Financial institutions must understand affirmative action obligations
Many don’t realize they need an affirmative action plan
FINANCIAL INSTITUTIONS INSIGHTS |
Many financial institutions are unaware that they are required to maintain an affirmative action plan (AAP) to prove they are providing equal opportunities to protected classes (i.e., minorities, women, individuals with disabilities and veterans). Generally, employers with 50 or more employees and a government contract of $50,000 or more are required to maintain an AAP. Many financial institutions don’t realize that having accounts insured through the Federal Deposit Insurance Corp. (FDIC) or the National Credit Union
Administration (NCUA), serving as a depository of federal funds or serving as a paying agent for U.S. savings bonds creates a contractual relationship that triggers the AAP requirement.
Even absent a clear contractual relationship, it is in a financial institution’s best interest to maintain a solid AAP. Not only will the plan satisfy requirements under the Department of Labor’s Office of Federal Compliance Programs (OFCCP), it can serve as valuable protection in the event that you are the subject of a discrimination lawsuit by a member of a protected class. In addition, there is increased cooperation among both federal and state agencies that enforce various nondiscrimination laws and regulations. If your financial institution comes to the attention of one of these agencies, it is increasingly likely that they will share their findings with other agencies; those agencies may also pursue enforcement actions.
Start by understanding what employment and related data you need to gather and ensuring that you have the systems and processes in place to collect and efficiently report that information for AAP purposes. An AAP typically includes:
- An analysis of applicant flow, current workforce information and employment-related activity that occurs over the period of a year
- Statistical reports and narrative information reflecting compliant policies and procedures
- Proactive affirmative action measures including training programs and outreach efforts.
Many financial institutions choose to work with an outside vendor that is well acquainted with equal opportunity rules and that also has experience coordinating the data and systems issues necessary to address them. Once you have the right AAP process in place, regularly updating your AAP is a relatively straightforward activity.
Financial institutions that fail to comply with AAP requirements can end up facing penalties and significant unwanted attention from federal and state regulators. Take the time now to understand your obligations and develop an appropriate AAP.