OFCCP Issues National Interest Exemption from Certain Affirmative Action Obligations

“Nature provides exceptions to every rule.”
― Margaret Fuller

On March 17, 2020 Craig Leen, a Director in the Office of Federal Contract Compliance Programs (“OFCCP”), wrote a Memorandum to all of the contracting agencies of the federal government. This memorandum is known as the Coronavirus National Interest Exemption (“NIE”). The NIE is an OFCCP response to the current coronavirus outbreak and seeks to grant limited exemptions from a few of the laws administered by the OFCCP.

Who does it apply to?

This NIE applies to federal contractors and subcontractors who enter into U.S. Government supply, service or construction contracts during the period of March 17, 2020 to June 17, 2020 for the purposes of providing coronavirus relief. These exemptions apply, more specifically, to new contracts entered into for the purpose of the relief,  and not to contractors engaged in performing existing government contracts. The distinction being that the NIE applies only to specific contracts, and a contractor who owns an exempt contract must continue to fulfil its obligations to the OFCCP for its non-exempt contracts.

What does it do?

The NIE provides “relief” from certain parts of Executive Order 11246 (EO 11246), as amended, Section 503 of the Rehabilitation Act (Section 503), as amended, and Section 4212 of the Vietnam Era Veterans' Readjustment Assistance Act (VEVRAA), as amended. Generally, contractors performing under a covered contract no longer have to abide by the sections that require affirmative action to ensure the hiring of employees without regard to their sex, sexual orientation, religion, color, race, disability status, or veteran status. However, this waiver only applies to the exempted contracts. Specifically, the OFCCP suggests federal agencies include this as preludes to the following FAR clauses in their contracts:

As a preamble to the insertion of 52.222-26: Notice: The following terms of this clause are waived for this contract: subparagraph (c)(2), (c)(3), (c)(4), (c)(5)(ii), (c)(6), (c)(8), and the phrase “on-site compliance evaluations and” in (c)(9).

As a preamble to the insertion of 52.222.35: Notice: The following terms of this clause are waived for this contract: in subparagraph (b), the phrase “and requires affirmative action by the Contractor to employ and advance in employment qualified protected veterans”; additionally, in subparagraph (b), the phrase “requirements of the equal opportunity clause at 41 CFR 60-300.5(a)” shall be interpreted to exclude in full paragraphs 2-7, 9-10, and 12 of 41 CFR 60-300.5(a), and the phrase “take affirmative action to employ, advance in employment and otherwise” from paragraph 1 of 41 CFR 60-300.5(a).

As a preamble to the insertion of 52.222-36:

Notice: The following terms of this clause are waived for this contract: in subparagraph (a), the phrase “and requires affirmative action by the Contractor to employ and advance in employment qualified individuals with disabilities”; additionally, in subparagraph (a), the phrase “requirements of the equal opportunity clause at 41 CFR 60-741.5(a)” shall be interpreted to exclude in full paragraphs 4-5 and 7 of 41 CFR 60-741.5(a), and the phrase “take affirmative action to employ and advance in employment individuals with disabilities, and to” from paragraph 1 of 41 CFR 60-741.5(a).”

Coronavirus National Interest Exemption Memorandum, Craig Leen, Office of Federal Contract Compliance Programs.

It is important to note however that this waiver does not apply to the processing of complaints under the same acts. Instead, it seeks to prevent the burden imposed by the OFCCP under the covered acts with regard to hiring under these contracts. It does not exempt contractors from laws relating to the discrimination and retaliation against protected classes in the fulfillment of their contracts. In addition, contractors who are only performing under these exempted contracts, and do not have other contracts with the federal government, need not file EEO-1 forms unless it is required by their status as a private employer.

Why Do We Need This?

These exemptions follow from the premise that: these laws will burden contractors providing aid specifically for relief from the coronavirus, this burden will in some way delay the relief that the contractors can supply or increase the overall cost to the public, and that the waiver will make an impactful change on that burden. However, these rationales may not be very persuasive in some circumstances. For example, many federal contractors have existing compliance programs that will continue to be utilized on non-exempt contracts and thus will be utilized on the now-exempt contracts. The compliance programs required by these laws will still be in effect for the contractors on other contracts, and thus a waiver for only their exempt contracts may not bring any real economic relief that could be passed on to the public. These exemptions also do not provide relief form any state-imposed obligations. Therefore, many of the contractors will have to continue to comply with similar laws or choose to because of their other contracts. Furthermore, one could argue that the founding premises of the laws that the NIE provides a waiver for is that a diversified labor pool will bring a more qualified and able work force – i.e.,  a workforce that would be able to deal with the current crisis. However, the actions taken by the OFCCP contradicts that sentiment.

This is not the first time that the OFCCP has granted a NIE – it did so during the Hurricane Katrina relief actions in 2005, as well as during Hurricanes Florence and Michael in 2018. It isn’t clear that those exemptions amounted to anything significant. And critics of the current law would say that the protected classes that are most likely to be harmed by the virus, will further be harmed by the waiver provided by the NIE. Other critics would say that there is no evidence that the NIE has helped in any of the prior instances, and therefore would help now. However, the Trump Administration obviously hopes that the actions taken by the OFCCP will bring positive long-term impacts. Or, perhaps, it is just another demonstration of the rule that no crises should go to waste.

For more information, please visit the Department of Labor FAQ’s section on the Coronavirus NIE,  https://www.dol.gov/agencies/ofccp/faqs/covid-19. Or contact counsel if you are a contractor and are unsure of your obligations.