Posts Tagged ‘audits’

CAI’s Experts Take the Confusion out of Affirmative Action Planning

Thursday, November 3rd, 2011

Madison Upton (left), Kaleigh Ferraro (right)

In October CAI’s Affirmative Action Plan (AAP) Experts, Kaleigh Ferraro and Madison Upton, hosted a free webinar to educate current and future government contractors on the basics of creating a compliant AAP. The team compiled a list of questions most frequently asked by organizations that are required to have a written AAP. If your company has 50 or more employees and holds a federal government contract or subcontract of $50,000 or more, read the answers below to make sure your organization stays compliant.


AAP Frequently Asked Questions

1.     When do we have to turn in our AAP?

Contractors and subcontractors are required to develop AAPs annually. AAPs are not submitted unless your company is selected for an audit.


2.     Are there specific qualifications for employees that must be included in our AAP?

All full-time and part-time, regular employees must be included in AAP reports. Employees on short-term leave or military leave should be included as well. Temporary employees, such as co-ops and interns, are not typically included in AAPs.


3.     How long do we need to keep our AAPs?

Contractors need to keep their current AAP and their AAP from the previous year.  All others may be discarded. However, if your organization is under audit, you must maintain all existing AAPs and accompanying reports until the audit’s conclusion. For example, if you are audited, and it takes three years from today to close the investigation, you must maintain your AAPs from 2010, 2011, 2012, 2013 and 2014, as well as pertinent employment records.


4.     What if employees or applicants choose to not disclose their race, ethnicity, gender, disability status or veteran status?

Government contractors and subcontractors are required to develop reports that use race and gender employee information. These organizations must solicit race and gender information from applicants and employees, but individuals may choose to not disclose this information, as it is voluntary to self identify.

Organizations are allowed to visually identify applicants and employees who do not self identify themselves so they can be included in AAP reports and/or EEO-1 reports. The OFCCP suggests that members of HR or managers make the visual identifications.

Contractors are not obligated to guess the race, ethnicity or gender of people who apply online or through resume and decline to self identify. If the applicant is interviewed, then a contractor may visually identify the candidate in person.


5.     How does the OFCCP choose companies to audit?

The OFCCP maintains a listing of federal contractors and uses the Federal Contractor Scheduling System (FCSS) and “administratively neutral selection criteria” to choose organizations that will be audited. Items that are considered by the FCSS may include EEO-1 reports, establishment size, random sampling of contractors and mathematical models that compare workforce profiles with other establishments in the same industry and labor market.

The OFCCP typically sends out audit scheduling letters twice a year.  The OFCCP regional offices notify approximately 2,500 establishments in early October, and a second list of approximately 5,000 establishments in early March. Organizations that are not in the FCSS can be selected for audits as well.  These organizations may include corporate offices, approved functional AAPs, or companies with credible reports of alleged violations of laws and regulations. If an organization is selected for an audit, it will not be selected again for 24 months.


6.     How should we respond to an audit letter?

When the OFFCP mails a scheduling letter to a contractor or subcontractor, the organization has 30 days to respond to the letter. The scheduling letter will request information, such as the written AAPs, compensation data and personnel activities, which include hires, applicants, promotions and terminations.


7.     What types of penalties can the OFCCP assess during an audit?

The OFCCP can collect compensatory and punitive damages, which are often the result of back pay for candidates who are not selected, or unexplained salary differences between employees. Organizations may also agree to conciliation agreements that may result in additional submitted reports.


8.     We are a subsidiary of a parent company.  We do not have any contracts, but our parent company does.  Are we a contractor and therefore subject to AAP regulations?

The OFCCP uses the NLRB test of common ownership to determine if a subsidiary is covered. If your organization fits one of the characteristics below, you are required to complete an AAP.

  • Interrelation of operations – there are common services provided between companies, such as insurance, retirement policies, federal tax ids, etc.
  • Centralized control of labor relations – all locations are subject to identical or similar personnel policies, which are determined by the corporate office. These policies include decisions to hire, promote, terminate, etc. All decisions must be approved by corporate headquarters.
  • Common management – the multiple locations share officers, boards of directors, presidents, etc. Subsidiary facilities are not independent in functions concerning operations, pay, benefits, etc.
  • Common ownership or financial control – the parent company and subsidiaries are owned by the same organization.


9.     Are we required to submit all of our organization’s job openings with the state job service?

Yes, contractors who hold contracts of $100,000 or more must list all job openings with the state job service.  North Carolina requires all open positions to be listed with the NC Employment Security Commission, but there are three exceptions to this regulation:

  • Positions soliciting executives and senior management candidates
  • Positions that will be filled internally
  • Positions that will last fewer than 3 days


10.   We post our open positions on internet jobs boards, so we receive a lot of interested candidates. Do we have to regard everyone who applies as an applicant for consideration in our analysis?

No, the OFCCP issued an Internet Applicant Rule to address the issue of recruiting through online sources.  In order to be an internet applicant, a candidate must satisfy the following four criteria:

  • Individual submits interest in employment through internet or other electronic data technology
  • The contractor considers the individual for employment
  • The individual possesses the basic qualifications for the position
  • The individual does not withdraw himself or herself from consideration


For additional answers to your AAP questions, please contact one of CAI’s AAP experts: Kaleigh Ferraro at or Madison Upton at You can also reach Kaleigh or Madison at 919-878-9222 or 336-668-7746.

Government Audits: Readiness is Key

Tuesday, May 24th, 2011

Preparing your company for a government investigation is important as the current administration increases the amount of money and resources allocated to auditing companies from different industries and of various sizes. Although your company might follow correct policies and procedures mandated by the government, communication from a displeased worker or fault-finding town citizen can create cause for an investigator to review your workplace standards.

For some audits, such as an OSHA audit, inspections are conducted without advance warning to the organization, so attentiveness to rules and regulations is vital. Creating an action plan for the possibility of an inspection is critical to avoiding costs, penalties and loss of credibility associated with a bad review. Here are a few tips that are applicable to all audits and will ensure a successful evaluation:

  1. Keep Staff Informed! Even though some audits occur without warning, audits or investigations that are expected should be on everyone’s radar. Managers should be aware of the scope of the audit and when it is slated to take place. Company leadership should also inform employees that cooperating with the auditor is necessary to ensure a smooth review process.
  2. Organize! Organize! Organize! Employee documentation, computer files, financial information and similar records should be neatly arranged and easily accessible for the auditor. Retrieve records kept at off-site locations as well. Organizing documents before the auditor’s arrival will allow you to identify and locate missing or misfiled information. Failure to keep records readily available can result in a slower investigation process or several follow-up visits from the auditor.
  3. Take Interviews Seriously! No matter which type of audit your company encounters, preparing for questions that might arise is crucial. Some report that the initial management interview is the most influential part of the process, because it sets the course for the remainder of the audit. Demonstrating preparation during this component will alert the auditor that your company takes the investigation process seriously. For interviews with employees, allow the auditor to speak with them during work hours to avoid contacting them at home. Although you should avoid explicitly telling your employees what to do during an interview, it is important to make them aware of their rights during the process.

CAI offers an Investigation Survival Webinar Series for more information and tips that apply to audits. The program includes seven 90-minute webinars designed to guide you through various government investigations, including ICE, EEOC, Wage and Hour, and OSHA audits. Led by experienced professionals who have supported many employers through different investigations, the series will help answer any specific questions you have concerning audits. You can take the courses individually, or you can register for all seven and receive a volume discount.

For additional information or to register, please visit and use the search code CISWS.

Photos Source: erix!