJ.