Basic EEO Requirements for Small Businesses with Federal Contracts

Executive Order (EO) 11246 prohibits employment discrimination by Federal contractors and subcontractors and federally-assisted construction contractors and subcontractors. It also requires them to take affirmative action to ensure that all individuals have an equal opportunity for employment without regard to race, color, religion, sex, or national origin. Generally, EO 11246 applies to contractors with 50 or more employees and a Government contract or subcontract greater than $50 thousand. The Department of Labor, Office of Federal Contract Compliance Programs (OFCCP) has been tasked to administers and enforce the Executive Order.

The basic EEO requirements of a Federal contractor are these:

• Don't discriminate
• Post EEO posters
• Include EEO tag line in employment advertising
• Keep records
• Permit OFCCP access to books and records during a compliance evaluation or a compliance investigation.
• File an annual EEO-1 report. 

We will look at each of these requirements in more detail over the next few days.

Don't Discriminate: Employment discrimination takes different forms. Employment discrimination is illegal and generally results when a person is treated differently (usually less favorably) because of his or her race, color, religion, sex, or national origin. In addition, employment discrimination can result when a neutral policy or practice has an adverse impact on the members of any race, sex, or ethnic group and the policy or practice is not job related or required by business necessity.

Here's an example where a "neutral policy" resulted in discrimination. Company A needed to hire entry-level laborers. The jobs required heavy lifting and physical exertion, but did not require any technical skill. The company however had a policy that required all employees to have a high school diploma so it automatically excluded applicants who had not finished high school.

The high school diploma requirement however disqualified a greater number of Hispanic candidates for the labor jobs than Non-Hispanic White candidates. According to census data for that particular location, 94 percent of the white population had high school diplomas while only 47 percent of the Hispanic population had completed high school. When Company A could not provide a business justification for using the high school diploma requirement, OFCCP ruled that they had engaged in prohibited discrimination.