Applicant Definition and Recordkeeping 2005

The Management Advantage, Inc.

Who is an Applicant? Now We Know!

There are some basic differences between applicant definitions acceptable to the U.S. Department of Labor's (DOL) Office of Federal Contract Compliance Programs (OFCCP) and the Equal Employment Opportunity Commission (EEOC).

The EEOC has issued guidelines. The OFCCP has issued final rules. Rules have the weight of law. Guidelines do not. If you are a federal contractor, you would be best served if you adopted the OFCCP approach to defining "job applicant."

EEOC GUIDELINES

On February 24, 2004, the Equal Employment Opportunity Commission and several other agencies published in the Federal Register a set of questions and answers that will be added to the 1979 Q & A's associated with the Uniform Guidelines on Employee Selection (41 CFR 60.3). The Office of Federal Contract Compliance Programs (OFCCP) through the Department of Labor, Employment Standards Division, and the Civil Rights Division of the Department of Justice also signed the proposal and request for comments from the public. Here are the additional questions and answers as proposed in this filing:

"UGESP" = Uniform Guidelines on Employee Selection Procedures

Q 94: Do federal employment nondiscrimination laws apply to employers and other UGESP-covered entities when they use the Internet and related electronic data processing technologies for recruitment and selection?

A: Yes. Title VII and Executive Order 11246, as amended, apply when covered employers use the Internet and related electronic data processing technologies for recruitment and selection. Title VII covers private and public employers, employment agencies, and labor organizations as these terms are defined at 42 U.S.C. 2000e; id. at 2000e-16 (Federal Government). Title VII covers discrimination on the bases of race, color, religion, sex, or national origin. Executive Order 11246, as amended, which covers Federal Government contractors, their subcontractors, and their vendors, also prohibits employment discrimination because of race, color, religion, sex, or national origin.

Q 95: Is Internet recruitment, like traditional recruitment, exempt from UGESP requirements?

A: Yes. As a business practice, recruitment involves identifying and attracting potential recruits to apply for jobs. Under UGESP, "recruitment practices are not considered ... to be selection procedures," \21\ and the UGESP requirements geared to monitoring selection procedures do not apply. Just as recruiters traditionally researched paper copies of professional and employer publications and listings to identify potential recruits, so recruiters now search huge bodies of information online -- which include new resources such as personal Web sites and a variety of resume databases -- for the same purpose. Online recruitment also involves organizing the search results into usable formats.

Q 96: For recordkeeping purposes, what is meant by the term "applicant" in the context of the Internet and related electronic data processing technologies?

A: The term 'applicant' is discussed in the 1979 set of questions and answers promulgated by the agencies to clarify and provide a common interpretation of UGESP. \22\ Question & Answer 15 of that publication states:
Question and Answer No. 15, Adoption of Questions and Answers to Clarify and Provide a Common Interpretation of the UGESP, 44 FR 11998 (March 2, 1979).

The precise definition of the term 'applicant' depends upon the user's recruitment and selection procedures. The concept of an applicant is that of a person who has indicated an interest in being considered for hiring, promotion, or other employment opportunities.

In order for an individual to be an applicant in the context of the Internet and related electronic data processing technologies, the following must have occurred:
(1) The employer has acted to fill a particular position; (2) The individual has followed the employer's standard procedures for submitting applications; and (3) The individual has indicated an interest in the particular position.

To elaborate on the three prongs of this test:
(1) The employer has acted to fill a particular position.

An example under the first prong is:

Example A: Individuals who register online for Customer Service Representative positions with an Internet and cable television service provider are asked to complete online personal profiles for the employer' resume database. The company acts to fill to vacancies at its Greater New York Service Center, and identifies 200 recruits from the database who have indicated that they are available to work in the New York area. One hundred of these people respond affirmatively and timely to the employer's inquiry about current interest in the particular New York vacancies. Even if the employer chooses to interview only 25 people for the position, all 100 are UGESP "applicants."

(2) The individual has followed the employer's standard procedures for submitting applications.

If everyone who applies online must complete an online personal profile, only those individuals who do so can be UGESP applicants. If job seekers must use an electronic kiosk or contact a store manager to apply for a sales position, only those who do so can be UGESP applicants. If an employer e-mails online job seekers to ask if they are currently interested in a particular vacancy, only those who meet the employer's deadline can be UGESP applicants. These procedures and directions must be nondiscriminatory because recruitment and the application processes are subject to Title VII and Executive Order 11246.

(3) The individual has indicated an interest in the particular position.

The core of being an "applicant" is asking to be hired to do a particular job for a specific employer. An individual can only accurately assess her interest in an employment opportunity of which she is aware.

With respect to Internet recruiting, this means that people who post resumes in third party resume banks or on personal Web sites are not UGESP "applicants" for all employers who search those sites. By posting a resume, the individual is advertising her credentials to the world and indicating a willingness to consider applying for new positions that may be brought to her attention. The individual is not indicating an interest in a particular position with a specific employer. If an employer contacts this individual about a particular position after finding her resume or personal profile online, and the individual indicates an interest in that position, then the individual becomes a UGESP "applicant," if she also meets the second prong of the test set forth above. Similarly, if an employer contacts an individual about a particular position in response to an unsolicited resume submitted online, and the individual indicates an interest in that position, then the individual becomes a UGESP "applicant" if she also meets the second prong of the test.

Furthermore, even if the individual expresses an interest in a whole category of positions in response to an employer's solicitation -- for example, marketing opportunities -- the individual is not an applicant but is identifying the kinds of positions in which she may be interested. She is not indicating an interest in a particular position with a specific employer. It is only with respect to a particular position that an individual can assess her interest and choose whether or not to apply.

If an individual submits a resume or personal profile repeatedly to the same employer (for example, by adding numerous online job listings to her "shopping cart") or simply sends resumes (for example, by using automated online tools that identify job listings and submit resumes), the individual again is identifying the kinds of positions in which she is interested and is not automatically an applicant.

In certain circumstances, however, actions by a job seeker in response to an employer-hosted job listing will display hallmarks of an actual, individual assessment of interest in a particular position that the employer is acting to fill. For example, a job seeker's interest in a particular position becomes evident when the job seeker complies with an employer's procedural requirements that are unique to that position.

Thus, completion and submission of an electronic application form, which form is unique for a particular position, indicates that the job seeker has a specific interest in that particular position.

Example B: Game Park is hiring park rangers, who perform specified duties and receive a starting salary within a particular range. Game Park posts an announcement on its Web page stating that it is accepting applications for its next park ranger training class, which starts in six months, and that all people who complete the required forms within one month will be evaluated for entrance into the class. Job seekers are directed to complete a detailed questionnaire asking about their experience in wildlife management, forest fire prevention, firearm safety and first aid. This profile is only suitable for the position of park ranger; it cannot be used for other Game Park positions. When these profiles are compiled into a database, all of the job seekers will be "applicants" if they satisfy the second prong of the above- referenced test.

Q 97: Are all the search criteria that employers use subject to disparate impact analysis?

A: Yes. All search criteria used are subject to disparate impact analysis. Disparate impact analysis can be based on Census or workforce data. If a disparate impact is shown, the employer must demonstrate that its criteria are job-related and consistent with business necessity for the job in question. 42 U.S.C. 2000e-2(k).

Example C: An employer has two large printing plants. The company's employment Web page encourages individuals who visit to register to be considered as printers by submitting personal profiles online. Some basic identifying information is required, and one question asks for total years of printing experience.

The employer authorizes the hiring of three new printers at one of the plants. To identify job seekers, Human Resources turns to several resources including its internal database. Even before it identifies those who properly followed the employer's online procedures and who are actually interested in these positions at this time, the employer searches the database to identify job seekers with two years printing experience. The search identifies 120 individuals, of whom only 50 express an interest in the positions and followed all the application procedures. These 50 people are UGESP applicants.

However, the impact of the employer's screen for two years' printing experience can be analyzed using workforce and Census data. For example, the experience requirement could be assessed based on relevant labor force statistics. If a disparate impact on a protected group were shown, then the employer would have to show that two years of experience was job-related and consistent with business necessity for its printing positions.

Q 98: Are employment tests, including those administered online, subject to UGESP?

A: Yes. Online tests, including tests of specific or general skills, are selection procedures rather than recruitment under UGESP because the test results are used as "a basis for making employment decisions." \24\ Employers and recruiters who use such tests should maintain records or other information "which will disclose the impact which its tests ... have upon employment opportunities of persons by identifiable race, sex or ethnic group." \25\ If employment tests have a disparate impact, they are lawful only if they are "job-related for the position in question and consistent with business necessity." 42 U.S.C. 2000e-2(k)(1)(A)(i).

OFCCP RULE

The OFCCP (Office of Federal Contract Compliance Programs in the U.S. Department of Labor) is responsible for enforcement of affirmative action and equal employment opportunity laws and regulations related to federal contractors. OFCCP has finalized its rules about the definition of Internet applicant. On October 7, 2005, OFCCP posted its final rule in the Federal Register. It is not identical to the EEOC and Department of Justice guidelines.

Here is what the OFCCP has to say:

An Internet applicant is someone who...

has submitted an expression of interest in employment through the Internet or related technology
the employer has considered as a job seeker for a particular open position
expresses interest that indicates he or she possesses the advertised, basic qualifications for the position
and, did not subsequently indicate no longer having an interest in employment in that position.

Federal contractors will have to provide race, ethnicity and gender information for those individuals who the contractor considers for a particular position and who possess basic qualifications. The rule also requires contractors to retain all expressions of interest by individuals considered and specifies records to be maintained about searches of internal and external databases. OFCCP retains the ability to assess whether selection criteria used by federal contractors are discriminatory.

Clearly, it is important to the OFCCP that the issue of qualifications be addressed in the definition of job applicant.

On a practical level, OFCCP says applicant vs. new hire data can be analyzed statistically at any stage in the employment process PRIOR to the interview stage. It is universally agreed in the enforcement community that an "applicant" is created some time before a decision is made about which people to interview.

If you are an affirmative action employer supplying contracted goods and/or services to the federal government, you may need to have a written affirmative action plan. We can help. Call us to discuss your needs, toll-free at 1-888-671-0404.

If you are any employer with 15 or more people on the payroll and you are involved in interstate commerce (ship goods across state lines), you are obligated to abide by 41 CFR 60-3, the Uniform Guidelines on Employee Selection Procedures. That involves validating any written employment test and performing statistical testing on data associated with each step of your employment selection process. The purpose is to determine if there is any unintended disparate impact against any protected group. If you need help with this testing process, call us. We can help with that also.

New OFCCP Regulations Contain Explosion of Record Maintenance Requirements

If you are a federal contractor, selling goods or services to the federal government or a subcontractor to a direct contract holder, you will want to know about new record keeping requirements that will begin on February 6, 2006. They are much more complex than anyone has dreamed possible. The result is you will have to spend much more money to comply than you may have originally believed. Here�s why.

On October 7, 2005, the U.S. Department of Labor�s Office of Federal Contract Compliance Programs (OFCCP) published its Final Rule for contractors� "Obligation to Solicit Race and Gender Data for Agency Enforcement Purposes." (41 CFR 60-1.3) It also contains the agency�s definition of "Internet Job Applicant," something that contractors have been waiting on for many years.

Not only does the OFCCP disagree with the EEOC in its definition of Internet Job Applicant, these enforcers of affirmative action regulations have expanded the burden of record retention significantly for federal contractors. To understand the changes these new regulations are making and the impact they will have on federal contractors and subcontractors (employers), it�s necessary to step back and look at the context in which all this is happening. It�s also a good idea to understand something about the way things are done in the agency.

Background

Begin by realizing that in 2005, and for the past few years, the Department of Labor (DOL) is a civilian agency operating in an environment of a war mentality in Washington, DC. Within the government, attention is being paid to the war effort and not much is left for civilian agencies. Nonetheless, DOL�s Office of the Solicitor drafts new regulations to define "Internet Applicant" and spell out the expectations of enforcement folks about collecting and retaining data about the sex and race/ethnicity of job applicants. While they were at it, they threw in some words about what they expect contractors to retain in the form of other records.

The agency is being led by Charles James, Sr. Mr. James has extensive experience in the community of federal contractors and understands affirmative action issues from the contractor viewpoint. He has been working for the last several years to refocus the use of his agency�s diminishing resources. Congress has been reducing OFCCP�s budget and continuing its expectation that OFCCP will maintain enforcement efforts at the old levels. Something had to give.

That something was procedure. Mr. James decided that changes to the way OFCCP approached its enforcement responsibilities could yield greater results and waste less efforts if they turned a bit toward enforcement of Title VII and focused less on the mechanics of affirmative action plans.

Expensive Monster Waiting Down the Road

Actions to refocus its efforts will bring OFCCP more visible results, allowing it to create a positive report to Congress. What is so positive? Money, of course. Money collected in settlements from employers. Here�s how it will work.

Currently, a contractor who fails to have an Affirmative Action Plan in place when it is required is subject to one of two remedies by OFCCP. Either the agency can proceed through the process of seeking debarment for the contractor or the contractor can acquiesce and sign a Conciliation Agreement. That agreement will simply require the contractor to put a plan in place, report periodically to OFCCP on its progress and be off the hook after a couple of years. There isn�t usually any financial penalty, except in the case of debarment.

The agency has been doing thousands of compliance reviews and constructing many Conciliation Agreements with contractors that don�t involve any monetary settlement in the remedy.

So, Mr. James has decided that it will be more productive for his group to begin looking more closely at contractor organizations for signs of illegal discrimination. After all, OFCCP has as part of its mission the enforcement of Civil Rights laws such as the Civil Rights Act of 1964, Title VII, the Vietnam Era Veterans Readjustment Assistance Act and the Rehabilitation Act.

The Civil Rights Act provides for financial remedies to illegal discrimination. These can include back pay, front pay, expense reimbursement, punitive damages, reinstatement, retroactive promotion, and more. Back pay can be calculated for two years in most cases. So, let�s see � If OFCCP discovers some pay discrepancies between minorities and non-minorities, it can push for two years� back pay representing the gap amount which would have been earned if the employer had paid everyone correctly. Depending on the

number of folks affected, these dollars can grow rapidly. They are cash flow dollars, being paid out at the time of settlement. Often amounts total in the 6 and 7 digit ranges. Now, I�ve been a manager for 40 years. In all that time, I�ve never seen a company budget money for a line item such as "Potential Discrimination Settlements." These things just aren�t a part of financial planning efforts. One reason is such a budget item would be tantamount to admission that the employer is illegally discriminating. So, when such settlements hit an employer, the impact can be felt on the bottom line profit levels and in earnings per share. Mr. James may be on to something. He�s found a way to get the attention of federal contractors by going after employer errors that can be expensive. And, there is another weapon in his arsenal we have yet to discuss. That is the public press release.

Every time OFCCP reaches a Conciliation Agreement with a contractor, it sends a press release to all the local news media where that contractor is headquartered, to the financial press and to key national press contacts. Each of these press releases explains that the contractor has agreed to pay to settle allegations of illegal discrimination, whether or not the contractor denies that discrimination took place. And, it cites the amount of the agreement. If there are other key provisions of the agreement, they will also be included in the press release.

This type of negative publicity is usually unwelcome to employers.

So, Mr. James has concluded that seeking out systemic discrimination within contractor organizations will produce settlements involving large amounts of money that will prove to Congress his agency is performing its function well. That, in a nut shell, is why Mr. James and the OFCCP are trying to employ more statistical analysis of contractor compensation data. They are looking for cases of illegal discrimination they can then remedy with Conciliation Agreements. The name of the game is now "discrimination" and not so much "affirmative action."

An Expanded Record-Keeping Requirement

New OFCCP regulations finalized [See Note 1 at end]in October 2005, provide significant modifications to the record retention requirements for federal contractors. We�re talkin� a lot more records! Here are some key items from 60-1.12 as it is now written.

Contractors must keep and maintain:

Any record created by the employer pertaining to hiring, assignment, promotion, demotion, transfer lay off or termination, rates of pay or other terms of compensation and selection for training or apprenticeship
Other records having to do with request for reasonable accommodation, and results of any physical examination
Job advertisements or postings
Applications
Resumes
Any and all expressions of interest through the Internet or related electronic data technologies � such as on-line resumes or internal resume databases
Records identifying job seekers contacted regarding their interest in a particular position
The Contractor must maintain a record of each resume added to its internal resume databases, a record of the date each resume was added to the database
A record of each position for which a search of the database was made and corresponding to each search, the substantive search criteria used and the date of the search
When using external databases, contractors must maintain a record of the position for which each search of the database was made, and corresponding to each search, the substantive search criteria used, the date of the search, and the resumes of job seekers who met the basic qualifications for the particular position who are considered by the contractor.

All of this is required, "regardless of whether the individual qualifies as an Internet Applicant under 41 CFR 60-1.3."

But wait �there�s more �

Records retained must now also include:

Tests and test results
Interview notes

Those are some rather sweeping requirements encompassing many more records than have been included in the past. Let�s just look at three of these new requirements as examples.

Records identifying job seekers contacted regarding their interest in a particular position The employer must now maintain a record of EVERY contact made with ANYONE who has expressed a job seeker�s desire for employment. Contents of the "record" are not specified in the regulations. However, a record might contain a date the contact was made, the name of the individual job seeker, the job involved, and why the contact was made. Contractors should NOT collect race and sex data on these people unless they fall into the category of "job applicant" or "Internet applicant."
A record of each position for which a search of the database was made and corresponding to each search, the substantive search criteria used and the date of the search.
If you search your own database for candidates, you must maintain a log of each search. Here the regulations are specific about content. Required components are the date, the position involved, and the search criteria used. There is no provision for limiting the log of searches to those done only by Human Resources. If you allow operations managers to search your databases those searches, too, must now be logged.
When using external databases, contractors must maintain a record of the position for which each search of the database was made, and corresponding to each search, the substantive search criteria used, the date of the search, and the resumes of job seekers who met the basic qualifications for the particular position who are considered by the contractor.

Here is another log maintenance requirement. But, it doesn�t say it is limited to searches done by you as the employer. What about searches done by your agent, the executive search specialist or placement firm?

Consequences of a Cavalier Approach

In the past year, we have heard several federal contractors say, "We aren�t going to update our affirmative action plan this year. We don�t want to spend the money. Let them catch us." That�s quite a shift from a policy of full compliance. There is no question about the cost of being a federal contractor just having increased. If you want to be in compliance, your data management systems must be able to keep resumes, job applications, interview notes, lists of selection criteria at a minimum.

Up to this point it has been common for contractors to ignore the requirement to collect job applicant data and perform disparate impact testing on new hires, promotions and terminations.

As you can imagine, there have been many excuses created for why those logs didn�t exist at the end of the year. Now, the OFCCP may be getting more aggressive in its enforcement efforts by employing a provision that has existed in the regulations for many years.

If you look at 41 CFR 60-3.4 (D) you will find the following at the end of that section:

Where the user has not maintained data on adverse impact as required by the documentation section of applicable guidelines, the Federal enforcement agencies may draw an inference of adverse impact of the selection process from the failure of the user to maintain such data�(emphasis added).

Disparate or adverse impact is illegal discrimination. If OFCCP may infer by default that absence of data means the data would have shown illegal discrimination, they have all they need to force any contractor to the negotiation table and insist on a Conciliation Agreement containing dollar remedies.

We will be encouraging our clients to establish the proper record management systems so they can avoid the most unpleasant consequences of being found to have discriminated illegally because of the "inference" provision.

Recommendations for Employers

Make a list of records you are currently keeping. Then make a list of records you are required to keep under this new regulation. Identify any new records you must maintain and make plans for how that will be done.
Review the new requirements with your Chief Financial Officer and Chief Executive Officer. Identify additional budget requirements resulting from the new record keeping requirements.
Train your management staff in the new requirements and enroll them in the process so, when appropriate, they are creating and protecting required records.
Be sure you have a retention process that allows for destruction of records once they are no longer required. It will be bad enough having to store three years worth of paper and electronic data (the current year plus two previous years), saving it for longer than that would be unnecessary expense.
____________________________
Note 1: Published as a Final Rule in the Federal Register (Pages 58946 through 58963) on October 7, 2005. The Office of Management and Budget (OMB) in the White House still has to approve the rule before it is truly final. If OMB rejects the new regulation, OFCCP will return to its former regulatory content as though 41 CFR 60-1.3 and 60-1.12 had never been changed.
�2005 William Truesdell. All Rights Reserved.

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Who is an Applicant? Now We Know!

***EEOC GUIDELINES***

***OFCCP RULE***

New OFCCP Regulations Contain Explosion of Record Maintenance Requirements

EEOC GUIDELINES

OFCCP RULE