Government Contractor Compliance & Regulatory Update

New OFCCP Directive Introduces Early Resolution Procedures For Compliance Evaluations

Quick Hit: OFCCP’s new Directive 2019-02 sets forth Early Resolution Procedures (“ERP”) to resolve violations discovered during a desk audit of contractors with multiple establishments.  OFCCP touts that “ERP allows OFCCP and contractors with multiple establishments to cooperatively develop corporate-wide compliance with OFCCP’s requirements.”  Contractors who successfully resolve violations through ERP will be spared full scale compliance evaluations, but will have to agree to conciliation agreements that will include five years of monitoring and commitments to rectify similar issues at some or all of the contractor’s other establishments.  In return, contractors will receive a five-year moratorium on compliance evaluations of some or all of their establishments.

Key Takeaway: The Directive makes a lot of sense – for OFCCP.  ERP provides OFCCP a way to obtain a conciliation agreement rectifying violations without having to expend the resources required for a full compliance evaluation.  In addition, ERP provides OFCCP a way to get contractors to address violations at establishments beyond the one at issue in the compliance evaluation.

It is far less clear, however, if ERP makes sense for contractors.  On the plus side, contractors who conciliate through ERP will be able to short-circuit intrusive and costly compliance evaluations – including onsite visits and extensive (and often disruptive) employee interviews by OFCCP.  ERP also provides, in some cases, for a moratorium from compliance evaluations for five years – which any contractor would welcome.  Finally, ERP provides a mechanism to understand early in a compliance evaluation the issues on which OFCCP is focused, and an opportunity to correct any misunderstandings in advance of an onsite inspection.

But, the benefits come at a cost – primarily in the form of monitoring periods and mandated status reports – in some cases for a period of five years.  Moreover, in only some cases will the compliance evaluation moratorium apply to more than just one of the contractor’s establishments.

As with all OFCCP initiatives, whether the Directive is a welcome development will depend on how it is implemented and the circumstances involved.

More Detail: On November 30, 2018, OFCCP issued the Directive establishing ERP.  The ERP aim to “reduce the length of compliance evaluations through early and efficient resolutions,” in a manner that “maximizes OFCCP resources.”  ERP provide contractors with multiple establishments the opportunity, if offered by OFCCP, to resolve compliance violations on a company-wide or multi-establishment basis prior to the issuance of a Predetermination Notice or Notice of Violation, and without being subjected to an onsite visit.

The Directive sets out three sets of ERP:

 1. Non-Material Violations. The Directive anticipates that “non-material problems that can be corrected immediately during a desk audit” will be addressed through a closure letter referencing “the non-material violations and their remedies.”  Such non-material problems” include “an unacceptable AAP element” and “lack of good faith efforts.”  The Directive notes that this approach is consistent with OFCCP’s current practices.

2. Material Violations: Non-Discrimination. The Directive calls for OFCCP to seek to address more substantive violations that do not involve discrimination identified during a desk audit of a specific establishment, such as those associated with “record keeping, applicant tracking, failure to implement audit and reporting systems, and failure to conduct self‐analysis,” through an “Early Resolution Conciliation Agreement with Corporate‐Wide Corrective Action” (“ERCA”).  ERCAs, if agreed to by the contractor, will require the contractor to review its remaining establishments or a negotiated subset for similar violations and, if necessary, “implement corrective actions at those establishments to eliminate the violations(s) and prevent recurrence.”  ERCAs will require “progress reports,” in which the contractor “will report the results of its analysis, findings, any corrective actions, and will provide OFCCP with all supporting documents and information reasonably related to such a review.”

If a contractor enters into an ERCA for this type of violation, “OFCCP will not schedule a new compliance evaluation at that particular establishment for a five‐year period from the effective date of the ERCA.”  But that establishment “will be under progress report monitoring for part of the five‐year period,” and other establishments may be scheduled for compliance evaluations – even if they are covered by the ERCA.

3. Material Violations: Discrimination. If material discrimination violations are found during a desk audit, the violations may be resolved through a multi-step approach.  First, the compliance officer will promptly discuss the “desk audit findings and potential for ERP resolution” with OFCCP district and regional office management.

If the compliance officer receives approval, the officer will contact the contractor to schedule “essential” interviews “by phone or videoconference” to assess the violations, as well as data in order to “identify potential affected applicants and/or employees, and calculate the estimated monetary remedy.” The Directive anticipates that contractors will be provided 14 days to provide requested information.  After OFCCP receives the information, it is to “expedite and seek to complete a refined analyses in 14‐calendar days.”  If the analyses still indicate potential discrimination, the compliance officer, Assistant District Director and/or District Director will contact the contractor to offer the ERP option.”

If the contractor seeks to engage in ERP, it must meet with OFCCP within 14-calendar days of agreeing to do so. During that meeting, the parties will discuss “OFCCP’s findings, proposed remedy, and corrective actions.” The contractor is free to provide OFCCP additional information that it contends mitigates or eliminates the discrimination indicators found by OFCCP.

As part of this ERP conciliation, OFCCP will seek “make‐whole relief for affected class members, which may include back pay, job offers to affected class members that OFCCP has found to meet minimum/preferred qualifications, salary adjustments and/or other appropriate remedies and corrective actions.”  Any ERCA reached will require the contractor to review all, or a negotiated subset, of its remaining establishments for similar violations, and implement any necessary “corrective actions at those establishments to eliminate the violations(s) and prevent recurrence.” Corrective actions “may include job offers to affected class members that OFCCP has found to meet certain qualifications, salary adjustments and/or other appropriate corrective actions.”

ERCAs will include a five-year monitoring period where contractors will submit semi-annual progress reports to OFCCP.  In such reports, “the contractor will report the results of its analysis, findings, any corrective actions, and will provide OFCCP with all supporting documents and information reasonably related to such a review.”  For contractors that enter into an ERCA, “OFCCP will not schedule any of the contractor’s establishments covered by the ERCA for a new compliance evaluation for the five‐year period, concurrent with monitoring, from the effective date of the ERCA.”

OFCCP anticipates that ERP conciliation efforts should be completed within two months, but provides that OFCCP can provide extensions if the parties are “making substantial progress towards an agreement”

Resolving the matter at this stage with an ERCA will avoid further investigation by OFCCP, including an onsite visit. However, if conciliation efforts fail during the ERP, “OFCCP will immediately request any additional data and records it needs to continue the compliance evaluation.”

OFCCP Rescinds Active Case Enforcement Procedures

Quick Hit:  Office of Federal Contractor Compliance Programs (“OFCCP”) has issued Directive 2019-01 (the “Directive”), which rescinds Directive 2011-01 which established OFCCP’s now-defunct Active Case Enforcement or “ACE” policy.  Through ACE, OFCCP conducted fewer but more intensive compliance evaluations of government contractors.  In issuing the Directive, OFCCP is formally ending ACE, while adopting an approach it contends keeps the better components of ACE while allowing OFCCP to conduct more compliance evaluations in a more efficient manner.

Key Takeaway:  ACE has never been viewed positively by contractors, and with the new Directive OFCCP has signaled that it too is done with at least some portions of ACE.  The Directive is consistent with OFCCP’s recent statements about bringing a practical and efficient approach to compliance evaluations.  OFCCP has long lamented that very few of all compliance evaluations end with a notice of violations.  Accordingly, it is not surprising that OFCCP has elected to streamline its compliance evaluation processes.  Doing so should permit OFCCP conduct more compliance evaluations and focus its attention on truly problematic contractors, while not wasting its limited resources on compliant contractors.  Hopefully contractors experiencing compliance evaluations will experience more stream-lined, less costly and less burdensome compliance evaluations as a result of the Directive.

However, contractors should not take the Directive to mean that OFCCP compliance evaluations will now be just a “rubber stamp.”  The Directive makes clear that elements of ACE still live on in the 2014 amendments to the Federal Contractor Compliance Manual (“FCCM”) and other OFCCP directives.  And with the Directive, OFCCP has expressly stated it expects to conduct more compliance evaluations.  From what we can tell at this time, conscientious contractors should probably face shorter, less painful audits, whereas contractors that neglect their OFCCP obligations will face compliance evaluations that look a lot like ACE.

More Detail:

On November 30, 2018, OFCCP issued the Directive, which rescinds the former ACE Directive 2011-01 (the “ACE Directive”).  As the Directive notes, the ACE was introduced in 2010 to replace OFCCP’s Active Case Management (“ACM”) policy, “which focused enforcement efforts on cases with indicators of systemic discrimination under the Executive Order, through abbreviated and generally shorter desk audits.”  Under the ACE Directive, OFCCP was required to conduct “full OFCCP desk audits under all three legal authorities” (Executive Order 11246, Section 503 of the Rehabilitation Act, and the Vietnam Era Veterans’ Readjustment Assistance Act (“VEVRAA”).  “As a quality control measure, the ACE directive increased the frequency of a mandatory onsite review, from every 50th scheduled contractor establishment to every 25th establishment.”  A side effect of the ACE was that the “overall processing time [of compliance evaluations] increased.”

The Directive explains that the OFCCP “has embedded valuable components of ACE and the prior Active Case Management (“ACM”) policy into its standard operating policies and procedures and updated the FCCM.”  Further, the Directive explains that the “OFCCP began posting its [Supply and Service] scheduling list methodology on its website” and “proactively discloses how it neutrally selects contractor establishments for a compliance evaluation, including the frequency of mandatory onsite reviews for quality control purposes.”  According to the Directive, the OFCCP has also “established procedures to shorten the time to complete a full desk audit and encouraged a collaborative approach during conciliation to resolve issues more quickly.”  The OFCCP also recently announced “efforts to monitor compliance through AAP verification and compliance checks,” which, according to the Directive, further supports the basis to rescind the ACE Directive.

As such, OFCCP is retaining certain elements of ACE, but streamlining the process.  No longer will every compliance evaluation include a full desk audit; nor will there be a mandated formula for determining onsite reviews.  To be clear, the Directive anticipates more compliance evaluations – not fewer – but that the compliance evaluations will be more efficient.  As the Directive puts it, “OFCCP is maximizing its resources by proceeding with the most effective aspects of ACM and ACE,” negating “the need for the ACE directive as a freestanding guidance document.”

OFCCP Introduces New Directive Enhancing Compliance Guidance Programs For Contractors

Quick Hit:  The Office of Federal Contractor Compliance Programs (“OFCCP”) issued Directive 2019-03 (the “Directive”), which announces two steps the agency will take to enhance compliance assistance for contractors.  OFCCP will now make “certain Help Desk inquires and responses dynamically available and searchable as a self‐service option on OFCCP’s website.”  OFCCP will also begin using Opinion Letters to provide guidance to the contracting community in response to fact-specific inquiries from contractors and their employees.  The Directive envisions that these changes will provide a resource for contractors, thereby enhancing compliance.

Key Takeaway:  Contractors have legitimately complained of the dearth of OFCCP guidance.  This deficiency has hindered contractors in their efforts to comply with OFCCP regulations, and given OFCCP compliance officers too much leeway during compliance evaluations to dictate often shifting interpretations of what OFCCP regulations require.  The publication of Help Desk questions and answers and the introduction of Opinion Letters should provide contractors guidance regarding their compliance obligations, and something upon which to rely in defending their practices during compliance evaluations or enforcement actions.  As such, the Directive is a welcome development.

However, like all of the new initiatives announced by OFCCP in the past year, whether this Directive ends up living up to its promise depends on OFCCP’s execution.  If the Directive results in clear, unambiguous guidance to contractors’ vexing questions, it will be a true positive development.  If, however, the guidance provided through the Help Desk and Opinion Letter publications is vague, equivocal, or otherwise unclear, it will prove to be of no use to contractors – and could even make their compliance obligations even more challenging.

We will monitor the Help Desk and Opinion Letter publications and provide any noteworthy developments to our readers.

More Detail:  On November 30, 2018, OFCCP introduced the Directive, which aims to further develop the OFCCP’s Help Desk and commence OFCCP’s use of Opinion Letters.  The stated purpose of the Directive is to “provide additional compliance assistance and guidance regarding OFCCP’s laws and regulations in a manner that employees and employers can easily access and reasonably rely upon, as they seek to understand their rights and obligations under the law.”

OFCCP currently operates a Help Desk.  According to the Directive, the Help Desk is a very popular resource, which has received 2,664 inquiries in the first three quarters of FY 2018.  Apparently recognizing that many contractors and employees have the same questions, OFCCP seeks to enhance the utility of the Help Desk by making certain inquiries and their responses available online in a dynamically searchable database.

The OFCCP also plans to institute the use of Opinion Letters, a tool that has long been used by other divisions of the U.S. Department of Labor.  Contractors can request “[f]act‐specific guidance about OFCCP’s jurisdictional coverage or application of guidance,” to which OFCCP may publicly issue a response in the form of an Opinion Letter.  Additionally, if the OFCCP receives certain Help Desk questions that are deemed worthy of an Opinion Letter, it may decide to publish an Opinion Letter on that topic.  Perhaps most importantly, “[a]s a matter of prosecutorial discretion, OFCCP also would consider whether a contractor acted consistently with an Opinion Letter, Directive, FAQ or Help Desk answer when determining whether to cite a violation for related actions.”  Accordingly, Opinion Letters will have some teeth – but they will not be legally binding.

Although the Directive is effective as of November 30, 2018, OFCCP still has many action items to complete before the full benefits of the improved Help Desk and Opinion Letters will be realized, such as the establishment of a process for issuing Opinion Letters and development of a “dynamic and searchable publicly available source of Help Desk questions and answers while preserving the anonymity of requestors.”  Nevertheless, this Directive appears to be a positive development which, when fully implemented, should provide contractors with helpful guidance as they work to comply with OFCCP regulations.

OFCCP Seeks The “Carrot” Approach With Two Contractor Recognition Programs

Quick Hit: The Office of Federal Contractor Compliance Programs (“OFCCP”) is seeking to establish two new contractor recognition programs, which would promote contractors with sound compliance programs and provide temporary relief from compliance reviews and desk audits. First, OFCCP has proposed an Excellence in Disability Inclusion Award (the “Disability Inclusion Award”), which aims to “highlight successful practices and strategies of contractors that have expanded and improved recruitment, hiring, retention, and promotion opportunities for individuals with disabilities.”

Second, the OFCCP announced a new Leadership in Equal Access and Diversity Award (the “LEAD Award”), which “recognize[s] contractor best practices in comprehensive equal employment opportunity and nondiscrimination programs” by identifying “contractors that go above and beyond in creating and implementing programs of inclusion and fair treatment in the workplace, regardless of race, color, sex, sexual orientation, gender identity, religion, national origin, disability, or status as a protected veteran, and recognize the importance of fairness in compensation practices and pay transparency.”

The proposals provide that awardees of the Disability Inclusion Award and LEAD Award will receive a two and three year moratorium, respectively, from scheduled compliance evaluations. Both Awards must be approved by the Office of Management and Budget (“OMB”) and are open for notice and comment through December 4, 2018 for the Disability Inclusion Award and December 18, 2018 for the LEAD Award.

Key Takeaways: In proposing the Awards, OFCCP is seeking to provide contractors with an incentive to implement innovative diversity and inclusion programs in their workplaces. Although providing proverbial carrots to encourage compliance is a welcome approach, the burden associated with applying for the awards appears likely to undermine the awards’ purpose. To be considered for either award, contractors will have to submit to an application process which will demand significant amounts of information and specific future commitments if they receive an award. Additionally, the LEAD Award requires that awardees undergo a compliance evaluation prior to receiving the award if the contractor has not undergone a desk audit in the past two years.

Thus, while the programs seem like a step in the right direction, the programs may not provide sufficient incentive for contractors to engage in creative diversity and inclusion programs. Contractors may view the burden associated with applying for such awards as not being worth the effort, particularly given the small number of awards that OFCCP plans to issue each year. Given that the OFCCP’s planned Affirmative Action Verification Program  would reduce the likelihood compliant contractors will subject to a compliance evaluation, many contractors may find the burden of the awards process outweighs the potential benefit of receiving an award.

That being said, contractors that pride themselves on creating and implementing creative diversity and inclusion programs will likely find the prospect of obtaining an award from OFCCP to be a valuable and effective way to demonstrate to the community their commitment to diversity and inclusion.

More Detail:

Excellence in Disability Inclusion Award

On October 5, 2018, the OFCCP announced its desire to offer the Excellence in Disability Inclusion Award (the “Disability Inclusion Award”) in order to encourage contractors to focus on disability inclusion efforts. The initiative is proposed as part of a partnership between OFCCP and the Office of Disability Employment Policy (“ODEP”). According to OFCCP’s announcement, “OFCCP and ODEP seek to recognize contractors that are going above and beyond to foster employment opportunities for individuals with disabilities.” Recipients of the Disability Inclusion Award would be provided a two-year moratorium on compliance evaluations.

OFCCP’s proposal, which is subject to approval by the OMB, sets forth various prerequisites for the Disability Inclusion Award. To be considered for the Disability Inclusion Award, contractors must:

1. Have current Affirmative Action Programs (“AAPs”) for women and minorities, veterans and individuals with disabilities;

2. Have active equal employment opportunity and affirmative action programs;

3. Have no unresolved violations of Section 503, Executive Order 11246 or the Vietnam Era Veterans’ Readjustment Assistance Act (“VEVRAA”);

4. Have no adverse decisions by a court, Administrative Review Board, or Administrative Law Judge related to violations of Section 503 and Executive Order 11246, VEVRAA, or the Americans with Disabilities Act (“ADA”);

5. Not be covered by another OFCCP compliance evaluation moratorium; and

6. Not have received a Disability Inclusion Award in the past two years.

To apply for a Disability Inclusion Award, contractors must submit a detailed application to the OFCCP containing:

1. Specific information about the contractor and its compliance programs;

2. A statement of support (subject to specific criteria) from the contractor’s CEO or President and the contractor’s highest ranking executive responsible for overseeing the contractor’s Equal Employment Opportunity/Affirmative Action (“EEO/AA”) Program, containing a number of commitments and certifications including:

  • Agreement to participate in a public service announcement “on the importance of contractor compliance with OFCCP’s regulations and that generally aligns with ODEP’s broad goal of developing and validating policy strategies and effective practices for increasing employment opportunities for individuals with disabilities”:;
  • Acknowledgment “that the nominated contractor establishment, if selected for an award, will work with OFCCP and ODEP in a peer-to-peer mentoring program to support contractors as they seek to comply with OFCCP regulations”;
  • Agreement to “develop and/or provide input into the development of technical assistance, outreach, and model practices for use by other employers, including federal contractors, as a part of the compliance and technical assistance programs offered by OFCCP and ODEP”; and
  • Certification “that the nominated contractor establishment is currently in compliance with its Section 503 and EO 11246 obligations, and VEVRAA if applicable, and has no unresolved (i.e., violations that are in litigation, violations in an open conciliation agreement, and violations in a pending compliance review) OFCCP violations”.

3. A statement of support (subject to specific criteria) from at least two job applicants or employees who directly benefited from the contractor’s diversity inclusion program or initiative;

4. A copy of the contractor’s current AAP for individuals with disabilities;

5. Specified data from the previous two AAP years relating to the contractor’s outreach efforts, utilization analyses, computation supporting these analyses and documentation regarding compliance efforts; and

6. A detailed description (subject to specific criteria) of the EEO/AA program or initiative that the contractor establishment implemented for individuals with disabilities.

As proposed, each year, the OFCCP will select only two small contractor awardees (100 or less employees) and two large contractor awardees (more than 100 employees).

The Disability Inclusion Award proposal is open for notice and comment through December 4, 2018. Comments may be submitted electronically at www.regulations.gov and via mail to:

Harvey D. Fort, Acting Director, Division of Policy and Program Development, Office of Federal Contract Compliance Programs, 200 Constitution Avenue NW, Room C-3325, Washington, DC 20210

Leadership in Equal Access and Diversity Award

On October 19, 2018, the OFCCP announced its partnership with the Women’s Bureau to propose the Leadership in Equal Access and Diversity Award (the “LEAD Award”). The LEAD Award, unlike the Disability Inclusion Award, is broadly focused on the full scope of a contractor’s inclusion program and practices. The LEAD Award is available to supply and service (non-construction) contractors that “have developed and successfully implemented comprehensive equal employment opportunity and nondiscrimination programs.”

The LEAD Award specifically aims to promote contractors with inclusion programs recognizing the “importance of fairness in compensation practices and pay transparency, and reflect the value of having active partnerships with community-based organizations.” Because of this, LEAD Award recipients must “must demonstrate sound policies, practices, and strategies for outreach and recruitment, hiring decisions, training and advancement, compensation, retention, and other employment activities.”

Similar to the Disability Inclusion Award, contractors must meet several eligibility requirements to qualify for a LEAD Award. A contractor must:

1.  Have current AAPs for women and minorities, veterans and individuals with disabilities;

2. Have no adverse decisions by a court, Administrative Review Board, or Administrative Law Judge related to violations of Section 503 and Executive Order 11246, VEVRAA, the ADA, Title VII related to employment discrimination, or the Equal Pay Act in the past three years;

3. Have no open conciliation agreements, consent decrees, pending litigation, or open enforcement actions for an OFCCP violation;

4. Not currently be undergoing a compliance review by OFCCP;

5. Either have undergone an OFCCP compliance evaluation within the past two years or undergo a desk audit before its selection is final;

6. Not be covered by another OFCCP compliance evaluation moratorium; and

7. Not have received a LEAD Award in the past two years.

Eligible contractors must submit an extensive nomination package to be considered for the LEAD Award, which must contain:

1. Specific information about the contractor and its compliance programs;

2. A statement of support (subject to specific criteria) from the Contractor’s CEO or President and the contractor’s highest ranking executive responsible for overseeing the contractor’s Equal Employment Opportunity/Affirmative Action (“EEO/AA”) Program, which must include the following:

  • A commitment “to develop and/or provide feedback on the development of technical assistance, outreach, best practices, and lessons learned materials for use by other employers as a part of the compliance and technical assistance programs offered by DOL’s OFCCP, and Women’s Bureau (WB) for a period not to exceed 12 months”;
  • A “certification that the nominated contractor establishment is in compliance with its EO 11246, Section 503, and VEVRAA obligations, and has no pending or open violations, open conciliation agreements, or pending litigation involving OFCCP”; and
  • A “certification that the nominated contractor establishment has no adverse decisions by a court, ARB, or ALJ for the past three years, and or is not currently under monitoring for a violation of EO 11246, Section 503, VEVRAA, discrimination under Title VII, ADA, or the Equal Pay Act”;

3.  A description (subject to specific criteria) of the structure and operation of the establishment’s EEO/AA programs, and how those programs supported compliance with EO 11246, Section 503, and VEVRAA; and

4. Copies of the establishment’s AAPs for EO 11246, Section 503, and VEVRAA for the current year and the two years prior to the application.

The OFCCP will award six LEAD Awards per year (one from each of OFCCP’s regions). After receiving the LEAD Award, contractors are obligated to participate in various programs with the OFCCP aimed at improving compliance in the contracting community. LEAD Award recipients also receive a three (3) year moratorium on compliance evaluations.

As with the Disability Inclusion Award, the LEAD Award is subject to approval by the OMB after the notice and comment period closes. Comments must be submitted no later than December 18, 2018. Comments may be submitted electronically at www.regulations.gov and via mail to:

Harvey D. Fort, Acting Director, Division of Policy and Program Development, Office of Federal Contract Compliance Programs, 200 Constitution Avenue NW, Room C-3325, Washington, DC 20210

 

Trump Administration OFCCP Continues To Obtain Large Recoveries From Contractors in FY18

Quick Hit: Data released by OFCCP shows the agency obtained $16.4 million in monetary relief for roughly 12,000 class members in FY 2018. While that is a drop from the record year recovery of $23.9 million in FY 2017, it is much higher than $10.5 million obtained in FY 2016 and $6 million obtained in FY 2015. In addition, based on statements  made by OFCCP Acting Director Craig Leen, FY 2019 could set new financial recovery records.

Key Takeaway: Reports of OFCCP’s demise under the Trump Administration have been greatly exaggerated. Indeed, the predictions of many that contractors would face little OFCCP scrutiny or enforcement under the Trump Administration has not come to pass. OFCCP continues to engage in compliance evaluations and it has managed to obtain significant recoveries despite initiating only one enforcement proceeding during the Trump Administration.

And while FY 2018 recoveries were less than those of FY 2017, FY 2019 is shaping up to be a record year for OFCCP in terms of monetary recoveries. Reports indicate that the agency already has obtained over $5 million in contractor settlements in the less than two months since FY 2019 began.

To the extent contractors continue to harbor any illusions that OFCCP is not taking its enforcement obligations seriously, these latest statistics should wake them up to the sobering reality that they should take their compliance obligations seriously or risk significant monetary and other consequences.

More Detail: The Labor Department’s Fiscal Year 2018 ended on September 31, 2018, with the OFCCP releasing its statistics on monetary relief obtained from settlements reached with federal contractors. The agency obtained $16.4 million in FY 2018. While that is a drop from the record year recovery of $23.9 million in FY 2017, it is much higher than $10.5 million obtained in 2016 and $6 million obtained in 2015.

The FY 2018 financial recovery consists of the OFCCP’s settlement of 58 discrimination, 18 pay discrimination and 18 systemic pay discrimination cases. These settlements covered more than 12,000 employees and job applicants. By way of comparison, these numbers were lower in the previous year, with the agency reportedly settling 47 discrimination, 19 pay discrimination and 16 systemic pay discrimination cases covering 11,653 employees.

OFCCP Enters Into MOU With Employer Group

Quick Hit: OFCCP has entered into a memorandum of understanding (the “MOU ”) with the National Industry Liaison Group (the “NILG”), a non–profit employer association that focuses on affirmative action and equal employment opportunity. The MOU is aimed at facilitating communications between OFCCP and the NILG in an effort to improve contractor compliance with OFCCP requirements as well as providing a mechanism to share contractor concerns with the agency.

Key Takeaway: Since the beginning of the Trump Administration, OFCCP has repeatedly stated that it is interested in improving relations with the government contractor community, increasing transparency, and balancing its enforcement efforts with those aimed at assisting contractors achieve compliance with its regulations. The MOU appears to be another example of the agency formalizing this commitment. Although the MOU is a welcome development and one that could provide contractors with greater clarity about their OFCCP obligations while also leading to welcome changes to the manner in which OFCCP implements its regulations, time will tell whether this initiative results in real, tangible benefits for government contractors.

More Detail:

The OFCCP and NILG entered into the MOU on August 27, 2018. The stated purpose of the agreement is to provide “a vehicle for exchanging information, obtaining feedback, and receiving advice from contractors” in order to “support contractor education and training; enable voluntary compliance with OFCCP’s regulations; and minimize, to the extent feasible, the cost of compliance by contractors.”

Among the goals of the MOU are: (1) coordination by the two organizations at both the national and local levels; (2) examination of “compliance challenges experienced by contractors”; (3) exploring “options for minimizing and eliminating operational, organizational and attitudinal barriers” contractors believe are impeding affirmative action and equal employment opportunities in their workplaces; and (4) improving OFCCP’s contractor education compliance tools and resources.

In order to achieve these goals, the OFCCP has committed, among other things, to:

  • Attend one annual meeting with the NILG Board;
  • Provide input and participating in the NILG’s annual national conference;
  • Make representatives available for at least one regional or local ILG meeting in each OFCCP region annually;
  • Engage in “various outreach initiatives that encourage all contractors, including NILG and local ILG members, to provide constructive feedback on OFCCP’s compliance evaluation process, education, outreach, and compliance assistance activities. OFCCP may reflect a consideration of this feedback in the development of contractor–focused activities”;

The NILG’s commitments include:

  • Using the annual meeting with OFCCP’s national office to discuss contractor concerns regarding OFCCP’s evaluation process and improving training and education;
  • Working with OFCCP to work cooperatively with OFCCP regarding its annual NILG conference and local ILG meetings;
  • Informing its Board members and local ILG members of OFCCP initiatives, opportunities to provide OFCCP feedback, and OFCCP-sponsored compliance assistance programs;

OFCCP Proposes New FAAP Directive

The Office of Federal Contractor Compliance Programs (“OFCCP”) is seeking approval to change its Functional Affirmative Action Program  (“FAAP”) requirements. The proposed directive, for which comments are due by November 13, 2018, proposes sweeping changes to the current FAAP directive, with the stated aim of encouraging contractors to use FAAPs. Continue Reading

OFCCP Announces Contractor Recognition Program

The Office of Federal Contractor Compliance Programs (“OFCCP”) has announced though Directive 2018-06 (the “Directive”) the development of a Contractor Recognition Program, which aims to “recognize contractors with high-quality and high-performing compliance programs and initiatives.” The Contractor Recognition Program arises out of feedback the OFCCP received from the contracting community in 2017 and 2018.

While the Contractor Recognition Program is still under development, the Directive provides some indication as to what contractors can expect. The Directive states that the OFCCP is currently developing “a contractor recognition program that highlights implementable best or model contractor practices, a contractor mentoring program that uses contractors to help their peers improve compliance, and other initiatives that provide opportunities for contractors to collaborate or provide feedback to OFCCP on its compliance assistance efforts.”

OFCCP Issues Directive Announcing Ombud Service

Quick Hit: OFCCP has announced its intention to create an Ombud Service. The new service will create a new position within the OFCCP, the “Ombud,” who will serve as a contact for contractors seeking to raise concerns or suggestions about OFCCP.

Key Takeaways:

  • The Ombud Service represents another example of OFCCP working to implement initiatives identified in its Town Hall Action Plan. With its flurry of recent Directives, OFCCP is taking steps to show contractors that it is responsive to their concerns.
  • The OFCCP’s new Directive merely announces the creation of the service in the future. In principle, the idea of an Ombud Service makes sense. It would provide contractors with an avenue to raise concerns and address perceived unfair conduct by compliance officers. However, until we see the details of the program it is difficult to predict how useful it will be.
  • One detail that will portend the effectiveness of the new service is how it handles confidentiality. Although the Directive recognizes that contractors are concerned that raising issues with the agency could lead to retribution, the Directive does not contain any statements regarding how the Ombud Service will protect the identities of contractors raising concerns. Whether and to what extent OFCCP can provide contractors such assurances will be a key element of the program and perhaps the key determinant of its success.

More Detail: On September 19, 2018, OFCCP issued Directive 2018-09 (the “Directive”), which announces the “planned implementation of an Ombud Service in the national office to facilitate the fair and equitable resolution of specific types of concerns raised by OFCCP external stakeholders in coordination with regional and district offices.”

As explained in the Directive, OFCCP is creating the Ombud Service in response to recommendations made by the Government Accountability Office’s (“GAO”) September 2016 Equal Employment Opportunity: Strengthening Oversight Could Improve Federal Contract Nondiscrimination Compliance report, as well as contractor feedback received at Town Hall meetings held by OFCCP in 2017. The new service appears aimed at addressing the concern reported by the GAO that “[s]takeholders and contractors fear that asking OFCCP for assistance would call attention to them and possibly make them a target for future OFCCP enforcement actions, such as compliance evaluations.” It also aims to respond to concerns that the agency “does not have an independent mechanism through which external stakeholders, after having exhausted district and regional office channels, can share their concerns with OFCCP about a particular open matter or provide general feedback and recommendations to improve the administration of the agency.”

The Directive does not create the Ombud Service; rather it simply announces that OFCCP plans to implement such a service. The Ombud Service’s mission will be “to facilitate the fair and equitable resolution of concerns raised by OFCCP’s external stakeholders, conduct independent and impartial inquiries into issues related to the administration of the OFCCP program, and propose internal recommendations to continuously improve the quality of services OFCCP provides to its stakeholders.”

The Directive provides contractors with some details about what to expect from the new service. Per the Directive, the Ombud Service “should require the Ombud to:

  • Listen to external stakeholder concerns about OFCCP matters and suggestions for improvements;
  • Promote and facilitate resolution of OFCCP matters at the district and region office level;
  • Work with OFCCP district and regional offices as a liaison to resolve certain issues after stakeholders have exhausted district and regional office channels;
  • Refer stakeholders to the OFCCP Help Desk for routine compliance and technical assistance inquiries;
  • Accept and review matters referred directly by the national office; and
  • Have the discretion to reject a referral in appropriate circumstances.”

The Directive also makes clear that the Ombud Service “will not

  • Advocate for either side of a dispute;
  • Give legal advice, analysis, opinions, or conclusions;
  • Conduct compliance evaluations, complaint investigations or participate in conciliation agreement negotiations; and
  • Have any role in conduct or discipline issues regarding OFCCP staff.”

When more details about the Ombud Service are announced we will report them here.

 

OFCCP Issues New Directive Addressing “Transparency In OFCCP Compliance Activities”

Quick Hit: OFCCP has issued Directive 2018-08 (the “Directive”) which sets forth new policies and procedures for OFCCP compliance evaluations. The Directive contains numerous specific rules and procedures that compliance officers must follow at every phase of a compliance evaluation.

Key Takeaways:

  • The Directive provides contractors a better sense of what they can expect during a compliance evaluation. The rules contained in the Directive can be cited to during a compliance evaluation if (or when) compliance officers fail to abide by them. If your business is currently under a compliance evaluation, review the Directive and make sure your compliance officer is following its requirements. It may take some time before compliance officers are familiar with all of the Directive’s details.
  • The Directive reinforces the comments included in Directive 2018-07 that OFCCP expects contractors to have prepared their Affirmative Action Programs (“AAPs”) on time and be able to produce them to OFCCP within 30 days of receipt of a Scheduling Letter. The Directive makes clear that contractors should not expect to receive extensions of time on this deadline and should expect OFCCP to promptly issue show cause notices when this deadline is missed. In other words: Make Sure You Prepare Your AAPs Annually!
  • Contractors under audit should expect more transparency from OFCCP. For example, compliance officers must now provide specific explanations about what indicators of discrimination have prompted an onsite inspection, and share details underlying any Notice of Violation during the conciliation process – including regression analysis details supporting a pay discrimination finding.
  • If the Directive is followed, contractors under audit should expect to receive regular communications from their OFCCP compliance officer. The Directive requires compliance officers to communicate with contractors within 15 days of the issuance of the Scheduling Letter, after receiving the contractor’s AAP and supporting documentation in response to the scheduling letter (ideally within 5 days), and regularly thereafter (“ideally at least once every 30 days).
  • OFCCP appears to be listening to the contractor community. Many of the provisions in the Directive respond to concerns raised by contractors for years. That being said, the Directive contains wiggle room for compliance officers, so the extent to which the Directive provides contractors with more transparency and predictability during onsite evaluations remains to be seen. That being said, if followed, the Directive contains numerous provisions (as detailed below) that should improve the compliance evaluation experience.

More Detail: On September 19, 2018, OFCCP issued Directive 2018-08 (the “Directive”). The Directive’s stated purpose is “[t]o ensure transparency in all stages of OFCCP compliance activities to help contractors comply with their obligations and know what to expect during a compliance evaluation, and to protect workers from discrimination through the consistent enforcement of OFCCP legal authorities.” This is the latest in a string of measures taken by OFCCP to improve its transparency – a major shortcoming identified by contractors during OFCCP’s 2017 Town Hall Meetings and an initiative included in OFCCP’s Town Hall Action Plan.

OFCCP states that the Directive “extends OFCCP’s transparency initiative to every stage of a compliance evaluation to facilitate consistency of operations, improve efficiency, and resolve collaboratively matters during compliance evaluations.” To emphasize that point, the Directive states that “Transparency should guide OFCCP staff during every stage of a compliance evaluation, from beginning to end.” To that end, the Directive sets forth numerous new policies and procedures that either clarify ambiguities or fill in gaps in the Federal Contract Compliance Manual (“FCCM”) – the main resource upon which contractors rely to understand the procedures applicable to compliance evaluations. The Directive makes clear that it expressly “supersede[s] any procedures in the FCCM or other previously issued guidance to the extent they could be read to conflict.” It also expressly states that “OFCCP staff must follow” the new policies and procedures.

Some of the key provisions of the Directive include:

  • 30 Day Extensions Available – But ONLY For Supporting Data. The Scheduling Letter that commences a compliance evaluation provides a 30 day period in which to provide the requested AAP and supporting data. The Directive provides that contractors may receive a 30 day extension on the deadline for providing supporting data, provided that: (1) the request is made within 30 days of receiving the Scheduling Letter, and (2) the contractor timely submits its AAPs within the initial 30-day period. The Directive makes clear that extensions of time to submit AAPs will rarely be granted. Failure to meet deadlines for submitting AAPs and/or supporting data will result in the “immediate” issuance of a Notice to Show Cause why OFCCP should not initiate enforcement proceedings, providing contractors an additional 30 day period in which to provide the information. These Show Cause Notices will not require approval from OFCCP’s National Office.
  • Initial Contact by Compliance Officer After Issuance of Scheduling Letter. Within 15 days after a Scheduling Letter is issued, the compliance officer will contact the contractor to: (1) establish the compliance officer as the primary point of contact; (2) provide an overview of the compliance evaluation process; (3) offer compliance assistance; (4) explain the available 30 day extension on the deadline to provide supporting data; and (5) the Notice to Show Cause process if the contractor cannot meet deadlines for submitting its AAP and supporting data.
  • Time to Address Issues with Initial Submissions. The Directive requires compliance officers to notify contractors promptly of any deficiencies in the AAPs and supporting data submitted in response to the Scheduling Letter, and provide “15 days to provide complete and acceptable submissions.” Many contractors complained about the short timelines provided by some compliance officers. Now contractors can expect at least 2 weeks to respond to issues with their initial submissions.
  • No Fishing Expeditions During the Desk Audit Phase and Parameters On Additional Data Requests. The Directive makes clear that during the desk audit stage of a compliance evaluation, any follow up requests by compliance officers must be limited to the data requested by the Scheduling Letter. If the matter progresses beyond the desk audit phase, requests for information may go beyond that requested in the Scheduling Letter, but should be aimed at “refin[ing] indicators and prepar[ing] for a potential onsite visit.” Moreover, contractors must be informed why the information is being requested, and the requests must be “reasonably tailored to the areas of concern, and allow a reasonable time to respond.”
  • Contractors Must Be Told Why OFCCP Is Coming Onsite. Onsite confirmation letters must “[i]nclude a high-level summary of any preliminary indicators of discrimination.” With this requirement, contractors should no longer face the prospect of an onsite inspection without knowing what OFCCP is investigating. The sample onsite confirmation letter attached to the Directive indicates that OFCCP must provide specific details about the indications of discrimination leading to the onsite. Specifically, the sample explanations in the form letter suggest that OFCCP must disclose the type of violation and the job group at issue: “(1) (e.g., hiring practices in the Technician I job group); and (2) (e.g., compensation policies and practices with respect to women in the following pay analysis groups).” That being said, OFCCP makes clear that the stated reasons for its onsite inspection do not limit the scope of its review, as it states in the sample onsite confirmation letter: “identification of these preliminary indicators does not limit the scope of OFCCP’s authority to confirm compliance with other requirements or investigate other potential violations that it discovers during the course of this compliance review.”
  • Quick Closure of Most Compliance Evaluations. The Directive contemplates that for “the majority of cases” where the desk audit review reveals no indicators of discrimination or evidence of other violations, compliance evaluations should be closed within 45 days of receipt of the contractor’s AAPs and supporting data.
  • Sharing Information in Conciliation Phase. The Directive anticipates a “collaborative approach” between OFCCP and contractors during the conciliation phase, including provision by OFCCP of “information and essential source data.” This includes sufficient information “to assist the contractor in understanding and replicating OFCCP’s findings, sharing factors used to calculate back pay, [and] providing an overview or summary of anecdotal evidence or non–statistical findings to add context to the statistical results.”
  • Next Business Day Rule. The Directive includes a rule (contained in footnote 5) that if certain deadlines fall on a weekend or holiday, the Contractor has until the next business day to respond. Although this seems like a minor enhancement, it relieves contractors of the need to either ask for permission to extend a weekend or holiday deadline or respond in advance of the deadline.
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