Construction Compliance Frequently Asked Questions

These Frequently Asked Questions are offered to foster a better understanding of federal construction contractor obligations and OFCCP’s construction compliance evaluation process. They are not intended to be all-inclusive but rather supplement other compliance assistance materials, particularly the Construction Contractors Technical Assistance Guide (TAG).

APPLICATION OF LEGAL AUTHORITIES

  1. When does Executive Order 11246 apply to federal construction contractors?
  2. When do Section 503 of the Rehabilitation Act of 1973 (Section 503) and the Vietnam Era Veterans’ Readjustment Assistance Act of 1974 (VEVRAA) apply to federal construction contractors?
  3. What is the difference between a direct federal construction contract and a federally assisted construction contract?
  4. Are federal construction contractors required to develop a written affirmative action program (AAP) under Executive Order 11246?
  5. Are direct federal contractors required to develop VEVRAA and/or Section 503 AAPs based upon the aggregate total of all construction trade and non-trade employees company-wide?
  6. I have a construction contract only. Some of my employees do not work in construction trades. Are these employees covered under 41 CFR part 60-4?
  7. If a prime contractor has both a construction and a supply and service contract, which employees are covered under 41 CFR part 60-2 and which employees are covered under 41 CFR part 60-4?
  8. If a contractor has a single contract that involves both construction and nonconstruction, which affirmative action obligations apply to the contract?
  9. How can a contractor determine whether a contract involves both construction and supplies and services?
  10. Where can a construction contractor find detailed information regarding obligations and compliance evaluations?
  11. What is Executive Order 13496 and is it applicable to construction contracts?
  12. What are the physical posting and contract inclusion requirements of Executive Order 13496?

OFCCP CONSTRUCTION EVALUATION PROGRAM

  1. What if the contractor’s geographic area does not have a minority participation goal because it was designated after 1980?
  2. Are covered construction contractors and subcontractors required to comply with OFCCP-administered laws at all construction worksites?
  3. Does OFCCP have a process for evaluating a construction contractor when a project has more than one place of performance? For example, an interstate paving project that encompasses multiple counties.

INVESTIGATING DISCRIMINATION

  1. What does OFCCP look for during a compliance evaluation in terms of discrimination?
  2. Is harassment a form of discrimination that OFCCP looks for during a compliance evaluation?
  3. Are contractors permitted to use tests or other exams to select individuals for hire?
  4. Are construction contractors required to monitor their compensation policies and practices and personnel activity?
  5. If employees or applicants experience discrimination while working for or applying to work for a federal or federally-assisted construction contractor or subcontractor, what can they do?

OFCCP COMPLIANCE REVIEW BASICS

  1. What types of employees are covered under 41 CFR part 60-4?
  2. Which employees should be included in my employment activity (applicants, hires, promotions, layoffs, recalls, and terminations) and payroll data submission?
  3. Who should be considered a member of the “construction trades” for purposes of providing data for Items 2 and 3 in the Itemized Listing of the construction Scheduling Letter?
  4. What good faith efforts are construction contractors required to take in order to increase the participation of minorities and women in the skilled trades?
  5. The regulations establish goals for the number of women and minorities that participate in each trade at the contractor’s workforce. If a contractor is meeting all of these participation goals for minorities and women, does that mean it is not engaging in any discrimination?
  6. What are promising practices for construction contractors to monitor and organize utilization hours?
  7. If a contractor fails to meet its participation goals, is it in violation of Executive Order 11246?
  8. Does a construction compliance review include a mandatory on-site?
  9. The construction Scheduling Letter encourages contractors to submit their information in an electronic format, but what if I do not maintain my records electronically?
  10. How should payroll data be organized for submission?
  11. What applicant and hiring data should be included in the Section 503 and VEVRAA affirmative action programs, to comply with the data collection analysis requirements?
  12. What types of accommodation request records are federal contractors required to maintain?
  13. What materials does OFCCP provide to construction contractors to help them understand what they should provide specific to each legal authority (Executive Order 11246, Section 503 of the Rehabilitation Act, and VEVRAA) in response to the construction Scheduling Letter?

SCHEDULING

  1. What information sources does OFCCP use to identify direct federal and federally assisted construction contractors and subcontractors?
  2. How are construction contractors and subcontractors selected for compliance evaluations?
  3. Does OFCCP schedule construction contractors and subcontractors for compliance evaluations by establishment, project, or by specific areas?
  4. Does OFCCP consider the number of trade employees at a construction contractor or subcontractor when making scheduling decisions?

APPLICATION OF LEGAL AUTHORITIES

1. When does Executive Order 11246 apply to federal construction contractors?

Executive Order 11246 applies to federal construction contractors that meet one or more of the following contract thresholds:

  1. A direct federal construction contract or subcontract of over $10,000.
  2. A federally assisted construction contract or subcontract of over $10,000.
  3. Two or more federal construction contracts or subcontracts of less than $10,000 that, when added together, total more than $10,000 within any 12-month period or can reasonably be expected to total more than $10,000 during that time.
  4. A construction contract or subcontract of over $10,000 with a federal nonconstruction contractor or subcontractor, if the construction contract/subcontract is necessary in whole or in part to the performance of the federal nonconstruction contract or subcontract or if the subcontractor performs, undertakes, or assumes any portion of the contractor’s obligation.

2. When do Section 503 of the Rehabilitation Act of 1973 (Section 503) and the Vietnam Era Veterans’ Readjustment Assistance Act of 1974 (VEVRAA) apply to federal construction contractors?

Section 503 applies to federal construction contractors with a direct government contract of more than $15,000.

VEVRAA applies to federal construction contractors with a direct government contract of $150,000 or more.

Construction contractors and subcontractors whose sole coverage comes from federally assisted construction contracts are not covered by Section 503 and VEVRAA.

3. What is the difference between a direct federal construction contract and a federally assisted construction contract?

A direct federal construction contract is an agreement or modification to an agreement entered into directly with the federal government through one of its agencies for the purchase, sale, or use of personal property or nonpersonal services, where the term “nonpersonal services” includes construction services. For example, a construction contract awarded by the General Services Administration to build a federal courthouse would constitute a direct federal construction contract.

A federally assisted construction contract is an agreement or modification paid for in whole or in part with funds obtained from the federal government but where the government is not a party to the construction contract. Federally assisted contracts could be funded through, for example, a federal grant, contract, loan, insurance, or guarantee. An example of a federally assisted construction contract could be a contract to build highways or bridges funded by federal grants to state Departments of Transportation.

Executive Order 11246 applies to both direct federal construction contracts and federally assisted construction contracts.

Section 503 and VEVRAA apply solely to direct federal construction contracts. Federally assisted construction contracts are exempt from both Section 503 and VEVRAA.

4. Are federal construction contractors required to develop a written affirmative action program (AAP) under Executive Order 11246?

No, OFCCP does not require construction contractors to develop a written AAP under Executive Order 11246. Instead, OFCCP has established participation goals for minorities and women based on civilian labor force participation rates and has outlined in the regulations specific affirmative actions contractors must take in order to ensure equal employment opportunities. (41 CFR 60-4.3(a)7)

5. Are direct federal contractors required to develop VEVRAA and/or Section 503 AAPs based upon the aggregate total of all construction trade and non-trade employees company-wide?

Contractors with 50 or more employees and a direct federal contract of $50,000 or more have AAP requirements under Section 503 (41 CFR Part 60-741, subpart C). For VEVRAA, contractors with 50 or more employees and a contract of $150,000 or more have AAP requirements (41 CFR Part 60-300, subpart C).

Page 33 of the Construction Contractors Technical Assistance Guide (TAG) instructs federal construction contractors to develop and maintain Section 503 and VEVRAA AAPs in one of the following two ways:

6. I have a construction contract only. Some of my employees do not work in construction trades. Are these employees covered under 41 CFR part 60-4?

The requirements set forth at 41 CFR part 60-4 apply to the workers who are engaged in on-site construction and functions incidental to the actual construction, such as supervision or inspection. The regulations define “construction work” and “site of construction” at 41 CFR 60-1.3.

7. If a prime contractor has both a construction and a supply and service contract, which employees are covered under 41 CFR part 60-2 and which employees are covered under 41 CFR part 60-4?

A contractor’s obligation to comply with 41 CFR part 60-2 and/or 60-4 requirements will depend on the type of contract(s) it has. Executive Order 11246 defines “construction contract” as “any contract for the construction, rehabilitation, alteration, conversion, extension, or repair of buildings, highways, or other improvements to real property.” The regulations also define “construction work” and “site of construction” at 41 CFR 60-1.3. Supply and service contracts are nonconstruction contracts, as implicitly defined at 41 CFR 60-2.1.

If a contractor has a direct or federally assisted construction contract as set forth at 41 CFR part 60-4, the part 60-4 requirements apply to its workers who are engaged in on-site construction and functions incidental to the actual construction, such as supervision or inspection, at all worksites across the United States where its construction workers are located. The part 60-4 requirements also apply to those construction employees of covered construction contractors who work on nonfederal or nonfederally assisted construction sites. If the same contractor has a covered nonconstruction contract of $50,000 or more and at least 50 nonconstruction employees, that contractor must comply with the affirmative action obligations at 41 CFR part 60-2 at every establishment (or functional/business unit, as applicable) where those nonconstruction workers are located.

8. If a contractor has a single contract that involves both construction and nonconstruction, which affirmative action obligations apply to the contract?

Consistent with applicable Federal Acquisition Regulations, a single contract, meeting applicable jurisdiction thresholds and including both construction work and nonconstruction (supply and service), must comply with the affirmative action obligations applicable to the predominant part of the work, or if the contract is divided into parts, the affirmative action obligations applicable to each portion.

9. How can a contractor determine whether a contract involves both construction and supplies and services?

If questions arise about the type of contract, a prime contractor should consult with their contracting officer and a subcontractor should consult with the prime contractor.

10. Where can a construction contractor find detailed information regarding obligations and compliance evaluations?

OFCCP’s website contains various compliance assistance materials for construction contractors, including a Construction Contractors Technical Assistance Guide, Small Federal Contractor Technical Assistance Guide, Posting and Notices Guide & Checklist, Recordkeeping Guides, and best practice suggestions. Additionally, the agency conducts compliance assistance webinars at national and local levels, and direct compliance assistance may be requested from local district offices.

11. What is Executive Order 13496 and is it applicable to construction contracts?

Executive Order 13496, Notification of Employee Rights Under Federal Labor Laws, 74 FR 6407 (February 4, 2009), requires that federal contractors provide notice to their employees of their rights under federal labor laws. Specifically, Executive Order 13496 requires that covered contractors provide notice of employee rights under the National Labor Relations Act (NLRA), the law that governs relations between unions and employers in the private sector. The NLRA guarantees the right of employees to organize and to bargain collectively with their employers, to engage in other protected concerted activity with or without a union, or to refrain from all such activity.

Executive Order 13496 is applicable to non-exempt, covered construction contracts, as well as to supply and service contracts. Executive Order 13496’s requirements are the same for all contractors with covered contracts. However, Executive Order 13496 is not applicable to federally assisted construction contracts. (DIR 2010-01, Verification Procedures Under Executive Order 13496, Notification of Employee Rights under Federal Labor Laws, and the Department of Labor’s implementing regulations at 29 C.F.R. Part 471.)

12. What are the physical posting and contract inclusion requirements of Executive Order 13496?

Contractors and subcontractors subject to Executive Order 13496 are required to post the Department of Labor notice informing their employees about their rights under federal labor laws. The size, form, and content of the notice are prescribed by the Secretary of Labor and cannot be altered by contractors. The poster and related information are located on the Office of Labor-Management Standards website at www.dol.gov/olms/regs/compliance/EO13496.htm.

Additionally, all non-exempt federal contracts, subcontracts, and purchase orders must include a prescribed contract clause that sets out the text of the employee notice and outlines the contractor’s posting obligation. The employee notice clause can be incorporated by reference, rather than verbatim. To include the clause by reference, the contract or purchase order must cite to "29 CFR Part 471, Appendix A to Subpart A." Appendix A is available at Executive Order 13496: Notification of Employee Rights Under Federal Labor Laws.

OFCCP CONSTRUCTION EVALUATION PROGRAM

1. What if the contractor’s geographic area does not have a minority participation goal because it was designated after 1980?

Although a geographic area may not have a minority participation goal, the 6.9 percent participation goal for women applies nationwide. Additionally, even absent minority goals, during a compliance review OFCCP will still evaluate a contractor’s good faith efforts to increase its representation of minorities and women as required by 41 CFR part 60-4.

2. Are covered construction contractors and subcontractors required to comply with OFCCP-administered laws at all construction worksites?

Yes. Covered contractors and subcontractors must comply with these laws at all worksites, unless otherwise exempt. For example, a company with a federal construction contract in California must comply with OFCCP requirements at the California worksite where the federal contract work is being performed and at all the company’s worksites throughout the United States.

3. Does OFCCP have a process for evaluating a construction contractor when a project has more than one place of performance? For example, an interstate paving project that encompasses multiple counties.

OFCCP schedules and evaluates construction contractors based on defined geographic areas (SMSAs and Non-SMSAs) published in the Federal Register. Many of these areas include a grouping of several counties or county equivalents. During a compliance evaluation, OFCCP may request records and other information related to any of the contractor’s construction projects located in the scheduled SMSA or Non-SMSA. If a project crosses county lines, such as a long stretch of interstate, OFCCP could request records related to the entire project, if each of those counties is in the defined geographic area. OFCCP’s Participation Goals for Minorities and Females defines the geographic areas the agency uses to schedule construction contractors.

In other circumstances, a large project may include work that crosses more than one SMSA or Non-SMSA. In this context, if the contractor is scheduled for a compliance evaluation, OFCCP will request records and other information associated with the project which occurred while employees are specifically working in the counties published for the scheduled geographic area (SMSA or Non-SMSA).

INVESTIGATING DISCRIMINATION

1. What does OFCCP look for during a compliance evaluation in terms of discrimination?

OFCCP looks for evidence of disparate treatment and disparate impact discrimination.

Disparate treatment discrimination occurs when a contractor intentionally treats an individual or group differently on the basis of a prohibited factor (race, color, religion, sex, sexual orientation, gender identity, national origin, disability, status as a protected veteran, or protected disclosure of compensation information), and this treatment is not based on a legitimate nondiscriminatory reason. Examples of disparate treatment include a contractor assigning women applicants to only lower-paid, unskilled positions because of their gender.

Disparate impact discrimination occurs when a contractor’s use of a facially neutral policy or practice (e.g., a test, an interview, a degree requirement, a leave or hours policy) disqualifies members of a protected class at a substantially higher rate than others and is not justified by business necessity and job-relatedness (or it is justified by business necessity but there are less-discriminatory alternatives available that would meet the contractor’s need). The contractor does not have to intend for the practice to discriminate against certain groups for this to constitute unlawful discrimination. An example of disparate impact discrimination would be a lifting requirement that disproportionately disqualifies women from employment where it is not necessary for someone in the particular position being filled to lift items of that weight. Another example of disparate impact discrimination could be using a “word-of-mouth” recruitment process that results in disproportionately excluding certain racial or ethnic groups from consideration for job openings.

2. Is harassment a form of discrimination that OFCCP looks for during a compliance evaluation?

Yes, harassment because of a protected basis, such as sex, race, ethnicity, sexual orientation, gender identity or disability can be a form of unlawful discrimination that OFCCP will investigate during a compliance evaluation. With respect to harassment, the conduct does not have to be of a sexual nature. Harassment can take the form of comments or conduct that creates an intimidating, hostile, or offensive work environment. Contractors are required to ensure that all forepersons, superintendents, and other on-site supervisory personnel are aware of and carry out the contractor’s obligation to maintain a non-hostile working environment free from harassment, intimidation, and coercion, including quid pro quo harassment where submission to unwelcome sexual advances or requests for sexual favors is made either explicitly or implicitly a term or condition of an individual’s employment or submission to or rejection of such conduct by an individual is used as the basis for employment decisions affecting such individual.

3. Are contractors permitted to use tests or other exams to select individuals for hire?

Yes. However, any test or other selection procedure that contractors use to select candidates for hire or to make job assignments or promotions cannot discriminate against those being considered. For example, if a contractor uses a mental ability (cognitive) test that results in a significantly lower percentage of minority candidates securing jobs as journey workers, the contractor must show that the test is necessary for the job in question. To that end, if a selection test or procedure has adverse impact on individuals in a particular race, sex, or ethnic group unless a validity study cannot or need not be performed for the reasons set forth at 41 CFR 60-3.6(B), the test or procedure must be validated to ensure that the qualification the selection procedure is designed to measure is job-related and consistent with business necessity. (For more information regarding validated selection procedures, see the Uniform Guidelines on Employee Selection Procedures and Uniform Guidelines Questions & Answers).

4. Are construction contractors required to monitor their compensation policies and practices and personnel activity?

OFCCP’s regulation at 41 CFR 60-4.3(a)7.m requires construction contractors to continually monitor their personnel practices to ensure employees are not subject to discrimination. Personnel practices include actions taken by management related to decisions regarding their employees, for example, hiring, firing, layoff, promotion, transfer, demotion, compensation, salary increase, salary decrease, work assignments, and benefits. Contractors should also examine employee access to opportunities affecting compensation, such as higher-paying positions, job classifications, work assignments, training, preferred or higher-paid shift work, access to overtime hours, pay increases, and incentive compensation. The Construction Contractors Technical Assistance Guide, on page 30, provides contractors with promising practices they may use to assist with demonstrating compliance. For example:

Additionally, OFCCP’s regulation at 41 CFR 60-4.3(a)7.k requires the contractor to validate all tests and other selection requirements where there is an obligation to do so under 41 CFR part 60-3 (Uniform Guidelines on Employee Selection Procedures (1978). This requirement is described on page 29 of the Construction Contractors Technical Assistance Guide.