But There Are Several Disconcerting Initiatives Of Concern To Contractors
OFCCP’s “FY 2023 Congressional Budget Justification” seeks $147,051,000 and hopes to increase its employee headcount by 208 from 420 to 628 employees. This is close to the 188-employee headcount budget increase President Biden last year sought for OFCCP in a federal government budget which a bi-cameral bi-partisan Congress resoundingly rejected across the broad expanse of the Executive Branch of the federal government. Accordingly, the chances of OFCCP’s budget passing through the same Congress with an approaching mid-term election is less than last year’s chances of passage. This is especially true with recent mid-term election polling results showing Republicans likely to re-take the U.S. House of Representatives by 25-30 extra seats.
While Democrats can currently drive a budget through and pass the House, the prospect of Republicans taking the House of Representatives back a short 9 months from now will drive Senate Republicans to procrastinate on the FY 2023 budget until after the next Congress is seated on January 3, 2023.
However, on the bright side for OFCCP, Senate Democrats are again openly discussing subjecting the entire Budget to a very controversial “Reconciliation Vote” requiring only a 50% +1 majority vote and not a 60-vote plurality. (Of course, this drastic “nuclear option” parliamentary maneuver would require not only convincing Senators Joe Manchin (D-WVA) and Kyrsten Sinema (D-AZ) to get on the bandwagon and would have severe repercussions within the Senate for decades to come. So, Democrats will not lightly go this route, despite strong pressure from liberal Democrats that Senate Majority Chuck Schumer just “go for it”). So, there is one possible path forward for OFCCP’s big budget proposal. The odds are better to bet on college basketball, though.
Budget Justification Highlights For Programs And Initiatives OFCCP Is Proposing For FY 2023 (beginning October 1, 2022)
Budget Justifications are important because they explain what the agency did in the prior year to earn its budget while they also defend the proposed budget for the next year.
1. Priorities (see p. 10 of OFCCP’s FY 2023 Budget Justification): OFCCP has identified three broad, generalized priorities for FY 2023:
- “Build a more effective contractor compliance evaluation process for greater strategic impact to redress systemic employment discrimination and promote equal employment opportunity.
- Empower workers by developing strong partnerships with workers’ rights organizations to better identify potential systemic issues in contractor workplaces.
- Promote proactive action by employers to monitor and address barriers to equal opportunity, changing employer and industry practices that can prevent discrimination and promote access to good jobs for all workers.”
Most of this language is hollow platitudes, but the second bullet is interesting and new if its vague language suggests OFCCP is hopeful to partner with local advocacy groups (i.e., unions and civil rights social reform groups) to “snitch” on contractors to provide “probable cause” to audit particular companies. We saw this pattern briefly (for about one-year) in the Carter Administration. Just as soon as a union labor dispute arose, within weeks OFCCP would often suddenly issue a Desk Audit Letter and OSHA would show up in force to almost immediately investigate goofy safety violations.
(I remember representing one of the large oil companies which suddenly had three hundred broken hammer handles on one day in one of its Baytown, Texas refineries accompanied by a dozen employee safety complaints. OSHA responded within 48 hours and had eight investigators on-site for 6 weeks, leading to 70-pages of alleged safety violations, most of it (suddenly) broken equipment or equipment which needed daily cleaning and maintenance—a bane to these employees since the maintenance and cleaning had to be done at the very end of shift spoiling a casual daily departure from the plant. And when safety inspectors seemed confused as to where to go next in the many acres of this large refinery, the union made it easy by leaving a trail on the walking paths and catwalks of additional broken handles from many different types of handheld tools leading to equipment the union wanted the investigators to inspect. By the third day I had suggested to the union and the OSHA investigators that we just get a union steward to lead the safety inspectors around the complex so at least we could save the environment from the further pollution of broken hand tools “lighting up” the path.
2. “Enhanced Compliance Assistance” To Selected Mega Construction Projects Promised (see p. 13): Trying to position itself as relevant to the $1 trillion Bipartisan Infrastructure Law (“BIL”), OFCCP has pitched the Budget committees of the House and Senate for more budget saying: “As the BIL funding rolls out, in FY 2023 OFCCP will increase its capacity to provide compliance assistance related to large infrastructure projects.”
- OFCCP is not threatening more construction contractor audits, although audits are certainly also part of OFCCP’s plans. Rather, OFCCP is pursuing the plan the Clinton OFCCP first devised to have OFCCP officials connect with the General Contractor on so-called Mega Construction Projects (“MCPs”). The idea is for OFCCP to meet with the project General Contractor BEFORE the work begins and before the GC’s subcontractors hire up for the job to make sure the subs are aware of their non-discrimination duties by offering “compliance assistance” to the GC and its subcontractors. This is classic technical assistance.
- While the Clinton Administration identified MCPs to be federal contract and federally assisted construction contracts valued at $25M, or more, and tried to visit all of them, OFCCP proposes for FY 2023 to be less specific and less universal. Rather, OFCCP wishes to narrow its focus to a “selected group of BIL-funded infrastructure projects” without explaining how OFCCP will identify which to approach and offer OFCCP’s compliance assistance. See page 16, at the top, for more discussion of how OFCCP intends to go about the MCP project selections in conjunction with the federal agencies writing BIL construction contracts.
3. OFCCP and the pending Fair Chance Improvement Act (“FCA”). OFCCP may win the assignment to be the enforcement agency to enforce the FCA should it pass through the Congress and become law. The FCA would prohibit federal contractors and subcontractors from inquiring about an applicant’s criminal history early in the application process. This is the federal government now toying with what previously was known as “Ban the Box” legislation now operating in thirty-seven states.
The White House is currently hopeful that if the Congress enacts the FCA, it will also assign OFCCP all FCA enforcement responsibilities. Despite the dilution of OFCCP’s historically defined mission and application of the compliance tools OFCCP has honed over the decades which would occur with that assignment, one would nonetheless not expect opposition from minority group representatives since ex-convicts of color would be the primary beneficiaries of the FCA. Major federal contractors may therefore rejoice if the FCA comes to pass because OFCCP will become distracted away from them while the agency pivots to stand up any new FCA enforcement program.
4. OFCCP Planning a Major Pivot Away From General Assignment Compliance Officers And Towards Quantitative Data Specialists. We have seen specialization increasing in each year since the Bush Administration (the son) which first hired Labor Economists (LEs) and statisticians to backstop OFCCP’s compensation discrimination analyses. At the same time, we have seen OFCCP begin to centralize enforcement decisions in the National Office in a small team, quickly bottlenecked, while slowly but surely de-emphasizing District Offices and scaling back and then closing or downgrading many of them.
Now OFCCP wants to make a major leap forward to move OFCCP more rapidly towards more systemic and quantitative analyses while using Compliance Officers in the District Offices more as paralegals to gather and organize data files. OFCCP is also on a mission in FY 2023 to train agency Compliance Officers to hunt for and gather anecdotal evidence to buttress the cold statistical analyses and, OFCCP hopes, bring those data convincingly to life:
“In FY 2023, OFCCP will increase its capacity to strengthen its investigation and resolution of systemic discrimination cases by hiring and training highly skilled and specialized employees, including team leads, investigators, data scientists, statisticians, labor economists and industrial psychologists.” (see page 14, middle)
Federal contractors will not applaud this initiative, however, since contractors have not graded highly OFCCP’s experience for the last 20 years with increasing numbers of OFCCP Labor Economists. Many contractors nationwide complain the OFCCP LE data do not add up (mathematically), the contractor does not see or believe OFCCP’s bald assertions of “systemic” discrimination and cannot replicate OFCCP’s liability and damages analyses of what OFCCP’s LEs claim to have found.
Having more of the same confusion will not seem appetizing to the vast majority of federal contractors which feel OFCCP’s Labor Economists seek to force “hit the number” quota hiring and seek to force federal contractors into a limited number of constricting Grade and Step pay boxes mirroring the federal civilian labor force compensation system. Absent a major change in OFCCP transparency of analyses OFCCP relies upon when putting forward claims of unlawful discrimination, it is easy to predict many coming clashes between OFCCP and contractors and an eventual dismantling of the move to LE prosecutors the next time the White House shifts political parties. It is the right idea (I was the one who recommended to a very dubious OFCCP senior staff in 2001 that the agency hire its first round of LEs). However, the agency has struggled to incorporate the use of LEs in a proper manner.
Also missing from OFCCP’s discussion of ramping up LE services is any connection to the Solicitor’s Office to provide legal advice as to how the LEs might properly structure their analyses consistent with Executive Order 11246 standards (which will vary from Title VII standards as to those several Title VII amendments not yet implemented to also amend the Executive Order in parallel).
5. OFCCP Planning To Pivot Away From “Single Establishment” Audits. In a subsection of its Budget Justification spread over pages 14 and 15 and titled “Achieving greater strategic impact by strengthening enforcement and increasing coordination,” OFCCP re-states its desire to audit “company-wide.” This notion has been an aspiration of OFCCP Directors going back to the Reagan Administration. However, Pat Shiu (in the Obama Administration) was the only OFCCP Director who came close to realizing this pipedream. Pat realized, however, that absent a major change to both OFCCP’s audit selection protocols and the design of Affirmative Action Plans—both of which are founded on the concept of a “single establishment” architecture—that the only way to audit “company-wide” was to gang tackle a bevy of corporate establishments (30 or 40 at a time over sequential years).
This “gang tackle” methodology allowed OFCCP to get a view of many related corporate establishments simultaneously to either realize that their hiring and pay systems OFCCP investigated were benign, or the company was decentralized and NOT subject to centralized control or seek to force a change in enough establishments that the “tail would wag the dog” and force a corporate-wide epiphany. The legality of “company-wide” audit selections was never subjected to a legal test because OFCCP stopped this secret program a few years after it began.
Shirley Wilcher (Clinton Administration OFCCP Director) attacked the issue a different way. Shirley, following the lead of her predecessor Cari Dominguez in the Bush Administration (the father) who created and launched so-called “Glass Ceiling audits” of corporate headquarter and regional HQ establishments. Shirley sought to audit any centralized hiring and/or pay systems and “put a wrench” on them at the fountainhead in Headquarters from which any centralized national policies and/or practices were created and emanated outward. But OFCCP soon realized it could not evaluate from the vantage point at Headquarters how, exactly, local establishments of the company were implementing the national policy or practice, or with what result as to Protected Group members.
While announcing a “more enterprise-wide approach,” OFCCP does not yet explain how, exactly, it intends to proceed. I think it knows but does not want contractors to know for fear of lawsuits to stop OFCCP’s planned approach. Here is what OFCCP says, exactly (see page 14, bottom):
“OFCCP will work to align its traditional review of single “establishments” with the evolving reality of the workplace, including taking a more enterprise-wide approach where appropriate to evaluate contractors’ employment practices, including compensation. By hiring employees with relevant statistical, analytical, enforcement, and technical expertise, OFCCP will be better equipped to lead and support a more coordinated and cross-regional nationwide approach to identifying and investigating systemic discrimination in contractor workplaces. OFCCP will also enhance its database production, software expertise and research capabilities to support stronger coordinated enforcement.”
What this sounds like is that OFCCP is going to resurrect “gang tackles” of companies, and thus set down for audit many corporate establishments simultaneously which OFCCP hopes to manage more closely across OFCCP regional offices. If “gang tackles” return, they will be fairly apparent to the targeted companies which will see their audit counts suddenly jump higher.
And then there is this vague and amorphous promise of regulatory reform floated to the end of this same paragraph discussing “Achieving greater strategic impact by strengthening enforcement and increasing coordination” which may be tied to the enterprise-wide initiative, although it is difficult to be sure given its physical distance from the enterprise-wide discussion and the appearance of the following language:
“As indicated in its regulatory agenda, OFCCP will also undertake efforts to modernize its compliance program for federal supply and service contractors and subcontractors through proposed regulatory actions that are aligned with today’s workplace realities.” (see p. 15, top para, last sentence)
Perhaps OFCCP intends to propose a regulation to change its Rules which lay down the “establishment” structure upon which OFCCP has premised its operations for 50 years since the Nixon Administration in 1972 invented Affirmative Action Plans for Minorities and Women and created the concept of employment “Goals.”
Indeed, OFCCP has already, by mere executive fiat and without proper legal authority, changed its audits of construction contractors to force audits not by the “establishment” selected for audit (and as noted by address on OFCCP’s CSAL) but by what OFCCP describes, in error, as “Standard Metropolitan Statistical Areas (SMSAs).” (The U.S. Bureau of the Census (“BoC”) changed terminology and definitions with the 2000 Census, retired SMSAs (which had a short life span between 1970 and 2000) and in 2003 rolled out its first MSAs (Metropolitan Statistical Areas). MSAs are the geographical tool the BoC and contractors use today to define large city centers and their surrounding supporting and integrated geographical, political, and economic areas. Note, the last major adjustment of identified MSAs was in 2010.
This all becomes important as we have seen the Biden OFCCP also announce as to Supply and Service contractors that, again by executive fiat, it would audit all AAP establishments within a campus setting or those located in the same city. In the case of construction contractors, OFCCP currently calls the company under audit at the inception of the audit to ask what other establishments the contractor has in the “SMSA” (sic). Then, OFCCP insists to impasse that the construction contractor must deliver to OFCCP information for all its other establishments in the “SMSA” (sic).
So, OFCCP is already experimenting and “bending the rules” to force area-wide audits as it further contemplates “enterprise-wide audits” to come in some sort in 2023 all the while hoping contractors will “just play ball with OFCCP” and not object to this extra-legal way of proceeding. What OFCCP does not seem to grasp just yet, though, is that contractors already faced with “area-wide” audits are aghast and privately shaking their heads in disappointment that OFCCP has chosen to yet again flaunt its Rules and longstanding practices rather than to resorting to proper legal process. Perhaps the upside of this recent OFCCP activity is that it will re-inflate the local Industry Liaison Groups (”ILGs”) to discuss this newly changing landscape at OFCCP and its maverick processes to achieve change by brute force.
6. OFCCP Still Pushing ERPs (Early Resolution Procedures). However, OFCCP does not want to use the ERP language since that was Trump nomenclature…and well, anything Trump in this Administration…is, well, “icky” (in technical legal terms. Ha-Ha!) Here is how OFCCP now takes eighteen words (underscored below) to say what the Trump acronym said in four letters:
“In FY 2023, OFCCP intends to make major enhancements to its Compliance Management System (CMS) to enhance and streamline enforcement, and assist workers. These include creating a procedure so that multiple establishments of the same company under compliance reviews may be grouped together in a single conciliation agreement.” (see pp. 14-15) (emphasis added)
As the guy who first suggested to OFCCP the use of what came to be known as an ERP (to resolve two JBS cases in litigation and simultaneously several other active OFCCP audits), I obviously admire their use, at least in the right circumstances. However, they are not for every company…indeed they are probably not useful settlement vehicles for MOST contractors. An ERP was, and remains, an exotic settlement tool, with many pros and cons.
The Trump OFCCP quickly realized their value for OFCCP and quickly signed about one dozen+ ERPs on the heels of the JBS ERP before the two political appointees in the Trump OFCCP left office after President Biden was elected. The Biden OFCCP has thus far not pursued ERPs with the vigor that the Trump OFCCP Director did. OFCCP’s new Budget Justification heralds a return to ERPs, if OFCCP can convince contractors to sign them.
7. OFCCP is Promising Much New Training for Its Staff. Here is how OFCCP describes what is coming:
“In FY 2023, OFCCP will increase investments in internal training programs to ensure its employees are well equipped to investigate complex systemic discrimination cases and complaints. Training will focus on strengthening compliance officers’ skills in developing anecdotal evidence and identifying potential discrimination, including on the basis of disability, LGBTQ status or veteran’s status.
Oddly, too, OFCCP is declining to disclose its training materials to contractors, despite the fact that Freedom of Information Act litigants have previously forced USDOL to turn over training materials in other sub-agencies. One would have thought, too, that the training given OFCCP investigators would be equally valuable to federal contractors. Already, however, many contractors are murmuring about OFCCP’s use of standardized questionnaires in audits (102 question Compensation interrogatories; 2-page single-spaced list of questions for CMCE (Corporate Management Compliance Evaluations: aka “Glass Ceiling Audits”). OFCCP’s use of a standardized but malformed battery of “job listing questions” has also been unsettling to many contractors in audit.
It is unclear, by the way, whether OFCCP has budget sufficient to carry forward the training it intends absent any new budget, should the Congress set OFCCP’s FY 2023 budget at either the same level, via a Continuing Resolution perhaps as the parties find they cannot agree on a bi-partisan budget, or near to it following bi-partisan compromise.
8. Conclusion. In the end, OFCCP can accomplish almost all (perhaps not all training) of the priorities, programs, and initiatives OFCCP proposes on even only a “level” budget (approximating the level of funding it has now), if that is what occurs at the end of the long legislative path to a new FY 2023 budget. However, greater funding would allow OFCCP to accelerate its announced plans for delivery during its Administration. Remember, this would be money for October 2022 to and through September 30, 2023 taking the Biden OFCCP up to about one year before the 2024 Presidential elections in November 2024. The question which will also haunt many on the Budget Committees in the House and Senate is whether they should give more budget to an agency they view to be suffering declining service performance and efficiency, or whether it should wait to allow OFCCP to stabilize its operations before throwing more money at a still stabilizing operation with an uncertain return on that investment? With Jenny Yang at the helm, however, the OFCCP could certainly turn things around and gain the respect and deference to help get her budget approved.