(d) The contractor should advise top management of program effectiveness and submit recommendations to improve unsatisfactory performance. § 60-2.26 Support of action programs. (a) The contractor should appoint key members of management to serve on Merit Employment Councils, Community Relations Boards and similar organizations. (b) The contractor should encourage minority and female employees to participate actively in National Alliance of Businessmen programs for youth motivation. (c) The contractor should support Vocational Guidance Institutes, Vestibule Training Programs and similar activities. (d) The contractor should assist secondary schools and colleges in programs designed to enable minority and female graduates of these institutions to compete in the open employment market on a more equitable basis. (e) The contractor should publicize achievements of minority and female employees in local and minority news media. (f) The contractor should support programs developed by such organizations as National Alliance of Businessmen, the Urban Coalition and other organizations concerned with employment opportunities for minorities or women. § 60-2.30 Use of goals. SUBPART D-MISCELLANEOUS The purpose of a contractor's establishment and use of goals is to insure that he meet his affirmative action obligation. It is not intended and should not be used to discriminate against any applicant or employee because of race, color, religion, sex, or national origin. § 60-2.31 Preemption. To the extent that any State or local laws, regulations or ordinances, including those which grant special benefits to persons on account of sex, are in conflict with Executive Order 11246, as amended, or with the requirements of this part, we will regard them as preempted under the Executive order. § 60-2.32 Supersedure. All orders, instructions, regulations, and memoranda of the Secretary of Labor, other officials of the Department of Labor and contracting agencies are hereby superseded to the extent that they are inconsistent herewith, including a previous "Order No. 4" from this Office dated January 30, 1970. Nothing in this part is intended to amend 41 CFR 60-3 published in the FEDERAL REGISTER on October 2, 1971 or Employee Testing and Other Selection Procedures or 41 CFR 60-20 on Sex Discrimination Guidelines. Effective date. This part shall become effective on the date of its publication in the FEDERAL REGISTER (12-4-71). Signed at Washington, D.C., this 1st day of December 1971. J. D. HODGSON, Secretary of Labor. HORACE E. MENASCO, Acting Assistant Secretary for Employment Standards. JOHN L. WILKS, Director, Office of Federal Contract Compliance. [FR Doc. 71-17789, Filed 12-3-71; 8:51 a.m.] Hon. DoN EDWARDS, FEDERAL DEPOSIT INSURANCE CORPORATION, Chairman, Civil Rights Oversight Subcommittee, Committee on the Judiciary, House of Representatives, Washington, D.C. DEAR MR. EDWARDS: This will reply to your letter of March 27, 1972 in which you ask for information concerning steps taken by the Corporation to prevent violations of Title VII of the Civil Rights Act of 1964, as amended (42 U.S.C. 2000e-2000e-15), relating to equal employment opportunity. The Department of the Treasury is the primary enforcement agency with regard to compliance by banks with Title VII of the 1964 Act. Under Treasury regulations implementing Executive Order 11246 (41 C.F.R. §§ 10-12.801-1012.815), all banks with 50 or more employees must file Equal Opportunity Reports with the Joint Reporting Committee of the Equal Opportunity Commission and the Office of Federal Contract Compliance of the Department of Labor and with the Treasury Department. In addition, such banks must have on file on their premises a written Affirmative Action Program outlining their plans with respect to implementation of the Treasury regulations and the Executive Order. To aid the Department of the Treasury in the performance of its functions, Corporation examiners, in the course of their regular examinations of insured State nonmember banks, determine that the last required Equal Opportunity Report has been duly filed and that the bank has a written Affirmative Action Program on file. You also request a memorandum of law concerning sanctions available to the Corporation with respect to the correction of existing discriminatory practices or the prevention of the establishment of discriminatory practices. The primary sanction available to the Corporation is found in section 8(b) of the Federal Deposit Insurance Act, as amended (12 U.S.C. 1818(b)), authorizing the Corporation in the case of insured State nonmember banks, and the Comptroller of the Currency and the Board of Governors of the Federal Reserve System with respect to national banks and State member banks respectively, to institute cease-and-desist proceedings when it appears that such a bank has engaged in or is about to engage in any violation of law, rule or regulation. A violation of either the Civil Rights Act of 1964 or the Treasury regulations implementing that Act would be a sufficient basis for instituting proceedings by the Corporation under section 8(b). If we can be of any further assistance, please let us know. FRANK WILLE, Chairman. BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM, Hon. DON EDWARDS, DEAR MR. CHAIRMAN: I am writing in reply to your request for an outline of actions the Board of Governors has taken to prevent violations of the equal employment opportunity policies of Title VII of the Civil Rights Act of 1964 by institutions which the Board supervises, namely, State member banks. As you know, under Executive Order 11246, the Equal Opportunity Program Office in the Treasury Department is the compliance agency for commercial banks. In cooperation with the Treasury Department, Federal Reserve examiners determine whether State member banks have: (1) filed required reports with the Joint Reporting Committee of the Equal Employment Opportunity Commission; (2) sent copies of the reports to the Treasury Department and the Department of Labor and (3) kept on file a written affirmative action plan. Copies of the Federal Reserve examiners' findings are forwarded to the Treasury Department for any compliance work necessary. Over and above this cooperative interagency effort, the Board has developed several programs of its own in which you may be interested. 1. In April 1971, the Board adopted regulations covering nondiscrimination in employment by Board contractors and subcontractors holding construction, service and supply contracts. Although the Board is not within the class of Federal Executive Agencies to which Executive Order 11246 applies, the concept of the executive order relating to the equal employment policy on contracts and subcontracts is being fully applied by the Board to the contracts and subcontracts to which the Board is a party. Also, the provisions of the "Washington Plan" which cover quantified minority hiring goals in 11 skilled contruction trades are included in the prime contract for the Board building annex now under construction. 2. An Affirmative Action Plan with quantified objectives and timetables covering the recruitment, hiring, assignment, training, and promotion of minorities and women was initially adopted by the Board in December 1960. This plan is revised annually. Each Federal Reserve Bank has an Affirmative Action Plan as well, similar to that of the Board. 3. In November 1969, the Board adopted regulations and procedures applicable to Board employees to provide a method for the processing of complaints in the field of equal employment opportunity. Equal employment counselors and a Federal Women's Program Coordinator have been appointed. 4. In March 1971, the Board appointed a Director of Equal Employment Opportunity who monitors the affirmative action plans of the Board and the Reserve Banks and serves as a consultant to the Reserve Banks on all equal employment opportunity matters, including the processing of discrimination complaints. Finally, in response to your request, I am enclosing a copy of a legal memorandum concerning the extent to which the Board of Governors has authority with respect to member banks to impose sanctions designed to correct existing discriminatory patterns or to prevent establishment of discriminatory patterns. Sincerely yours, Enclosure MEMORANDUM OF LAW ARTHUR F. BURNS. This memorandum discusses the extent to which the Board of Governors of the Federal Reserve System has authority with respect to State member banks to impose sanctions designed to correct existing discriminatory employment patterns or to prevent establishment of discriminatory employment practices. It was prepared in response to an inquiry from Representative Don Edwards, Chairman, Civil Rights Oversight Subcommittee, Committee on the Judiciary, House of Representatives. I. BOARD POWERS IN GENERAL In the exercise of its supervisory functions relating to State member banks, the Board possesses limited statutory authority. The Board is not a bank chartering authority and the rights and privileges of State member banks are derived directly from the chartering authorities of the respective States. While State member banks are subject to various provisions of the Federal Reserve Act and other federal banking laws, primary supervisory and regulatory control rests with the State chartering authorities. The Federal Reserve Act, 12 U.S.C. § 330, provides: "... [A]ny bank becoming a member of the Federal Reserve System shall retain its full charter and statutory rights as a State bank or trust company and may continue to exercise all corporate powers granted it by the State in which it was created . . ." The Board, early in its history, recognized its narrow regulatory and supervisory role when it stated: [T]he Board understands that it is not its function to undertake to impose on the activities of member banks, any restrictions that are not contemplated by the Act, but only to prescribe such regulations as are designed to carry out the purposes of the Act." (1916 Federal Reserve Bulletin 393) In its relations with State member banks, the Board continues to rely on statutory authorization as a basis for exercising its supervisory responsibilities. Sections 9 and 11(a) of the Act (12 U.S.C. 325, 248(a)) authorize the Board to examine the accounts, books, and affairs of member banks and to require such statements and reports as the Board deems necessary to carry out the purposes of the Act. Traditionally, the exercise of this authority has been restricted to matters affecting the financial soundness of the State member banks. Federal banking law contains no provision which would serve as a basis for the assumption by the Board of overall supervisory power over the employment policies of State member banks except as these policies may prove detrimental to the financial soundless of a bank. II. TITLE VII AND EXECUTIVE ORDER 11246-ENFORCEMENT SCHEME Title VII of the Civil Rights Act of 1964, as amended by the Equal Opportunity Act of 1972 (42 U.S.C. 2000e-2000e-15), prohibits racial discrimination or other unlawful employment practices by any employer engaged in any industry affecting commerce who has fifteen or more employees (§ 703 (a)). It seems clear that banks, including State member banks of the Federal Reserve System, are covered by the provisions of Title VII. The enforcement scheme established by Title VII, as amended, includes investigation by the Equal Employment Opportunity Commission (“EEOC"), attempts by that agency to eliminate an allegedly discriminatory practice through informal conference and conciliation, and initiation by the EEOC of a civil action against any respondent not a government, government agency or political subdivision (§ 706(a)-(d)). Where a charge of unlawful employment practices is dismissed by the EEOC after its investigation, the Act provides that a civil action may be brought by the person claiming to be aggrieved against the respondent named in the charge (§ 706 (f) (1)). Where the EEOC, on the basis of a preliminary investigation, concludes that prompt judicial action is necessary, it may bring an action for appropriate temporary relief pending final disposition of the charge. The court in which such action is brought may enjoin the respondent from engaging in such unlawful employment practice and order such affirmative action as it finds appropriate (§ 706(f) (2), (f) (5)). Where the Attorney General has reasonable cause to believe that any person or group of persons is engaged in a pattern or practice of resistance to the requirements of Title VII and such action is intended to deny the full exercise of the rights under Title VII, the Attorney General may bring a civil action requesting relief. This action may include application for a permanent or temporary injunction, restraining order or other order against such persons responsible for the pattern or practice (§ 707(a)). The 1972 Act provides that the EEOC will assume the functions now performed by the Attorney General with respect to initiation of employment discrimination actions, two years from the effective date of the Act. The Act does not appear to grant authority to the Board or any other financial supervisory agency to institute proceedings to enforce Title VII. In addition to the enforcement provisions of Title VII, Executive Order 11246. as amended. (30 F.R. 12319) affects all Federal depositories and issuers of U.S. Savings Bonds and Notes, including commercial banks, savings banks, and savings and loan associations serving as issuing and paying agents of the United States. Under this Executive Order, the Department of the Treasury has primary enforcement responsibility for monitoring the employment practices of banks and other financial institutions. Treasury regulations, issued pursuant to this authority (41 CFR §§ 10–12.801-10-12.815), provide that banks with 50 or more employees are required to develop and maintain a written affirmative action program and must file Equal Opportunity Reports (Standard Form EEO-1) with the Joint Reporting Committee of the EEOC, the Department of Labor and the Treasury Department. Financial institutions cannot qualify as a Federal depository unless they comply with all of the provisions of Executive Order 11246. The Secretary of the Treasury may terminate at any time the qualification of a bank as a Federal depository upon a finding of noncompliance with the provisions of the Executive Order (31 CFR 214.5 (e)). Federal Reserve System examiners cooperate with the Treasury by conducting a two-part inquiry to determine whether a qualifying member bank has filed the required report and maintains a written Affirmative Action Plan. Reports containing negative findings are also forwarded to the Board's Director of Equal Employment Opportunity. In the past, allegations against a member bank of discriminatory employment practices received by the Board have been investigated by the Department of the Treasury pursuant to its regulatory provisions, with the cooperation of the Board. III. SANCTIONS AVAILABLE TO THE BOARD Neither Title VII nor Executive Order 11246, as amended, provides authority whereby the Board could impose sanctions on member banks for unlawful employment practices. However, where the Board determines that a member bank has engaged in or is about to engage in any violation of law, rule or regulation. the provisions of the Financial Institutions Supervisory Act (12 U.S.C. 1818(b) (1)) authorize the Board to initiate cease and desist proceedings against such bank. It would appear that this provision provides a basis for the institution by the Board of proceedings to enforce the provisions of the Civil Rights Act of 1964 and the Regulations of the Department of the Treasury. Hon. DON EDWARDS, GENERAL SERVICES ADMINISTRATION, Chairman, Subcommittee on Civil Rights Oversight, Committee on the Judiciary, House of Representatives, Washington, D.C. DEAR MR. CHAIRMAN: In response to your May 8, 1972 letter asking four questions relevant to your study of the Federal Power Commission, the following answers are provided: Question 1. What are the parameters of the General Services Administration's responsibilities under Executive Order 11246 with respect to the utilities indus tries? What impact has GSA had in dealing with discriminatory employment practices in these industries? Answer. Executive Order 11246, as amended, provides under Part II, Section 202, that all government contracting agencies shall include in every governmet contract hereafter entered into the requirements of the Government's equal employment opportunity program. The U.S. Department of Labor Order No. 1 of October 1969 assigned the contract compliance responsibility for the utility industry to the General Services Administration. In those instances where written, formal bilateral contracts are executed, there has been no difficulty in implementing Executive Order 11246, as amended, and reviewing the employment practices of the utility contractor. One year after the reorganization of GSA's contract compliance program in 1970, GSA's efforts resulted in the companies in the electric, gas, and sanitary services industries submitting Affirmative Action plans and EEO 1 reports that indicated parity would be reached in penetration ratio (percent of minorities in the work force) seven years sooner than previously predicted (1976 instead of 1983) and that parity would be reached in occupation ratio (equality of wages) seventeen years sooner than previously projected (1981 instead of 1998). Specific examples of progress in this area follow: a. Washington Gas Light Co. (WGL) In the two-year period, from 1969 to 1971, the minority employment increased by 14.1%. This increase in the penetration ratio was accompanied by an increase in the occupation ratio. For example, in the “Officials and Managers" category, the total number of minorities increased from 12 to 17 and they now represent 4.1% of that category; in the "Professionals" category, it went from 5 to 11 (or 5.0% of the total); in the "Skilled" category, it went from 157 to 181 (or 25.7%); and, in the "Semi-skilled" it increased from 338 to 384 (or 62.7% of the WGL total). What makes this progress outstanding is that it occurred even though the company was experiencing severe cut-backs in their overall employment. For example, in October 1971, WGL's total work force was 3,000. A scant seven months later, this figure dropped by 320 employees to 2,680. b. Potomac Electric Power Company (PEPCO) In January of 1972 GSA's contract compliance staff analyzed the entire PEPCO organization. This analysis showed that an "affected class situation" exists in several departments. An affected class situation occurs when members of a particular minority group are kept in a particular class of jobs (such as maintenance men, etc.). The result of this analysis will be a formal agreement to eradicate this situation. c. Baltimore Gas & Electric Company (BG&E) The impact of the GSA Contract Compliance program is just beginning to be felt at BG&E. A total of 27 of BG&E facilities were reviewed and the results show that BG&E has a long distance to go to reach parity. The minority representation at the company is currently 15.3% while the Baltimore Standard Metropolitan Statistical Area Negro percentage is 21.9% (1960 Cenus). In Baltimore City itself minorities compose 47% of the population. In order to help eliminate this disparity, a conference was held in Washington with officials of the company. The company has agreed to establish separate goals and timetables for each department with severe under-utilization of minorities and females. There are 31 departments in this category (which consists of any department with less than 11% minorities, or less than 16% women). This unique approach has the effect of pinpointing and helping to eliminate such discriminatory practices as segregated departmental areas and work crews. d. AT&T (Bell System) GSA's contract compliance efforts with various companies in the Bell System began in 1969. The accompanying chart reflects the amount of change in the minority penetration into the work force of the 20 Bell System companies and the AT&T Headquarters office and the Long Lines offices from 1969 to 1970. The 1971 statistics will be available by June 1, 1972, and judging by some of the quarterly EEO progress summaries received, it is anticipated that considerably more improvements will be evident. |