Government Contractor Compliance & Regulatory Update

LGBT Advocacy Groups File Lawsuit Challenging President Trump’s Executive Order on Diversity Trainings

Quick Hit:

On November 2, 2020, LGBT advocacy groups filed the second challenge to President Trump’s recent Executive Order on “Combatting Race and Sex Stereotyping” (the “Order”).  Like the first lawsuit, this lawsuit alleges that the Order violates the First and Fifth Amendments by infringing on the Constitution’s guarantees of Free Speech and Due Process.  Additionally, this Complaint alleges that the Order is unconstitutionally vague.

More Detail:

As we previously reported, the first challenge to the Order was filed by the NACCP Legal Defense Fund on behalf of the National Urban League (“NUL”) and the National Fair Housing Alliance (“NFHA”) in the Unites States District Court for the District of Columbia.  This second lawsuit was filed in the United States District Court for the Northern District of California by Lambda Legal on behalf of various LGBT groups.  Named defendants in the lawsuit include President Trump; Secretary of Labor, Eugene Scalia; the United States Department of Labor (“DOL”), the Director of Federal Contract Compliance Programs (“OFCCP”); the Office of Management and Budget (“OMB”); the U.S. Department of Justice (“DOJ”); and Attorney General William Barr, among others.

According to the Complaint, the Order “plainly discriminates against speech on the basis of . . . content and viewpoint . . . and constitutes a clear violation of the First Amendment.”  It requires organizations and individuals relying on federal funding to “choose between funding that is critical to their clients, and the trainings that are necessary to enable [these organizations] to serve [their] clients directly.”  This has the effect of “chilling” speech, which in the case of these organizations in particular, could have a more dire impact—the Plaintiffs note that without proper training on the history of marginalized communities and the role that “implicit bias” can play, their work cannot succeed.

Plaintiffs seek a declaratory judgement that the Order and its implementing agency action are unlawful and unconstitutional, and preliminary and permanent injunctions enjoining implementation and enforcement of the Order.

We anticipate that other lawsuits against the Order will be filed, and we will monitor and report on any newsworthy developments.

Civil Rights Groups File Challenge to President Trump’s Executive Order on Diversity Trainings

Quick Hit:

On October 29, 2020, civil rights groups filed a lawsuit challenging President Trump’s recent Executive Order on “Combatting Race and Sex Stereotyping” (the “Order”).  The Complaint alleges that the Order violates the First and Fifth Amendments by infringing on the Constitution’s guarantees of Free Speech, Equal Protection, and Due Process.  The Complaint also alleges that the Order is unconstitutionally vague and should be declared unlawful and invalid.

More Detail:

The Order, issued on September 22, 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.  The lawsuit was filed by the NACCP Legal Defense Fund on behalf of the National Urban League (“NUL”) and the National Fair Housing Alliance (“NFHA”), and names President Trump; Secretary of Labor, Eugene Scalia; and the United States Department of Labor (“DOL”), as defendants.  The Complaint was filed on behalf of both the named parties and on behalf of other entities affected by the Order.

According to the Complaint, the Order is an attack on free speech and “prohibits laudable and necessary efforts by Plaintiffs who want to counteract the effects of systemic discrimination and biases in the workplace.”  Ultimately, the Complaint argues, the Order “unconstitutionally forces Plaintiffs to choose between censoring speech on these important issues or forfeiting any opportunity to enter into a federal contract for the provision of goods or services or to receive federal funds as a grant recipient.”

Further, the Plaintiffs allege that the terms of the Order are unclear and often left undefined.  This brings unpredictability and uncertainty, as there “is no objective way to determine which activities are permitted and which are prohibited.”  This also invites the possibility of “selective enforcement.”  Plaintiffs claim the Order is an attempt to “censor and chill” discussions surrounding equality and inclusion—speech that is “at the core of the First Amendment’s protections.”

Plaintiffs, among other relief, seek a declaration that the Order is unlawful and invalid and a permanent injunction enjoining its enforcement.

We will continue to monitor developments with this lawsuit and advise our readers of further developments.

OFCCP Obtained $35.6 Million From Contractors in FY2020

During an October 21, 2020 “stakeholder” call, Director Leen took the opportunity to laud the agency’s accomplishments over the past four years, including record financial recoveries.  Director Leen noted that the agency’s total recoveries over the past four years exceeded the prior nine years combined.

As we previously reported, in FY2019, OFCCP set a new record for financial recoveries:  over $40 million.  The trend of high recoveries continued during fiscal year 2020; OFCCP reports that it had its second-highest financial recovery on record in FY2020, obtaining $35.6 million from contractors.

OFCCP Provides Additional Guidance On “Combatting Race and Sex Stereotyping” Executive Order

On October 21, 2020 the U.S. Department of Labor’s Office of Federal Contract Compliance Programs (“OFCCP”) held a stakeholder call regarding the agency’s implementation of Executive Order 13950, “Combatting Race and Sex Stereotyping” (the “Order”) which, as we have previously reported, restricts the concepts which contractors may include in anti-discrimination and diversity trainings provided to their employees.  Additional posts discussing the order and related developments are available here, here and here.

Proskauer attended the call, during which OFCCP Director Craig Leen answered questions related to the agency’s release of the Request for Information required by the Order and the roll out of a landing page devoted to the Order.

OFCCP’s Request for Information

On October 21, 2020 OFCCP announced the publication of a Request for Information (“RFI”), consistent with the Order’s directive that the agency do so within 30 days.  In the RFI, OFCCP requests that contractors and other stakeholders provide “comments, information, and materials . . . concerning workplace trainings involving prohibited race or sex stereotyping or scapegoating.”  On the stakeholder call, Director Leen made clear contractors are not required to provide the information, but rather the request is voluntary.

The RFI invites contractors to “provide various other types of materials, such as PowerPoints, photographs, videos, handwritten notes, or printed handouts.”  Responses to this RFI are due by December 1, 2020.

The RFI specifies categories of information it seeks, noting contractors “do not need to provide a response for every category number”:

  1. Workplace trainings that promote, or could be reasonably interpreted to promote, race or sex stereotyping.
  2. Workplace trainings that promote, or could be reasonably interpreted to promote, race or sex scapegoating.
  3. The duration of any workplace training identified in categories 1 or 2.
  4. The frequency of any workplace training identified in categories 1 or 2.
  5. The expense or costs associated with any workplace training identified in categories 1 or 2.

OFCCP additionally requests input on any or all of the following questions, if applicable:

  1. Have there been complaints concerning this workplace training? Have you or other employees been disciplined for complaining or otherwise questioning this workplace training?
  2. Who develops your company’s diversity training? Is it developed by individuals from your company, or an outside company?
  3. Is diversity training mandatory at your company? If only certain trainings are mandatory, which ones are mandatory and which ones are optional?
  4. Approximately what portion of your company’s annual mandatory training relates to diversity?
  5. Approximately what portion of your company’s annual optional training relates to diversity?

Contractors may submit materials in response to the RFI anonymously, however, the RFI notes “any materials submitted in response to [the RFI] may be subject to public disclosure.”

During the October 21, 2020 stakeholder call, Director Leen explained that the RFI in intended for information collection rather than enforcement purposes.  Director Leen indicated that responses to the RFI will be treated the same way as contractors’ requests for compliance assistance, meaning the agency will not bring enforcement actions solely based on submissions.  That being said, if, in response to a contractor’s submission, OFCCP provides advice for compliance with the Order and the contractor decides not to implement the agency’s advice, OFCCP could potentially take enforcement action on that basis.  For further information on this point, Director Leen directed stakeholders to pages 8-9 of the RFI, which provides in relevant part:

OFCCP will, consistent with law, exercise its enforcement discretion and not take enforcement action against Federal contractors and subcontractors that voluntarily submit information or materials in response to this request for information, as it relates to submitted information or materials and potential non-compliance with Executive Orders 13950 or 11246, provided that such contractor or subcontractor promptly comes into compliance with the Executive Orders as directed by OFCCP.

Given that responses could potentially lead to enforcement action, it is an open question why any contractor would respond to the RFI.

Executive Order 13950 Landing Page

During the October 21, 2020 stakeholder call, Director Leen also highlighted OFCCP’s launch of a landing page devoted to the Order.  This landing page contains links to:

  • Frequently Asked Questions (“FAQs”) the agency previously published regarding the Order (for more information on the FAQs, see our previous blog post).
  • OFCCP’s RFI; and
  • OFCCP’s Complaint Hotline to Combat Race and Sex Stereotyping (for more information on the Hotline, see our previous blog post and podcast).

[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.

play podcast


Listen to the podcast.

 

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.

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