OFCCP Week In Review: April 15, 2019

The DE 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:

• Big, Big Week for OFCCP
• OFCCP Proposes Two New Construction Compliance Check Audit Scheduling Letters
• OFCCP Financial Industry Town Hall
• Plaintiffs Want EEO-1 Component 2 Pay Data Reporting Completed By May 31, 2019
• OFCCP Legal Industry Town Hall
• Stanton To Lead WHD
• EEOC Released FY 2018 Enforcement and Litigation Data
• OFCCP & ODEP Talk Disability Inclusion
• OFCCP Proposed New Audit Letters

Tuesday, April 8, 2019: Big, Big Week for OFCCP

Just to organize the avalanche, OFCCP this week launched major policy and audit announcements EACH day of the week, Monday through Friday.

OFCCP on Monday published the first of two “Notice Documents” seeking comments collectively on six new proposed OFCCP audit Scheduling Letters.

Beginning Tuesday, OFCCP held two Town Hall Meetings in New York City addressed to two different industries on back-to-back days (Tuesday and Wednesday). So you have to read both stories which our roving reporter Candee Chambers wrote while on-site at both Town Hall Meetings. Different news each day.

And then on Thursday, OFCCP Director Craig Leen hosted a conference call with ILG Chairs and unleased some surprising news our very own Candee Chambers and Jennifer Polcer report

Now, about those new proposed six audit letters. On Monday, OFCCP published a little observed “Notice Document” rolling out four documents and seeking comments on two new (never previously seen) construction audit Scheduling Letters for use in coming Compliance Checks. OFCCP is now dusting off and revitalizing that old Compliance Check investigative tool which the Bush OFCCP (the son) both birthed and then killed as too resource intensive. OFCCP has now beefed up these newly proposed Compliance Check Letters for construction (not Supply and Service. See that story on Friday’s coverage of the newly proposed Supply and Service audit Scheduling Letters, below).

However, do not think these new Letters are a continuation of the old OFCCP Compliance Check program. These Letters, if finalized as is, will demand MUCH more contractor time to respond to OFCCP. OFCCP proposes one letter for federal contractors signing prime contracts (which OFCCP curiously calls “direct” contracts) and a second similar, but shorter (but still very extensive), letter OFCCP proposes to use for federal construction contractors which sign contracts for “federally assisted” construction projects.

And finally, on Friday, OFCCP published a second “Notice Document” (unrelated to Monday’s “Notice Document”) rolling out 6 documents, which caught everyone’s attention. This second Notice Document seeks public comments on four new Supply & Service audit Scheduling Letters for:

• Supply and Service “regular” Compliance Reviews;
• Supply & Service Compliance Checks (so if OFCCP’s proposals go to final, the agency will end up with three different Compliance Check letters);
• Supply & Service Focused Review audit Scheduling Letter testing VEVRAA Compliance; and
• Supply & Service Focused Review audit Scheduling Letter testing Section 503

So, the week began with new proposed Construction Industry Compliance Check Scheduling Letters and ended on Friday with Supply & Service audit Scheduling Letters, with Town Halls and a major conference call squeezed in the middle. What a meaty week!

 

We discuss, below, all six of these new audit Scheduling Letters and the important and surprising news which spilled out of the two OFCCP Town Halls and the ILG Chairs’ conference call with Director Leen.

 

Monday, April 8, 2019: OFCCP Proposes Two New Construction Compliance Check Audit Scheduling Letters

Since the review process for all six of OFCCP’s proposed new audit letters will go on well past the start of the new audits scheduled to begin after May 9, under the new CSAL, all OFCCP audits will proceed under OFCCP’s EXISTING and approved audit Scheduling Letters. (Indeed, the new proposed OFCCP audit Scheduling Letters may not be approved and in use until late summer or even the new Fiscal Year (starting October 1, 2019) depending on how many comments OFCCP receives and how quickly OMB can decide how to proceed),

Since four of OFCCP’s proposed audit Scheduling Letters are new, (Supply & Service Focused Reviews (503 & VEVRAA), and the two construction Compliance Check Letters), those audits appear destined to start perhaps in FY 2020 (starts October 1, 2019). OFCCP could, of course, choose to use its existing Compliance Check Letter for Supply & Service and commence those any time after early May, 2019.

1. The public is invited to supply written comments in support, opposition or correction of either or both proposed OFCCP Compliance Check Scheduling Letters NOT LATER THAN midnight on Friday June 7, 2019. See Federal Register for April 8, 2019.
2. OFCCP’s “Notice Document” ID number is OFCCP-2019-0001-0001. Click on that link to find all four documents OFCCP is putting forward as to the construction Compliance Check letters:
   1. The “Notice Document” inviting comments;
   2. A nine-page “Justification” memorandum explaining what OFCCP is up to;
   3. OFCCP’s construction contractor Compliance Check Letter the agency proposes to use if the contractor “has a direct federal contract and meets the jurisdictional thresholds of all three programs.”  (emphases added)
   4. OFCCP’s construction contractor Compliance Check Letter the agency proposes to use for the contractor “whose sole coverage comes from federally assisted construction projects only.”
      • NOTE: OFCCP plans (each Fiscal Year) 300 of the “direct contractor” Compliance Check audits and 200 of the “federally assisted” (only) contractor audits.
3. OFCCP finally, publicly and in writing, admits that “Construction contractors are not required to develop an AAP under Executive Order 11246.” See footnote 4 of the “Justification.” This should finally end the occasional aberrational rogue OFCCP District Office which insists that construction contractors must develop AAPs for Minorities and Women for the contractor’s non-craft (white collar) employees. Rather, because of their mobile workforce, construction contractors must comply with the 16 Affirmative Action “Steps” for ALL of its employees, and not develop AAPs for Minorities and Women. See 41 CFR Section 60-4.
   • NOTE: Construction contractors must nonetheless develop AAPs for Individuals with Disabilities and for Protected Veterans if Section 503 and/or 38 U.S.C. 4212 of VEVRAA apply to the contractor.
4. Here is what is common to both of OFCCP’s proposed construction contractor Compliance Check audit Scheduling Letters:
   1. OFCCP asserts that both of OFCCP’s proposed Compliance Check audit Scheduling Letters are designed to test ONLY whether the contractor has complied with its recordkeeping requirements.
      • While not so-stated, OFCCP has designed these audit scheduling Letters, by the way, to allow the agency to side-step the Fourth Amendment “Warrant” requirement which sprang from OFCCP’s PRIOR construction contractor audit Scheduling Letter. That prior audit Scheduling Letter started with an on-site investigation triggering the Fourth Amendment’s “Warrant” requirements as highlighted in OFCCP’s recent loss in federal court in the OFCCP v. Baker DC construction company case. Good rebound for OFCCP from a bruising loss forcing the revamp of OFCCP’s construction program (which is what you are now witnessing).
   2. Both proposed Letters also contain an extensive so-called “Itemized Listing” attachment (following the pattern of Supply & Service audit Scheduling Letters);
   3. The contractor may choose the form of Compliance Check it prefers, either:
      • an on-site meeting during which OFCCP would come to the contractor’s establishment and pick-up the documents OFCCP demands for review in the audit Scheduling Letter (see below); or
      • an “e-mail” to OFCCP attaching the documents OFCCP requested in OFCCP’s audit Scheduling Letter (see below).
      • NOTE: It is highly unlikely any contractor will deliver the requested data by e-mail. Given BOTH the enormous volume of the data to be supplied and the confidential nature of the data (especially hours worked and payroll data), it is more likely contractors will direct OFCCP to an encrypted FTP site, or download the data into a password protected thumb drive and carefully bundle the drive into an overnight delivery package to OFCCP.
   4. OFCCP asserts in its “Justification” that “If OFCCP determines during the compliance check that the contractor has not maintained AAPs, affirmative action specifications, and required records, * * * [OFCCP] may place the contractor in a pool for a future compliance evaluation.” See Justification, page 1, para 1/bottom.
   5. OFCCP is proposing to require contractors to respond to the Itemized Listing in ONLY “electronic format. See “Justification” at p. 5/para 3 and at p. 8/para 13.
   6. OFCCP proposes to “not request information of a sensitive nature from contractors or any other parties during the course of a compliance check.” *** “…compliance checks are a type of compliance evaluation used to confirm that contractors maintain certain records…” See “Justification” at p. 7/para 11.
      • SO, OFCCP is saying it is just checking for recordkeeping violations AND NOT to allege substantive discrimination or affirmative action violations beyond recordkeeping violations.

5. The Itemized Listing of OFCCP’s “direct federal contractor” Compliance Check audit Scheduling Letter demands this kind of contractor deliver to OFCCP an extensive collection of 8 different systems of records, including:
   • employment transaction data for “applicants” (not defined) through terminations;
   • payroll records [by project by employee, gender/race/ethnicity, hire date, trade, total hours worked in each trade, OT worked in each trade, wage rates by trade, apprenticeship status, and type of employment (FT/PT/day labor, etc.)];
   • job ads and postings
   • “documentation of accommodation requests received and their resolution, if any”;
   • 503 and VEVRAA AAPs;
   • data metrics for 503 and VEVRAA;
   • other lesser listed documents.
   • OFCCP estimates it will take contractors an average of 30 minutes to read the “direct contractor” audit Scheduling Letter and attached Itemized Listing and an average of 8 hours to retrieve and submit the requested documents.
     • NOTE: Our experience suggests it will take most construction contractors considerably longer than 8 hours to collect, organize, integrate, quality control check and report just the payroll records alone. This is because the many different types of information OFCCP is proposing to collect are typically spread across numerous different paper and electronic file systems and do not exist as an integrated whole. One option is for contractors to simply deliver responsive documents in the state the contractor finds them, not integrated or as a composite whole and leave those integration tasks to OFCCP.
   • OFCCP also estimates it will take OFCCP compliance staff an average of only 4 hours to review the contractor’s documents and conclude the audit.

6. The audit Scheduling Letter OFCCP proposes for the “federally assisted” contractors (only) would demand, if approved, four kinds of document sets including:
   • employment transaction data for “applicants” (not defined) through terminations;
   • payroll records [by project by employee, gender/race/ethnicity, hire date, trade, total hours worked in each trade, OT worked in each trade, wage rates by trade, apprenticeship status, and type of employment (FT/PT/day labor, etc.)];
   • examples of job ads and postings; and
   • “documentation of accommodation requests received and their resolution, if any.”
   • OFCCP estimates it will take “federally assisted” (only) contractors an average of 30 minutes to read their audit Scheduling Letter and attached Itemized Listing and an average of 5 hours to retrieve and submit the requested documents.
     • NOTE: Our experience suggests it will take most construction contractors considerably longer than 5 hours to collect, organize, integrate and report just the payroll records alone since the many types of information OFCCP is proposing to collect are typically spread across numerous different paper and electronic file systems and do not exist as an integrated whole. See other comments above.
   • OFCCP also estimates it will take OFCCP compliance staff an average of only 2 hours to review the contractor’s documents and conclude the audit.

Tuesday, April 9, 2019: OFCCP Financial Industry Town Halls

The two OFCCP Town Halls held in New York City this past week for the Financial Industry on Tuesday and the Legal Industry on Wednesday (found below) primarily reiterated much of what we reported from the Tech Town Halls in late February, although there were a few additional (and very important) items that were released. Plans after all of the Town Halls this year are to develop an action plan based on the collaborative ideas generated between
OFCCP and the contractor community.  As a result of the Town Halls held in 2017, 25 ideas were generated, 18 were agreed upon and nine have already been implemented with the remaining nine still in progress.

The focus of the town halls this year is to allow government contractors in various industries to both get to know the OFCCP personnel and to share their ideas with them.  The same individual who led the town halls in 2017 led these town halls and allowed attendees (almost 100 strong) to share ideas and develop new ways for the OFCCP to assist the contractor community and work more effectively together.

OFCCP Director Craig Leen opened the sessions discussing the four pillars of his tenure at the agency: Transparency, Certainty, Efficiency and Recognition.

Highlights from the Financial Industry Town Hall include discussion and direction on:

1. Promotions and Parental Leave policies. Women fill dramatically fewer leadership positions than men and this is an area where the Director believes OFCCP can make a big impact. Promotions, along with Parental Leave Policies, allowing both men and women to utilize, aren’t allowing women the same benefits as men if/when leave is taken.  Relative to the financial and legal industries (of which Director Leen has direct, related experience), men cannot have the balance of work and family and women cannot get back on the partner track when one or both of the individuals take time off for family responsibilities.
2. Focused Reviews – Section 503 Focused Reviews are already on the CSAL list and VEVRAA Focused Reviews will be next. Next year, Promotions (for Women and People of Color) will be on the list for Focused Reviews.
   1. Guidance for the upcoming Section 503 Focused Reviews:
      1. All AAPs will be requested during the Section 503 reviews to further this concern that not all contractors are completing their plans as required to do business with the federal government
      2. How are IWDs doing in your companies? Are they included in all aspects of the company’s performance; are they included in all opportunities for training, promotion, leadership?
      3. Educate your CEO as he/she will be interviewed
      4. Chief Accessibility Officer and Disability Inclusion Officer will be interviewed; if you do not have anyone in either of these roles, it might be wise to consider
      5. Centralized Accommodation Systems highly recommended as we reported from the Tech Town Halls. Do you have one system or do you allow the individual receiving the accommodation request to make the decision?
   2. OFCCP is developing training in preparation for the Section 503 Focused Reviews
   3. The Standard Compliance Evaluation Report (“SCER”) will be published so you will know exactly what the OFCCP will be asking for and reviewing during their Focused Reviews
   4. Tina Williams, the Deputy Director of Policy at OFCCP, is a resource and is overseeing the Section 503 Focused Reviews. If you need assistance, feel free to reach out to her at Tina@dol.gov.
   5. Companies are urged to do their own Focused Reviews before the OFCCP arrives to do their evaluations of their own Section 503 practices
   6. Build relationships NOW with the local Vocational Rehabilitation Counselors in your local areas. The OFCCP is developing lists of contacts in each region and will reach out to determine if you have engaged with them in your quest to hire qualified IWDs
   7. Engage with the USDOL Office of Disability Employment Policy (ODEP) if assistance is needed in your organization
   8. Consistency between how all individuals are treated in your organization is key; Individuals with Disabilities must have the same opportunities as all other employees and leadership starts at the top
   9. The Section 503 Focused Reviews webpage has guidance to assist employers in making necessary modifications in their workplace to improve the culture for IWD’s
   10. Craig Leen’s video that he created for the OFCCP is something he recommends other companies do to show their focus on disability inclusion
3. Are your websites accessible? Remember, the OFCCP will test your system by applying for a job and will most likely request an accommodation so get your systems ready. More importantly, does someone even need to request an accommodation or can they apply through an accessible site without having to be delayed in receiving the same opportunities as job-seekers not needing an accommodation?

Important Idea: Contact Recruit Rooster’s COO, Heather Hoffman if you need assistance in the development of accessible career websites to assist individuals with disabilities in applying for a job at your company.

Upcoming plans on OFCCP’s list:

1. Scheduling Letter Data Collection – which was actually released this week with more information found below
2. AAP Verification Initiative – this will be released for comment within the month. A database/portal has been developed to collect all AAPs in an effort to identify most likely violators which will then be used to select those companies for review
   1. The System for Award Management (“SAM”) database has been reviewed for all 3500 on the CSAL list and the OFCCP is looking to ensure you have indicated you are a Government Contractor and you do have an AAP – this database is an official website of the U.S. Government and there is no cost for its use. If you have not registered your company on this site, you need to do so now.
3. Similarly Situated Employee Groups – Round tables with industry and Civil Rights groups will be planned this year to understand more clearly how contractors define their “similarly situated” employees
   1. Guidance is forthcoming from the OFCCP focused on how contractors should develop “pay analysis groups”
4. Military Spouses – OFCCP will begin looking at the hiring of military spouses. More guidance with this initiative will be forthcoming
5. Opinion Letters and an Online Help Desk called “Communities of Practice” will be released soon

Director Leen also introduced Dr. Patricia Greene, the Director of the DOL Women’s Bureau who spoke about their mission to safeguard the interests of working women, advocate for equality and economic security and promote quality work environments. Dr. Greene described her agency’s focus on identifying, researching and analyzing the topics working women care about most; pioneering innovative policies and programs to address them; and enhancing public education and outreach efforts to raise awareness on key issues and developments affecting women in the workforce.

The day ended with attendees identifying the most important things on which the OFCCP should focus:

1. Peer-to-peer/Networking opportunities for OFCCP and the Government Contractor community
2. Mandatory Paid Leave for employers
3. Top-down training outlines for contractors to use in their own organizations

Bottom line: Director Leen is very proud of the work his agency has accomplished thus far and is pleased with the higher dollar amounts of relief captured in back pay collections while creating and maintaining greater relationships with the contractor community. He is concerned with the unnecessary length of time it has taken in the past to complete audits and is now clearly focusing on quality and efficiency. Actual statistics are broken down in a story below.

No matter what, Director Leen is very clear in his message: he wants to improve opportunities for all employees and expects companies to put their best foot forward in making this happen.  He has a mission and will not stop until women, people of color, individuals with disabilities and veterans have the same rights and opportunities as all Americans.

 

Tuesday, April 9, 2019: Plaintiffs Want EEO-1 Component 2 Pay Data Reporting Completed By May 31, 2019

Plaintiffs National Women’s Law Center and Labor Council for Latin American Advancement this week requested Judge Chutkan of the federal District Court in Washington D.C. to set a May 31, 2019 deadline for the EEOC to finish collecting EEO-1 Component 2 pay data.

Plaintiffs also requested the Court to require:

• Defendants EEOC and Office of Management and Budget (“OMB”) to provide notice to covered employers by April 12, 2019, that EEO-1 reporting obligations due by May 31, 2019, must include Component 2 pay data;
• the EEOC to develop a plan to open the Component 2 pay data collection sufficiently in advance so that both Component 1 and Component 2 data can be submitted simultaneously by May 31, 2019;
• Defendants to provide status reports to Plaintiffs and the Court every 30 days, beginning on April 30, 2019, as to the development of automated systems, descriptions of work being performed by third-party vendors needed to implement the reporting portal, a summary of all employer and interagency outreach efforts, and a record of internal training sessions for enforcement staff on the collection and use of Component 2 pay data;
• Defendants to invoke emergency extension authority to allow for the collection of Component 2 pay data beyond the September 30, 2019 date (i.e the end of the three-year period OMB has currently authorized the EEOC to collect Component 2 pay data
  • NOTE: This is the primary reason the Plaintiffs are pushing so hard for the unrealistic date of May 31, 2019 reporting since they know the Trump EEOC might not seek an extension of the Component 2 collection authority or the OMB may not grant any EEOC request to extend the collection for another 3 years.
• EEOC by April 19, 2019, to develop a plan to collect pay data for calendar year 2017 that was not collected due to OMB’s prior stay, since vacated as a result of the court’s order.

What’s Next?

The Court will now consider the submissions from both Plaintiffs and Defendants before issuing an order to resolve the case. The Court  also favorably considered the request of DirectEmployers and the American Society of Employers (in Detroit), and the later-filed U.S. Chamber of Commerce Amici Curiae briefs (“i.e. Friend of the Court” briefs) to be accepted for the Court’s review. Judge Chutkan, who is presiding over the litigation, tomorrow, Tuesday April 16, 2019 will also hold a Hearing in her Washington D.C. Courtroom to determine what she will next do to resolve the successful Complaint of the Plaintiffs.

Note:

It is widely expected that the OMB and the EEOC will appeal any Order Judge Chutkan will issue. It is also widely expected that one or more employer groups may sue the EEOC to set aside and stop the pay data reporting obligation should the obligation ever indeed become final. A long road may still lie ahead for all involved.

The case is: National Women’s Law Center, et al. v. Office of Management and Budget, et al., Case No. 1:17-cv-02458-TSC

Wednesday, April 10, 2019: OFCCP Legal Industry Town Hall

The Legal Industry Town Hall began in much the same way as the Financial Industry Town Hall the previous day, but with many
fewer attendees. OFCCP Director Craig Leen discussed the four principles in which the agency is operating today:

1. Transparency;
2. Certainty;
3. Efficiency; and
4. Recognition

Through these tenets, his hope is that the OFCCP and the contractor community develop greater trust and respect for one another and together, accomplish equal employment opportunity for all.  He believes we all have the same goals and he plans to continue assisting contractors in “getting it right.”

The Director shared his pride in the accomplishments the OFCCP has realized thus far with the recovery of approximately $45 million in back pay in 2017 and 2018, which is more than double the amount recovered by the OFCCP in the prior four years.

He continued by explaining his hope for the Town Halls to build relationships and to provide the contractor community the opportunity to share ideas and views on what the OFCCP can and should do to help them.

Director Leen, having a great deal of experience in law firms, shared some firmly held beliefs of what the legal sector should do to assist in the furtherance of all protected classes in their firms and he also shared his plans to make this happen. He cited the National Association for Law Placement (“NALP”) statistics and indicated law firms have potential systemic issues with the promotion of women, people of color, and especially individuals with disabilities and this must be addressed and rectified.  While some of the legal industry attendees argue the equity and non-equity partner reach by the OFCCP is limited (although guidance in this area is coming and Leen believes non-equity partners are covered “as employees” by OFCCP’s Rules), Director Leen focused more on promotions from Associate to Partner, where Title VII does apply.  He also believes the parental leave programs are not equitable, especially in the financial industry and in law firms.  Men are not encouraged to use their leave and women are not integrated back into their firms when their leaves have ended or they decide to extend their leave.

Bottom line, those law firms who did find themselves on this year’s CSAL list need to be prepared to provide information on both their equity and non-equity partners as well as how they process promotions and prove there is no discrimination in promotional opportunities and selection. The Director reiterated several times that promotions should be based on merit and that will be an area of concentration when focused reviews for promotions are implemented next year.

Law firms are definitely going to be a focus in future audits – to the extent they are a covered federal Government contractor. The 2019 scheduling methodology focused on industries with the highest incidence of violations and the Town Halls echoed that methodology. Industries chosen this year included tech companies, financial firms and law firms.  A focus on universities and law firms will be forthcoming.

Buckle your seatbelts…it could be a bumpy ride in the coming year!

Wednesday, April 10, 2019: Stanton to Lead WHD

The Senate confirmed Cheryl Stanton, a former Ogletree Deakins Nash Smoak & Stewart PC shareholder, to lead the U.S. Department of Labor’s Wage and Hour Division (“WHD”).

Stanton currently serves as Executive Director of the South Carolina Department of Employment and Workforce; a position she was appointed to by then-Gov. Nikki Haley in 2013. She also served in the White House under President George W. Bush as the administration’s principal legal liaison to the U.S. Department of Labor, National Labor Relations Board, and Equal Employment Opportunity Commission.

 

Wednesday, April 10, 2019: EEOC Released FY 2018 Enforcement and Litigation Data

he U.S. Equal Employment Opportunity Commission (“EEOC”) released a detailed breakdown for the 76,418 charges of workplace discrimination the Agency received in Fiscal Year (“FY”) 2018. The full enforcement and litigation statistics for FY 2018, which ended Sept. 30, 2018, are posted on the EEOC website, which also includes a detailed breakdown of charges by state.

The data shows that retaliation continued to be the most frequent Charge the EEOC received, followed by sex, disability, and race.

#METOO

The Agency received 7,609 sexual harassment charges – a 13.6% increase from FY 2017–even though the number of sexual harassment Charges dropped in California – and obtained $56.6 million in monetary benefits for victims of sexual harassment.

 

	FY 2018 (percent of all charges filed)	FY2017 (percent of all charges filed) WIR: 01/29/18
Retaliation	39,469 (51.6%)	41,097 (48.8%)
Sex	24,655 (32.3%)	25,605 (30.4%)
Disability	24,605 (32.2%)	26,838 (31.9%)
Race	24,600 (32.2%)	28,528 (33.9%)
Age	16,911 (22.1%)	18,376 (21.8%)
National Origin	7,106 (9.3%)	8,299 (9.8%)
Color	3,166 (4.1%)	3,240 (3.8%)
Religion	2,859 (3.7%)	3,436 (4.1%)
Equal Pay Act	1,066 (1.4%)	996 (1.2%)
Genetic Information	220 (.3%)	206 (.2%)
Total Charges Received	76, 418	84,254
Total Resolved Charges of Discrimination	90,558	99,109
Calls Received	519,000	540,000
Lawsuits filed	199	184

 These percentages add up to more than 100 because some charges allege multiple bases.

 

Thursday, April 11, 2019: OFCCP & ODEP Talk Disability Inclusion

The National Industry Liaison Group (“NILG”) brought Craig Leen, Director of OFCCP, and Jennifer Sheehy, Deputy Assistant Secretary of the Office of Disability Employment Policy (“ODEP”) together to speak on the importance of disability inclusion in the workforce and how their respective Agencies continue to reinforce the commitment to increase the participation of people with disabilities in the workforce.

Director Leen kicked off the webinar with the reinforcement of the Agency’s four principles: Transparency, Certainty, Efficiency and Recognition. We broke down the specifics of these principles from his speech at NELI last fall. Director Leen spoke at length about the upcoming Section 503 Focused Reviews. Contractors, if you haven’t reviewed the OFCCP best practices by now, it’s time to take action. It was quite clear by listening to Director Leen that he is passionate that these best practices be standard operating procedures for organizations.

Behind the scenes

Speaking to the point of efficiency, Director Leen called out his Agency on some appalling backlog numbers. Currently, OFCCP has over 100 active Compliance Evaluations (“audits”) that are over four years old. Of that, many are in year seven, eight or nine! He informed listeners that this is unacceptable and has instructed Compliance Officers to do one of three things with these audits:

1. Close the audit,
2. Settle/conciliate the audit, or
3. Refer the audit for enforcement.

The internal deadline set by Director Leen is the end of this fiscal year (September 30, 2019).

Highlights of things to come

• OFCCP technical assistance guides for universities
• OFCCP technical assistance guides for compensation
• Published Contacts for the State Vocational Resource Centers.
• Revised Scheduling Letters (see Friday’s story below)
• Focused Reviews in all future CSALs (Corporate Scheduling Announcement List)
• Scrutiny of company promotion data. The Director shared shocking numbers demonstrating the shortfall of women and minorities in higher level positions. He specifically pointed to the legal field’s lack of diversity at the top, when the figures show so many women and minorities in the field of law.

 

Friday, April 12, 2019: OFCCP Proposed New Audit Letters

The OFCCP published a Notice proposing and seeking public comment on four new OFCCP Supply & Service (not construction: that was Monday’s round of proposals) audit Scheduling Letters for:

• Section 503 Focused Reviews (this is new);
• VEVRAA Focused Reviews (this is new);
• Compliance Reviews (revising the current audit Scheduling Letter); and
• Compliance Checks (very similar to the old Bush Administration Compliance Check Letter)

Contractors have until June 11, 2019 to get their Comments into OFCCP.

Compliance Reviews/Evaluations

OFCCP proposes to use this revised audit Scheduling Letter for Compliance Reviews (i.e. OFCCP’s “regular” audits), Functional Affirmative Action Program Compliance Reviews, and Corporate Management Compliance Evaluations (i.e. “Glass Ceiling Reviews” of corporate headquarter offices). Several new items dive deeper within the existing requests. There are also two entirely new requests.

New Requests:

• A list of the Contractor’s three largest subcontractors based on contract value;
• Results of the most recent analysis of the compensation system(s) to determine whether there are gender-, race-, or ethnicity-based disparities.

Changes to Existing Document Requests in the Current OFCCP Itemized Listing:

OFCCP’s current Executive Order 11246 “Itemized Listing” (attached to OFCCP’s Supply & Service Compliance Review Audit Scheduling Letter) requests only aggregated information, for “minorities.” OFCCP now proposes to collect from contractors, IN ADDITION, data by specific race and ethnicity when a Contractor’s availability calculations show what OFCCP’s Rules (for almost 40 years) have described as a “substantial disparity”: in the selection of one protected sub-group over another (i.e. Whites vs Blacks; or Hispanics vs Asians, etc.). This nearly moribund OFCCP Rule at 41 CFR Section 60-2.16(d) has been largely dormant for the entirety of its existence, other than in Silicon Valley. OFCCP occasionally raises the issue there when it feels the typically high-tech contractor is making its “Minority” availability for engineers on the backs of Asians, typically to the detriment of Blacks and Hispanics. NOTE: If OFCCP determines a “substantial disparity” exists for any Protected Group, OFCCP (not the Contractor) may impose Placement Goals for the specific minority subgroup(s) suffering the “substantial disparity.” The “substantial disparity” Rule is currently unenforceable since OFCCP has never defined what a “substantial disparity” is or when it exists.

As to Section 503 and VEVRAA document collections, OFCCP now seeks to expand the collection of the Contractor’s Data Metrics if “you are six months or more into your current AAP year when you receive the [OFCCP audit Scheduling] letter by requiring “information for every (emphases supplied), completed month of the current AAP year. In other words, OFCCP is proposing to have Contractors bring their data metrics right up to date to the time of your receipt of OFCCP’s audit Scheduling Letter if you are in the back half of your AAP year at the time you receive the audit Scheduling Letter.

To have enough “chips at the table” to buy the added burden on Contractors just discussed, OFCCP also proposes to eliminate from the existing OFCCP audit Scheduling Letter for Supply & Service Contractors as to Section 503 and VEVRAA the request to see documentation of “all actions taken to comply with the audit and reporting systems.” NOTE: The Office of Management & Budget (“OMB”), the economic and regulatory arm of The White House which manages all of the federal agencies in the Executive Branch of the federal government (i.e. those reporting to the President) looks at regulatory burdens like a pie: there is only so much pie to go around. So, an agency cannot expand its share of the pie without very good reason. So, agencies often give up some burden hours on Contractors to shift to a new burden of like amount (as you see going on here).

OFCCP is now dusting off this Bush Administration Compliance Check program (for Supply & Service contractors) but is proposing three changes of note: (1) to expand the document collection adding a small burden, (2) to reduce it, and (3) and like the new construction Compliance Check audit Scheduling Letters, to require electronic submission of all documents and data, IF the Contractor elects to send the documents/data to OFCCP, rather than to invite OFCCP on-site (as the Contractor may do: but why?):

1. TINY BIT MORE BURDEN: OFCCP is proposing to collect your AAPs for all of its enforcement programs, including Section 503 and VEVRAA (given OFCCP’s legitimate anxiety that most contractors do not have their AAPs ready and in place annually as OFCCP Rules require) instead of collecting just the AAP for Minorities and Women as in the past. NOTE: This is not much additional burden since Contractors are already supposed to have these AAPs completed and ready for review per OFCCP’s Rules. Contractors will not be able to mount any effective resistance to this change of collection request; and
2. OFCCP proposes to seek only “examples” of disability accommodations instead a list of all accommodations as was previously the case.

REMEMBER: In the Bush Administration, these audits lasted an AVERAGE of 20 minutes, if the contractor elected to conduct them on-site. Quick-in; quick-out. The notion OFCCP Director Shirley Wilcher had during the Clinton OFCCP when she conceived of this form of Compliance Evaluation in 1999 (effective in 2000) was that OFCCP was “tickling” the contractor and hopefully thus stimulating internal corporate review of what the company was doing as to each of OFCCP’s three programs. OFCCP’s hope was that shining a light on its three programs would energize and unleash much greater corporate introspection than merely sitting for coffee and donuts for 20 minutes.

Focused Reviews

OFCCP has now published two entirely new audit Scheduling Letters for Focused Reviews; one for Section 503 and one for VEVRAA. Neither audit Scheduling Letter uses the device of an attached “Itemized Listing.” Rather, OFCCP puts forward its document requests to start its Desk Audit in the body of its audit Letter.

Be Forewarned: 503 is Back!

OFCCP is launching these Focused Reviews for the first time, starting with Section 503 Focused Reviews (VEVRAA Focused Reviews will be in the next CSAL…maybe circa 2021). The proposed audit Scheduling Letters portend a “deep dive” and an intensive review of the critical components of a Contractor’s disability (and Protected Veteran) non-discrimination decisions and Affirmative Action efforts. As we discussed in a prior WIR, however, the document requests in OFCCP’s Focused Review letters are not new: rather OFCCP lifted the document requests verbatim from OFCCP’s existing Supply & Service audit Scheduling Letter (from the Section 503 section and the VEVRAA section respectively).

It is little remembered now, but before President Bush (the father) signed the Americans with Disabilities Act into law in 1990 (Title I, Employment, became effective April 26, 1992), OFCCP created the backbone disability law on which the Congress predicated the ADA. Moreover, OFCCP used to harvest much more back-pay in Section 503 failure-to-accommodate cases than under its primary program under Executive Order 11246 and used to refer Section 503 cases to enforcement on about a 20-1 ratio to EO 11246 case prosecutions.

It is also clear to us at DirectEmployers that Director Leen intends to build his OFCCP legacy in some great part on Section 503 enforcement.

Both of the Letters propose to require electronic submission of all documents and data to OFCCP. See footnote 4 of both Letters. Both Letters also request 12 (parallel to each other) deliverables including “Applicant and employee level employment activity data for all applicants and employees.” This itemized request (#11) goes on to specify that this information is to include hires, promotions, and terminations (voluntary & involuntary), with job titles and job group information. In addition, item #12 requests compensation data for all employees.

 

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.