Much as the agency has done in response to past crises, the OFCCP has granted a three-month “exemption” for federal contracts pertaining to coronavirus relief. What does that mean?
First, let’s be clear that this does not have any significant impact on existing federal contractors. If you are already obligated to prepare AAPs, you still have to finish and implement your AAPs. If you are already subject to OFCCP audit, those audits will still happen. This mainly applies to new contractors and is only a partial exemption from OFCCP requirements.
Federal contracting agencies are required to insert the OFCCP’s “EO clauses” in their federal contracts. That is the “hook” that imposes special EEO/AA obligations on federal contractors. Federal agencies do not have the authority to pick and choose the circumstances in which they will include the EO clauses. In other words, they do not have the authority to decide whether and to what extent OFCCP jurisdiction applies to any particular contract. Even if the agency fails to insert the required contract language, the EO clauses will be read-into the contract as a matter of law.
In times of crisis, when OFCCP’s requirements might discourage organizations from providing essential help, the OFCCP can and does grant limited waivers. Most recently, the OFCCP has done this repeatedly in recent years for hurricane relief efforts.
The OFCCP does not grant blanket waivers for any purpose. Instead, federal agencies are authorized to insert special language exempting certain portions of the OFCCP’s EO clauses. This special language allows an organization to enter into federal contracts without fear of that triggering an audit.
How does that work? The OFCCP basically grants federal contracting agencies the authority to determine whether or not a particular contract falls into the national interest exemption. Here, the contract must specifically be for “coronavirus relief.” But the OFCCP does not define that term; they leave it up to the contracting agency to decide.
If the contract is deemed to fall into the exemption, the federal contracting agency inserts special language into their contracts provided by the OFCCP. If that language is not included in the contract, the contract is not exempt.
And those contracts are not exempt from OFCCP jurisdiction entirely. Contracts subject to these national interest exemptions still confer the obligation to ensure nondiscrimination under the OFCCP’s various laws. However, they do not confer the obligation to prepare formal, written affirmative action programs (AAPs). And the OFCCP commits to not initiating an audit based on these contracts.
That is not the same as the OFCCP not auditing companies that hold such a contract—it is not a “get out of jail free” card. It simply means that if the OFCCP schedules the company for an audit, they must point to a different federal contract to establish jurisdiction, one that does not contain the special national exemption language.
Because the nondiscrimination provisions are not exempted, the OFCCP can still investigate discrimination complaints based on an “exempted” federal contract.
What is less clear is whether and to what extent this extends to subcontracts. Logic dictates that if an organization enters into a subcontract that is necessary for the performance of a prime contract that, in turn, is subject to the national interest exemption, then the exemption should “flow-down” to the subcontracts. The OFCCP confirms that (not in the exemption itself, but in subregulatory guidance). As long as the prime contract is exempt, all necessary subcontracts are similarly exempt. It is up to each contractor whether or not to include special language in the EO “flow-down” clause. Unlike the prime contract, though, the special language does not have to appear in subcontracts for those contracts to be exempt.
Is your head spinning yet? That’s okay. If you are otherwise already a federal contractor required to prepare AAPs and subject to audit, this is unlikely to impact you at all. It is just a way to encourage new federal contractors to pitch in and help out.
The coronavirus relief exemption applies to contracts entered into from March 17, 2020 to June 17, 2020. The exemption and guidance are available on the OFCCP’s website here.