OFCCP Issues Long Awaited Final Rule on Definition of Internet Applicant

 
Wednesday, February 1, 2006
 
by Jackson Lewis

On October 7, 2005, the Office of Federal Contract Compliance Programs issued its long awaited final rule regarding the definition of an Internet Applicant entitled "Obligation To Solicit Race and Gender Data for Agency Enforcement Purposes."  The final rule will go into effect on February 6, 2006.   Note: Although the OFCCP has announced it will not extend the February 6, 2006 effective date of the new Internet Applicant rule, it will not cite contractors for 90 days following the effective date for technical recordkeeping violations if the contractor can demonstrate efforts towards compliance. Specifically, a contractor will not be cited for failure to comply with the rule's provisions provided it: (1) demonstrates that it is taking reasonable steps to update its systems to comply with the rule, including a projected date of compliance, and (2) collects and maintains records according to the established procedures consistent with OFCCP's pre-Internet Applicant rule recordkeeping requirements.

Under the final rule, an individual is considered an "Internet Applicant" if the following four criteria are met:

  1. The individual submits an expression of interest in employment through the Internet or related electronic data technologies ;
  2. The contractor considers the individual for employment in a particular position;
  3. The individual's expression of interest indicates the individual possesses the basic qualifications for the position; and
  4. The individual at no point in the contractor's selection process prior to receiving an offer of employment from the contractor, removes himself or herself from further consideration or otherwise indicates that he or she is no longer interested in the position.

Background

For years the contractor community and the OFCCP were divided on the definition of applicant.  Since the definition of applicant determines the size of the pools used for adverse impact analysis, the stage at which a contractor identifies an applicant is significant:  identify early and the size of the pools (and thus potential liability) are greater; identify later and the size of the pools (and potential liability) decrease. 

Many contractors insisted on counting applicants at the interview stage, which was the first point they could observe the race and gender of the applicant.  This also was consistent with the belief of many contractors that "true" applicants were only those who were "minimally qualified."   The OFCCP, on the other hand, insisted this was too late in the process because too many individuals already had been screened out.  The "pre-minimally qualified" were applicants too, the OFCCP argued, just not as qualified.  Instead, it maintained the definition had to start earlier and that anyone who expressed an interest in employment was an applicant.  This broad definition, the OFCCP asserted, could include all unsolicited resumes or everyone in an electronic applicant database.  Not only did this exponentially increase the size of the applicant pool (and therefore, the potential for adverse impact), but it made collection of race and sex information very difficult.  Adding to the confusion, the definition of applicant was not uniformly applied among the OFCCP's various offices. 

With that as a backdrop, in late 2000 a governmental inter-agency task force, (consisting of the OFCCP, Equal Employment Opportunity Commission, the Civil Rights Division of the Department of Justice, and Office of Personnel Management), was created to examine the thorny issue of defining "applicant."  After a wait of over three years, on March 2, 2004, the EEOC published in the Federal Register a proposed inter-agency guidance on the definition of applicant entitled "Adoption of Additional Questions and Answers to Clarify and Provide a Common Interpretation of the Uniform Guidelines of Employee Selection Procedures as They Relate to the Internet and Related Technologies." 

Shortly thereafter, on March 29, 2004, the OFCCP published in the Federal Register a "Notice of Proposed Rulemaking; Request for Comments" containing its own definition of "Internet Applicant."  The OFCCP's proposed definition, unlike the EEOC's, included an element of "minimum qualifications."  During the public comment period, the OFCCP received a total of 46 comments.  On Friday, October 7 th , despite the fact that the March, 2004 proposed joint guidance issued by the EEOC, had yet to be finalized, the OFCCP issued its final rule. The OFCCP's final rule largely adopts its original proposal with some important modifications.

Explanation Of The Final Definition

While the final rule establishes minimum standards for applicant recordkeeping for Internet and related electronic technologies, the OFCCP states that contractors may "voluntarily adopt recordkeeping practices that are broader than those mandated by the final rule." 
The Final Rule Addresses Contractor Concerns Over The Separate Definitions For Paper And Electronic Applicants.

A number of public comments expressed concern over having two different standards for defining applicant; one for internet and one for paper applicants.  The OFCCP addressed this issue in the final rule.

Under the final rule, " submits an expression of interest in employment through the Internet or related technologies " includes:

all expressions of interest, regardless of the means or manner in which the expression of interest is made, if the contractor considers expressions of interest made through the Internet or related electronic technologies in the recruiting or selection processes for that particular position. (emphasis added).

Thus, the OFCCP eliminates the dual standard for those positions for which the contractor considers expressions of interest through both the Internet and traditional means. In other words, if the contractor accepts only hard copy resumes/applications for a position, then the final rule does not apply to that position.  However, if the contractor solicits and accepts applications or resumes for the position via the Internet or other related electronic technologies, as well as in hard copy, the new rule applies.  Therefore, if an employer advertises a job opening and states in the advertisement that it will accept resumes/applications electronically or in hard copy, the new rule applies to both the electronic and hard copy applications.
Under The New Rule, It Is Up To The Contractor Whether It  " Considers The Individual For Employment In A Particular Position."

Under the final rule, carrying over a concept from the proposed rule, the phrase " the contractor considers the individual for employment in a particular position " means that the contractor assesses the substantive information provided in the expression of interest with respect to any qualifications involved with a particular position.  Thus, an employer is not required to consider expressions of interest that either are not submitted in accordance with the contractor's standard procedures for applying for a job or that are not submitted with respect to a particular position.  For example, if the contractor has consistently applied a practice of not accepting unsolicited resumes, it is under no obligation to start doing so under this final rule.

In addition, the new rule allows employers to draw the line at too many applicants.  The rule provides that if there are a large number of expressions of interest, the employer has not "considered the individual for employment in a particular position" if it uses data management techniques that do not depend on an assessment of qualifications , such as random sampling or absolute numerical limits to reduce the number of expressions of interest to be considered, provided that the sample is appropriate in terms of the pool of those submitting expressions of interest.  In this regard, an employer is free to apply a data management process (to limit the number of expressions of interest that must be considered) that is facially neutral and does not produce disparate impact based on race, gender or ethnicity in the expressions of interest to be considered.  For example, an employer could decide it will only look at the first one hundred applicants or 10% of the applicants.  Any above one hundred or the remaining 90% would not be considered applicants.

The Final Rule Makes It Clear That An "Applicant" Must Meet All Of The Position's Basic Qualifications In Order To Satisfy The Element That "The Individual's Expression Of Interest Indicates The Individual Possesses The Basic Qualifications For The Position."

Pursuant to the final rule, " Basic Qualifications" refers to qualifications:

  1. That the contractor advertises to potential applicants that they must possess in order to be considered for the position, or
  2. For which the contractor establishes criteria in advance by making and maintaining a record of such qualifications for the position prior to considering any expression of interest for that particular position if the contractor does not advertise for the position but instead uses an alternative device to find individuals for consideration ( e.g. , use of an external resume database), and

In addition to the foregoing, "basic qualifications" must meet each of the following three (3) conditions:

  1. The qualifications must be noncomparative features of a job seeker ( e.g. , two year experience requirement would be acceptable; a requirement that the individual be one of the top five individuals in terms of experience would not be acceptable).
  2. The qualifications must be objective in that they do not depend on the contractor's subjective judgment ( e.g. , a requirement of a college degree in accounting is acceptable whereas a requirement that the individual have a degree from a "good school" would not be).
  3. The qualifications must be relevant to performance of the particular position and enable the contractor to accomplish business-related goals ( e.g. , requirement of an accounting degree may not be acceptable for a human resources position).

To reiterate, a job seeker must meet all of a company's basic qualifications in order to be an Internet Applicant under the final rule. 

SPECIAL NOTE: The OFCCP stresses the fact that employment tests used as employee selection procedures, including on-line tests, are not considered basic qualifications under the final rule.  Also, factors such as an individual's salary requirements, willingness to travel, willingness to work certain shifts, etc .are not basic qualifications.  These factors are contemplated in the fourth criteria of the Internet Applicant definition – the individual at no point removes himself or herself from consideration .

The Final Rule Allows Contractors To Discount As Applicants Any  Individual Who, Prior To Receiving An Offer Of Employment From The Contractor, Removes Him Or Herself From Further Consideration Or Otherwise Indicates That He Or She Is No Longer Interested In The Position.

In the past, contractors used failure to show up for interviews or return telephone calls as a reason for rejecting applicants.  The new rule clarifies that such conduct means the individual does not even have to be counted as an applicant.  Even more significant is that the final rule allows contractors to infer lack of interest in the position from information it gleans from the resume or application form, such as salary requirements or shift availability.  Thus, the final rule provides that a company may conclude that an individual has removed him or herself from consideration:
 

  1. if the individual has indicated that he or she is no longer interested in the position for which the contractor has considered the individual, based on the individual's express statement that they are no longer interested; or
  2. on the individual's passive demonstration of disinterest shown through repeated non-responsiveness to inquiries from the contractor about the position in question ( e.g. , fails to respond to telephone calls, letters, etc. ); or
  3. based on information the individual provided in the initial expression of interest ( e.g. , salary requirements, shift availability, etc .) provided that the employer has been consistent in not considering similarly situated individuals [1]

To take advantage of this criteria, contractors must be sure to fully document and retain any documentation regarding an applicant's withdrawal from the applicant process; an applicant's lack of response to the employer's efforts to contact them; and conditions contained in the applicant's initial expression of interest ( e.g. , salary requirements, etc. ) in anticipation of scrutiny by the OFCCP during a compliance review.  This will allow removal of such individuals from any adverse impact analysis. 

Under The Final Rule, In Addition To Substantial Recordkeeping Obligations, The Contractor Also Must Maintain Records Of Those It Does Not Consider As Applicants So That If Necessary, The OFCCP Can Review Whether The Contractor's Applicant Definition Is Lawful.

The final rule mandates that companies retain substantial documentation relating to Internet Applicants as follows:

  1. Any and all expressions of interest through the internet or related electronic data technologies as to which the contractor considered the individuals for a particular position including on-line resumes and internal resume databases;
  2. All records identifying job seekers contacted regarding their interest in a particular position;
  3. For internal resume databases, a record of each resume that was added to the database (and the date it was added), the position for which each search of the database was made, and corresponding to each search, the substantive search criteria used and the date of the search.
  4. For external resume databases, a record of the position for which each search of the database was made, and corresponding to each search, the substantive search criteria used, the date of the search, and the resumes of any job seekers who met the basic qualifications for the particular position who are considered by the company.

The OFCCP states that the records listed above must be maintained regardless of whether the individual qualifies as an Internet Applicant.  Although the OFCCP's final rule allows companies to determine themselves who possesses basic qualifications, employers may fully expect the OFCCP to closely scrutinize companies' practices in this area to ensure equal employment opportunity. Employers must therefore maintain applications/resumes for Internet Applicants who do not possess minimum qualifications, even if these applicants are not included in the applicant flow report and resulting adverse impact analysis.

The New Rule Requires Contractors To Solicit Race, Gender, And Ethnicity Data From All Individuals Who Meet The Definition Of Applicant And Permits Contractors To Make Identification Based On Visual Observation For Applicants Who Decline To Self-Identify.

Under the final rule, companies are required to solicit race, gender, and ethnicity data from all individuals who meet the definition of Internet Applicant. The OFCCP further states that visual observation is permissible when the applicant appears in person and declines to self-identify their race, gender or ethnicity. The Rule does not , however, mandate a specific time in the employment process at which such information must be solicited.  The OFCCP continues to encourage the use of applicant self-identification methods such as tear-off sheets, auto responses, etc

To Make Sure A Contractor's Applicant Definition Is Not Having An Adverse Impact,  The OFCCP Can Review The Impact Of The Definition Using Labor Force Statistics And Census Data.

The OFCCP has always expressed concern that the definition of "applicant" used by a company not be so limited that it destroys opportunities for minorities and females.  With the adoption of the new basic qualifications standard, the OFCCP's concern is magnified.  The OFCCP had stated in the proposed rule that "the application process itself might not adequately reflect the actual potential applicant pool, since otherwise qualified people might be discouraged from applying because of a self-recognized inability to meet the very standards challenged as being discriminatory."  Continuing its concern, the OFCCP states in the introduction to the final rule that it will refer to Census and "other labor market data" during compliance reviews to determine whether basic qualifications have an adverse impact on the basis of race, ethnicity, or gender. [2]   In other words, an applicant definition cannot itself have an adverse impact on minorities or females.  To determine if this is occurring, the OFCCP may compare the composition of minorities or females in the resulting applicant pool, with their availability in the appropriate segment of the Census.

What Can Employers Do Now?

As discussed above, the OFCCP is providing a relatively short 120 days (or until February 6, 2006) for employers to implement systems that will comply with the final rule.  It is imperative that contractors immediately take steps to address these developments.  Companies may wish to consider the following preemptive efforts:

  1. Reevaluate the definition of applicant and procedures for tracking applicant data in light of the final rule;
  2. Consider what impact dual definitions of Internet Applicant and traditional applicant will have on current or future hiring and recordkeeping practices and consider always having an electronic component to any position opening to bring all openings within the electronic definition;
  3. Review recordkeeping policies and test HRIS systems to determine whether the company has the technological capacity to comply with the new recordkeeping requirements;
  4. Compare existing applicant flow data with availability data to identify areas of significant difference and consider broadening good faith outreach efforts in those areas to ensure that the company's applicant flow data reflects surrounding Census and other labor market data; and
  5. Provide training to human resources and recruitment staff regarding the new requirements.
Footnotes:

[1] The final rule adds that if a large number of individuals meet the basic qualifications for a job, a company may employ data management techniques (described above) to limit the number of individuals an employer has to contact to determine the individuals' continued interest provided that the sample is appropriate in terms of the pool of those meeting the basic qualifications.

[2] If the OFCCP identifies a "significant" difference between the labor market data and the hiring activity of the company it will further investigate to ensure compliance with Executive Order 11246.  The OFCCP confirms in the introduction to the final rule that it will use the traditional two standard deviation threshold for determining statistical significance.

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