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In health care? Get ready for federal affirmative action scrutiny

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in Firing,Human Resources,Leaders & Managers,Management Training,Office Management,Records Retention

The agency that oversees affirmative action compliance for companies that do business with the government is getting ready to ramp up enforcement.

The U.S. Department of Labor’s Office of Federal Contract Compliance Programs (OFCCP) has a bigger budget and more staffing this year, and intends to audit federal government contractors or subcontractors that have 50 or more employees and a contract or subcontract of at least $50,000. Those employers are required to establish an affirmative action program.

And the OFCCP can be expected to increase its scrutiny on health care providers that are contractors or subcontractors for the government. They’re obligated to comply with OFCCP regulations.

Affirmative action required

As hospitals learned last year, they can become subject to affirmative action regulations without even realizing it. For example, in OFCCP v. UPMC Braddock (2007-OFC-001/002/003, 2009), the Department of Labor’s Administrative Review Board (ARB) ordered University of Pittsburgh Medical Center (UPMC) hospitals to comply with the affirmative action laws by virtue of their contract with a health maintenance organization (HMO) that, in turn, contracted with the Office of Personnel Management (OPM) to provide medical services to federal employees.

Because the medical services provided by the hospitals were necessary to the performance of the HMO’s contract, the ARB ruled that the hospitals were government subcontractors, even though they did not have notice of their subcontractor status and even though the contract between the HMO and OPM expressly excluded providers of medical services as subcontractors.

The ARB essentially found that parties cannot agree by contract to ignore affirmative action regulations to which they would otherwise be subject. The ARB concluded that the definition of subcontractor in the UPMC’s OPM contracts is limited to interpreting and executing those contracts, and cannot be used to avoid UPMC’s obligations to comply with affirmative action regulations.

Are you a subcontractor?

Most likely, health care providers will know if they contract directly with the federal government.

However, they may not be aware that they have entered into a government subcontract unless the prime contractor notifies them. That doesn’t always occur. (See the government’s definition of “subcontractor” below.)

Advice: If you are a health care provider, investigate whether you are assuming subcontractor obligations when you enter into a contract with a prime government contractor. The first step is to determine whether the other party to a contract is a government contractor. If so, the next step is to discover whether the services you will provide to the contractor will be necessary to or part of the services the contractor performs for the federal government.

What plans should cover

A government subcontractor is subject to the same requirements under the affirmative action regulations as a government contractor. Those regulations require the preparation of annual affirmative action plans for women and minorities, for veterans and for individuals with disabilities, within 120 days of executing the subcontract.

Affirmative action plans typically focus on areas in which the subcontractor’s workforce does not have the percentage of women and minorities that would be expected based on availability in the relevant labor market and internally in the hospital.

The OFCCP expects subcontractors to engage in affirmative efforts to recruit a diverse workforce, particularly if women or minorities are underrepresented in particular job groups. Contractors and subcontractors are also required to track data relating to personnel transactions (e.g., applicants, hires, terminations, promotions and the like).

The OFCCP conducts random audits. If the OFCCP advises a contractor or subcontractor of its intention to audit, it provides a brief 30-day window during which the contractor must submit its affirmative action plan.

Don’t wait for a notice from the OFCCP to prepare your affirmative action plans and set up appropriate data tracking processes. In the current atmosphere of increased oversight and more audits—plus government saber-rattling about fraud, waste and abuse—contractors and subcontractors should proactively self-audit their compliance efforts so they can detect and attempt to remedy any problems before the OFCCP or other government agencies ever get involved.

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