Government Contractor Compliance & Regulatory Update

OFCCP Releases 2021 VEVRAA Hiring Benchmark

The Office of Federal Contract Compliance Programs (“OFCCP”) has released its 2021 Vietnam Era Veterans’ Readjustment Assistance Act (“VEVRAA”) benchmark.  Effective March 31, 2021, the new benchmark is 5.6%, a slight decrease from 2020’s 5.7% benchmark.  This is OFCCP’s sixth reduction of the benchmark, which has steadily declined since its inception in 2014.

The VEVRAA Benchmark is the figure which federal contractors must use to assess the effectiveness of their outreach programs for the hiring of veterans.  Contractors may either use OFCCP’s national benchmark, or establish their own benchmark using applicable statistics and other metrics set forth in OFCCP’s regulations (41 CFR § 60-300.45(b)(2)).

 

 

OFCCP Effectively Ends Focused Reviews, Cancelling Those on FY2020 CSAL

On March 2, 2021, OFCCP announced it had amended the FY2020 Supply and Service Corporate Scheduling Announcement List (“CSAL”) issued on September 11, 2020. The amendments removed all establishments selected to receive focused reviews and compliance checks. In so doing, OFCCP removed over half of the 2,500 compliance evaluations included on the list. The amended list is available here.

In announcing the change, OFCCP stated the move would “allow[] it to more thoroughly evaluate contractors through the strategic allocation of limited agency resources.” As such, this move signals the end of focused reviews.

Those contractors scheduled for focused reviews may now breathe a sigh of relief, as they no longer face the imminent prospect of an OFCCP audit. Even so, nothing prevents these contractors from being scheduled for more comprehensive reviews when the next CSAL is issued. Given the expectation OFCCP will be more active under the Biden Administration, contractors should conduct self-assessments and consult with counsel to ensure they are in compliance with the myriad of additional regulatory requirements they face.

OFCCP Announces Response to Revocation of Executive Order Limiting Diversity Trainings

As we previously reported, shortly after taking office, President Biden revoked the controversial Combatting Race and Sex Stereotyping Executive Order (the “Order”) as part of a new Executive Order focusing on “Advancing Racial Equity and Support for Underserved Communities Through the Federal Government.”  The new Order notes that “[i]t is . . . the policy of [this] Administration that the Federal Government should pursue a comprehensive approach to advancing equity for all,” and is just one mechanism through which the President has begun making his mark in ways that will impact the government contractor community.

In response to the revocation of the Order, OFCCP announced the following actions:

  • OFCCP has rescinded its Frequently Asked Questions regarding the Order.
  • OFCCP will completely shut down the phone hotline and email address that were created to accept complaints related to contractors’ alleged noncompliance with the Order. OFCCP had previously acknowledged that it was no longer accepting complaints after a nationwide preliminary injunction prohibited enforcement of the Order, but it has now taken the additional step of completely shutting down the hotline and email address.
  • OFCCP will administratively close all complaints regarding alleged noncompliance with the Order received through the hotline or any other means. For any complaints that were previously held in abeyance pursuant to the preliminary injunction, OFCCP will notify affected employers to the extent possible.
  • OFCCP will not enforce any of the Order’s requirements, including the requirement that contractors include certain flow down provisions in their subcontracts. To the extent contractors have already included the provisions required by the Order in their subcontracts, OFCCP will no longer take any action to enforce such provisions.  Further, OFCCP will not require contractors or subcontractors to provide notice of their commitments under the Order to their respective labor unions or employee representatives.
  • OFCCP will not publish any additional Requests for Information from any individual or entity regarding the training, workshops or programming provided to employees of government contractors or subcontractors with regard to compliance or noncompliance with the Order.

As always, we will continue to report on noteworthy developments impacting the federal government contractor community.  In addition, you can subscribe to Proskauer’s Law and the Workplace blog to stay current on the latest Biden Administration developments impacting your business.

Jenny Yang Will Be The Next OFCCP Director

As previously reported, the new Biden Administration is wasting no time in making changes impacting the government contractor community.  This now includes changing leadership at the OFCCP.  As was anticipated, and is now reflected on the agency’s website, Jenny Yang, who served as EEOC Chair during the Obama Administration, has been selected for the OFCCP Director post.

It is too soon to know exactly what Director Yang’s priorities will be as OFCCP Director, but from her tenure at the EEOC it is anticipated she will focus on pay equity and sexual orientation and gender identity rights.  We will report on any new developments as Director Yang begins to make her mark on the agency.

As has been detailed extensively in this blog, outgoing Director Craig Leen has had an incredibly active tenure in the post.  His time at the agency has been noted for its focus on transparency, new initiatives such as focused reviews, efforts to improve the department’s efficiency, a notable increase in the number of contractor audits, securing record-levels of back pay and interest recoveries, and improved relations with the contractor community.  On a personal note, in my interactions with Leen over the years I found him to be incredibly dedicated and passionate about his work and the agency’s mission, as well as accessible, thoughtful, creative and practical.

 

 

President Biden Revokes Controversial Executive Order Limiting Contactor Diversity Trainings Shortly After Taking Office

As predicted, just hours after taking office, President Biden revoked the controversial Combatting Race and Sex Stereotyping Executive Order (the “Order”) issued by his predecessor in September.  As previously reported, the Order, among other things, required new contracts entered into with the federal government to include a clause prohibiting federal contractors from including certain concepts in diversity and awareness trainings.  The Order included a variety of penalties and sanctions for non-compliance, including debarment.

The Order was controversial from the start.  Many viewed it as an effort to impede unconscious bias and societal privilege trainings that had become more prevalent in the wake of the country’s renewed focus on racial justice and equality.  Lawsuits were filed to stop its enforcement, eventually resulting in one court issuing a preliminary injunction enjoining its enforcement in December.

In a statement issued prior to his inauguration, President Biden called the Order “damaging” and promised that in addition to revoking the Order, he would take “[a]dditional actions in the coming weeks will restore and reinvigorate the federal government’s commitment to diversity, equity, inclusion, and accessibility.”

The new President is already making his mark in ways that directly affect the federal government contractor community, and more changes are clearly in store.  For some predictions of what additional actions may be forthcoming, check out my presentation with Dr. Rick Holt of Resolution Economics from earlier this month recapping major OFCCP developments from 2020 and what we believe may be in store for 2021, available here.

And, as always, you can continue to rely on us to report on consequential developments impacting the federal government contractor community.  Stay tuned for an eventful 2021.

 

 

 

OFCCP Publishes Opinion Letter on Protections for Religious Liberty in (and out of) the Workplace

On January 8, 2020, the Office of Federal Contract Compliance Programs (“OFCCP”) published an opinion letter responding to an unidentified religious organization’s request for clarification on the “scope of the legal protections for religious liberty in the workplace.” The organization’s request stemmed from its concern that “employees in the technology, education, public, and other sectors may face discrimination at work based on faith-related activities and beliefs.”

Executive Order 11246 applies to federal contractors and subcontractors and, through its equal opportunity clause included in federal contracts, prohibits employment discrimination on a variety of characteristics, including religion. However, the executive order includes an exemption for religious corporations, associations, educational institutions, and societies with respect to the employment of individuals of a certain religion. OFCCP recently finalized regulations expanding the scope of this exemption.

Nonetheless, in its opinion letter, OFCCP noted that a contractor falling under the religious exemption often still has an affirmative obligation to provide religious accommodations and “should evaluate its processes to make sure it is not failing to provide religious accommodations when legally required to do so. If a proposed religious accommodation would impose an undue hardship, the contractor should work with the applicant or employee to attempt to identify a reasonable accommodation that would not impose such a hardship.” Further, the letter advises that contractors “should develop reasonable internal procedures to ensure that their obligation [to provide equal opportunities to members of all religious faiths (or no religious faith) and to provide appropriate accommodations] is being fully implemented.”

The opinion letter addresses six hypothetical scenarios of religious discrimination and assumes in its response that the employer agreed to the requirements of Executive Order 11246 and was not entitled to a religious exemption:

  • Where an applicant or employee suffers an adverse employment action because the employer assumes the individual has religious values that others may find offensive (e.g., wearing a hijab or attending an Orthodox synagogue where seating is separated by sex), that adverse employment action would be unlawful.
  • Where an applicant or employee suffers an adverse employment action because of his or her membership in a religious group that has taken public policy positions that others may find offensive (e.g., supporting or opposing the State of Israel or opposing late-term abortions), that adverse employment action would be unlawful.
  • Where an applicant or employee suffers an adverse employment action for: (1) attending or supporting a synagogue/church-sponsored cause or event (that is part of the individual’s religion); (2) the cause or event is one that others may find offensive (e.g., an anti-war rally, the March for Life, or a rally opposing anti-Semitism); (3) and the attendance takes place during non-work hours, that adverse employment action would be unlawful.
  • Where an employee suffers an adverse employment action for stating, during a company-provided rest break, that he or she has religious views that others may find offensive (e.g., supporting only traditional marriage or, conversely, supporting an expanded definition of the family), that adverse employment action would be unlawful. The opinion letter notes that it assumes for this hypothetical that the employee was not told that the comments were unwelcome and the employee stated his or her view respectfully, in a non-hostile way.
  • Where an applicant or employee suffers an adverse employment action after informing the employer he or she requires a religious accommodation (e.g., the inability to work on religious holy days or the need to have a personal microwave for kosher food), that adverse employment action would be unlawful. Further, the letter notes that “if the employer made no effort to act on the . . . accommodation request, it will likely be unable to demonstrate that the proposed accommodation would actually have posed an undue hardship.”
  • Where an applicant or recently hired employee is let go because he or she requested a religious accommodation (e.g., needing to leave work early in observance of the Sabbath), and was given no opportunity to discuss the requested accommodation with the employer, that termination is unlawful. Although the employer may not be required to provide an accommodation, the opinion letter again notes that if the employer does not act on the request, it will be difficult to show that the accommodation would pose an undue hardship.

These hypotheticals provide clearer guidance on the protections for religiously observant employees and clarify the freedom many employees must be afforded for expressing potentially controversial religious views. However, given the incoming new Administration, it is unclear whether this opinion letter and other developments regarding the religious exemption will be amended or even rescinded. Further, it is unclear whether OFCCP under the new Administration will continue to issue opinion letters. The practice was introduced in 2018, but in subsequent years has resulted in only a handful of opinion letters.

We will continue to report on note-worthy opinion letters as they become available as well as other OFCCP developments.

OFCCP Proposes Accommodations and Promotions Focused Review Scheduling Letters

As we previously reported, when OFCCP released its latest Corporate Scheduling Announcement List (“CSAL”) in September 2020, it identified contractors selected for the agency’s new reviews focused on promotions and accommodations.  Little was known about the reviews, although the agency provided some additional detail later that month when it launched two websites devoted to the new focused reviews.

However, the agency was not able to initiate such focused reviews as it had not proposed or received approval of scheduling letters for the reviews.  The agency has now begun that process, submitting to the Office of Management and Budget (“OMB”) proposed scheduling letters for the two new reviews.

The proposed scheduling letters must still be approved by the OMB before OFCCP may use them to schedule the new focused reviews.  Given the upcoming change in Administration, it is difficult to predict when, or even if, these letters will be approved, and what changes may be implemented in any final versions.  However, contractors selected for these reviews should be familiar with and follow developments regarding these letters as they provide the first real sense of the burden associated with such audits.

Below we summarize some of the key components of the proposed letters.  As discussed, the proposed letters seek information from contractors that go well beyond the stated focused purpose of the reviews and differ from the narrow scope of other focused review scheduling letters.  From this it appears these new focused reviews may be more like traditional establishment reviews with some additional lines of inquiry.  We will continue to monitor and report on this and other noteworthy OFCCP developments.

Proposed Accommodations Focused Review Scheduling Letter

OFCCP’s website on Accommodations Focused Reviews states that these reviews will look at review “contractor’s policies and procedures related solely to religious and disability accommodations.”  However, the scheduling letter seeks a plethora of materials and information that go well beyond this narrow stated scope.  Notable documents and information the proposed letter seeks to require contractors to submit, include:

  • A copy of their Executive Order 11246, Section 503 and VEVRAA AAPs;
  • Analyses of utilization of individuals with disabilities;
  • Information on contractors’ Executive Order 11246 affirmative action goals and progress toward goals;
  • Applicant, hiring, promotion and termination data. In addition to promotions data, contractors must include “a definition of ‘promotion’ as used by [their] company and the basis on which [the promotions] were compiled (e.g. promotions to the job group, from and/or within the job group, etc.).”
  • Compensation data; and
  • Copies of reasonable accommodation policies and documentation of any accommodation requests received and their resolution.

Proposed Promotions Focused Review Scheduling Letter

Similarly, the proposed Promotions Focused Review Scheduling Letter seeks information that goes beyond OFCCP’s prior statements concerning the scope of these new reviews.  On its website, OFCCP informed contractors these reviews would examine “contractor data, policies, and procedures related to promotions to ensure that federal contractors are meeting their equal employment opportunity obligations.”  However, like the proposed accommodations focused review scheduling letter, the proposed promotions focused review scheduling letter seeks to have contractors submit data and documents that go well beyond the stated focus of the review, such as hiring and termination data, and detailed compensation data.

Check back here for more information on the proposed scheduling letters and new accommodations and promotions focused reviews.

Join Our Annual OFCCP Year-in-Review Webinar

On Thursday, January 7, 2021, we will host our annual webinar, reviewing the significant Office of Federal Contract Compliance Programs (OFCCP) developments from last year and looking forward to what federal contractors can expect from the OFCCP in 2021. Partner Guy Brenner and labor economist Dr. Rick Holt, a Partner at Resolution Economics, will address topics ranging from new regulations and initiatives, to the latest trends in compliance evaluations, including:

  • The Combatting Race and Sex Stereotyping Executive Order and new OFCCP Hotline
  • New Regulations on PDNs and NOVs and Guidance on Non-Binary Employees
  • New Scheduling Letters
  • New Promotions and Accommodations Focused Reviews
  • Lessons learned from recent OFCCP settlements and litigation
  • Anticipated developments in 2021 under the Biden Administration

Click here to register and find more information.

Court Enjoins Enforcement of Combatting Race and Sex Stereotyping Executive Order for Federal Contractors and Grantees

Quick Hit:

On December 22, 2020, a federal judge issued a nationwide preliminary injunction enjoining sections of President Trump’s recent “Combatting Race and Sex Stereotyping” Executive Order (the “Executive Order”) that limit government contractors’ anti-discrimination and diversity trainings.  The injunction prohibits the Defendants from enforcing the Executive Order as it pertains to federal government contractors and grantees.

Key Takeaways:

The Executive Order has garnered a lot of attention and raised significant concerns among federal government contractors and grantees.  The Court’s Order gives these stakeholders some relief.  However, the Judge’s ruling is not a final adjudication.  Although the government is currently prohibited from enforcing the sections of the Executive Order applying to federal contractors and federal grantees, unless and until a final injunction is issued or the Executive Order is rescinded, contractors and grantees may still have to deal with the Executive Order in the future.

More Detail:

As we previously reported, LGBT advocacy groups filed this lawsuit challenging the Executive Order, and alleged that the Executive Order “plainly discriminates against speech on the basis of . . . content and viewpoint . . . and constitutes a clear violation of the First Amendment.”  Plaintiffs sought a preliminary injunction, which Judge Beth Labson Freeman of the United States District Court for the Northern District of California granted.

In conducting its analysis, the Court applied a balancing test, weighing the government’s interests as a federal contractor against the Plaintiffs’ First Amendment rights.  When a government entity is acting in its role as an employer, as is the case here, it has “broader discretion to restrict speech;” however, the restrictions “must be directed at speech that has some potential to affect the entity’s operations.”  Here, the Court found that the Government’s interest was outweighed by the effect of the Executive Order on the Plaintiffs’ “freedom to deliver the diversity training and advocacy that they deem necessary to train their own employees.”  Further, the Government has conditioned grant funding “on a speech restriction that is outside the confines of the grant program.”  The Court ruled that the prohibition goes too far to restrict speech, as the Executive Order effectively curtails the voices of scholars and intellects and “inhibits th[e] advancement” of “intellectual progress.”

With respect to the Plaintiffs’ allegations that the Executive Order is unconstitutionally vague, the Court not only agreed that the Executive Order contains much ambiguity with respect to what conduct is prohibited, but also noted that “the Government’s own interpretation of the reach of the Executive Order provides even more uncertainty about the scope of prohibited conduct.”  As such, the Court found that the Plaintiffs’ met their burden in demonstrating the Executive Order’s vagueness.

Ultimately, because the Plaintiffs were able to show that the Executive Order has a “significant adverse impact on their organizations and clients,” and the Government was not able to show that a preliminary injunction would “prejudice it or harm the public interest,” the Court granted Plaintiffs preliminary injunctive relief.

We will continue to advise our readers of any further noteworthy developments in this lawsuit.

OFCCP Issues Certainty Directive

Quick Hit:  On December 15, 2020, OFCCP announced the release of Directive 2021-02, Certainty in OFCCP Policies and Practices (the “Directive”).  The Directive generally “reaffirms” a number of certainty initiatives previously announced in agency publications, such as timely and efficient progress of compliance evaluations, professional conduct by OFCCP staff, and neutral scheduling of compliance evaluations.  The only additional commitments made by the agency in the Directive are to conduct ongoing reviews of its policies and practices to ensure they are clear and certain to the stakeholder community, and to provide a process by which contractors can seek clarification or disclosure of a policy or practice to ensure greater certainty.

More Detail:  In 2018, OFCCP adopted the principles of Certainty, Efficiency, Recognition, and Transparency (the “CERT Principles”).  OFCCP subsequently issued three directives related to the CERT Principles – Directive 2018-03, Transparency in OFCCP Compliance Activities, Directive 2018-06, Contractor Recognition Program, and Directive 2020-02, Efficiency in Compliance Evaluations.  The Directive is the final directive related to the four CERT Principles. Its stated purpose is “[t]o reaffirm OFCCP’s commitment to a number of certainty initiatives and principles, and establish a process to facilitate the continued provision of clarity and certainty in OFCCP policies and practices.”

The Directive incorporates and attaches guidance the agency previously published entitled “What Federal Contractors Can Expect” (referred to as the “Contractors Bill of Rights”).  In that document, OFCCP set forth the following eight commitments:

  1. Access to Accurate Compliance Assistance Materials
  2. Timely Responses to Compliance Assistance Questions
  3. Opportunities to Provide Meaningful Feedback and Collaborate
  4. Professional Conduct by OFCCP’s Compliance Staff
  5. Neutral Scheduling of Compliance Evaluations
  6. Reasonable Opportunity to Discuss Compliance Evaluation Concerns
  7. Timely and Efficient Progress of Compliance Evaluations
  8. Confidentiality

Accordingly, the Directive does little more than repackage prior commitments in a more formal way.  The Directive, does however, break some new ground, providing that “the agency is now adding a commitment to conduct ongoing reviews of its policies and practices to ensure they are clear and certain to the stakeholder community, and to provide for a process by which a member of the stakeholder community can seek clarification or disclosure of a policy or practice to ensure greater certainty.”

The Directive also highlights the following agency actions as evidence of its focus on increasing certainty:

The promulgation of the agency’s final rule on Nondiscrimination Obligations of Federal Contractors and Subcontractors: Procedures to Resolve Potential Employment Discrimination.

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