Commercial Real Estate and the OFCCP

Are you a commercial landlord or does your business lease any commercial real estate?  Does your business manage property?  If so, it is more important than ever to know your tenants or clients.  Landlords who lease their property to federal contractors or management companies who manage such property may unknowingly become federal contractors or subcontractors subject to certain equal employment opportunity (“EEO”) and affirmative action obligations developed by the increasingly active Office of Federal Contract Compliance Programs (“OFCCP”), a division of the U.S. Department of Labor.

Landlords and Property Managers May Be Federal Contractors or Subcontractors with Affirmative Action Obligations

When an eligible company enters into a lease agreement, or other supply and service contract, with a U.S. government agency above a threshold amount, it becomes a federal government contractor and, as such, must comply with the EEO and affirmative action obligations outlined in Executive Order 11246 (protecting minorities and women), Section 503 of the Rehabilitation Act, as amended (protecting individuals with disabilities), and Section 4212 of the Vietnam Era Veterans Readjustment Assistance Act, as amended (protecting covered veterans).  Subsequently, when a federal government contractor purchases services or supplies from another company, the latter may then become a federal government subcontractor, if value of the subcontract is above a threshold amount and the services or supplies being purchased are necessary to the performance of the prime federal contract.

As a result, landlords who lease space to the federal government, or a federal contractor or subcontractor, may be subject to OFCCP jurisdiction.  In turn, a landlord’s property management company may be a federal government subcontractor, as may the businesses who sell computers or other services/supplies to the property manager that are “necessary to the performance” of the landlord’s federal contract or the property manager’s contract with the landlord.  All tiers of subcontractors are at risk of coverage. 

Rest assured, however, that not all lessees are federal contractors.  If a company is simply leasing space from a landlord who happens to be a federal government contractor or subcontractor (but the company has no relation whatsoever to the prime federal contract or related subcontracts), the lease, without more, will not make the company a federal contractor or subcontractor.

What Are the EEO and Affirmative Action Obligations?

Federal contracts and subcontracts valued in excess of $10,000 are subject to a certain set of minimum non-discrimination obligations.  Federal contracts and subcontracts valued at $50,000 or more are subject to additional affirmative action plan development obligations if the contractor or subcontractor employs 50 or more employees. 

For example, at the $50,000 threshold, a federal contractor or subcontractor must, among other obligations:

• Develop a written affirmative action plan;
• Maintain a log of applicants using proper disposition codes and invite self-identification of an applicant’s protected status;
• Post notices of non-discrimination and include EEO/AA tag line on all recruitment advertising and post all jobs with state employment delivery service;
• Conduct and document outreach efforts for women, minorities, veterans and individuals with disabilities (including sending required letters to recruitment sources, unions, and subcontractors);
• Develop a reasonable accommodation policy for individuals with disabilities and document accommodation requests, including leaves of absence and ensure accessibility in technology, buildings, restrooms and parking lots; and
• Annually prepare up to two reports that are filed with the Government (the EEO-1 and the VETS-100A reports).

All of these obligations and more must to be put into place within 120 days of entering into a covered contract or subcontract. 

What This Means For Covered Real Estate Contractors

If your organization finds itself presented with a lease provision purporting to incorporate various EEO and affirmative action obligations, take note!  While this language alone will not and cannot make you a federal government contractor or subcontractor, it is important to explore whether you will become a federal contractor or subcontractor by entering into the lease or contract in question.  We can help you do this.  If you know you are already in a covered arrangement, either as a landlord or a commercial property manager, and have not developed an affirmative action plan, it is important to do so as quickly as possible.