OFCCP Week In Review: March 26, 2018

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, Candee Chambers and Jennifer Polcer. In today’s edition, they discuss:

• New OFCCP audit scheduling letters now coming
• President Trump signed FY2018 (The Year in Progress) omnibus spending bill

Monday, March 19, 2018: New OFCCP Audit Scheduling Letters Now Coming

If you received a January 31, 2018 Corporate Scheduling Announcement Letter (CSAL), you can now receive an OFCCP Audit Scheduling Letter at any time. The January 31, 2018 CSAL, for the first time, delayed the delivery of OFCCP Audit Scheduling Letters so Government Contractors could be sure to tidy up and prepare their data needed for audit. But as of March 19, the OFCCP Audit gates are now open and Audit Scheduling Letters will begin to flow out of OFCCP at about 60 per month. You may want to make sure that the location listed on the letter is on the lookout for the OFCCP Audit Scheduling Letter itself. The OFCCP does not send its Audit Scheduling Letters to a Government Contractor’s corporate Headquarters’ Offices unless the OFCCP has scheduled the corporate Headquarters Office for a compliance evaluation. Once you receive the OFCCP Audit Scheduling Letter, you will have 30 days to provide your responsive Affirmative Action Plans to the Agency for the establishment under audit, so every day counts. Audits will occur between last week and (likely) September 30, 2019 (see below in the budget story).

(See OFCCP Week In Review: February 12, 2018, for more on CSAL’s.)

Friday, March 23, 2018: President Trump Signed FY2018 (THE YEAR IN PROGRESS) Omnibus Spending Bill

After a week of wrangling between Senate Democrats and Republicans and House Democrats and Republicans, and between the Senate and the House, a disappointed President Trump signed the country’s largest-ever federal Omnibus spending bill less than 24 hours ahead of the time the federal government would again have run out of funds and shutdown. The U.S. House of Representatives had approved a spending bill on Thursday of last week by over a 40-vote margin (256 YEAH to 167 NAY).  On Friday, the Senate approved the bill by a (large) 14-vote margin (65 YEAH to 32 NAY, with three abstentions).

The Consolidated Appropriations Act, 2018 can be found here.

What just happened?

federal budget bills which comprise the “Discretionary Spending” portion of the full federal budget which the Congress annually considers and sends to the President to sign and fund all of the federal government agencies, including the USDOL. “Discretionary Spending” is only about 1/3^rd of the total annual U.S. budget and does NOT include “Mandatory Spending” (things like Social Security, Medicare and Medicaid which total almost 2/3^rd of the total federal budget) or annual interest on the federal debt (now approaching $1/2 Trillion annually). The total FY2018 federal budget is estimated to be over $4.5 Trillion and the federal deficit for FY2018 is now expected to be well over $1 Trillion for FY2018 (ending September 30, 2018) and is expected to take the federal deficit (now at $21 Trillion as of Sunday afternoon and growing at over $1 Million/minute = ~$3.8 Billion/day) to close to $22 Trillion by September 30, 2018.  This Discretionary Spending bill is for FY2018 (the current federal budget year which has been in progress since October 1, 2017) and now funds the Federal Government through the end of this 2018 Fiscal Year ending September 30, 2018.  The FY2019 Budget battles will thus begin in earnest this summer after only a short respite since the idea is to have a federal budget in place for the next Fiscal Year before it begins on October 1, 2018, only a short six months from now.

While late, this FY2018 Discretionary Spending bill is actually “early” as compared to last year when the Congress struck a Continuing Resolution deal in which the President acquiesced causing him to sign the bill on May 1, 2017, over seven months into the 2017 Fiscal Year.

(See OFCCP Week In Review: May 8, 2017.)

What did the President sign?

The bill contains the full legislation and funding for all of the 12 annual Appropriations bills. It totals $1.3 Trillion in Discretionary Spending, including $78.1 Billion in funding for the Global War on Terror (GWOT)/Overseas Contingency Operations (OCO). Total base funding, excluding OCO and emergencies, is $1.2 Trillion. This budget also provides the largest funding increase for the American military in 15 years and makes significant investments in national priorities like infrastructure, border security and the opioid epidemic.

For the Department of Labor, the bill provides a total of $12.2 Billion in discretionary appropriations – $129 Million above the FY2017 enacted level.

Why is the President unhappy?

“There are a lot of things that I’m unhappy about in this bill.  There are a lot of things that we shouldn’t have had in this bill, but we were, in a sense, forced — if we want to build our military — we were forced to have.  There are some things that we should have in the bill,” President Trump said in an on-camera press statement Friday afternoon. President Trump was also unhappy the bill did not address the so-called “Dreamers” issue in any way and did not fully fund his continuing quest to build a wall between the Southwest of the United States and Mexico.  (“Dreamers” are those illegal immigrants here by virtue of having been brought illegally into the United States as children and thus have grown up here for some portion of their childhood. Dreamers do not include children born in the U.S. from parents who were in the U.S. illegally.)

See President Trump’s interview here and his remarks here.

What is the bottom line for OFCCP?

• Page 886 of the budget bill informs us that, for salaries and expenses, the OFCCP now has $103,476,000 to finish out FY2018 (through September 30, of this year).

What does this new budget mean for OFCCP?

Short answers:

1. The Senate is now calling the shots on the OFCCP’s budget. (See more on this below)
2. The Senate (not the House and not The White House) wants to see OFCCP shrink slowly; not in big annual step downs. Note: OFCCP will need to shrink about 15 employees in the next 6 months of this Fiscal Year.
   • Note: The composition of the Senate will change in the coming November elections as 1/3 of the 100 Senators will be up for re-election and will likely be seated by the time of the next final budget round (for FY2019).
3. The OFCCP will now have 180 days to report to the Senate Appropriations Committee how it plans to physically reorganize OFCCP’s approximately 50 brick and mortar District and Area Offices to “rightsize” (Senate Appropriations Committee terminology) the agency now that it has shrunk in employee headcount by about 15% in the last 9 years (the 8 years of the Obama Administration and first year of the Trump Administration) and by almost 50% since the Reagan Administration when many of OFCCP’s current offices were sized and built out.
4. The Senate wrote its budget to fund almost exactly OFCCP’s current staffing configuration. The OFCCP will now have just enough budget to employ the current approximately 520 employees it has on-staff and will not have to take a reduction-in-force (RIF) in the next six months. Nonetheless, OFCCP will likely drop in the head count about 15 employees, but can likely do so through normal attrition rather than forcing a RIF. (Either the House or The White House budgets (see below) would have forced a MAJOR RIF at OFCCP even beyond the almost 50 employee headcount reduction OFCCP has already taken in the last 12 months. The House proposed FY2018 OFCCP budget would have forced almost a 90 employee RIF from this, in fact, FY2018 OFCCP budget and the White House proposed budget would have forced close to a 150 employee RIF. The OFCCP does not have sufficient budget, however, to fund training it has not had in five years, fund accredited training it hopes to have in the future but has not yet designed or budgeted, fund more on-site investigations and/or fund the Regional Skill Centers in New York and San Francisco the Obama and Trump OFCCP’s have suggested.)

What’s the background on this new lower budget to OFCCP, and the four short answers, above?

The FY2017 budget (last year) was $103,767,000 pursuant to the fourth Continuing Resolution in the last four years. It has been a bumpy and scary ride for the OFCCP. We broke it down and here are a few of those highlights:

• The White House had proposed $88M (-16.5%). (See OFCCP Week in Review: May 30, 2017.)
• The House had proposed $94.5M (-10.2%). (See OFCCP Week in Review: July 24, 2017.)
• The Senate had proposed $103M (-1.4%). (See OFCCP Week in Review: September 11, 2017.)
• At its $103,767,000 FY2017 budget level (last year), OFCCP was authorized to employ and could afford 525 employees, nationwide.
• OFCCP currently employs fewer than 520 employees (since about three months ago) following routine terminations (for cause and voluntary quits) and following OFCCP’s two “buy out” programs in the last eight months offering cash incentives to OFCCP employees to retire early or to resign. So, OFCCP has been saving increasing amounts of budget spend throughout half of its current 2018 Fiscal Year otherwise earmarked for salaries for this current Fiscal Year in progress and has apparently been spending at only about the $100M level (=520 employees, on average) for the last approximately 3 months or half of its Fiscal Year to date…to make up for carrying as many as approximately 540 employees during the first 3 months of its 2018 Fiscal Year which began October 1, 2017).
• The Senate’s $103,476,000 FY2018 budget put almost exactly $101M in OFCCP’s pocket to spend in FY2018 relative to its FY2017 budget. This is because OFCCP estimated its expenses to increase in this FY2018 by $1.376M and the Secretary’s Office is entitled to divert almost $1M from OFCCP’s budget as overhead to help manage and analyze OFCCP. So, $103,476,000 (new budget) MINUS about $2,226,000 ($1,376,000 increased expenses + ~$850,000 Secretary’s Office overhead = $2,226,000) = about $101M+. And remember, OFCCP had been spending somewhere close to about $103M per year since last October 1, 2017, when this current FY2018 began. However, beginning the middle of September 2017, OFCCP’s buy-outs began to take effect, and OFCCP began to achieve some budget savings due to a reduced payroll and began to experience more budget savings in the beginning of FY2018 as more buy-outs occurred and early retirements began to also occur on a staggered basis. (It’s about 10 OFCCP employees per million dollars of budget: $103M = 525 employees; $101M = about 505 employees…which is the average headcount for the year OFCCP has to achieve between now and September 30, 2018, having started the Fiscal Year with close to approximately 530 employees.)

What does this new budget mean for OFCCP audits?

With this essentially “steady state” budget, OFCCP will be able to continue to start the about 60 new audits/mo. nationwide it has been starting for the last year = about 720/year. (Compare about 5,000 OFCCP audits closed per year in the Bush Administration.) OFCCP could start and close more audits per year (OFCCP has to start more audits to close more audits) but will not do so UNLESS and UNTIL OFCCP changes its current philosophy of “Deep Dredge” investigations. (That style of investigation, which began about five years ago, consumes great volumes of OFCCP time and devours large quantities of contractor data and causes OFCCP to grind those data fine and slow over many years.) At this current pace of audit starts, the current CSAL – which authorized 1,000 new OFCCP audits to begin as early as last week – will proceed for the next approximately 17 months (which will occupy OFCCP to approximately the end of its 2019 Fiscal Year = September 30, 2019).

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 Jennifer at jpolcer@directemployers.org with your ideas.