Katrina Relief: U.S. Labor Department Exemption of Contractors from Written Affirmative Action Requirements
Katrina Relief: U.S. Labor Department
Exemption of Contractors From Written
Affirmative Action Requirements
Jody Feder
Legislative Attorney
American Law Division
Summary
In September, 2005, the Employment Standards Administration (ESA) of the
Department of Labor (DOL) issued a memorandum to all federal contracting agencies
waiving for a three-month period written affirmative action program, reporting, and
notice requirements with respect to federal contracts for Hurricane Katrina relief efforts.
The ESA invoked a regulatory exemption to relieve contractors of the obligation “to
develop the affirmative action program, prepare the reports, or provide the notices
usually required” by DOL regulations under E.O. 11246, Section 503 of the
Rehabilitation Act of 1973, and the Vietnam Era Veterans’ Readjustment Assistance Act
of 1974 (VEVRA). However, while avoiding affirmative action planning and reporting
aspects — possibly including goals, timetables, and perhaps other “proactive” hiring and
recruitment methods — the memorandum indicated that federal contractors would
remain subject to the basic anti-discrimination bans under those laws, which may be
enforced by individual complaint or agency compliance review. Although the ESA
memorandum clarified that the waiver is “subject to an extension should special
interests in the national interest so require,” the exemption does not appear to have been
extended beyond the initial three-month period. (Note: this report was originally written
by Charles V. Dale, Legislative Attorney.)
On September 9, 2005, the Employment Standards Administration (ESA) of the
Department of Labor (DOL) issued a memorandum to all federal contracting agencies
waiving for a three-month period written affirmative action program, reporting, and notice
requirements imposed by E.O. 11246 and related disability and veterans’ laws with
respect to federal contracts for Hurricane Katrina relief efforts.1 Generally, regulations of
1 Charles E. James, Sr., Deputy Assistant Secretary, “Memorandum to all Contracting Agencies
of the Federal Government Re: Contracts for Hurricane Katrina Relief Efforts,” (September 9,
(continued...)
the Office of Federal Contract Compliance Programs (OFCCP) under E.O. 11246 require
federal contractors and subcontractors with 50 or more employees, and contracts in excess
of $50,000 to refrain from discrimination and to take affirmative action with respect to
the employment of racial and ethnic minorities, women, and religious adherents. Section
503 of the Rehabilitation Act of 1973,2 as amended, requires contractors to take
affirmative action and make reasonable accommodations in hiring qualified individuals
with disabilities. The Vietnam Era Veterans’ Readjustment Assistance Act of 1974
(VEVRA) requires employers with government contracts in excess of $100,000 or more
to take affirmative action “to employ and advance in employment” disabled veterans and
qualified veterans of the Vietnam era.3
The central premise of E.O. 11246 is that absent discrimination, the racial, gender,
and ethnic composition of a contractor’s workforce will come to reflect that of the
qualified labor pool from which the contractor recruits and selects its employees.4
Accordingly, a contractor’s written affirmative action plan must include an analysis of the
composition of its workforce in comparison to that of the relevant labor pools. A plan of
action, with appropriate goals and timetables, to address underutilization of minorities and
women in the contractor’s workforce is another element. The remainder of the plan
outlines “good faith affirmative action activities” the contractor intends to take in order
to meet its goals and timetables and to remedy any other inequalities found to exist.5 Thus,
an acceptable plan includes provisions for outreach and positive recruitment of
underutilized groups as well as internal and external procedures for communicating and
acting upon the contractor’s commitment to equal employment opportunity, including
audit and reporting systems.6
In the aftermath of Hurricane Katrina, the ESA invoked a regulatory exemption to
relieve contractors of the obligation “to develop the affirmative action program, prepare
the reports, or provide the notices usually required” by DOL regulations under the three
laws.7 As a general matter, the waiver and exemption appear to be a permissible exercise
of DOL’s plenary rulemaking authority under both the executive order and the
Rehabilitation Act, which specifically includes provision for a Presidential waiver “in the
1 (...continued)
2 29 U.S.C. § 793.
3 38 U.S.C. § 4212.
4 41 C.F.R. § 60-2.10(a) (2004).
5 Id. at § 60-2.35.
6 Id. at § 60-2.17, 2.21. Specifically, the executive order requires inter alia that contractors and
subcontractors state in all job advertisements that qualified applicants will be considered for
employment without regard to race, color, religion, or national origin; advise labor unions and
include in every subcontract or purchase order a statement of their obligations under the order;
furnish all information and reports required by the enforcing agency and permit access to books,
records, and accounts; and file regular compliance reports describing hiring and employment
practices. Id. at §§; 60-1.40 to 1.47.
7 Id. at §§ 60-1.5(b)(1), 60-250.4(b)(1), and 60-741.4(b)(1).
national interest.”8 No similarly explicit statutory authority exists in VEVRA; but it might
reasonably be inferred in the present circumstances from a directive that DOL
“coordinate[ ]” reporting under that law with any other required reports to the Secretary
— such as those required by the other two exempted laws.9 However, while avoiding
affirmative action planning aspects — such as goals, timetables, and perhaps other
“proactive” hiring and recruitment methods — the memorandum indicated that federal
contractors would remain subject to the basic anti-discrimination bans under those laws,
which presumably could continue to be enforced by individual complaint or agency
compliance review. In addition, according to OFCCP Director James, covered contractors
would continue to be subject to Federal Acquisition Regulation requirements for posting
“Equal Opportunity is the Law” notices; recordkeeping and record retention; and
employment listings with appropriate local employment service offices.10
Originally, the waiver and exemption were set to expire after three months, but the
memorandum made clear that they were “subject to an extension should special interests
in the national interest so require.” Accordingly, opponents of the waiver argued that the
ESA memorandum amounted to an exemption of indefinite duration pertaining to a range
of contracting opportunities, the full scope of which were neither defined nor explicitly
limited by its terms. It was uncertain, for example, how broadly or narrowly the agency
considers “covered contracts entered into to provide Hurricane Katrina relief” and what
categories of contracts were to be exempted or for how long. In particular, it was unclear
whether the waiver and exemption related only to contracts directly performed in the
Katrina destruction areas, or could extend, as well, to procurement of goods and services
by FEMA or other agencies that aid the relief effort from off-site locations.
Others argued, however, that given the urgent demand for relief goods and services
posed by the disaster — and the possibly temporary or one-time nature of at least some
contract procurements — full compliance with all affirmative action planning and
reporting requirements, prescribed by departmental rules and regulations,11 were not
practicable in every case. For example, vendors supplying goods or services to the
government, whether by purchase order or formal written contract, are apparently viewed
as contractors for executive order purposes regardless of duration of the transaction if
other jurisdictional requirements are met.12 On the other hand, OFCCP regulations
8 E.O. 11246, § 201, 43 FR 46501 (1978)(“The Secretary of Labor shall be responsible for
administrative enforcement of Parts II and III of this Order. The Secretary shall adopt such rules
and regulations as are deemed necessary and appropriate to achieve the purpose of Parts II and
III of this Order.”); § 29 U.S.C. § 793 (c).
9 38 U.S.C. § 4212 (d)(2). See e.g. Butler v. McDonald Douglas, 93 F.R.D. 384 (S.D. Ohio
1981)(DOL regulations under § 4212 must be given persuasive authority as to proper
interpretation of the statute).
10 BNA, Daily Labor Report No. 176, p. A-1 (9-13-2005).
11 41 C.F.R. Part 60-2 (2004) (Affirmative Action Programs); Id. at Part 250 (Special Disabled
Veterans and Veterans of the Vietnam Era); and Id. at Part 741 (Affirmative Action Regarding
Individuals with Disabilities).
12 Cf. United States v. Mississippi Power and Light Co., 638 F.2d 899, 905 (5th Cir.
1981)(affirmative action “is deemed a part of all government contracts whether or not the
(continued...)
provide a 120-day “grace period” from the date of contract commencement for affirmative
action program development13 which, it was contended, provides larger contractors
covered by the law with ample opportunity to comply without interruption of necessary
relief activities. And because smaller contractors — i.e., those with less than $50,000.00
contracts or subcontracts or fewer than 50 employees — are not subject to written
affirmative action requirements, the waiver and exemption would presumably not apply
to them.
Ultimately, despite the fact that the waiver was “subject to an extension should
special interests in the national interest so require,” the exemption does not appear to have
been extended beyond the initial three-month period. As a result, the written affirmative
action requirements that were suspended for federal contracts in the wake of Hurricane
Katrina appear to have been reinstated.
12 (...continued)
contract is written and whether or not the clause is physically incorporated in the contract. The
regulation is an evocation of the strict policy that the affirmative action obligation is an
understood and unalterable part of doing business with the government.”).
13 41 C.F.R. at § 60-2.1(c).