Does My Company Need an Affirmative Action Plan?

Did your company recently receive a contract from the federal government? If so, you’re now under federal obligations for hiring practices, which can include implementing an affirmative action plan. While not every company with federal contracts needs an affirmative action plan, many do—so learn which companies need plans and what these plans mean below.

What Companies Need To Have an Affirmative Action Plan?

Certain companies that do business and hold contracts with the federal government fall under affirmative action compliance. Any company with 50 employees or more and one federal contract worth $50,000 or more must have an affirmative action plan (AAP).

If your business has just one federal contract worth the above amount and 50 employees, you could get penalized for not having an AAP. While companies outside these requirements are not legally bound to come up with AAPs, they’re highly recommended, and many do so voluntarily. Even if your company’s size and federal contracts don’t meet the requirements for an AAP, there are other federal fairness requirements you’ll have to abide by.

What Is an Affirmative Action Plan?

So, what are the key components of an affirmative action plan that a company needs? An AAP is a written document that outlines your company’s steps and plans to ensure equal employment opportunities for protected classes and minorities.

Pro Tip: Many companies outsource their compliance programs, like AAPs, to get expert analysis and ensure compliance with federal regulations.

In this plan, the company should include employment data for the previous year and outline future steps to remedy employment issues based on this data. These steps can range from posting open positions on job sites to more significant organization adjustments. Some companies may also have to show compliance with other federal obligations like transparency in pay and offering applicants the opportunity to self-identify race, gender, or veteran status.

What Happens if My Company Doesn’t Have an Affirmative Action Plan?

AAPs get enforced through audits by the Office of Federal Contract Compliance Programs (OFCCP). Yearly the OFCCP will conduct a compliance audit, which typically begins with a request for the company to submit its AAP to the office.

Most times, that’s as far as the audit goes, as the OFCCP reviews and gives the company a thumbs-up. But if they spot potential issues, the audit may include an on-site inspection and assessment of files and interview of employees. If the OFCCP finds the company violates federal requirements, it may impose monetary penalties, terminate the contract, and even bar the company from future government contracts.

If your company needs an affirmative action plan, you’ll want to take it seriously to avoid penalties! Don’t let a weak or ineffectual AAP lead to a compliance investigation and put your company in danger of losing valuable federal contracts.