Government Contractor Compliance & Regulatory Update

[Podcast]: OFCCP Opens Hotline for Complaints of Race and Sex Stereotyping in Workplace Training

the proskauer brief logo imageIn the latest episode of The Proskauer Brief podcast, partners Harris Mufson and Guy Brenner discuss the Trump administration’s recent Executive Order on Combating Race and Sex Stereotyping, which restricts the concepts that government contractors can include in their employee diversity and awareness training programs.  It also imposes certain penalties and sanctions, including debarment for failure to comply. Tune in as we discuss key considerations for government contractors in the wake of the order.

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View the transcript on our Law and the Workplace blog.

OFCCP Releases Guidance on Executive Order Limiting Contractors’ Anti-Discrimination Trainings

Quick Hit:

The U.S. Department of Labor’s Office of Federal Contract Compliance Programs (“OFCCP”) has issued guidance on President Trump’s September 22, 2020 “Executive Order on Combatting Race and Sex Stereotyping” (the “Order”) which restricts the concepts which contractors may include in anti-discrimination and diversity trainings provided to their employees.  Though much of the publication summarizes key provisions of the Order, two key components provide important guidance:  (1) although the Order’s prohibitions will only apply directly to contractors with contracts executed after November 21, 2020, OFCCP warns including the prohibited concepts in trainings may also violate the non-discrimination obligations found in Executive Order 11246 which apply to all federal contractors; and (2) OFCCP does not view the Order as barring all forms of unconscious bias or implicit bias trainings.

Key Takeaways:

Whether or not federal contractors are parties to contracts entered into after November 21, 2020, all contractors need to be aware of the restrictions contained in the Order, particularly given the hotline OFCCP established last week to receive complaints about trainings that violate the Order.  Contractors should also review the Order carefully to understand its precise parameters as they assess whether to enter into new contracts with the federal government.  Contractors may determine that they can continue their existing training programs and comply with the letter of the Order.  For example, as OFCCP has recognized, contractors can continue to provide their unconscious bias and similar trainings, provided they do not teach that a particular race or sex is “inherently racist, sexist, or oppressive.”

Contractors should also be aware that the Order, and OFCCP’s actions in response to it, reflect a growing focus on race discrimination of any kind, as opposed to only discrimination against traditionally disadvantaged groups.  Contractors must be aware that some efforts at increasing diversity and inclusion can be viewed as discrimination against white employees and that while OFCCP may not have been as focused on such issues in the past it clearly is now.  Indeed, recent press reports indicate OFCCP has initiated investigations of government contractors in response to their announced efforts to increase minority representation in their employee ranks.

More Detail:

As we previously reported, the Order, among other things, requires new federal government contracts to include a clause prohibiting federal contractors from including certain concepts in diversity and awareness trainings – including certain concepts that may appear in unconscious bias and societal privilege trainings.

OFCCP’s recent publication provides further guidance on how the Order will work in practice.  First, OFCCP notes that contractors who implement training programs that include race or sex stereotyping or scapegoating may not only be violating the Order, but also could violate Executive Order 11246 which prohibits discrimination  “against any employee or applicant for employment because of race, color, religion, sex, sexual orientation, gender identity, or national origin.”  The recent guidance indicates that trainings related to race or sex stereotyping may not “ensure . . . that employees are treated, during employment, without regard to race [or sex],” even though these sorts of trainings are often designed to accomplish exactly that.  As such, contractors who do not enter into new contracts with the Order’s prohibitions may still find themselves subject to OFCCP investigation if they offer trainings that violate the Order’s restrictions.

Second, the guidance notes that although many types of unconscious bias trainings are prohibited (including training based on the notion that individuals, by virtue of their protected characteristics are “racist, sexist, oppressive, or biased, whether consciously or unconsciously”), the training is permitted “if it is designed to inform workers, or foster discussion, about pre-conceptions, opinions, or stereotypes that people—regardless of their race or sex—may have regarding people who are different, which could influence a worker’s conduct or speech and be perceived by others as offensive.”  This matches the text of the Order which bars implicit bias training that teaches that members of a certain race or sex are “inherently” racist, sexist or oppressive.

As always, we will continue to advise our readers of further developments related to the Order.

OFCCP Opens Hotline for Complaints of Race and Sex Stereotyping in Workplace Training

As we previously reported, on September 22, 2020, President Trump issued his “Executive Order on Combatting Race and Sex Stereotyping” (the “Order”), which seeks, among other things, to prohibit government contractors from including certain concepts in diversity and awareness trainings.  The Order directed the Office of Federal Contract Compliance Programs (“OFCCP”) to establish a “hotline” to receive and investigate complaints that contractors are implementing employee training programs that violate the Order, as well as Executive Order 11246, and to take “enforcement action and provide remedial relief, as appropriate.”  On September 29, 2020, OFCCP announced the launch of this hotline and the creation of an email address and online portal that employees may use to submit complaints regarding training programs they believe violate the Order or Executive Order 11246.

Although  OFCCP notes that the Order only applies to Federal contractors “with Federal contracts entered into 60 days after the date of the [O]rder, or Nov[ember] 21, 2020,” the agency’s announcement warns that “training programs prohibited by the new Executive Order may also violate a contractor’s obligations under the existing Executive Order 11246, which prohibits discrimination based on race, color, religion, sex, sexual orientation, gender identity, national origin, and for inquiring about, discussing, or disclosing your compensation or the compensation of others.”

Government contractors should therefore be aware that their trainings may be the subject of complaints, irrespective of whether they enter into a new federal contract after November 21, 2020.

We will continue to advise our readers of developments related to the Order and its implementation.

OFCCP Provides Guidance On New Promotions and Accommodations Focused Reviews

As we recently reported, OFCCP has issued its 2020 Corporate Scheduling Announcement List.  That list included contractors selected for two new types of reviews focused on promotions and accommodations.  Other than some comments made by Director Leen in speeches, contractors had little information concerning the new types of reviews and what they entailed.

That is, until now.  On September 23, 2020, OFCCP announced the launch of two websites providing information on the new Promotions Focused Reviews and Accommodations Focused Reviews.  These websites provide an overview of the new types of focused reviews and the scope of the new evaluations.  The websites also include FAQ sections (see here and here) related to these new focused reviews, answering anticipated questions contractors may have concerning these new audits.  OFCCP has stated it will update the sites in coming months “to include best practices and other types of resources for both types of focused reviews.”

Note that OFCCP has not yet proposed scheduling letters for these new focused reviews.  Until it does so, and such letters are approved by the Office of Management and Budget, it will not be able initiate such reviews.  Even so, the new guidance provides contractors selected for such reviews some information upon which to prepare.

Below we summarize some of the key information provided by the OFCCP on its new websites.

Promotions Focused Reviews

The Promotions Focused Reviews site states that these evaluations will look at “contractor data, policies, and procedures related to promotions to ensure that federal contractors are meeting their equal employment opportunity obligations.”

The new website also gives contractors a sense of what these new reviews will entail.  It explains that during the course of promotions focused reviews “Compliance Officers will review, among other things, contractor policies and procedures, employee personnel files, and personnel data tracking contractors’ promotion decisions. . . .  OFCCP may also evaluate hiring and compensation policies, procedures, and data, as appropriate, to determine if qualified applicants are being steered into lower paying positions with limited upward mobility or otherwise prevented from advancing professionally.”

As with the Section 503 and VEVRAA focused reviews introduced last year, this focused review has a mandatory “on-site” component, during which compliance officers will “conduct interviews with managers responsible for promotion decisions and, if applicable, with affected employees.”  Such interviews should take place virtually while COVID-19 related social distancing measures are in effect.  It is also possible OFCCP will continue virtual on-sites after the pandemic concludes, as Proskauer has learned that OFCCP has found virtual on-sites to be effective and efficient.

The site also provides answers to frequently asked questions (“FAQs”) regarding these kinds of reviews, including what promotions focused reviews are and why such evaluations are being conducted.  The FAQs also covers:

  • How OFCCP defines “promotion.” The FAQs explain “OFCCP’s Federal Contract Compliance Manual (FCCM) defines promotion as ‘[a]ny personnel action resulting in, for example, the movement to a position affording higher pay, greater rank, change in job title, or increase in job grade; an increase in pay, requiring greater skill or responsibility; or the opportunity to attain such.  A promotion may be either competitive or noncompetitive.’  The definition of promotions as inclusive of advancement opportunities recognizes that promotion policies and/or procedures may effectively foster or hinder advancement and, as such, should be examined and corrected if discriminatory.”
  • Actions contractors should take in preparing for such a review. The FAQs provide that contractors can take steps such as “evaluating personnel activity (including promotions) and selection procedures to identify whether disparities on the basis of a protected characteristic [exist].”
  • Whether contractors can be subject to another kind of compliance evaluation while a promotions focused review is pending at the same establishment. The FAQs provide that “[w]hile a focused review is pending at an establishment, that establishment will not be scheduled for any other types of compliance evaluations.”

Accommodations Focused Reviews

The Accommodations Focused Reviews site provides that such evaluations will look at “a contractor’s policies and procedures related solely to religious and disability accommodations.”  To assist contractors meet their religious accommodation obligations, the site directs contractors to the Equal Employment Opportunity Commission Religious Discrimination Guidance.

The site also describes what contractors can expect during these focused reviews:  “Compliance Officers will examine a contractor’s policies and procedures related solely to religious and disability accommodations, as identified in the scheduling letter.  The Compliance Officer will specifically review documentation relating to accommodation requests and dispositions, with a particular emphasis on denial(s) of accommodation.”

This focused review, like other focused reviews, has a mandatory “on-site” component, during which compliance officers will interview “managers responsible for or involved in the accommodation process as well as with affected employees and applicants.”  Such interviews should take place virtually while COVID-19 related social distancing measures are in effect.  It is also possible OFCCP will continue virtual on-sites after the pandemic concludes, as Proskauer has learned that OFCCP has found virtual on-sites to be effective and efficient.

The FAQs page for accommodations focused reviews also provides answers to anticipated questions regarding the scope and purpose of such evaluations.  The FAQs include information regarding the OFCCP’s views on the legal obligation to accommodate disability and religious accommodation requests, as well as the availability of the undue hardship exception to providing requested accommodations.  Like the FAQs for Promotions Focused Reviews, these FAQs note that “[w]hile a focused review is pending at an establishment, that establishment will not be scheduled for any other types of compliance evaluations.”

New Executive Order Limits Contractors’ Anti-Discrimination Trainings

Quick Hit:

On September 22, 2020, President Trump issued an “Executive Order on Combatting Race and Sex Stereotyping” (the “Order”).  The Order, among other things, requires new contracts entered into with the federal government to include a clause prohibiting federal contractors from including certain concepts in diversity and awareness trainings – including certain concepts that are common in unconscious bias and societal privilege trainings.  Failure to comply may result in a variety of penalties and sanctions, including debarment.

Key Takeaways:

Although many concepts the Order seeks to prohibit are not controversial (such as the teaching of racial or gender superiority), others appear aimed at some aspects of unconscious bias and societal privilege trainings that have become increasingly common in the wake of the country’s renewed focus on racial justice and equality. We have already received many inquiries from government contractor clients seeking to understand the Order’s prohibitions and how they impact their diversity and inclusion efforts.  The Order appears to apply only to contractors who enter into new contracts with the federal government beginning in late November, but depending on how it is implemented, the Order may impact existing government contractors.

Before entering into new contracts containing the provision, contractors should be sure they understand the prohibitions to which they are agreeing and assess whether such restrictions are compatible with their diversity and inclusion training efforts and commitments.

Contractors should also monitor regulatory developments related to the Order, including a planned request for information related to their training efforts.

More Detail:

The Order’s preamble notes its intent to “combat offensive and anti-American race and sex stereotyping and scapegoating,” that is contrary to the “fundamental premises underpinning our Republic: that all individuals are created equal and should be allowed an equal opportunity under the law . . . .”  The Order suggests that certain anti-racism efforts undermine merit systems currently in place and are, themselves, fundamentally racist.

The Order notes that contractors “should . . . continue to foster environments devoid of hostility grounded in race, sex, and other federally protected characteristics” and that “training employees to create an inclusive workplace is appropriate and beneficial.”  However, in fostering such environments, the Order seeks to prohibit contractors from providing certain forms of popular trainings to their employees aimed at addressing racism, sexism, and oppression.

To that end, the Order requires that, beginning 60 days after its issuance, new federal contracts include a clause prohibiting the contractor from “inculcat[ing] in its employees any form of race or sex stereotyping or any form of race or sex scapegoating, including the concepts that:

  • One race or sex is inherently superior to another race or sex;
  • An individual, by virtue of his or her race or sex, is inherently racist, sexist, or oppressive, whether consciously or unconsciously;
  • An individual should be discriminated against or receive adverse treatment solely or partly because of his or her race or sex;
  • Members of one race or sex cannot or should not attempt to treat others without respect to race or sex;
  • An individual’s moral character is necessarily determined by his or her race or sex;
  • An individual, by virtue of his or her race or sex, bears responsibility for actions committed in the past by other members of the same race or sex;
  • Any individual should feel discomfort, guilt, anguish, or any form of psychological distress on account of his or her race or sex; or
  • Meritocracy or traits such as a hard work ethic are racist or sexist, or were created by a particular race to oppress another race.”

Trainings that “assign[] fault, blame, or bias to a race or sex, or to members of a race or sex because of their race or sex” are also prohibited.  Contractors with contracts containing this new clause will have to include these requirements in their applicable subcontracts and purchase orders.

In accordance with the Order, contractors subject to the new contractual provision, will also have to send a notice to each of its labor unions advising of the contractor’s commitments pursuant to the Order and post the notice in places available both to employees and applicants.

Contractors with contracts containing the new provision face cancellation, termination, or suspension of their contracts if they fail to comply, and they risk debarment and the possibility of additional remedies and sanctions.

In addition to the above requirements, the Order directs the Office of Federal Contract Compliance Programs (“OFCCP”) to establish a hotline to receive and investigate complaints that contractors are implementing prohibited trainings, and to take “appropriate enforcement action and provide remedial relief, as appropriate.”  Further, the Order requires OFCCP’s Director to publish, within 30 days of the issuance of the Order, a request for information in the Federal Register seeking information regarding contractors’ training of their employees, including “copies of any training, workshop, or similar programing having to do with diversity and inclusion as well as information about the duration, frequency, and expense of such activities.”  Exactly what is to be done with this information is not addressed by the Order.

We will continue to advise our readers of developments related to this Order.

OFCCP Updates September 2020 CSAL

As we previously reported, OFCCP released its latest Corporate Scheduling Announcement List (CSAL) on September 11, 2020, in which it identified 2,250 supply and service contractor establishments and 200 construction contractor establishments selected for various types of compliance evaluations.

Earlier this week, OFCCP updated the list.  The new list is available here.  It appears the updates include:  (1) changes to the types of reviews scheduled; (2) the addition of two new establishments; (3) the removal of two establishments that were duplicates; and (4) other technical/cosmetic revisions and updates.

Contractors should review the updated CSAL to ensure they are not impacted by the changes.  As a reminder, a great way to start preparing for an OFCCP audit is to review Guy Brenner’s recent presentation entitled “You are on the CSAL – Now What?”, delivered at the NILG’s 2020 annual conference. The presentation is available here.

OFCCP Takes Next Step In Establishing An Annual AAP Certification Program

On September 14, 2020, the Federal Register published an information collection request (“ICR”) by the OFCCP in which the agency discloses that it “seeks authorization for an annual Affirmative Action Program online certification process for federal contractors and for a secure method for federal contractors to submit AAPs electronically to OFCCP when they are scheduled for a compliance evaluation.”

In the ICR, the OFCCP requests public comment on its plan, noting it is “particularly interested in comments which:

  • Evaluate the proposed frequency and level of information collection;
  • Evaluate whether the proposed collection of information is necessary for the enforcement and compliance assistance functions of the agency that support the agency’s compliance mission, including whether the information will have practical utility;
  • Evaluate the accuracy of the agency’s estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used;
  • Enhance the quality, utility, and clarity of the information to be collected; and
  • Minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology, g., permitting electronic submission of responses.”

Comments on the ICR are due by November 13, 2020 and may be submitted here.

The ICR is the latest development in the agency’s efforts to establish an AAP certification process.  In 2018, the agency issued Directive 2018-07, which announced its intention to develop an Affirmative Action Program Verification Initiative.  As stated in the Directive, the agency views an annual AAP verification program as a way to both encourage compliance and also focus the agency’s audit efforts on those contractors likely not in compliance (i.e., those who fail to certify they have prepared an AAP).

Two years after the issuance of the Directive, we still do not know much about the specifics of the program other than the agency is working to implement it.  We will continue to monitor and report on developments.

OFCCP Issues Its 2020 Audit List – Was Your Company On It?

On September 11, 2020, OFCCP released its Corporate Scheduling Announcement List (CSAL). The list identifies 2,250 supply and service contractor establishments and 200 construction contractor establishments selected for compliance evaluations. Note that the list merely notifies contractors that they will be audited in the future, which gives them time to prepare. 

 

Contractors are advised to review the CSAL (available here) to see if they have been selected for an audit. If they have been selected, contractors should begin preparing for the type of audit for which they have been selected, and consult with counsel as necessary. One great way to start the process is to review Guy Brenner’s recent presentation entitled “You are on the CSAL – Now What?”, delivered at the NILG’s 2020 annual conference. The presentation is available here.

OFCCP FAQ Provides Guidance Regarding Non-Binary Employees and Applicants

The Office of Federal Contract Compliance Programs (“OFCCP”) recently released a FAQ addressing how contractors should “handle counting employees and/or applicants who identify as a gender other than male or female such as Gender X as recognized in California[.]”

In response to this question, the FAQ provides “[i]f an employee or applicant chooses to self-identify as non-binary, or as a gender other than male or female, the contractor must still include the individual in its AAP submission[,]” but “the contractor may exclude that individual’s data from the gender-based analyses required by OFCCP’s regulations.”  The FAQ further provides that “a contractor may not ask applicants or employees for documentation to prove their gender identity or transgender status.”

Employers are increasingly providing employees and applicants the opportunity to self-identify as a gender other than male or female, and until now federal government contractors have had no guidance regarding how to account for individuals who self-identified as non-binary or as a gender other than male or female in their affirmative action programs and analyses.  This FAQ, gives some clarity to the agency’s position on some of the issues that arise from the intersection of OFCCP regulations and gender non-binary employees and applicants.

Executive Order Addresses Federal Contractors’ Use of Foreign Workers

Quick Hit: On August 3, 2020, President Trump issued an “Executive Order on Aligning Federal Contracting and Hiring Practices With the Interests of American Workers” (the “Order”), which requires federal agencies to perform an internal audit of their contracting practices and the use of foreign workers by federal government contractors.  Further, the Order instructs the Secretaries of Labor and Homeland Security to ensure the employment of H-1B visa holders by contractors does not have “adverse effects” on United States workers.

More Detail: Within 45 days of the date of the Order (or by September 17, 2020), the Secretaries of Labor and Homeland Security are instructed to “take action, as appropriate and consistent with applicable law, to protect United States workers from any adverse effects on wages and working conditions caused by the employment of H-1B visa holders at job sites (including third-party job sites), including measures to ensure that all employers of H-1B visa holders, including secondary employers, adhere to the requirements of section 212(1) of the Immigration and Nationality Act (8 U.S.C. [§] 1182(n)(1)).”

Among other things, section 212(1) of the Immigration and Nationality Act requires employers, in applying to offer an H-1B visa, to state:

  • “the employer did not displace and will not displace a United States worker . . . employed by the employer within the period beginning 90 days before and ending 90 days after the date of filing of any visa petition supported by the application”;
  • the employer “has taken good faith steps to recruit, in the United States using procedures that meet industry-wide standards and offering compensation that is at least as great as that required to be offered to H-1B nonimmigrants . . . United States workers for the job for which the nonimmigrant or nonimmigrants is or are sought”; and
  • the employer “has offered the job to any United States worker who applies and is equally or better qualified for the job for which the nonimmigrant or nonimmigrants is or are sought.”

The Order directs that federal government agencies to conduct audits of their contracting practices for contracts awarded in fiscal years 2018 and 2019.  The head of the each agency is required, within 120 days of the Order (or by December 1, 2020), to “submit a report to the Director of the Office of Management and Budget summarizing the results of the [audit].”  If the audit reveals that corrective action is necessary, agency heads are required to “recommending, if necessary, corrective actions that may be taken by the agency and timeframes to implement such actions; and proposing any Presidential actions that may be appropriate.”  The head of each federal agency is directed to look at the following as part of the audit:

  • “whether contractors (including subcontractors) used temporary foreign labor for contracts performed in the United States, and, if so, the nature of the work performed by temporary foreign labor on such contracts; whether opportunities for United States workers were affected by such hiring; and any potential effects on the national security caused by such hiring”;
  • “whether contractors (including subcontractors) performed in foreign countries services previously performed in the United States, and, if so, whether opportunities for United States workers were affected by such offshoring”;
  • “any negative impact of contractors’ and subcontractors’ temporary foreign labor hiring practices . . . on the economy and efficiency of Federal procurement and on the national security”; and
  • “the employment policies of the agency to assess the agency’s compliance with Executive Order 11935 of September 2, 1976 (Citizenship Requirements for Federal Employment), and section 704 of the Consolidated Appropriations Act, 2020, Public Law 116-93.”

In remarks regarding the Order, President Trump stated “we’re finalizing H-1B regulations so that no American worker is replaced ever again.”  Secretary of Labor Scalia also spoke at the signing ceremony, indicating that Department of Labor and the Department of Homeland security will work together to investigate potential abuse of the H1-B program.  Specifically, Secretary Scalia remarked “[f]or more than 15 years, the Secretary of Labor has had the authority to initiate an investigation of abuse of H-1B program when he or she finds reasonable cause. . . .  That authority has never been used. . . . [We] signed a memo of understanding on Friday with the Department of Homeland Security . . . .  They’re going to now share information they have, which I can then use to bring cases.”

We will report any additional development related to the Order here.

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