The OFCCP Week in Review (WIR) is a simple, fast and direct summary of relevant happenings in the OFCCP regulatory environment, authored by experts John C. Fox and Candee Chambers. In today’s WIR, we cover:
- Minimum wage rises to $10.20 per hour for federal contractors
- OFCCP “Subpart C” regulations became effective as to Section 503 2.5 years ago–now what?
- US Government Accountability Office (GAO) issued a report critical of OFCCP’s enforcement program
- OFCCP confirms that its construction rule is dead
Monday, September 19, 2016: Federal Contractor Minimum Wage Rises to $10.20 Per Hour
Effective January 1, 2017, the Federal Contractor minimum wage will rise to $10.20 per hour, or $6.80 for workers who also earn tips as part of their wages.
These changes are part of an executive order signed by President Obama on February 12, 2014 which set the minimum wage at $10.10 per hour or $4.90 for those workers earning tips. The executive order increases the federal minimum wage annually and in 2015, it rose to $10.15 per hour or $5.85 for tipped workers.
The Department of Labor will index the minimum wage annually to keep up with inflation. The new required wages will be published at least 90 days before they are to take effect.
Tuesday, September 20, 2016: Do You Know Why This Was an Important Day?
It was the “Mid-Point” 2½ years after OFCCP’s “Subpart C” regulations first became effective as to Section 503 on March 24, 2014. Those regulations changed many compliance obligations as to Section 503, including by adding a new requirement that Government contractors covered by Section 503 “remind” incumbent employees that they may update their disability status. See 41 CFR Section 60-741.42(c) (published below). Subpart C is that portion of OFCCP’s new Section 503 Rules which prescribes various affirmative action requirements, including applicant and incumbent employee voluntary self-identifications of disability status. In addition to the four required self-identifications (“Pre-Offer/Post-Offer/during the first year Subpart C attached to the Contractor/5 years after Subpart C attached”), OFCCP’s new Rules also require that the contractor issue a mid-point “reminder” as noted below:
(c) “Employees. The contractor shall invite each of its employees to voluntarily inform the contractor whether the employee believes that he or she is an individual with a disability as defined in § 60-741.2(g)(1)(i) or (ii). This invitation shall be extended the first year the contractor becomes subject to the requirements of this section and at five year intervals, thereafter, using the language and manner prescribed by the Director and published on the OFCCP Web site. At least once during the intervening years between these invitations, the contractor must remind their employees that they may voluntarily update their disability status.” 41 CFR Section 60-741.42(c)
Accordingly, if your company became subject to Subpart C of the OFCCP’s Rules on the very day the Rules became effective (March 24, 2014), you were at the mid-point last Tuesday between the first year and the fifth year (when the “reminder” is approximately due).
The Reminder does not have to be precisely at the mid-point between the 1st and 5th years after Subpart C attached to one or more of your AAPs.
NOTE: Subpart C almost undoubtedly did NOT attach, in fact, to your company on March 24, 2014 when OFCCP’s new Section 503 Rules became legally effective. Rather, OFCCP’s Rules did not attach Subpart C’s obligations to your company until AFTER any existing Section 503 AAP expired at the natural end of its one-year cycle. (OFCCP allowed this “Phase-In” to avoid the otherwise need to terminate any in-force Section 503 AAP for any particular establishment on March 24, 2014). OFCCP neither wanted to force all Section 503 AAPs to henceforth be dated March 24 but also did not want to cause Government contractors with existing in-place AAPs to have to update their AAPS mid-year and throw away otherwise good work product. Below is OFCCP’s FAQ stating that OFCCP was exercising its discretion to NOT hold covered Government contractors accountable if they did not comply with OFCCP’s new Section 503 Rules until the contractor’s in-force Section 503 AAPs finished the one year cycles they were in after March 24, 2014:
“2. March 24, 2014 fell in the middle of my company’s AAP year. When are we required to put in place a new AAP that complies with Subpart C of the new regulations?
Contractors with an AAP in place as of the effective date of the new regulations (March 24, 2014) may maintain that AAP until the end of their AAP year and delay their compliance with the AAP requirements of Subpart C of the new regulations until the start of their next AAP cycle. Contractors are nevertheless encouraged to begin updating their employment practices and IT systems to come into compliance with the revised requirements of Subpart C of the new regulations as soon as possible. In addition, contractors are reminded that they must be in compliance with the other requirements of the new regulations, in subparts A, B, D and E, as of the effective date.”
- Section 503 AAP Year Date = January 1, 2014 to and through December 31, 2014
- Subpart C became legally effective March 24, 2014 except as to Section 503 AAPs still in force
- Subpart C attached to this AAP as of January 1, 2015 when the AAP in force at the time of OFCCP’s March 24, 2014 Rule finished its one year cycle
- Accordingly, the mid-point of this AAP, to which Subpart C attached on January 1, 2015 would be July 1, 2017 (half way between January 1, 2015 (when Subpart C first attached to this AAP) and January 1, 2020 (5 years after Subpart C first attached to this AAP)
NOTE: Many contractors do not have a single day each year on which the contractor publishes all of its Section 503 AAPs. Rather, these “rolling production” contractors will find that Subpart C attached to their Section 503 AAPs over a variety of dates unique to each date on which their Section 503 AAPs cycled for update.
NOTE 1: The Reminder does not have to be precisely at the mid-point between the 1st and 5th years after Subpart C attached to one or more of your AAPs. Your “reminder” only has to occur “during the intervening years between these “invitations” (meaning between the 1st and 5th year invitations to self-identify). So, relax: you have some time to publish your “reminder.” This reminder WIR (pun intended) is meant to get you thinking about your calendar, but not to put you into panic! When have you scheduled your Section 503 “reminder” to occur? Please calendar now.
NOTE 2: The Intermittent Government Contractor conundrum: Not all employers sign Government contracts seamlessly year-in and year-out. Rather, many companies gap Government contracts and sign Government contracts intermittently every other year or so. For “gappers”, OFCCP’s Rules start over and attach with each new Government contract as though the company were signing a Government contract for the first time. Said another way, all affirmative action requirements and non-discrimination requirements which OFCCP enforces end at the day, hour and minute when the Government contract terminates. Similarly, when a company becomes a Government contractor, OFCCP’s Rules then attach and compliance obligations begin. There is no “Phase-in” period for Government contractors which gap contracts. Rather, OFCCP designed its “Phase-In” to accommodate those federal contractors which already had a Section 503 AAP in place when the new March 24, 2014 Section 503 Rules became legally effective. Gappers, however, have no AAP in place at the time they sign a new Government contract. There is thus nothing to “Phase in”. Thus, a new Government contractor’s self-identification obligation running times (not the date your first Section 503 AAP is due) start upon execution of the Government contract.
Friday September 23, 2016: GAO Issued a Report Critical of OFCCP’s Enforcement Program
Two years in the making, the GAO published a report titled EQUAL EMPLOYMENT OPPORTUNITY: Strengthening Oversight Could Improve Federal Contractor Nondiscrimination Compliance making 6 recommendations as to how OFCCP should proceed to improve its discrimination law enforcement program. While Government contractors covered by OFCCP’s programs will find comfort with most of the GAO’s recommendations, Recommendation # 2 will alarm contractors (that OFCCP should require contractors to supply OFCCP annually with AAPs and certifications of updates).
Cynthia Hackerott, CCH’s OFCCP beat reporter who specializes in detailed and real-time OFCCP reporting, published an extensive commentary in Friday’s Wolters Kluwer CCH Employment Law Daily blog and attached a list of the GAO’s 6 recommendations, including an extensive commentary after each from John C. Fox. We recommend you read Cynthia’s fine piece. You may be very surprised by GAO’s Recommendation #3 and John’s Comment (concerning the lack of need for about 40 OFCCP brick and mortar District Offices).
The GAO’s Recommendations are not binding on OFCCP, but rather are merely suggestive. OFCCP indicated its interest to adopt all of GAO’s Recommendations.
Friday September 23, 2016: OFCCP Confirms that Its Hoped-For Construction Rule is Dead
Confirming what we reported here in a nationwide exclusive last January, OFCCP’s long hoped-for proposed Construction industry regulations will not see the light of day and will not be published in this Administration. We will reveal at the NELI Affirmative Action Briefings around the country beginning next week the behind-the-scenes forces which combined to kill this OFCCP proposal (too long to tell here). Revision of the construction regulations was Pat Shiu’s first priority among the hoped-for regulatory revisions on her punch list, dates back to just after her September 2009 appointment and was one of only two regulatory reforms (EO 11246 overhaul was the second one but was at the bottom of her list) she envisioned which she did not accomplish (in an otherwise breathtaking welter of Rules revisions touching every other part of OFCCP’s Affirmative Action and non-discrimination enforcement activities).
OFCCP sought to smooth over this setback by also announcing on Friday “a significant expansion” of its Mega Construction Project Program which features “[f]or the first time” a “strategic investment of agency resources” at OFCCP’s National Office (HQ) and in its six Regional Offices. This announcement overlooks, though, that the Carter, Reagan and George H. W. Bush (the father) Administrations all had a dedicated Construction Branch (GS 14 manager) supported by 6 Compliance Officers in the National Official Policy Division and each of OFCCP’s (then) 10 Regional Offices had at least one Compliance Officer dedicated solely to construction matters and OFCCP’s then 56 District and Area Offices all had CO’s designated as construction liaison officers specially trained and specialized in construction audits.
There are no new policy initiatives associated with Friday’s announcement and no expansion as to the number of construction audits (which have trended down from over 500 construction audits/year in the Clinton and Bush Administrations to 385 (while committing to conduct 450) in FY 2013 and to only 266 in FY2015. FY2016 ends this coming Friday. Early OFCCP enforcement data depict thus far another very difficult year for OFCCP with projections portraying the lowest number of audit closures in the last 45 years. Construction audit closures are not yet reported but we project them to come in under 200 for the entirety of FY2016).
THIS COLUMN IS MEANT TO ASSIST IN A GENERAL UNDERSTANDING OF THE CURRENT LAW AND PRACTICE RELATING TO OFCCP. IT IS NOT TO BE REGARDED AS LEGAL ADVICE. COMPANIES OR INDIVIDUALS WITH PARTICULAR QUESTIONS SHOULD SEEK ADVICE OF COUNSEL.
Reminder: If you have specific OFCCP compliance questions and/or concerns or wish to offer suggestions about future topics for the OFCCP Week In Review, please contact your membership representative at (866) 268-6206 (for DirectEmployers Association Members), or email Candee at firstname.lastname@example.org with your ideas.
John C. Fox, Esq. is President and Partner at Fox, Wang & Morgan P.C. where he represents companies and tries cases in state and federal courts throughout the United States. Mr. Fox has extensive trial experience, having spent more than 300 days in trial. Mr. Fox was also lead trial counsel in the first of the six wage-hour class actions known to have been tried in California and was lead trial counsel in what are believed to have been the two largest disability law suits in the United States. He is an across-the-board employment lawyer representing management nationwide. Full Bio »