CHA News Article

Process to Apply for Functional Affirmative Action Programs Revised
Applies to federal contractors, defined broadly by the OFCCP

The Office of Federal Contract Compliance Programs (OFCCP) has updated its guidance on the process federal contractors may use to apply for and maintain a functional affirmative action program (FAAP). An FAAP is based on a contractor or subcontractor’s business functions or business units, rather than the contractor’s physical locations. A contractor must seek approval and reach an agreement with the OFCCP before it can begin submitting FAAPs. Earlier this month, OFCCP explained the updated guidance in a webinar, which should be available on its website in the coming weeks.

Whenever OFCCP’s rules change, the question of which employers fall under its jurisdiction arises. Historically, employers receiving “federal financial assistance,” such as Medicare and Medicaid, have not been subject to OFCCP’s oversight and enforcement. However, the effect of participation in other federal programs has not been as clear.

In 2012, Congress attempted to limit OFCCP’s jurisdiction over TRICARE providers by implementing Section 715 of the National Defense Authorization Act, which states that health care providers operating as part of the TRICARE-managed network of providers will not be considered federal contractors or subcontractors. It is apparent, however, that OFCCP maintains its position that in certain circumstances, health care providers offering care to participants in federally funded health benefit programs — including Medicare, TRICARE and the Federal Employees Health Benefits program — will be considered subcontractors by OFCCP. Moreover, while OFCCP has indicated its adoption of a five-year moratorium on enforcement activities against TRICARE providers, the agency continues to assert jurisdiction against hospitals and health systems on other bases.

Health care providers and insurers should consult with counsel to reassess their affirmative action obligations and determine if there are other bases on which OFCCP may assert jurisdiction.