DE Talk | Excitement, Turbulence & Confusion: The Top 10 Employment Law Issues That Affected Federal Contractors in 2023

Season 5 • Episode 7

Our compliance experts John C. Fox and Candee Chambers are back for their highly-anticipated recap of all things employment law from the past year. As they look back, they’ll chat about the top 10 issues affecting federal contractors as directed by government regulatory agencies, and give hints as to what may be to come in 2024.

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About DE Talk

For DirectEmployers, it’s all about valuable connections and meaningful conversations. This monthly podcast features honest and open dialogue between powerhouse industry experts on a variety of HR topics ranging from OFCCP compliance advice to emerging recruitment marketing trends, diversity and inclusion initiatives, and insightful solutions that help infuse new life into your HR strategies.

Hosted by Candee Chambers, Executive Director of DirectEmployers Association.

Episode Guest

Episode Transcript

Candee Chambers (00:02):

Get ready. The DE Talk podcast starts now. Insightful conversations and dialogue, helping you put the human factor back in HR.

(00:14):

Well, John, welcome to our recap of the 2023 year with the OFCCP. We do this every year, and I always look forward to it, kind of a recap of what we experienced and what all of our members have experienced. We are going to cover the top 10 issues based on what we found important and what our members have talked to us about. Let’s get started.

John C. Fox (00:39):

Okay. Yeah. Well, this is always a fun journey through the past and it was a rock-roaring year. We had a lot of things and we didn’t cover four or five things that we could have covered. We narrowed it to the top 10.

Candee Chambers (00:52):

And we’ll see if we can stick to that. I’m going to give you a few topics and kind of share my thoughts and get your six minutes worth of information. I think first of all, we have to look at the productivity and the accomplishments of the OFCCP from a metrics point of view. I think it’s been a relatively quiet year. What do you think?

John C. Fox (01:19):

I would call it lackluster.

Candee Chambers (01:21):

Okay.

John C. Fox (01:21):

It was there. They surged at the end. We don’t know if this is going to be a trend, but it has been something we’ve observed for the last two years that the vast majority of their conciliation agreements, particularly those involving discrimination, were signed in the last quarter of the year.

Candee Chambers (01:39):

That always happens.

John C. Fox (01:40):

Most of them in the last month of fiscal year.

Candee Chambers (01:43):

And then they kept changing into October of the next fiscal year.

John C. Fox (01:47):

Yeah. They still kept dribbling in that conciliation agreement here or there that was signed long before sometimes the end of the fiscal year, but they just didn’t process it internally. We saw some of these agreements that were signed before October 1st, the beginning of the new fiscal year, as late as November, late November, and we just scratch your head and wonder what happened to that one.

Candee Chambers (02:12):

Could that be a record keeping issue?

John C. Fox (02:14):

Well, don’t turn that issue of theirs back on them. That’s the number one issue that OFCCP always cites against contracts.

Candee Chambers (02:22):

That’s just what I was throwing out there. Anyway. One thing that you and I both have been following quite a lot, and so is Cindy Hackerit in our weekend review, is what we call the Julie Su Saga. One thing that the Department of Labor, ever since Marty Walsh came to power as the Secretary of Labor, they have this good jobs initiative. In their terms, good jobs equals union jobs. And interestingly enough though, Julie Su never got confirmed, but wow, she was just renominated. What are your thoughts on Julie Su? She’s from your home state of California.

John C. Fox (03:03):

Well, her saga has captivated the public as she’s on again, off again, had two prominent Democrats failed to support her, which caused her nomination to be yanked previously. And actually there were another three or four Democrats in the wings that had great misgivings about her. I don’t know how successful this redo is going to do, but I think that’s to the side of the point that is most important and that is what’s the lasting impact of acting Secretary of Labor, Julie Su, on the labor department. And I very much am concerned as a former political appointee myself having been at the labor department, that it has left two kinds of impressions on the staff. One is what I’ll call the politicization of the career staff to believe that the only good jobs are union jobs. And this is not calling balls and strikes like Switzerland. You’re now saying that the union is the client, the objective, and it’s not the corporation or the other employees who may or may not favor that union. 96% of them in the private sector do not.

Candee Chambers (04:22):

Well, and John, it’s something that I’ve noticed over the last several years, and it’s the Department of Labor. And I get it, they look at the worker and the workers’ rights, but they also need to look at the employer that, oh, by the way, is paying those workers. And granted, years ago when unions started, they were necessary. I think they’re not as necessary today. And I think we’re trying to get that thought that everybody has to have a union to have a safe worker situation.

John C. Fox (04:57):

Well, my concern is that these are enforcement agencies, whether it’s OSHA, whether it’s the Wage Hour Division, whether it’s OFCCP, most of them are enforcing statutes. The labor department enforces, in fact, over 500 major federal statutes through various sub-component divisions like OFCCP. And as a result, they need to call balls and strikes fairly.

Candee Chambers (05:23):

Exactly.

John C. Fox (05:24):

They’re not on the side of the employee or the applicant. They’re not on the side of the union, they’re not on the side of the corporation. They should be in the middle.

Candee Chambers (05:33):

Yeah.

John C. Fox (05:33):

Now, if you’re a policymaking institution like ODEP, the Office of Disability Employment Policies, then fine. That’s what you do is you set policy. But when you’re an enforcement agency, you have a duty to everybody in the room, if you will. And I fear very much that that has been lost with Julie Su’s present because she’s just a very fierce advocate for employees. That’s what she wants to make her mark to be, and she is making that mark, but it’s not what the mission is, in fact, of the labor department. And indeed, she’s stepping all over the toes, ironically, of the NLRB. That’s an internecine war issue between the NLRB and Julie Su’s office. But nonetheless, the enforcement agencies should be neutral, not an advocate for one side or the other.

Candee Chambers (06:29):

Well, and it’s going to be interesting to see what happens, and I have a feeling that they must feel they have the votes or they probably wouldn’t have renominated her.

John C. Fox (06:38):

Yeah. You kind of wonder as they’re going into an election year, what kind of pork they might’ve offered to Senator Sinema. She was one of the two Democrat holdouts that-

Candee Chambers (06:48):

Manchin.

John C. Fox (06:49):

And Manchin, Manchin’s not going to be moved. He’s laid down his views very clearly. He’s broken with the Democratic Party and he is going to be off on his own.

Candee Chambers (06:59):

Election, yeah.

John C. Fox (07:00):

But to stop Julie Su’s nomination, you need more than just Manchin because that would take you from 51 Democrat Senators and Independents that caucus with the Democrats to 50, at which point the Vice President, Kamala Harris, could cast a tiebreaker. But Sinema makes it 49 against nays, as we call it in the Senate and 49 yeas and 51 nays from the Republicans and the two wayward Democrats. But there’s still three or four others that had great misgivings, had told Senator Schumer, the majority leader for the Democrats in the Senate, that they were not going to vote for her, but they did not want to publicly state that to the will at large. They didn’t need to with Sinema and with Manchin stopping the parade.

Candee Chambers (08:00):

Well, I think the unemployment issue in the state of California is the showstopper.

John C. Fox (08:06):

Well, that very much troubled a lot of people that because of her actions and her personal actions in that matter, that over 30 billion, depending on who you believe, or 12 billion if you believe what she concedes, were lost due to fraud during the COVID-19 period.

Candee Chambers (08:24):

That’s dollars.

John C. Fox (08:26):

Billion dollars when she was the labor secretary for the state of California and their UI program just did not have protections around it. We paid billions of dollars to the cartels in Mexico, we paid billions of dollars that we know and can confirm and they agree, to state and federal prisoners.

Candee Chambers (08:47):

Exactly, exactly. And how’s your budget in California these days? Let’s not get started on that.

John C. Fox (08:53):

That’s a whole other story and is important because it is the fifth-largest economy in the world, and if that doesn’t work well, then a lot of other economies don’t work well either.

Candee Chambers (09:04):

Maybe that’s why you could afford to give those billions to the cartel and…

John C. Fox (09:07):

Well, the numbers are always gigantic in California.

Candee Chambers (09:12):

We better move on. We’ll get you going down a whole other path there.

John C. Fox (09:16):

Exactly.

Candee Chambers (09:18):

Something that we keep hearing about are the EEO ones and the release based on the Freedom of Information Act request and how that’s been handled. What are your thoughts on that?

John C. Fox (09:31):

Well, I have very strong thoughts on that because not to sound like an Al Gore story, but I was the guy that wrote the amendments to the Federal Freedom of Information Act as to exemptions three and four that were the subject of these lawsuits that involved a request by some muckraker reporters out in Northern California who sought EEO-1 reports for five years involving thousands of federal contractors. You could not get those as a member of the public from the EEOC because Title VII is one of the 100 approximately federal statutes that has embedded within it a non-disclosure requirement. You cannot disclose to the public any document that comes into the EEOC. Public is defined as everybody except a charging party or the respondent company. You don’t get EEO-1s from the EEOC ever. That’s a federal or criminal offense.

Candee Chambers (10:33):

They went to the OFCCP.

John C. Fox (10:34):

They went to the OFCCP that does not have that non-disclosure requirement embedded in the executive order. It should be there. There have been recommendations from the National Academy of Sciences that the Congress write such an exemption to stop this disclosure of EEO-1s and other pay data from federal contractors. But nonetheless, it was twice peculiar. It was first peculiar because the labor department, both in the Trump Administration and in the Biden Administration, was encouraging and coaxing contractors to object to OFCCP disclosing their records to these muckraker reporters out in California, which they should have no role in that. They should just be neutral to say to them, here are your rights. You can choose to exercise them or not, and if so, here’s how you do it. But they were proselytizing people to object.

Candee Chambers (11:26):

Yeah.

John C. Fox (11:26):

The second thing that made that peculiar was that as I wrote in a Week in Review at the time, two years ago, this was an almost impossible case for a contractor or OFCCP to win. Those documents were going to be disclosed under Exemption Four. There’s just two ways about it. And that’s what the court found very recently in 2024, and they did all the more peculiar moment in history. It was also peculiar because they could never get the lists of who had objected and who had not objected correct. And it just made the-

Candee Chambers (12:00):

Well, not that many people objected, which is interesting.

John C. Fox (12:05):

It seemed like it was mishandled in every respect, logistically and policy-wise, but nonetheless, that saga is now going to be over because unless they appeal, a federal judge in Northern California and San Francisco has ordered them disclosed in the coming weeks in early February unless there’s an appeal.

Candee Chambers (12:29):

It’ll be interesting if there is, but okay. The latest and greatest topic that everybody is dealing with, and that’s artificial intelligence. And it’s been all over the news and all over the EEOC and now President Biden and everyone’s talking about artificial intelligence, and the one thing I will just say before I get your take on it, we’ve had two Annual Meetings, DEAMcon22 and DEAMcon23, and we had Keith Sonderling from the EEOC speak, and we had Jocelyn Samuels and Keith Sonderling speak. Keith has kind of taken a leadership role with the EEOC on artificial intelligence. And the one thing that he said, I have repeated a million times to our Members, and I think it is the most meaningful comment that I’ve heard, and that’s, “If you’re thinking about purchasing some AI software, talk to that vendor and find out what disparities they have uncovered.” He made the interesting comment, I have to laugh because that’s a term that we use all the time.

(13:35):

A lot of people don’t really understand what disparity means, but he said if they can’t answer that question or they don’t know what disparities there are, that’s not the company to work with and to buy your software from. And then Jocelyn Samuels and Keith, God love her. I mean when I was moderating the session with two of them, and she said she used ChatGPT to put together some remarks for a speech and just kind of measured it out, she said she changed it obviously. And then Aaron Braddock and my conversation with Torin Ellis said he had used ChatGPT to write a loving message or a text to his wife. People are using me-

John C. Fox (14:15):

And then confessed that [inaudible 00:14:18]-

Candee Chambers (14:18):

Confessed that-

John C. Fox (14:18):

Still didn’t kill him.

Candee Chambers (14:20):

Exactly. What a chuckle. I know. But we’ve seen EEOC kind of talk about a settlement in New York as the first AI enforcement action and we kind of uncovered that and said not so much. And what are your thoughts on all this, John?

John C. Fox (14:37):

Well, this has been the latest shiny object that everybody’s become interested in, but with good reason, and I might just accelerate to more modern times before I get back to the situation or I think we are, is that the Biden White House wrote a very comprehensive executive order with many, many subparts and directives to the federal agencies green lighting the use of AI nationwide. You’re going to see all the blue states now embrace this. You’re going to see self-driving cars real soon because the Biden administration resolved after three years of internal debate the feuds between the unions that didn’t want AI, fearful of impact on their memberships, the civil rights groups. Yeah. Well, there is a very profound concern on both sides of the aisle and Capitol Hill about what is the impact on employment because let’s take interstate trucks, there’s 1.8 million interstate truck drivers, there’s three million Uber and Lyft and taxi cab drivers. Those people are all gone potentially in the next two years.

Candee Chambers (15:51):

We had a discussion in our operations meeting on Tuesday and I said, “I’m nervous about getting into a driverless car.” And one of our leaders said, “Oh yeah, I’ve done it.” I don’t know that I would do it.

John C. Fox (16:04):

Right. Well, we got off to a false start with the EEOC proclaiming that they had the first ever AI successful enforcement. We wrote a Week in Review that debunked that and showed that it was an intentional discriminatory act that they had uncovered in a New York company that taught language skills and that it was really just changing the software to preclude women above a certain age and men above a certain age from being accepted as employees to aid in these translation services they were offering had nothing to do with artificial intelligence as it’s been defined in the federal code as something that calls for critical, analytical thought and not just computerizing and digitizing a particular task. The second thing is that the EEOC attack on AI, and they were very critical of it through the chair’s position, was now muffled because of the executive order that President Biden issued saying, “No, we’re actually in favor of it as the civil rights groups and the unions were told to step to the side, be quiet, that we had to do this.”

(17:28):

And you see a real sense of fear and anxiety in that executive order that we’re falling behind other nations and particularly the Chinese-

Candee Chambers (17:35):

That’s [inaudible 00:17:36] right there.

John C. Fox (17:36):

In the pursuit and deployment of AI. But where we are right now is that everything is starting to calm down now in light of that Biden executive order. The enforcement agencies are currently properly showing their concern about whether employment software is going to have an adverse impact. And I mean that in its technical sense, not in a lay or HR sense, but is there a disparity of a neutral particular-

Candee Chambers (18:03):

Specific, yeah.

John C. Fox (18:05):

Policy or practice that is excluding one part protected group disproportionately to one or more others? We’re trying to understand what it is and what it is not. Many of your Members are trying to figure out if they have AI and whole or in part in their HR tools and with what impact, if any. Everybody’s looking at this now a little bit more soberly and cautiously, and I would certainly say that if you have a vendor that won’t tell you the component parts of your software, you need to shop elsewhere. They need to be transparent about what’s in their software and whether there is technically AI in there, and if so, you need to track that. Not that the law will require that, but as a best practice, you should be examining whether that practice, that policy of using that particular software for selection or for promotion is having any kind of an impact on a protected group. And if so, do the legal analysis. This is a lawyer’s analysis. HR needs to gather the data.

Candee Chambers (19:02):

Exactly.

John C. Fox (19:03):

And some technologists need to ferret out whether the software tool in question has AI and what it is actually doing to change results in the data.

Candee Chambers (19:14):

I’ve had Members ask me questions about their software and how it’s being used and how they’re eliciting potential applicants, job seekers through their software, and it’s a little nerve wracking. It really is. I think it’s one of those things I think they need to get the right people looking at it and they need to have a company that is trustworthy and can answer those questions about disparities and that sort of thing.

John C. Fox (19:45):

But the AI team in a company should be composed of at least the following three kind of job titles. Somebody on the technology side to identify where there is AI in the tools.

Candee Chambers (19:56):

Mm-hmm.

John C. Fox (19:57):

Second, somebody in HR to gather the data to see how it is affecting decision-making. And third, a lawyer to frame the legal analyses.

Candee Chambers (20:05):

Exactly.

John C. Fox (20:07):

And we need somebody who’s experienced in the technical aspects of adverse impact. A lot of people say they are, most are not. We have not been validating tests for almost twenty-five years now in any volume, and so that skill set is largely lost on the current generation.

Candee Chambers (20:24):

There are companies out there that do it. I mean…

John C. Fox (20:26):

There are. You need specialized IO psychologists-

Candee Chambers (20:31):

Job analysis.

John C. Fox (20:32):

That are trained in employment side law. You need to understand Title VII, not just about how to validate things. I need also that you validate within the contours of what Title VII means and footnote, this is where the lawyer comes to play, the executive order definition of how to define business necessity when you do have adverse impact is different than the Title VII definition.

Candee Chambers (20:58):

Yeah. Oh, I-

John C. Fox (20:59):

We need to know what we’re testing for.

Candee Chambers (21:00):

I went through a week’s worth of training on that, John. Way back in my HR-

John C. Fox (21:04):

It was in the utility industry when you were at American Electric Power, were at the forefront of tests and validating them to make sure that they predicted successfully who was going to be successful on the job.

Candee Chambers (21:17):

Well, that’s for sure. Let’s move on. One of the things that I think took every federal contractor who was on a CSAL this year by just, I don’t want to say surprise, but by just devastation, was the new audit scheduling letter for supply and service contractors. I even made the comment in a webinar that I had had so many audits when I was actually a practicing compliance person that I am glad at this point that I’m not doing that because of all of the stuff that they’re asking for these days. I mean, and compensation analysis. I mean, I don’t know. I look at the burden hours that they put on that and there’s a reason that facepalm emoji is my favorite. It’s like really? I mean, what are they thinking? What are your thoughts on that? Do you have clients that are under that new-

John C. Fox (22:07):

Well, I think every contractor that’s looked at the new audit scheduling letter is upset about it because it does foreshadow tremendous burden. Now, the good news is that there were only 898 supply and service contract audits that were completed last fiscal year 2023.

Candee Chambers (22:29):

And now they’re going to increase that number with all this other stuff they’re asking for.

John C. Fox (22:31):

Well, they think they’re going to increase it, but with these kinds of data dredges that are coming out in these new scheduling letters, not only is the contractor going to be burdened, but there’s a lot more to look at on the OFCCP side. They’re going to slow down even slower than they are and realize that they are running at about 20% of what the Obama administration did, and about one third of what the Trump administration did. We’re seeing a gradual slowdown over time, but now they’re at a crawl. The good news is, as upsetting as this audit scheduling letter was for just about every contractor, it’s only going to affect a very tiny portion, those who are in a supply and service audit. The next thing that occurs to me about the scheduling letter is that there will be a lot of need for OFCCP to analyze a lot of data in a way that they’ve never looked at before.

Candee Chambers (23:36):

Exactly.

John C. Fox (23:37):

And as a result, you’re going to see a lot more back and forth. Now, here’s the rub. If you play by the rules of OFCCP’s regs, OFCCP cannot obtain anything more from a contractor during the desk audit-

Candee Chambers (23:51):

Than what they did-

John C. Fox (23:53):

Then what is in that audit letter and in the itemized listing that is attached to that audit.

Candee Chambers (23:58):

What about those supplemental data requests?

John C. Fox (24:00):

Those are totally illegal. They’re not appropriate. They’re not allowed.

Candee Chambers (24:03):

I handled them.

John C. Fox (24:05):

Everybody just caves in and honors that. It’s a tradition that people are just, oh, well, I got an email. They want these things, I’m going to send it to them. Well, realize you don’t have to do that. If you read the regs and take a look at 41 CFR section 62-1.42-

Candee Chambers (24:24):

We talk about this all the time.

John C. Fox (24:25):

Well, they say that if OFCCP wants anything more than what was in the itemized listing and the audit scheduling letter-

Candee Chambers (24:33):

They have to come onsite.

John C. Fox (24:35):

They have to come onsite. And to come on site these days, they need to have probable cause.

Candee Chambers (24:40):

Mm-hmm.

John C. Fox (24:41):

In the data that you deliver to them in response to that itemized listing, if there is not evidence of a prima facie case of unlawful discrimination, for example, or a violation of one of their technical affirmative action rules, they’re not allowed to come on site. But that’s a question of whether the employer wants-

Candee Chambers (25:01):

Wants to push back.

John C. Fox (25:02):

To push back, whether they want to just play ball with OFCCP.

Candee Chambers (25:06):

99.9% of the contractors are going to do that.

John C. Fox (25:10):

99.9% exactly have done that.

Candee Chambers (25:13):

Exactly.

John C. Fox (25:14):

And that’s why OFCCP is now surprised when contractors that are new to the process say, “That’s not the way the rules,” right? What are you asking me? All these email questions, their document requests, and you can’t do that.

Candee Chambers (25:27):

Well, I used to, and I still tell every one of our members, when they get requests, they’ll call me and they’ll say “They’re asking for this, this, and this,” and then I’ll say, “Well ask them to put it in writing.” I said, “I love playing dumb.” Just say, “I could get in a lot of trouble if I give you something that I’m not supposed to, so if you could put that in writing,” and I said, “Normally they won’t if it’s not something that will support a regulation,” although I just have to throw this out here. You know how it is with listing, I had one of our members get a letter from a compliance officer saying that they wanted proof of listing or no, no. It did say posting. Proof of their posting of jobs for people with disabilities as required by the regulations and proof of posting jobs for women and people of color, minorities was their term of course, in the regulations, as required by the regulations. I was like, again, the facepalm emoji. It’s part of riffraff, that’s it. And they put that in writing.

John C. Fox (26:30):

Right.

Candee Chambers (26:30):

It’s like, I love having things like that in writing.

John C. Fox (26:33):

Well, one of the well-known secrets at OFCCP these days is that there is universal criticism of their training programs. The people at OFCCP who are being trained by them tell me routinely, they think their training modules are terrible, they’re incomplete, they’re not detailed enough. They don’t really explain to them what to do.

Candee Chambers (27:00):

Well, I think Tina Williams for instance, I really do believe she understands the regulation. She knows the regulation.

John C. Fox (27:08):

Yes, she does.

Candee Chambers (27:08):

I think Deborah Carr did. I really do believe that there have been some really good knowledgeable people at the OFCCP, and I think when they go home, they probably shake their head and go, “Oh God, now what am I going to do?” I mean, I really do believe that, and it’s just like every company. You can tell people 10 times how to do something and they still get it wrong. Yeah.

John C. Fox (27:32):

But the model is broken on training at OFCCP. Candee, because the historic approach it has always used with whatever success or failure over the decades has been what I call Knight and Squire. You take a new hire and they follow you around and you train them through the more senior people job training, it’s OJT, but they’re working remote for the last couple of years. If they’re working hybrid, they’re still working remote most of the time. And so that Squire Knight process that used to happen in the office at desk by desk, in the hallways at the water cooler, that’s broken, that’s not happening anymore.

Candee Chambers (28:10):

They’re supposed to be spending more time in the office, so hopefully that will fight some of those issues.

John C. Fox (28:15):

You’re still losing about 70% of that opportunity to have that Squire Knight process. And the training modules are not very good. OFCCP has known this for a long time. They see people in the field dropping off from their training calls all the time. A lot of institutions are not good at building training institutional models and videos.

Candee Chambers (28:43):

And you know what? I’ve always said, OFCCP is no different than corporate America. You set policy at the national office, you set policy at the global headquarters. You’ve got the offices down below, and you obviously don’t know how they do everything at the various offices and they sit there and say, oh, yeah, right, we’re going to do that.

John C. Fox (29:02):

OFCCP doesn’t have the budget or the staff to do these with any quantity or quality.

Candee Chambers (29:06):

Yeah. It’s very similar to corporate America, but let’s talk about something that I think has had federal government contractors really nervous, and actually employers really nervous, and it’s something that has not happened yet at the EEOC, and that’s the component two hours worked and pay data. Now, we’ve had Kalpana Kotugal, who was sworn in August of 2023, and I think we all thought by September one we were going to see it. And Jocelyn said that there will be a noticing comment, so we’ll see. I mean, she said that in front of our audience, so we’ll see what happens, but what do you think’s going on there?

John C. Fox (29:48):

Well, and the other thing is that both Keith Sonderling and Jocelyn Samuels, the vice chair of the EEOC said at your DEAMcon conference in Chicago last April, that component two was coming.

Candee Chambers (30:01):

Exactly.

John C. Fox (30:03):

The question was not whether, it was just when. And I think that’s still where things sit.

Candee Chambers (30:08):

And they’ve got a democratic majority now as it’s supposed to be with the…

John C. Fox (30:12):

We’ve got three Democrat commissioners at the EEOC and two Republicans, but I think a lot of contractors are starting to feel cautiously comfortable that the component two is not coming now because nothing has happened in the seven months since Miss. Kotugal arrived, sworn in at the EEOC. But I think that’s not thinking the way the White House thinks about this.

Candee Chambers (30:39):

Yeah.

John C. Fox (30:40):

I think they’re thinking about it two ways. One, they need to get the EEOC more budget and more time to build a proper computer tool because it was a fiasco before, and the people that in the EEOC that were putting the technical computer software together concerned that it was all just masking tape.

Candee Chambers (30:58):

[Inaudible 00:30:59] the other person was saying.

John C. Fox (30:59):

Yeah, it was just band-aids and Duct tape, and it was about ready to fall apart. They’ve hired a very expensive Premier outfit to put together a new software platform that will handle this in an appropriate way, but that needs a little bit more time to bake in the oven. The second thing that is much more important is I think they’re saving this for a pre-election announcement to rally voters at that time and on the theory that if they win the second term, Democrats can then comfortably introduce component two in the early 2025 arena somewhere in the spring or fall, and they’re not in any rush. They want to do this right and comfortably because there was quite a hullabaloo about this-

Candee Chambers (31:50):

Oh, I know.

John C. Fox (31:50):

When this ran through in the waning days of the Obama administration, beginning days of the Trump administration. They lost a lot of corporate supporters.

Candee Chambers (32:00):

Yeah. Well, and I think everything that corporate America is dealing with right now with the new Far Council’s proposed rule that’s coming out on pay transparency. I mean, how many different ways is corporate America supposed to report on pay and handle pay transparency and all of this? It’s a checkerboard and we’ve got California, we’ve got other states that have their various forms of pay data, and I think it’s just getting to be a nightmare. And having worked for a national company in 49 states now, probably 50, we used to meet on a monthly basis and just say, if we had this to do over again, we wouldn’t do business in this state. We wouldn’t do business in that state. Well, that’s kind of impossible. And so God help the [inaudible 00:32:48].

John C. Fox (32:48):

Well, Candee, I think the bottom line is it’s coming, but it’s not near in time. It could pop out of the woodwork anytime soon, but I think it’s going to be probably something we see emerge from the EEOC much later in the year. Anybody who wants more information about that topic or any of these other topics should just read our Week in Reviews and use the search tool that is embedded in each Week in Review-

Candee Chambers (33:16):

Because we have the latest and greatest documents.

John C. Fox (33:17):

To go back and find these stories if you’re interested, and you’ll find the underlying documents that support the story, the regulation, the proposed regulation, the directive, the case decision, whatever it might be.

Candee Chambers (33:33):

What we’ve seen and what you’ve noticed, John, over the years, you’ve worked with the OFCCP for, what, 40 years?

John C. Fox (33:40):

Four decades plus.

Candee Chambers (33:41):

Yeah. We’ve kind of seen all sorts of things come out of the OFCCP, so I’m going to throw some information out. What do you think about that OFCCP portal, although I think everybody probably already knows what you think of the OFCCP portal.

John C. Fox (33:55):

Well, I wrote quite a bit about this in the Week in Review, but I would put this and about four or five other policy initiatives within the OFCCP into the heading of damn the torpedoes, full speed ahead. We’ve seen a change in temperament at the OFCCP in the last year, and what that new temperament is, is to disregard the legal formalities and disregard contractor objections. Just run over them and say, “No, we’re not giving you more time. We want this now or else we’re going to move to the next level of enforcement. We’ll issue the notice of violation or we’ll issue the notice to show cause. You can’t delay us anymore. We’re just going to keep rolling.” And there’s a certain utility to that to keep this agency going forward when they are very sluggish as it is, they need to pick up the pace, but they need to pick up their pace, not just the contractors pace.

Candee Chambers (34:57):

That’s a good way of putting it.

John C. Fox (34:59):

And it’s both sides of that house need to work together. I don’t think that contractors are unnecessarily delaying the delivery of data in audits, but I think two things are complicating this terribly, and one is that OFCCP is inappropriately very often asking for more data instead of going on site as they should and gathering the documents that they want. The second thing is that they are asking for more and more and more material, and in successive waves. And then there’s a long pause between-

Candee Chambers (35:35):

Before they respond. Exactly.

John C. Fox (35:37):

The contractor delivers and they get a response from OFCCP. We have in my office at least a dozen audits alone that we haven’t heard from OFCCP in two years. And we have a protocol with each client depending on what they want as to how often we tickle OFCCP about it, but usually it’s about once a quarter.

Candee Chambers (35:59):

Well see I always-

John C. Fox (35:59):

Or once a month, but it’s just not working.

Candee Chambers (36:02):

No, see, I always just said-

John C. Fox (36:04):

Leave sleeping dogs lying.

Candee Chambers (36:05):

Yep. Do not say a word because you know what? We did that with a nuclear power plant audit and they went probably a year and a half without any response and then boom, they closed it. We do a full compliance.

John C. Fox (36:18):

The OFCCP portal is one such example.

Candee Chambers (36:20):

After seven years, by the way.

John C. Fox (36:21):

Yeah. The portal was issued without legal authorization in my view. They should have gone to Administrative Procedure Act rulemaking to invite public comment about whether it was authorized by law and whether it met certain cost-benefit utilities. Half of the contractors plus did not comply, and of course OFCCP-

Candee Chambers (36:47):

Now they’re all getting audited this year with that lovely new supply and service scheduling.

John C. Fox (36:52):

OFCCP said they were going to audit those people, those contractors, they audit a very small fraction of them. Whether those were lawfully selected, by the way, is another question because if they do not have the legal authority to enforce the portal, then that audit is based on a compliant act of the contractor and makes the selection inappropriate to punish them for complying with the law. But nonetheless, OFCCP has not sought to sue any of the contractors that did not comply with the portal demand that they fill out AAP establishment web pages for every AAP establishment, which I think is revealing enough that they know they don’t have legal authority for this. Others that fall into the same category, demanding in audits the construction contractors, this is the latest explosion, but demanding that construction contractors provide OFCCP with supply and service style affirmative action plans for minorities and women as to the contractors noncraft employees. Of course, construction contractors follow the 16 steps with their rank-and-file employees. And there’s always been this big missing gap as to what to do with the construction contractors and noncraft employees, the supervisors, the superintendents, the architects.

Candee Chambers (38:24):

But what does their scheduling letter ask, John?

John C. Fox (38:27):

Well, this is another revelation that they don’t have authority to do this among many because the OFCCP just published their first ever construction audit scheduling letter that OMB approved. It does not. You’ll look in vain to find that bullet point that that says that you have to submit AAPs for noncraft. And of course it’s not there, they can’t enforce that. But contractors of good detention are struggling to figure out how to play ball with OFCCP.

Candee Chambers (38:58):

And how do you come up with three years of outreach data and all that other?

John C. Fox (39:02):

Well, here’s the dilemma. You’ve got three choices, don’t you? You comply and make them happy at great expense. I’ve seen several budgets done-

Candee Chambers (39:10):

How do you do that though? How do you go back and get-

John C. Fox (39:10):

That are at six figures, six figures to do this. Second, you tell them no and force OFCCP to file an administrative complaint to enforce their position.

Candee Chambers (39:22):

When they, again, just like with the portal, they know [inaudible 00:39:26].

John C. Fox (39:26):

I predict they will never pull the trigger on this because they lawyers are going to tell them, you have no legal standing to do this. The third is one that a lot of my clients are pondering along with those first two options, which is don’t do anything until you get an audit scheduling letter because how many construction people did they audit last year? 175. This is only an issue for a very, very small subset of the construction subset universe.

Candee Chambers (39:53):

Yeah. Yeah.

John C. Fox (39:55):

The problem with that option though is that if they do get an audit, they’re not going to be able to produce a supply and service AAP because they will not have fueled their databases with the necessary data going a year back and two years back.

Candee Chambers (40:10):

That’s what I was just starting to say. Yeah, exactly. That’s going to be interesting. What about the old, not old, the new compensation review requirements?

John C. Fox (40:21):

Well, those were highly criticized by the contractor community because the regulations-

Candee Chambers (40:29):

Who knows what they mean? I mean [inaudible 00:40:32]-

John C. Fox (40:31):

They’ve never been interpreted that way.

Candee Chambers (40:32):

No, and some of the extravagant compensation types of reviews most people have never even heard of.

John C. Fox (40:42):

Yeah. OFCCP is trying to jawbone people into thinking they have to do regression analyses and all kinds of statistical tests to satisfy the requirements for supply and service contractors at 41 CFR section 60-2.17B as in boy, that they undertake an evaluation that considers at least things like compensation, but without it putting any meat on the bones. When they don’t put any meat on the bones in the regulation under the Administrative Procedure Act, the contractor can interpret it any way it likes.

Candee Chambers (41:13):

Exactly.

John C. Fox (41:15):

OFCCP has to specify exactly what they want to provide for a level playing field among various contractors. By the way, there’s on point legal authority for that within OFCCP. That’s the OFCCP versus Firestone Tire Rubber case, which said that OFCCP can enforce rules, but it has to write it down so that everybody knows what an evaluation means, for example, or what a major or whatever the word is, has to be defined. If you don’t define it, the contractor can choose to define it however it wishes, and it cannot be wrong because there is not a contrary requirement in the rules is what Firestone said. Common Administrative Procedure Act rules. Contractors are working this out item by item in audits, and what we’re seeing is that OFCCP is accepting less and less all the time. I predict a year from now much of the hullabaloo about OFCCP seeking to compel extensive compensation data will recede, not stay where it is or increase.

Candee Chambers (42:22):

Well, that would be good. All right. John, you and I have spoken at, I don’t know how many ILGs and it seems like last year, this year, they’re all asking for the exact same thing. And it’s how to basically evaluate the difference between affirmative action and DE&I and how do you handle both? I mean, we’ve gotten so many different requests and all of them have just a little bit different focus. What is your recommendation, your suggestion? That’s a thing that everybody seems to be worrying about.

John C. Fox (43:02):

Well, I think everybody is tiptoeing around this issue very cautiously, both on the DE&I side and on the compliance side because there’s an uncertainty about where that line is drawn within a corporation between those two institutions. The affirmative action compliance personnel very much feel like the long forgotten cousins. They’re not getting the budget, they’re not getting the staffing, and they’re seeing the DE&I staffs suddenly just explode out of the floor.

Candee Chambers (43:34):

Well, they get the attention of leadership and they get the budget.

John C. Fox (43:37):

They’re often reporting to the CEOs directly.

Candee Chambers (43:40):

Exactly, exactly.

John C. Fox (43:40):

They are getting lots of budget, they’re getting lots of travel, and it’s very much disconcerting. There’s also a great uncertainty about what is the role, mission and footprint of responsibility of the DE&I people different from or overlapping with the compliance personnel. And a lot of people are struggling to resolve that at the worst view of it, turf war, the best view of it, just allowing everybody’s responsibilities in some rational way so you’re not duplicating resources.

Candee Chambers (44:14):

I’ve had several members that have asked about hiring 10,000 people of color, or let’s just focus on hiring a diverse workforce and they don’t even know what are in their placement goals or where their needs really are.

John C. Fox (44:37):

Well, what I have always said, going back 30 years before the word and language of DE&I was ever coined, was that you’ll have all the equal employment opportunity programs and practices that you need if you properly implement an affirmative action program for minorities and women, as OFCCP has outlined it in its rules. Because it will tell you what you need to do, the data you need to gather, the data you need to analyze to make sure that you are ensuring against unlawful discrimination. That what makes the executive order different than Title VII. Title VII just makes you defend the charge and prove that you did not unlawfully discriminate, but affirmative action causes you to be a scout and an investigator and an analyst to look at your systems of higher employment, promotion, compensation, termination, and make sure that they are not unlawfully discriminating before the discrimination can occur. And thus make sure that you are operating in a non-discriminatory environment from cradle to grave, hired a determination.

(45:49):

And so the bottom line is, there is no need for DE&I if you properly implement an affirmative action program because that is your DE&I program. I wouldn’t be too concerned about that issue analytically, but the implementation of this issue within companies is really causing quite a bit of internal confusion in my observation of it. But they’re all going to have to work it out on their own and divide the turf. A lot of compliance people are very miffed that they’re training DE&I people they think to do their job.

Candee Chambers (46:28):

Yeah. I think the DE&I people are just listening to their leadership saying, we need to have more women. We need to have more of this group or that group without understanding the information below that level and how you get to those types of metrics. I think you had talked years ago about a company that wanted to hire more African-Americans, but it was in a small town and they didn’t have the town that was really welcoming to African-American individuals. They didn’t have a hairstylist, they didn’t have the types of businesses that people who are African-American would comfortably shop and that sort of thing. I don’t remember what-

John C. Fox (47:20):

This is the story of Corning Glass-

Candee Chambers (47:21):

That’s what it, yeah.

John C. Fox (47:22):

In upstate New York. Way upstate the middle of nowhere. And they wanted to-

Candee Chambers (47:28):

They were trying do a good, yeah.

John C. Fox (47:29):

Engage a very healthy diversity approach back in the seventies. And they studied it quite carefully because they were all technical people.

Candee Chambers (47:37):

Oh, churches. That’s what I-

John C. Fox (47:38):

They went to Harlem and they tried to replicate in Corning, New York where Corning Glassware is headquartered, a slice of New York. They brought the hairstylists, they brought the Baptist churches, they brought all the cultural-

Candee Chambers (47:55):

That’s what it was, cultural. Yep.

John C. Fox (47:57):

Issues and support props that you need to sustain a community and not just have a one-off hire here or there.

Candee Chambers (48:03):

Right.

John C. Fox (48:04):

And it took a lot of time, a lot of money, a lot of careful planning, but they were very successful in transplanting-

Candee Chambers (48:12):

Yeah, good for them for doing, exactly. But it’s a costly exercise.

John C. Fox (48:16):

And not required, but that is the highest state of the art of affirmative action is creating availability where it doesn’t exist.

Candee Chambers (48:23):

Yeah. Exactly.

John C. Fox (48:24):

By the way, OFCCP used to have a requirement in its definition of the narrative that a contractor had to undertake, but that went away in 2000, but that does not mean that contractors cannot work on that. One of my clients, Monsanto, addressed this issue by building an apprenticeship program for women to train them to be simultaneously a journeyman plumber, journeyman electrician, and a journeyman maintenance repair person. They had to all do all of that at one, and they put them into a formal apprentice training program that they created and off they went and they created a lot of women. They tripled the availability that was otherwise available in the marketplace.

Candee Chambers (49:13):

And again, if they would take that money that they allot to DE&I and apply it to the affirmative action processing, you could do a lot of things. And so that’s pretty cool actually. We’ve had a lot of companies that have stubbed their toes along the way, and I think we’ve pretty much hit that with what they’re trying to do. I worked for America Electric Power and we handled DE&I and affirmative action under the same group. And I was at Cardinal Health and they had affirmative action in one side and DE&I in another. The DE&I person reported directly to the chief human Resources officer, got a lot of attention. And we’ve seen it both ways, and the head of DE&I would tell the affirmative action people what we were supposed to do. And it’s like, excuse me, but we’re the legal requirement.

John C. Fox (50:05):

Well, I’ve had a presentation that I’ve done for over 35 years that I’ve had by various titles, but I originally called it Preferences and Focus to explain the law surrounding when you could take race or gender into account to hire-

Candee Chambers (50:22):

Manifest imbalance or strong basis and evidence, right?

John C. Fox (50:25):

Those are the two legal triggers that allow that. Well said. And I then changed it to Doing Right the Right Way because I realized a lot of companies were stubbing their toes trying to implement what we now call diversity programs because they didn’t know enough and understand enough about the law to integrate it with their operational practices.

Candee Chambers (50:48):

I mean, good for them for wanting to do better.

John C. Fox (50:49):

And so the place that I see the light bulbs go off in people’s heads these days is, as you and I saw in our Arizona ILG meeting recently when we made this point together and everybody just thought it was probably the best seminar they’d been to ever or in a long time. I got that comment repeatedly. But that point that we made was, if you tell me that you don’t have a manifest imbalance in the selection of one protected group over another, you can’t prove that manifest imbalance element that allows for race-based or sex-based, gender-based decision-making. Or if you cannot tell me that you have a strong basis in evidence, that’s the language from the Supreme Court, that authorized preferences based on race, based on gender to correct a legal error that your company had made, you had discriminated against African-Americans or discriminated against women. You can take self-help is what the Supreme Court has told us, either by showing that you have a manifest imbalance or you have a strong basis in evidence to believe that you violated the law. If you tell me you don’t have either of those, then I would tell you that as a matter of law, you don’t have a DE&I problem.

Candee Chambers (52:11):

Well, if you’re hiring to availability, which basically says that over time your workplace should mirror the labor market in which you do business. And if you are basically right in that same metric, then how are they saying that they don’t have enough of one protected class or another?

John C. Fox (52:34):

There may be a very large African-American community, a very large Hispanic community, but that is not represented in your workforce. But then you’ve got to get to the question of qualifications, interest, etc. And pipeline. All those are issues. I’ll just give you the punchline conclusion. When we teach the affirmative action plan basics, nuts and bolts, we always end, you and I, with the five reasons that one has to set a goal for minorities or women or both. And if you have one of those five drivers, that’s what will cure your diversity imbalance.

Candee Chambers (53:15):

Mm-hmm.

John C. Fox (53:16):

We just got to figure out which one. Unfortunately, OFCCP rules do not require the AAP to have that definition and statement of this is what caused our imbalance to know what to fix. It’s like a doctor prescribing medicine without having done a diagnostic test.

Candee Chambers (53:33):

All right. Well, let me get to the very last thing I wanted to highlight today, and I’m going to do a shout-out as a compliment to you, John. Your blog was I think the most read blog out of JD Supra during 2023, and it was related to your predicted outcome of the Harvard and UNC case. And you accurately predicted the outcome and you had written, I think, about four blogs altogether, one prior to and then three following the decision. What can you add related to the Harvard UNC case decision?

John C. Fox (54:14):

Well, I think what-

Candee Chambers (54:15):

And congratulations, by the way. It’s pretty exciting.

John C. Fox (54:18):

Thank you. It was one of those things, it takes 40 years to build up to the point where you can write a blog like that. But the thing that I think most people took away from the Harvard UNC case or should have, is that there are very defined rules here about when one can use race and when one cannot use race in any matter in employment and admissions. By the way, while that was an admissions case decision or that you could use preferences for African-Americans and other protected groups, the Supreme Court for 30 years has used the employment cases interchangeably with the admissions cases. It’s the same case law, same analytical root thinking.

Candee Chambers (55:03):

But I hated when pundits kept saying they’re doing away with affirmative action in university settings.

John C. Fox (55:10):

Well, one of the points that I made in the blog that went so viral the week before the Supreme Court decided the case was to point out that these are not affirmative action cases.

Candee Chambers (55:24):

Exactly.

John C. Fox (55:25):

They were called that by the media. They were called that by the parties because they wanted to not say what this really was, which was direct evidence of decision-making based on race.

Candee Chambers (55:39):

Which is unlawful in the employment context.

John C. Fox (55:41):

The universities denied that initially, but then in the trial, they admitted it through their experts and through their witnesses that they were taking race into account, no bones about it. Their argument to the court was, we have a legal permission to do so that this court has previously permitted. And what the controversy socially, culturally was that that was quite right. The court had permitted for about 25 years now almost the use of race under certain conditions. And the trial courts had found that the university’s UNC at Harvard had followed those requirements. But the Supreme Court said that was all misthinking. We had a 30 year detour in constitutional law that allowed the use of race, and we’re now returning to the view that we’ve had for 200 years before that. The point that I think everybody has to take away is that there are rules here, and just having the right instinct to do the right thing is not enough. You need to do it the right way. And that’s why I think our preferences and focus preferences seminar has been so popular because it explains the law and how to do it right.

Candee Chambers (57:04):

Well, I think that’s what makes our presentations good. You give the legal ramifications. I tell the HR people how to handle it.

John C. Fox (57:12):

Exactly.

Candee Chambers (57:15):

‘Cause we don’t always want to live by the legal requirements that you guys put out.

John C. Fox (57:18):

Yeah. The way I think about it’s, I’m the architect that draws the design of the house. Somebody now has to go build it.

Candee Chambers (57:24):

Yeah. Well, we try to figure out how to make that work. All right. Well, John, thanks again for joining me. This is always a lot of fun. I look forward to this particular podcast every year and we talk a lot about what we’re going to do as the year comes around. This next year, I think we’ve proven, is going to be an interesting time for federal government contractors and HR professionals like I always was as we gear up for those upcoming elections. I think we’re already starting to see some things come to light. To stay current on all of the upcoming legislation and all the various hot topics that we cover, I encourage all of our listeners to subscribe to receive our OFCCP Week in Review. Don’t you agree?

John C. Fox (58:08):

Oh yeah.

Candee Chambers (58:08):

And it’s a review that provides, as John was saying, a weekly summary, but it includes every supporting document behind the scenes. And we don’t pull information from what somebody else has written. We go searching for it ourselves and we find the actual documents. You can actually visit directemployers.org/subscribe and join our mailing list and receive alerts of new posts every Monday at 3:00 P.M. Eastern Time. Thanks again, John. I look forward to seeing what 2024 brings, aren’t you?

John C. Fox (58:46):

It’s going to be a lot more of the same. Excitement, turbulence, confusion.

Candee Chambers (58:50):

There you go. Let’s end on that. I don’t think I can make it any better.

(58:55):

Thank you for tuning in for another episode of the DE Talk podcast. Stay connected with DirectEmployers on Facebook, Twitter and LinkedIn, and subscribe to our emails by visiting DirectEmployers.org/subscribe to receive notifications of new episodes, webinars, events, and more.