Government Contractor Compliance & Regulatory Update

OFCCP Announces New Round of Contractors Selected for Audit — Was Your Company Selected?

On January 20, 2023, OFCCP announced the release of the first Corporate Scheduling Announcement List (CSAL) of FY23. The list consists of 500 locations selected for a Compliance Review (Establishment Review), Corporate Management Compliance Evaluation, or Functional Affirmative Action Program Review.

Note that the list merely notifies these contractors that they will be audited – audits will not commence until the contractor receives a Scheduling Letter. However, OFCCP changed its policies in March 2022 so that Scheduling Letters may be issued immediately (as opposed to the prior policy of not issuing Scheduling Letters earlier than 45 days from the publishing of the CSAL). So, contractors on the list must understand they are now “on the clock.”

Contractors are advised to review the CSAL (available here) to see if they have been selected for an audit. Those selected should consult with counsel as necessary to ensure they are prepared for their upcoming compliance evaluation (which could come at any time).

Fifth Circuit Affirms Injunction Preventing Enforcement of Contractor Vaccine Mandate Against Louisiana, Indiana, and Mississippi

By Guy Brenner, Jacob P. Tucker and Olympia Karageorgiou on December 20, 2022 Posted in Federal Contractors, OFCCP

On December 19, 2022, the U.S. Court of Appeals for the Fifth Circuit affirmed a preliminary injunction halting enforcement of the federal contractor and subcontractor vaccine mandate requirements issued in response to Executive Order 14042, Ensuring Adequate COVID Safety Protocols for Federal Contractors (the “federal contractor mandate”).

Louisiana, Indiana, Mississippi (the “Plaintiff States”), sought to enjoin enforcement of Executive Order 14042 with respect to contracts entered into between the three states and the federal government, as well as contracts between private contractors in those states and the federal government. On December 16, 2021, the District Court for the Western District of Louisiana granted an injunction barring enforcement of the federal contractor mandate because it determined the plaintiffs, inter alia, (i) had Article III standing to raise individual claims as federal contractors; and (ii) demonstrated the elements necessary to obtain injunctive relief. The court, however, declined to extend the scope of the injunction to non-plaintiff states or federal contractors.

On appeal, a divided Fifth Circuit panel upheld the preliminary injunction. Similarly to the district court, the appellate court declined to extend the preliminary injunction to private contractors within the Plaintiff States.

The Fifth Circuit held that the federal contractor mandate does not comport with the major questions doctrine, which “serves as a bound on presidential authority” and provides that an agency’s exercise of “powers of vast economic and political significance”—such as enacting a vaccine mandate—must be clearly granted by Congress. The court rejected the federal government’s argument that the federal contractor mandate bears a close nexus to the Procurement Act’s goal of promoting economy and efficiency in government contracting, finding instead that the federal contractor mandate is an “‘enormous and transformative expansion in’ the President’s power under the Procurement Act.”

The Court also found that the Plaintiff States sufficiently demonstrated that they would experience irreparable “nonrecoverable compliance costs” if required to comply with the federal contractor mandate, such as the cost of having to choose between firing valuable employees or foregoing federal contracts.

The Fifth Circuit also dismissed the federal government’s argument that delaying the mandate would result in productivity losses from schedule delays and employees being sick, isolating, or quarantined. In response, the Court cited to President Biden’s public comment that “[t]he pandemic is over” and held that regardless, “[t]here is generally no public interest in the perpetuation of unlawful agency action.” In contrast to these “abstract” harms, the Court found that the Plaintiff States articulated more concrete harm should the preliminary injunction be lifted, in the form of loss of employees or federal contracts, as well as other administrative compliance costs.

As to the dissent, Circuit Judge James E. Graves, Jr. contended that the federal contractor mandate is within the scope of the President’s broad authority to issue orders to “improve the economy and efficiency of contractors’ operations” pursuant to the Procurement Act. Judge Graves rejected the majority’s reasoning that the federal contractor mandate is impermissible because it seeks to govern the conduct of employees, rather than employers. Further, Judge Graves argued that the major questions doctrine does not apply to the federal contractor mandate because the mandate: (i) delegates power to the President rather than an unelected agency; and (ii) is an exercise of the government’s proprietary authority, and is not an unlawful “‘enormous and transformative expansion in’ regulatory authority.”

We will continue to report on developments to the federal contractor mandate here.

OFCCP Proposes Changes To Scheduling Letter and Itemized Listing

By Guy Brenner and Olympia Karageorgiou on November 23, 2022 Posted in Federal Contractors, OFCCP

On November 21, 2022, OFCCP published notice in the Federal Register that it is seeking reauthorization of a revised Compliance Review Scheduling Letter (“Scheduling Letter”) and Itemized Listing. These documents are issued at the outset of an OFCCP audit, requesting multiple categories of documents from the contractor selected for audit.

OFCCP’s proposed revisions to the Scheduling Letter include:

Requiring contractors who have “campus-like settings”, including “hospitals and information technology companies” and other “work environments in which a contractor “maintains multiple [affirmative action programs (“AAPs”)] for the same campus,” to “submit the information requested in this scheduling letter for all AAPs developed for campuses, schools, programs, buildings, departments, or other parts of [a contractor’s] institution, or company located in” a city. OFCCP justifies this change by noting it is consistent with changes made to its audit scheduling methodology, and claiming the change will “avoid dispute over the compliance obligations of contractors with campus-like settings,” “provides a more efficient use of agency resources and promotes a broader understanding of an organization’s equal opportunity programs through a holistic review of the campus.”
Adding in an option for the scheduling letter to be issued via email with a read receipt requested and requesting that contractors submit their AAPs and itemized listing information electronically.
Modifying language regarding consequences for failure to submit the requested information, so that contractors are notified that “OFCCP may initiate enforcement proceedings if [they] fail to submit the AAPs and Itemized Listing information within 30 calendar days of… receipt of the” Scheduling Letter. The current Scheduling Letter’s language is less precise about what can lead to enforcement proceedings and does not include the deadline contained in the proposed language.

With regard to the Itemized Listing, OFCCP’s proposals include:

Item 4: Expanding the scope of information sought regarding the contractor’s “determination of minority and female availability.” Currently, the Itemized Listing limits the information sought to the factors found in 41 C.F.R. § 60-2.14 (c)(1)-(2) — “the percentage of minorities or women with requisite skills in the reasonable recruitment area” and “the percentage of minorities or women among those promotable, transferable, and trainable within the contractor’s organization.” OFCCP proposes to expand the scope of information sought in Item 4 to all the factors set forth in 41 C.F.R. § 60-2.14.

OFCCP explains its proposal now includes the requirement that “the contractor … provide documentation to OFCCP demonstrating the consideration of the most current and discrete statistical information available, its reasonable recruitment area, and the pool of promotable, transferable, and trainable employees.” OFCCP contends “[t]his change allows OFCCP to better assess whether the contractor is in full compliance with all provisions of 41 CFR § 60-2.14.”

Item 7 (new): Requiring federal contractors to provide “a list identifying all action-oriented programs designed to correct any problem areas identified pursuant to 41 CFR § 60-2.17(b).” OFCCP notes it “does not currently collect information about a contractor’s action-oriented programs with the current compliance review scheduling letter,” and that by “[a]dding this item to the letter” OFCCP will be able “to more thoroughly review contractors’ compliance in this important area, as well as enable OFCCP to understand the action-oriented programs that a contractor is undertaking as part of its AAPs at the beginning of a compliance review.”
Item 8 (previously Item 7): Requiring the contractor to “indicate whether [it] believe[s] the totality of [its] efforts were effective” in recruiting qualified individuals with disabilities. Contractors concluding that the totality of their efforts was “not effective in identifying and recruiting qualified individuals with disabilities” must additionally “provide detailed documentation describing [their] actions in implementing and identifying alternative efforts, as provided in 41 CFR § 60-741.44(f)(3).” OFCCP explains this change is the result of contractor “confusion over what documentation is sufficient for their Item 8 submission,” and will provide for “uniformity in contractors’ submissions and ensure consistency in what OFCCP is requesting across field offices as well as allow OFCCP to more efficiently assess whether the contractor is in full compliance with 41 CFR § 60-741.44(f).”
Item 11 (previously Item 10): Expanding the information contractors must submit regarding their Section 503 utilization analysis. The revised Item 11 specifies that contractors identifying an “underutilization of individuals with disabilities” must “provide a description of the steps taken to determine whether and where impediments for equal employment opportunity exist.” An employer’s response must include an “assessment of personnel processes, the effectiveness of… outreach and recruitment efforts, the results of [the contractor’s] affirmative action program audit, any other areas that might affect the success of the affirmative action program, and a description of action-oriented programs developed and executed to correct any identified problem areas.” OFCCP states this change is a response to contractor “confusion” over the “documentation … sufficient for their Item 11 submission,” and notes the change will “promote uniformity in contractors’ submissions and ensure consistency in what OFCCP is requesting to review across field offices.”
Item 12 (previously Item 11): Similar to proposed Item 8, proposed Item 12 would require contractors to indicate whether they believe the totality of their efforts were effective in recruiting qualified protected veterans and provide “detailed documentation describing [their] actions in implementing and identifying alternative efforts.” OFCCP justifies this change on the same grounds as it provided for proposed Item 8.
Item 19 (new): Requiring contractors to provide “[d]ocumentation of policies and practices regarding all employment recruiting, screening, and hiring mechanisms, including the use of artificial intelligence, algorithms, automated systems or other technology-based selection procedures.” OFCCP explains that the “use of [algorithmic] technologies may lead to instances of screening or selection bias” and so the “addition of this requirement will allow OFCCP to assess the contractor’s use of such technology to determine whether these tools are creating barriers to equal employment opportunity.”
Item 20 (previously Item 18): Requiring contractors to provide additional promotion and termination information, specifically: (a) “identify whether each promotion was competitive or non-competitive,” as well as “the previous supervisor, current supervisor, previous compensation, and current compensation”; (b) “[p]rovide documentation that includes established policies and describes practices related to promotions”; (c) break down “the total number of employee terminations” by “reason(s) for termination (g., retirement, resignation, conduct, etc.) including gender and race/ethnicity information for each.” Proposed Item 20 also requires contractors to provide “[f]or each job title or job group … the total number of employees, by gender and race/ethnicity, as of the start of the immediately preceding AAP year.” OFCCP contends this information is necessary “to create accurate pools for the promotion and termination impact ratio analyses” and that including this information in the Itemized Listing will “promote the timely and efficient exchange of information.”
Item 21 (previously Item 19): Requiring contractors provide two snapshots of compensation data: one as of “the date of the organizational display or workforce analysis, and the other as of the “date of the prior year’s organizational display or workforce analysis.” OFCCP explains that the proposal “will allow OFCCP to better identify whether there is systemic pay discrimination happening at a contractor’s workforce.” Further, Item 21 will “clarify” that contractors must submit compensation data for temporary employees provided by staffing agencies.

In addition, revised Item 21(c) expands on the “documentation and policies related to the contractor’s compensation practices” contractors must submit, to include “those that explain the factors and reasoning used to determine compensation (e.g., policies, guidance, or trainings regarding initial compensation decisions, compensation adjustments, the use of salary history in setting pay, job architecture, salary calibration, salary benchmarking, compensation review and approval, etc.).”

Item 22 (new): Adding a request that the contractor submit “[d]ocumentation that the contractor has satisfied its obligation to evaluate its ‘compensation system(s) to determine whether there are gender-, race-, or ethnicity-based disparities,’ as part of the contractor’s ‘in-depth analyses of its total employment process’ required by 41 CFR 60-2.17(b)(3).”

Pursuant to this query, federal contractors must explain:

“When the compensation analysis was completed;
The number of employees the compensation analysis included and the number and categories of employees the compensation analysis excluded;
Which forms of compensation were analyzed and, where applicable, how the different forms of compensation were separated or combined for analysis (e.g., base pay alone, base pay combined with bonuses, etc.);
That compensation was analyzed by gender, race, and ethnicity; and
The method of analysis employed by the contractor (e.g., multiple regression analysis, decomposition regression analysis, meta-analytic tests of z-scores, compa-ratio regression analysis, rank-sums tests, career-stall analysis, average pay ratio, cohort analysis, etc.).”

This proposed addition is consistent with Directive 2022-01, as revised, which made clear OFCCP would request such information during audits.

Item 24 (new): Requiring the provision of “copies of existing written employment policies concerning equal opportunity, including anti-harassment policies, EEO complaint procedures, and employment agreements, such as arbitration agreements, that impact employees’ equal opportunity rights and complaint processes ….” OFCCP contends this information “will allow OFCCP to better assess a contractor’s EEO compliance.”
Item 25 (previously Item 21): Expanding the information requested regarding contractors’ “most recent assessment of [their] personnel processes,” to include “at a minimum a description of the assessment, any impediments to equal employment opportunity identified through the assessment, and any actions taken, including modifications made or new processes added, as a result of the assessment.” OFCCP contends this change addresses contractor “confusion over what documentation is sufficient for their Item 25 submission,” that “[r]equiring the submission of this additional item will promote uniformity in contractors’ submissions and ensure consistency across field offices in what OFCCP is requesting to review,” and the new information will allow OFCCP “to more efficiently assess whether the contractor is in full compliance with all provisions of 41 CFR §§ 60-300.44(b) and 60-741.44(b).”

As the summary of key changes above demonstrates, OFCCP is seeking to impose significant new initial audit submission requirements. Notably, OFCCP is not proposing to change the 30 day deadline to submit this voluminous amount of information; indeed, as noted above, OFCCP is proposing to emphasize that failure to provide “the requested information … within 30 calendar days” may lead to enforcement proceedings.

The public has until January 20, 2023 to submit comments on proposed changes.

We will continue to monitor and report on further developments here.

OFCCP Hosts Webinar Discussing Changes to FAAP Directive

By Guy Brenner and Megan Childs on November 22, 2022 Posted in Federal Contractors, OFCCP

On November 17, 2022, OFCCP hosted a webinar discussing the changes it made to Directive 2013-01 earlier this year through Revision 3 (the “Directive”). The Directive sets forth the agency’s policies and procedures for federal contractors implementing and maintaining FAAPs.

As many contractors know, FAAPs provide an alternative for federal supply and service contractors to align their Affirmative Action Programs (“AAPs”) with functional or business units, rather than a particular establishment. OFCCP explains that this approach enables a covered contractor “to organize its AAP to reflect how the entity operates functionally rather than where its facilities and people are physically located.” FAAPs may therefore be a preferable and more efficient approach for multi-establishment contractors.

A contractor may choose to utilize both FAAPs and traditional establishment AAPs for different aspects of their organizations. However, a functional or business unit must have: (i) at least 50 employees; (ii) its own managing official; and (iii) the ability to track and maintain its own personnel activity.

Unlike establishment AAPs, FAAPs must be approved in advance by OFCCP. Although FAAPs are not a new option for contractors, OFCCP in recent years has become much more accepting and even encouraging of contractors utilizing FAAPs. Depending on a contractor’s workforce, FAAPs may be an attractive option, but FAAPs have some drawbacks of which contractors should be aware and carefully consider before seeking to transition their establishment AAP(s) to a FAAP.

According to OFCCP, Revision 3 primarily “provides clarification regarding procedural requirements, in addition to minor language and formatting changes, that continue to provide for a FAAP process that is efficient, fluid, and collaborative.”

Although minor, Revision 3 establishes the following changes and clarifications to the Directive:

Corporate Headquarters Information. Contractors requesting a FAAP agreement must provide:

(i) the name and address of the contractor’s corporate headquarters overseeing the contractor operations in the U.S.; and

(ii) the name and contact information of the corporate representative in charge of overseeing the agreement.

Notification of Changes to the Primary Corporate Contact. In the event of a change to the primary contact listed in a FAAP agreement, the contractor must notify OFCCP within 60 days of the change. The communication must provide the updated information of the new primary corporate contact, including their name, address, and email address.
Renewal Procedure. Once established, a FAAP agreement is valid for five years. It may be terminated upon 90 calendar days’ written notice, which must include an explanation and the effective date for the termination. Alternatively, a FAAP agreement can be renewed by following the procedure outlined in Revision 3. A renewal certification must be submitted in writing at least 120 calendar days before the expiration of the existing FAAP agreement.
Electronic Submissions. Where possible, all submissions – including requesting, modifying, or terminating a FAAP agreement – must now be submitted electronically to OFCCP. Instructions on electronic submissions can be found here.

The revisions apply to any covered contractor entering, modifying, or renewing an agreement on or after September 21, 2022.

Further information and guidance is available by contacting OFCCP’s Functional Affirmative Action Program Branch via email at OFCCP_FAAP-UNIT@dol.gov or by phone at (202) 693-1125. Answers to FAQs are also available here.

We will continue to monitor and report on further OFCCP developments.

OFCCP Adopts Updated “Know Your Rights” Poster for Contractors

By Guy Brenner and Olympia Karageorgiou on November 8, 2022 Posted in OFCCP

As our colleagues previously reported, on October 19, 2022, the EEOC updated its “Know Your Rights” poster for employers. On October 28, 2022, the Office of Federal Contractor Compliance Programs (“OFCCP”) notified contractors that they must post the new EEOC poster, replacing the 2009 “EEO is the Law” poster and the 2015 “EEO is the Law” Supplement that contractors previously were required to post.

In announcing the update, OFCCP explained that the new “Know Your Rights” poster “summarizes the federal laws prohibiting job discrimination and explains how employees or applicants can file a complaint if they believe they have experienced discrimination.”

OFCCP further explains that the new “Know Your Rights” poster makes the following changes from the previous “EEO is the Law” posters:

“Notes that harassment is a prohibited form of discrimination”;
“Clarifies that sex discrimination includes discrimination based on pregnancy and related conditions, sexual orientation, or gender identity”;
“Explains protections under Executive Order 11246 related to asking about, disclosing, or discussing pay”; and
“Eliminates the need for federal contractors to post the 2015 ‘EEO is the Law’ Supplement.”

All employers subject to equal employment opportunity (EEO) and nondiscrimination laws must display the latest “Know Your Rights” poster on their premises. While OFCCP has not announced a date by which federal contractors should post the updated “Know Your Rights” poster, the EEOC has advised that employers should post the poster “within a reasonable amount of time.”

As the OFCCP reminds contractors, “the notice must be posted prominently, where it can be readily seen by employees and applicants for employment.” Posters must also be accessible to employees working offsite, as “all applicants and employees must have a way to access the poster, either electronically or physically.”

The OFCCP’s announcement also advises that “federal contractors are still required to post the Pay Transparency Nondiscrimination Provision and include it in employee handbooks and manuals.” The OFCCP’s Posting & Notice Requirements Guide, detailing other posting and notice requirements for contractors, can be found here.

Task Force and OMB Issue New Guidance on Federal Contractor Vaccine Mandate

By Guy Brenner and Olympia Karageorgiou on November 7, 2022 Posted in Coronavirus, Federal Contractors

As federal contractors are aware, on December 7, 2021, a federal judge issued a nationwide preliminary injunction halting enforcement of the federal contractor and subcontractor vaccine mandate requirements issued by the Safer Federal Workforce Task Force (the “Task Force”) in response to President Biden’s Executive Order 14042, Ensuring Adequate COVID Safety Protocols for Federal Contractors. Our summaries of the ruling and the federal contractor vaccine mandate are available here and here. After the nationwide injunction was issued, the Task Force suspended its enforcement of Executive Order 14042’s vaccine mandate. However, as we previously reported, on August 26, 2022, the Eleventh Circuit upheld the injunction as it pertained to the plaintiffs, but determined the lower court erred in issuing a nationwide injunction barring enforcement of the vaccine mandate against all federal contractors and lifted that portion of the injunction. The Eleventh Circuit’s decision went into effect when it issued its mandate on October 18, 2022.

In anticipation of and following the Eleventh Circuit’s ruling taking effect, the Task Force published two updates for federal contractors related to the vaccine mandate and the impact of the Eleventh Circuit’s decision. On October 14, 2022, the Task Force announced its three-step plan for addressing the narrowing of the injunction:

First, OMB planned to “provide an initial notification to agencies to ensure that they comply with applicable injunctions, including as it relates to any inclusion of a contract clause implementing requirements of Executive Order 14042 in solicitations and new contracts.”

Second, after issuing the notification, “the Task Force intends to update its guidance regarding COVID-19 safety protocols for covered contractor and subcontractor workplace locations. The Task Force will include in its updated guidance a timeline for implementation by contractors and subcontractors. The Director of OMB will also review the updated Task Force guidance and make a determination regarding whether the new guidance promotes economy and efficiency in Federal contracting. Such a determination would be published in the Federal Register, pursuant to Executive Order 14042.”

Third, the “OMB will provide guidance to agencies on timing and considerations for the provision of written notice from agencies to contractors regarding enforcement of contract clauses implementing requirements of Executive Order 14042, except as barred by any applicable injunctions. Such guidance from OMB will not be issued prior to the updated Task Force guidance.”

As OMB advised, “[u]ntil all three of these steps are taken, OMB advises Federal agencies that they should not take any action to enforce any requirement that covered contractors comply with the COVID-19 safety protocols” issued by the Task Force.

On October 19, 2022 the OMB completed step one of its plan, issuing additional guidance to agencies on enforcement of Executive Order 14042. The guidance explains that “to allow time to develop advice and processes for meeting agencies’ obligations under Executive Order 14042 and applicable court orders” agencies should not “(1) take any steps to require covered contractors and subcontractors to come into compliance with previously issued Task Force guidance; or (2) enforce any contract clauses implementing Executive Order 14042.”

Federal contractors should note that the OMB’s current halt on enforcement applies specifically to the federal contractor vaccine mandate and does not implicate the Task Force’s existing guidance for COVID-19 workplace safety protocols with respect to mask wearing for on-site and/or on-duty federal contractors under Executive Order 13991.

We will continue to monitor developments and report on them here.

OFCCP Extends Deadline For Contractors To Object To Release of EEO-1s

By Guy Brenner on September 15, 2022 Posted in OFCCP

As previously reported, OFCCP has received a FOIA request seeking federal contractors’ and subcontractors’ EEO-1 reports from 2006-2020. On August 19, 2022, OFCCP published a notice informing contractors and subcontractors of that fact and giving them until September 19, 2022 to submit any written objections to releasing their reports.

On September 15, 2022, OFCCP extended the deadline to submit written objections. Now contractors have until October 19, 2022 to subject objections. In its announcement, OFCCP explains the reasons for the extension. First, it notes “numerous contractors and contractor representatives have contacted the agency requesting an extension of time to submit objections.” Second, OFCCP has received questions from contractors asking “whether they are included in the universe of Covered Contractors during the requested timeframe.” To address this issue, OFCCP will be “emailing contractors that OFCCP believes are covered by this Freedom of Information Act (FOIA) request, using the email address provided by contractors that have registered in OFCCP’s Contractor Portal and the email addresses provided as a contact for the EEO-1 report.”

OFCCP has a webpage containing answers to frequently asked questions, and advises contractors that they may contact its FOIA Help Desk at 1-800-397-6251 with questions not covered by the frequently asked questions page.

A discussion of the FOIA request and details about filing objections can be found here.

OFCCP Warns Contractors That Have Not Certified AAP Compliance To Do So By September 1, 2022

By Guy Brenner and Megan Childs on August 30, 2022 Posted in Federal Contractors, OFCCP

Earlier this year, OFCCP launched its “Contractor Portal,” which “[c]overed federal contractors and subcontractors (“contractors”) must use … to certify, on an annual basis, whether they have developed and maintained an affirmative action program for each establishment and/or functional unit, as applicable.” Contractors were required to certify whether they had developed such AAPs by June 30, 2022.

In a bulletin transmitted on August 29, 2022, OFCCP encourages contractors who have not certified to do so “as soon as possible,” noting that:

Contractors that have not certified will be more likely to appear on OFCCP’s scheduling list than those that have certified their compliance with AAP requirements. Contractors that have not certified compliance include those that have not utilized the Portal to certify whether they are meeting their AAP requirements, as well as those contractors that have certified they have not developed or maintained an AAP.

Even so, OFCCP makes clear it has “not extended the June 30[, 2022] deadline,” suggesting those that certify after the deadline are still subject to increased likelihood of audit selection. However, it notes contractors that missed the deadline would benefit from certifying now:

[C]ontractors that have not certified compliance by September 1, 2022, will be included on a list provided to federal agency contracting officers. The purpose of this list is to enable contracting agencies to notify contractors of their certification obligations, thereby assisting OFCCP in securing compliance.

Contractors that have not certified should consult with counsel to determine their best next steps.

We previously reported on the certification process here. OFCCP also provides resources on its Contractor Portal website, including a user guide and FAQs. Any technical issues should be submitted to the OFCCP Contractor Portal Technical Help Desk by submitting a request form. The Help Desk can also be reached by telephone at 1 (800) 397-6251.

We will continue to monitor and report on developments on this and other OFCCP-related matters on this blog.

OFCCP Launches Construction Contract Award Portal

By Guy Brenner and Megan Childs on August 26, 2022 Posted in Federal Contractors, OFCCP

OFCCP has launched its new online portal: the Notification of Construction Contract Award Portal (NCAP). NCAP is expected to modernize how OFCCP receives required notices about construction contract and subcontract awards by eliminating the need to submit contract award information by mail or email.

According to the notice, “NCAP provides contracting officers, contractors, and applicants seeking federal assistance for construction projects (such as state DOTs), a more efficient and secure electronic means to submit a notice to OFCCP within 10 working days of an award of a federal or federally assisted construction contract or subcontract in excess of $10,000.”

Contractors will be able to securely and efficiently upload awarded contract information using a single or bulk upload.

The portal, including a comprehensive user guide, can be accessed here. How-to videos providing instruction on setting up an account in NCAP, submitting single or multiple award notifications, and viewing previously submitted award notifications are available here, and FAQs will be forthcoming.

OFCCP Revises Its Pay Equity Directive

By Guy Brenner and Megan Childs on August 19, 2022 Posted in Federal Contractors, OFCCP

As we previously reported, in March of this year, OFCCP issued its first directive of the Biden Administration – Directive 2022-01 (the “Directive”) – which addressed the issue of contractors’ obligations to conduct analyses of their compensation systems, as well as the agency’s expectations regarding providing those analyses when under audit. The Directive received a lot of (mostly negative) attention, for appearing to indicate the agency would demand privileged pay equity analyses during audits, as well suggesting that contractors are obligated by regulation to conduct full pay equity analyses.

Now, five months after issuing the Directive, the agency has issued significant revisions to it. As summarized in its announcement, the Directive has been revised in three main ways:

It explicitly reaffirms the agency’s position that it does not require the production of attorney-client privileged communications or attorney work product.
It identifies the documentation that OFCCP requires from a contractor to determine that the contractor has satisfied its obligation to perform a compensation analysis.
It explains the documentation required from a contractor when its compensation analysis identifies problem areas to demonstrate that it has implemented action-oriented programs.

It also removes references to “pay equity audits,” replacing the phrase with “compensation analysis,” in order to, as OFCCP Director Jenny Yang contends, “avoid any confusion regarding the nature of a contractor’s obligations.”

OFCCP “reaffirms” (or reverses) its position on production of privileged materials. With respect to production of privileged information, the Directive now states that the “Directive is not intended to encourage waiver of privilege. Rather, this Directive informs contractors that, where they maintain this information in non-privileged form, making it available can assist OFCCP in conducting a more efficient compliance evaluation.” While the agency characterizes this as a “reaffirm[ation],” it is clearly an effort to reverse the clear impression that the agency would be demanding privileged information the original Directive generated.

Even so, the agency makes clear that contractors will not be permitted to simply claim their compensation assessments are protected from disclosure during an audit. The Directive provides that “[c]ontractors will not be found in compliance with their compensation analysis obligations if they simply invoke privilege and provide OFCCP with no or insufficient documentation of compliance.” As discussed below, OFCCP maintains contractors have methods of confirming compliance without revealing privileged information.

OFCCP details what it expects to see from contractors regarding their compensation assessments. The Directive contends that contractors are required to conduct analyses of their compensation systems and provide documentation “confirm[ing] that the contractor has evaluated its compensation systems for race-, gender-, or ethnicity-based disparities.” The agency notes that “the most useful form of documentation is a contractor’s full compensation analysis because it allows OFCCP to understand how the contractor evaluates its compensation systems in practice,” and “encourage[s]” contractors to provide their “full compensation analyses available where OFCCP identifies concerns during a compliance evaluation.”

Where a contractor’s full compensation analysis contains privileged communications or protected work product, the Directive provides that the contractor “may fulfill its regulatory obligations by making available to OFCCP other documentation that it has conducted the [required] compensation analysis.” The Directive identifies a number of ways this can be accomplished:

“[A] contractor may make available a redacted version of its compensation analysis, provided that the non-redacted portions include the required facts” discussed in the Directive.
“[A] contractor may conduct a separate analysis during the relevant AAP period that does not implicate privilege concerns and provide that analysis to OFCCP in full.”
“[A] contractor may generate a detailed affidavit that sets forth the required facts described [in the Directive] but does not contain privileged material.”

The Directive notes that where compensation evaluation documentation is demanded by the agency, the contractor must

“provide documentation that demonstrates at least the following:

i. when the compensation analysis was completed;

ii. the number of employees the compensation analysis included and the number and categories of employees the compensation analysis excluded;

iii. which forms of compensation were analyzed and, where applicable, how the different forms of compensation were separated or combined for analysis (e.g., base pay alone, base pay combined with bonuses, etc.);

iv. that compensation was analyzed by gender, race, and ethnicity; and

v. the method of analysis employed by the contractor (e.g., multiple regression analysis, decomposition regression analysis, meta-analytic tests of z-scores, compa-ratio regression analysis, rank-sums tests, career-stall analysis, average pay ratio, cohort analysis, etc.).”

Documentation of Action-Oriented Programs To Correct Pay Disparities. The Directive also addresses the information a contractor must provide during an audit regarding pay disparities discovered during a compensation analysis. Specifically, the Directive provides that where such disparities are discovered, OFCCP regulations “require the contractor to develop and execute action-oriented programs to correct them.” As such, “OFCCP may request documentation demonstrating that the contractor did so.” When it does,

“OFCCP will require documentation that demonstrates, at a minimum:

i. the nature and extent of any pay disparities found, including the categories of jobs for which disparities were found, the degree of the disparities, and the groups adversely affected;

ii. whether the contractor investigated the reasons for any pay disparities found;

iii. that the contractor has instituted action-oriented programs designed to correct any problem areas identified;

iv. the nature and scope of these programs, including the job(s) for which the programs apply and any changes (e.g., pay increases, amendments to compensation policies and procedures) the contractor made to the compensation system; and

v. how the contractor intends to measure the impact of these programs on employment opportunities and identified barriers.”

In her blog post published on August 18, 2022, Director Yang confirms that “[c]ombatting pay discrimination is a top priority for OFCCP” and notes that OFCCP “reviews contractors’ pay data and practices to identify problems that would not otherwise come to light because workers are often unaware of their colleagues’ pay.”

As such, contractors need to understand that notwithstanding the welcome “reaffirmations” contained in the Directive, OFCCP remains focused on pay discrimination issues and will devote significant attention to compensation matters during audits. Contractors should familiarize themselves with the Directive, as revised, and ensure they are prepared to respond to OFCCP’s inquiries regarding their compensation analyses.

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