September 24, 2013

EXACTLY WHAT IS A HIRING BENCHMARK?

(And explain it to me, like I’m a 6th grader…in my best Denzel Washington voice, which is not very good)

The final VEVRAA rule will require federal contractors to establish a “hiring benchmark,” which OFCCP repeatedly and clearly states is NOT a goal. However, it is still unclear, based on inconsistencies across the final regulatory text, the preamble, and the FAQ, exactly what a “hiring benchmark” IS.

First, the VEVRAA preamble states that, “The primary intent of the benchmark proposal was to provide the contractor a yardstick that could be used to measure progress in employing protected veterans.”

  • DCI Comment: Okay, this looks like we are going to use the benchmark number as a yardstick when comparing it to our employment.

This explanation is continued over several pages. The three bullets pulled out below provide additional insight into OFCCP’s intent:

  • OFCCP expects contractors to assess if they meet the benchmark and adjust recruitment efforts accordingly, but enforcement will not be based solely on this, as explained here: “Owing to the imprecise nature of the data upon which benchmarks would be based, OFCCP did not propose additional affirmative action obligations (or OFCCP enforcement actions) if a contractor did not meet the benchmark that it set. To be sure, OFCCP would expect that as part of its annual recruitment and outreach assessment, the contractor would assess why it did not meet the benchmark and adjust its recruitment efforts for the following year based on what it has learned. However, the proposal would not have OFCCP undertake enforcement action solely on the basis of a disparity between the benchmark and the actual percentage of veterans hire.”
    • DCI Comment: Okay, so far it looks like we use the benchmark to assess our outreach and recruitment efforts as it relates to protected veterans. How in fact we determine whether or not we “met” the benchmark is unclear but surely that is coming later on in the preamble.
  • Now the preamble explains specifically why the terms “goal” and “benchmark” are different; this hinges on part of a sentence in paragraph (b) being removed: “Consequently, the purpose and function of goals established in the Executive Order regulations differ from benchmarks under the VEVRAA regulations. Therefore, we use different terminology to distinguish the terms clearly. To further clarify this difference, the final rule slightly revises the language in paragraph (b) of this section. The proposal defined hiring benchmarks as ‘the percentage of total hires that are protected veterans that the contractor will seek to hire….’ The final rule deletes the clause ‘that the contractor will seek to hire’ from the text of paragraph (b) given the explanation above.”
    • DCI Comment: Huh? I thought we were looking at our benchmark number against our employment percentages. It appears that we will instead be comparing our benchmark to the total percentage of protected veterans HIRED during the AAP period, as opposed to existing in our workforce. It appears that they removed from the final rule the language “seek to hire” because that sounds too much like a quota. Okay, we will compare the benchmark number to the hiring percentage. There is another major problem with this explanation, however, and the problem is that the entire sentence, not just the piece they stated was removed, is missing from the final rule.
  • Yet another quote more closely reflects the final regulation: “The purpose of VEVRAA hiring benchmarks is simply to provide the contractor a quantifiable means to measure its progress towards achieving equal employment opportunity for protected veterans. The contractor’s obligation under § 60-300.45 is to establish a benchmark and document that it has done so. Contractors will not be subject to an enforcement action or found to be in violation of the VEVRAA regulations for failing to meet the benchmark.”
    • DCI Comment: Okay now I am confused again. Are we using it to compare to employment, hires or nothing at all? Maybe we just write the number 8 and the year on a piece of paper and maintain it. Surely the final regulations will clearly tell us exactly how to measure whether or not we “met” our benchmark number.

Now, let’s review what the VEVRAA final regulatory text actually says. This wording is pulled directly from the Benchmarks for Hiring section (60-300.45).

  • “(a) Purpose: The purpose of establishing benchmarks is to create a quantifiable method by which the contractor can measure its progress toward achieving equal employment opportunity for protected veterans.” 
    • DCI Comment: Wait a second, when did the purpose of the benchmark number turn into a measure of determining whether or not we are discriminating against protected veterans? This contradicts the FAQ guidance and the first quote pulled from the preamble above. We need to digress for a second to define “equal opportunity”. Merriam-Webster dictionary defines equal opportunity as:
      1. Nondiscrimination in employment
      2. A context in which there is no discrimination
    • So apparently the final regulation states that the purpose of a benchmark is not for affirmative action and outreach and recruitment assessment but is instead to be used to determine whether or not you are discriminating against protected veterans. Thus another question: how do we do that? (Hint: I don’t care what the preamble says, OFCCP will be conducting disparity analyses (not under an adverse impact theory) to determine whether or not contractors’ hiring practices disproportionately screen out protected veterans and individuals with disabilities.)
  • The next paragraph provides contractors with the option of using the OFCCP provided benchmark or setting their own using the five factors outlined: “(b) Hiring benchmarks shall be set by the contractor on an annual basis. Benchmarks shall be set using one of the two mechanisms described below.”
  • This final paragraph of the section requires contractors to record the number and keep that record for three years: “(c)The contractor shall document the hiring benchmark it has established each year. If the contractor sets its benchmark using the procedure in paragraph (b)(2) of this section, it shall document each of the factors that it considered in establishing the hiring benchmark and the relative significance of each of these factors. The contractor shall retain these records for a period of three (3) years.”
    • DCI Comment: Am I missing something here? What happened to the section in the preamble that says the final rule will include a sentence explaining that the benchmark will be used to evaluate the percentage of total hires that are protected veterans? (Oops, someone may have accidentally hit the control X button when it was time to go to the final.)

Next, let’s review how the OFCCP FAQ guidance explains the difference between a hiring benchmark and a goal.

  • “5. Is the hiring benchmark a “goal” – No, the hiring benchmark in VEVRAA functions differently from the “goals” expressed in the Executive Order 11246 regulations and the Section 503 Final Rule. The hiring benchmark in VEVRAA provides a yardstick against which contractors can measure the success of their efforts to recruit and employ qualified protected veterans. A goal, on the other hand, not only serves as a yardstick to measure the success of outreach and recruitment efforts, but it also provides an equal opportunity objective, based on the availability of members of the protected group in the labor force, that should be attainable if the contractor complies with its affirmative action program. In contrast, the only data regarding veteran availability in the labor force encompasses all veterans, and is broader than the subset of veterans who are protected by VEVRAA. Therefore, such data could not be used as the basis for establishing an availability-based goal.” 
    • DCI Comment: Notice that the bold (emphasis added) section states that the difference is that a goal takes the yardstick (or benchmark) and actually uses this number as an equal opportunity objective. But wait a second, the final regulation states that the purpose of the hiring benchmark is to achieve equal employment opportunity. Doesn’t this contradict the final rule?

Across all of these documents, there is an inconsistency between the definition of a benchmark and the purpose it should serve. The crux of the definition confusion stems from saying that a benchmark is just the “yardstick” and not an equal opportunity objective in the FAQ, in the crosswalk between the existing and new rule, and in part of the preamble. However, in the final regulatory text, the purpose is explained as being a method to measure progress toward achieving equal employment opportunity for protected veterans, as opposed to being confined to the “yardstick” principle. In addition, the crosswalk adds a whole new component giving contractors discretion to apply the benchmark to job groups, when the preamble explains that the appropriate data to make this comparison does not exist.

What is the bottom line? In other words, exactly what is the contractor required to do with this hiring benchmark? Even though the final regulatory text relates the benchmark to a measure against equal employment opportunity, the definition given for a goal, there is no requirement to analyze workforce utilization against that benchmark, beyond assessing the appropriateness of outreach and recruitment efforts. Thus, the requirements outlined in section 60-300.45 are in-line with the “yardstick” definition of the hiring benchmark, even if the described purpose in that section is not.

by Kristen Pryor, M.S., HR Analyst, and David Cohen, President,  DCI Consulting Group

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