Under new leadership, the U.S. Department of Labor’s Office of Federal Contract Compliance Programs (OFCCP) is following through on its commitment to prioritize pay equity and ramp up enforcement of employee diversity, equity, and inclusion (DEI). The agency recently released new requirements around Affirmative Action Plans (AAP) that will impact federal contractors and subcontractors.

Going forward, federal contractors and subcontractors must take extra steps to demonstrate their workplaces are equitable. Below we cover what you should know about the OFCCP’s new AAP requirements.

Annual Affirmative Action Plan (AAP) verification

Following approval of its Affirmative Action Program (AAP) verification initiative, the OFCCP will require federal contractors and subcontractors to provide annual confirmation of AAPs through a web-based portal. Since contractors do not submit AAPs unless they are audited, there previously has not been a practical mechanism in place for the OFCCP to ensure compliance. The verification obligation is designed to encourage federal contractors to develop and maintain AAPs as the law requires.

Failure to complete the verification will increase a contractor’s risk of being audited. This can lead to serious penalties — especially if it is found that a contractor does not have an AAP — including debarment and cancellation of federal contracts, “Show Cause” notices, and other enforcement actions.

Updated EEO census data

The OFCCP also announced that federal contractors and subcontractors must begin using the updated 2014-2018 EEO tabulation census data to develop all AAPs that are created on or after January 1, 2022. This replaces the outdated 2006-2010 EEO tabulation currently being used. The OFCCP will also begin using the new data to evaluate organizations on the same date.

These two requirements complement another recent OFCCP pledge to leverage EEO-1 Component 2 pay data to look for pay discrimination practices. This move signals support for the Equal Employment Opportunity Commission’s decision to bring back pay data reporting for employers, if and when the agency decides to do so. With the national strategy for achieving racial and gender equality having just been released, it may be sooner than anticipated.

How to ensure compliance

The OFCCP’s recent changes work in tandem to reinforce a federal focus on workplace DEI, signaling to employers that proactive measures are necessary to avoid falling out of compliance. Contractors can manage emerging equal pay requirements and track their workforce diversity by leveraging a software tool and partnering with an expert in DEI.

Conducting a pay equity audit is a best practice to ensure legal protection. Our comprehensive PayParity solution combines auditing and ongoing monitoring features with DEI consulting to help employers proactively achieve pay equity within their workplaces.

To learn more about how pay equity software fosters workplace equality, download our research report conducted by Harvard Business Review Analytic Services, Creating a Culture of Diversity, Equity, and Inclusion.