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OFCCP audits: Are you really covered?

February 1, 2011
by Richard W. Castleton
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Review the laws and your compliance

The Office of Federal Contract Compliance Programs (OFCCP) enforces equal employment opportunity laws. This most prominently includes Executive Order 11246 (EO 11246), Section 503 of the Rehabilitation Act of 1973 (Section 503), and the Vietnam Era Veterans Readjustment Assistance Act (VEVRAA). This article provides a general review of these laws, OFCCP jurisdiction, and how this impacts the long-term care (LTC) industry.

OFCCP-ENFORCED LAWS

EO 11246 prohibits discrimination and requires affirmative action to ensure that all employment decisions are made without regard to race, color, religion, sex, or national origin. EO 11246 generally applies to entities that hold government contracts and subcontracts (collectively “contracts”) of over $10,000. If the entity employs at least 50 employees, and the contracts have a value of at least $50,000 (the “50/50 threshold”), the employer must have a written Affirmative Action Program (AAP).

Section 503 of the OFCCP prohibits discrimination and requires affirmative action in the employment of qualified individuals with disabilities. Section 503 generally applies to entities that hold government contacts of over $10,000. Entities that satisfy the 50/50 threshold must have a written AAP.

VEVRAA prohibits discrimination and requires affirmative action in the employment of specified categories of veterans. In 2003, VEVRAA was amended by the Jobs for Veterans Act which modified the categories of protected veterans and the monetary thresholds for coverage. For contracts entered before December 1, 2003, VEVRAA generally applies to entities that hold government contracts of $25,000 or more. If the entity satisfies the 50/50 threshold, the entity must have a written AAP. If the contract was entered on or after December 1, 2003, VEVRAA generally applies if the entity holds contracts of $100,000 or more. If the entity employs more than 50 employees and the value of the contracts are over $100,000, then the entity must have a written AAP.

Richard W. Castleton
Richard W. Castleton

Employers subject to EO 11246, Section 503, and VEVRAA may also be required to:

  • perform self-audits,

  • ensure adequate representation of women and minorities, and

  • take material steps to resolve issues relating to under-representation of women and minorities.

Employers should consult with an attorney to ensure they properly draft and implement an AAP.

SPECIAL ISSUES

Medicare and Medicaid Payments. Receipt of Medicare or Medicaid payments alone generally does not subject an employer to OFCCP-enforced laws. However, if an entity has contracted directly with a government agency or contractor to provide care for federal employees, veterans, or active duty military personnel and their families, the entity may be subject to the requirements of EO 11246, Section 503, and VEVRAA. This is of particular concern where an entity contracts to provide services with Veteran's Affairs or the Department of Defense (DOD).

TriCare. One such example is a contract under which an entity provides medical services to TriCare participants. TriCare is the health insurance program for military personnel and their families. This has been a topic of increasing concern in the healthcare industry in light of a recent decision handed down by an Administrative Law Judge (ALJ).

In 2008, the OFCCP issued a compliance review notification to a Florida hospital. The hospital contested coverage. The OFCCP indicated that the hospital was subject to its jurisdiction because the hospital had a contract to provide medical services to TriCare participants with Humana Military Healthcare Services, Inc. (HMHS), which in turn had a contract with the DOD. In October 2010, the ALJ decided that the hospital was subject to OFCCP-enforced laws. The ALJ focused on the language of the HMHS/DOD contract. The contract required HMHS to build a network of healthcare providers that would give medical services to TriCare participants. The ALJ held that the hospital providing services to TriCare participants was a subcontractor to the HMHS/DOD contract, and therefore subject to the requirements of EO 11246, Section 503, and VEVRAA.

Despite the fact that this decision was appealed and, as of January 2011, no final decision had been issued, the OFCCP used the ALJ decision to assert jurisdiction over healthcare facilities. This is of significant concern for hospitals, and may impact other types of healthcare facilities as well.

THE LTC INDUSTRY

LTC facilities may see an increase in the number of compliance review notifications. This is most likely tied to the OFCCP's substantial increase in budget and personnel over the past two years. Coupled with ALJ decisions that expand OFCCP jurisdiction as described above, this is troubling news.

However, LTC facilities should keep several things in mind. First, the OFCCP has not announced any directive targeting LTC facilities. Second, any increase in compliance reviews is most likely connected to the increased staff more than anything else. And third, receiving a compliance review notification does not mean that the OFCCP has determined that the entity is within its jurisdiction. Indeed, less than one-fifth of investigations of assisted living or nursing care facilities resulted in violations over the past two years. OFCCP compliance officers indicate that this is most likely because these facilities do not have government contracts.

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