What is a Hire from OFCCP’s Perspective?
What is a Hire from OFCCP’s Perspective?
Every month, the Department of Labor (DOL) releases a report concerning jobs that were added to the economy. The report released at the start of May 2016 indicated that approximately 160,000 jobs were added. Many articles about this report commented on the reduced level of hiring that occurred in April as compared to previous months, and focused on the fact that the U.S. has been experiencing strong hiring for the last several years.

The one thing that no article questioned was what was meant by the word “hiring.” It was clear the Department of Labor’s report referred to situations where an individual who had not previously been part of an organization’s payroll had been added to the organization’s payroll.

While most people seem to understand what is normally meant when people talk about “hiring,” there is some confusion about what constitutes a hire when dealing with the Department of Labor’s Office of Federal Contract Compliance Programs (OFCCP). As a general rule, it appears that when OFCCP talks about a hire, the agency is referring to a situation where an external candidate is offered and accepts a position and is added to an organization’s payroll.

Where Does OFCCP Mention Hires?

While OFCCP does not explicitly define the term “hire” in the definition section of its regulations, there are a number of places where OFCCP discusses hires. (Note: I’ll cite below to sections in the affirmative action regulations such as 41 CFR 60-2.17, which means “Section 2.17 within Chapter 60 of Volume 41 in the Code of Federal Regulations.”)

Generally, OFCCP discusses hires in the context of either comparing hires to applicants, or in the context of discussing the various types of personnel activity that federal contractors and subcontractors are required to track. Among the places where OFCCP discusses hires are the following:

  • 41 CFR 60-2.17(b): Section 60-2.17(b) states that federal contractors must evaluate “personnel activity (applicant flow, hires, terminations, promotions, and other personnel actions) to determine whether there are selection disparities” involving race, ethnicity, or gender.

  • 41 CFR 60-3.3(A): The Uniform Guidelines on Employee Selection Procedures, which are found at 41 CFR Section 60-3, discuss hiring in a number of places. For example, Section 60-3.3(A) states that the “use of any selection procedure which has an adverse impact on the hiring, promotion, or other employment...of members of any race, sex, or ethnic group will be considered to be discriminatory...”

  • 41 CFR 60-300.5(a): The equal opportunity clause found within OFCCP’s regulations for protected veterans state that federal contractors and subcontractors must avoid discrimination against protected veterans in areas including “[h]iring, upgrading, promotion, award of tenure, demotion, transfer, layoff, termination, right of return from layoff and rehiring.”

  • 41 CFR 60-741.5(a): The equal opportunity clause found within OFCCP’s regulations for individuals with disabilities has a parallel clause to the one found in Section 60-300.5(a).

  • Itemized Listing: The letter that organizations receive at the start of an affirmative action compliance review includes an itemized listing requesting various pieces of information. Item 18 in the itemized listing requests “[d]ata on...employment activity (applicants, hires, promotions, and terminations) for the immediately preceding AAP year...”
When is a “Hire” Not a Hire?

There are three very different sets of circumstances in which the concept of a “hire” becomes muddled when dealing with OFCCP.

  • The first set of circumstances involves those situations where employers have made a job offer to an applicant, and the job offer is declined.

  • The second set of circumstances involves those situations where organizations use the word “hire” to refer to a variety of events in which individuals are selected for open positions.

  • The third set of circumstances involves the statistical analyses that must be done under OFCCP’s revised regulations involving protected veterans and individuals with disabilities.
The common thread between these situations is that the word “hire” is being used in a much different way than the word “hire” is used in normal conversation or in typical OFCCP thought.

Job Offers as Hires

One of the obligations of federal contractors and subcontractors is to demonstrate that they have made efforts to recruit and select qualified minorities, females, protected veterans, and individuals with disabilities. Another related obligation is that companies must be able to demonstrate that they have made efforts to hire the best qualified individuals. While these obligations may occasionally seem to be in conflict, OFCCP has made it clear that companies covered by the federal affirmative action regulations are to provide equal opportunity to all applicants and employees. This means that these companies must make outreach efforts and monitor the selection process to ensure that they include a broad cross-section of candidates, but that ultimately companies must hire the best qualified individuals.

There are times when data that would typically be presented to OFCCP during a compliance review may fail to fully demonstrate that a company is meeting both of these obligations. For example, consider what happens if the best qualified candidate for a position is a female, the female turns down a job offer, and a male who is the next best qualified candidate is hired. In this case, summary data on applicants and hires for that position will only show that a male was hired.

It is not unusual in the situation noted above for companies to want to show that the female who was offered the position was effectively a “hire.” The female would have been a hire if not for her decision to withdraw from consideration at the final phase of the selection process. By showing this female as a hire in any data delivered to OFCCP, the company demonstrates its success in making effective outreach efforts AND its intent to hire the best qualified candidate.

The issue that companies face when they count job offers as hires is that a job offer is, in fact, not a hire. Good statisticians will tell us that when developing statistical descriptions of what has occurred, we should be comparing expressions of interest and selections. For analytical purposes, a job offer is a selection, and thus organizations should be comparing individuals who properly applied for positions with individuals who were selected for those positions. However, on a practical level, offering an individual a job is not the same as having that individual actually join the company’s payroll. The individual who joins the company collects a salary, has the potential for moving to other positions, and receives various benefits of employment. The individual who declines an offer receives none of these things.

Organizations that want to count job offers as hires are left with a number of options. One option would be to count job offers as hires in all data and then simply explain to OFCCP during a compliance review that not all persons shown as hired in data provided to the agency were actually added to the company’s workforce. Another option would be to provide OFCCP with data that specifically displays both job offers and hires. Any applicant-“hire” analyses could then be conducted using all job offers or only those job offers where individuals actually became part of an organization’s workforce. A final option would be to count only those individuals who are actually added to an organization’s workforce as hires in any data delivered to OFCCP. If questions arose about outreach efforts or statistical disparities, the organization could then explain that it made job offers to additional candidates that were declined.

It is important to consider what impact the inclusion of job offers has on data that might be provided to OFCCP. If an organization routinely makes job offers to minorities, females, protected veterans, or individuals with disabilities who reject these offers, the organization may be able to claim that its outreach efforts are more effective than what its data might otherwise suggest. However, if job offers are typically made to the same demographic group that is hired, data on job offers may put an organization in a more difficult position with OFCCP.

Job Changes as Hires Part 1: Internal Hires

Considering job offers to be the same as hires may make analytical sense when reviewing data. However, there is another use of the word “hires” that presents problems for organizations that need to comply with the federal affirmative action regulations. This involves the idea that there are “internal hires” and “external hires.”

Some organizations consider a candidate who is chosen through any type of selection process to be a hire, regardless of whether the candidate is already an employee of the organization. In circumstances where candidates are required to formally express interest in an open position and demonstrate why they are best qualified for the opening, it may make no difference to an organization whether a candidate is an employee (i.e. an internal candidate) or an external candidate.

While from an analytical perspective, there may be no value in distinguishing internal hires from external hires, a quick review of the way in which OFCCP uses words suggests that there is a clear distinction in the agency’s view between the selection of an internal candidate and the selection of an external candidate. OFCCP’s regulations routinely ask federal contractors and subcontractors to collect and analyze data on “hires” and “promotions.” If all selections, whether of internal or external candidates, are considered to be “hires,” then it is difficult to imagine what would be considered a promotion. Since the requirement to collect and analyze data on hires and promotions appears so frequently in OFCCP’s mandates, the agency clearly believes there must be some kind of data to collect on promotions that is separate from what is collected on hires.

Job Changes as Hires Part 2: OFCCP’s Veteran and Disability FAQs

While OFCCP has had what seemed to be a consistent approach to defining what is a hire in its published regulations and its itemized listing, the agency created confusion for federal contractors and subcontractors through several recent frequently asked questions (FAQs) associated with the revised regulations regarding protected veterans and individuals with disabilities that went into effect in 2014. These regulations included for the first time a requirement to collect and report on certain types of data. Among the data to be included in the AAPs for these two groups are the following:

  1. The number of applicants who self-identified as protected veterans and individuals with disabilities;
  2. The total number of job openings and total number of jobs filled;
  3. The total number of applicants for all jobs;
  4. The number of protected veterans and individuals with disabilities hired; and
  5. The total number of applicants hired
Initially, there was some confusion in the federal contractor community about the terms “job openings” and “jobs filled.” OFCCP provided answers on the FAQ portion of its website that gave some insight into what the agency believes these terms mean. Unfortunately, these answers also created significant confusion about how to analyze data on hires. One of the FAQs that caused the most problems is as follows:

  • FAQ: The data collection requirements in section 60-741.44(k) also ask contractors to report the number of jobs "filled" (60-741.44(k)(2)) and those "hired" (60-741.44(k)(4) and (5)). How does the number of "jobs filled" differ from the number of people "hired?"

  • Answer: In the context of the data collection requirements of 60-741.44(k), jobs "filled" refers to all jobs the company filled by any means, be it through a competitive process or non-competitively, e.g., through reassignment or merit promotion. It, therefore, should take into account both new hires into the company and those employees who were placed into new positions via promotions, transfers, and reassignments. In contrast, the number of those "hired" refers solely to those applicants (both internal and external to the contractor) who are hired through a competitive process, including promotions. [Emphasis added]
This FAQ is associated with the disability regulations; there is a parallel FAQ for the protected veteran regulations.

The result of these FAQs is that OFCCP is contradicting itself. In various portions of its regulations, including portions of its veteran and disability regulations, as well as in its itemized listing, OFCCP clearly distinguishes between hires and promotion. However, in this FAQ, OFCCP seems to clearly indicate that external hires and promotions are both to be counted as “hires.”

Actions for Federal Contractors and Subcontractors to Take

The question of what constitutes a “hire” should have had an easy and straight-forward answer. Yet, there are various situations that cause confusion. The most prominent problems grow out of OFCCP’s recent FAQs for its veteran and disability regulations.

Here are some basic actions for federal contractors and subcontractors to consider as they think about what constitutes a hire:

  • Understand that OFCCP has traditionally defined a hire as a situation where an external candidate is offered and accepts a position and is added to an organization’s payroll.

  • If job offers are going to be counted as hires, determine how job offers will be displayed in data. Will job offers simply be rolled into hire data? Will job offers be displayed separately in statistical reports provided to OFCCP? Will information on job offers only be provided when questions arise during a compliance review?

  • If job offers are going to be counted as hires, determine what the impact of showing job offers will be. Do disparity analyses look more favorable for your organization? Does the inclusion of information on job offers suggest your organization is making effective outreach efforts?

  • Determine whether “internal hires” should be reclassified for use in data submitted to OFCCP as promotions or transfers or some other form of job change.

  • Determine how your organization is going to deal with the fact that the data submitted under item 18 in the itemized listing will potentially contradict the data submitted as part of the data collection analysis in the regulations for protected veterans and individuals with disabilities. Should there be annotations stating that there are two definitions of “hire” being used, and thus two different totals regarding hires that occurred during a prior AAP year? Should federal contractors and subcontractors ignore the answers OFCCP has provided in its FAQs regarding the data to be collected under the veteran and disability regulations, and use the traditional definition of hires to display data on hires? How will your organization respond to questions from OFCCP in this regard?
OFCCP could have greatly simplified the lives of federal contractors and subcontractors by clearly defining the word “hire” in its formal regulations. Because OFCCP failed to do so, organizations now need to be aware of the issues surrounding the word “hire” and how they will deal with these issues.

Please note: Nothing in this article is intended as legal advice or as a substitute for any professional advice about your organization's particular circumstances. All original materials copyright © HR Analytical Services Inc. 2016