Quick Hit: OFCCP has published a Notice of Proposed Rulemaking (NPRM) it states would “codify the procedures that the agency currently uses to resolve potential discrimination and other material violations” and “clarify definitions to specify the types of evidence OFCCP will use to support its discrimination findings.”  The procedures dictate OFCCP’s use of Predetermination Notices (PDNs) and Notices of Violation (NOVs), and also provide the statistical and non-statistical requirements for discrimination findings.

Key Takeaways:

The proposed rule has a number of important components.  First, it codifies the procedures for two formal notices—PDNs and NOVs—OFCCP uses to notify contractors of findings of employment discrimination.  As such, if adopted, the proposed rule will provide contractors more clarity with regard to this process and make it more difficult for the agency to change the process.  The agency has been criticized for having opaque and inconsistently applied procedures.  For example, much of what occurs during an audit is guided by the Federal Contract Compliance Manual (FCCM), but the document itself makes clear it “does not establish substantive agency policy.”  As such, contractors had little recourse if compliance officers ignored provisions of the FCCM.  Moreover, OFCCP could change the FCCM’s procedures anytime it wished.  For example, OFCCP recently changed the PDN process in the FCCM via a Directive.  If adopted, the new regulations will codify the PDN and NOV process and prevent any changes absent a formal rulemaking with notice and the opportunity for review and comment.

Second, as part of the codification of the PDN and NOV process, OFCCP has proposed that contractors may bypass PDN and NOV procedures when there are preliminary findings of material violations and skip straight to conciliation, even when the violations involve discrimination.  This is consistent with OFCCP’s general effort to streamline the audit process and facilitate the resolution of audits on an expedited basis.

Third, and perhaps most important, the proposed rule defines the statistical thresholds necessary for the issuance of a PDN, providing that a PDN will not be issued when statistical indicators of discrimination are below three standard deviations absent “corroborating nonstatistical evidence” that “demonstrat[es] an intent to discriminate.”  However, “corroborating nonstatistical evidence” is not required to issue a PDN where the statistical indicators of discrimination are at or above three standard deviations.

More Detail:

On December 30, 2019, OFCCP issued the NPRM proposing a number of changes to its regulations.  OFCCP explains that the proposed rules are intended to “provide federal contractors and subcontractors with greater certainty about the procedures that OFCCP follows during compliance evaluations to resolve employment discrimination and other material violations.”  The proposed rules have a number of components.

First, they codify OFCCP’s use of PDNs and NOVs.  Under the proposal, which is similar to current stated practice, if a compliance review “indicates preliminary findings of discrimination,” the agency will send the contractor a PDN to inform it of the agency’s preliminary findings. The contractor will then have 15 calendar days to respond. If the contractor fails to respond “or provide a sufficient response within 15 calendar days of receipt of the notice,” OFCCP may issue an NOV.  Under the proposal, where the violations do not involve discrimination, a PDN is not required before issuing an NOV.

Under the proposed rule,  “[i]f a compliance review or other review by OFCCP indicates preliminary findings of discrimination or other material violations of the equal opportunity clause, OFCCP may issue a [NOV] to provide notice to the contractor requiring corrective action and inviting conciliation through a written agreement.”

In addition to codifying the process of issuing PDNs and NOVs described above, the proposed rules clarify that “[a] contractor may waive the [PDN and NOV] procedures . . . to enter directly into a conciliation agreement.” This bypass option is available even when the material violations involve discrimination. According to the NPRM, allowing contractors to skip the PDN and NOV procedures “would further the agency’s efforts to improve efficiency, codifying an expedited option for resolution that would apply to compliance reviews in their early stages.”

Second, OFCCP has proposed that it will not issue a PDN notifying a contractor of preliminary findings of discrimination unless its statistical analysis shows a disparity of at least two standard deviations.  Importantly, in instances where the statistical indicators of discrimination are between two and three standard deviations, the agency will require “corroborating nonstatistical evidence” demonstrating “an intent to discriminate” before issuing a PDN. The nonstatistical evidence OFCCP may examine includes “testimony about biased statements, remarks, attitudes, or acts based upon membership in a protected class; differential treatment through review of comparators, cohorts, or summary data reflecting differential selections, compensation and/or qualifications; testimony about individuals denied or given misleading or contradictory information about employment or compensation practices; testimony about the extent of discretion or subjectivity involved in making employment decisions; or other anecdotal or supporting evidence.”

However, the proposed rules provide that OFCCP may issue a PDN without any corroborating nonstatistical evidence where the statistical indicators of discrimination are at least three standard deviations.

Finally, the proposed rules update references to OFCCP’s agency head in regulations from “Deputy Assistant Secretary” to the correct title of “Director.”

Comments on the proposed rule are due by January 29, 2020 and can be submitted here. We will continue to advise our readers of developments related to this proposed rule as more details are made available.

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Photo of Guy Brenner Guy Brenner

Guy Brenner is a partner in the Labor & Employment Law Department and leads the Firm’s Washington, D.C. Labor & Employment practice. He is head of the Government Contractor Compliance Group, co-head of the Counseling, Training & Pay Equity Group and a member…

Guy Brenner is a partner in the Labor & Employment Law Department and leads the Firm’s Washington, D.C. Labor & Employment practice. He is head of the Government Contractor Compliance Group, co-head of the Counseling, Training & Pay Equity Group and a member of the Restrictive Covenants, Trade Secrets & Unfair Competition Group. He has extensive experience representing employers in both single-plaintiff and class action matters, as well as in arbitration proceedings. He also regularly assists federal government contractors with the many special employment-related compliance challenges they face.

Guy represents employers in all aspects of employment and labor litigation and counseling, with an emphasis on non-compete and trade secrets issues, medical and disability leave matters, employee/independent contractor classification issues, and the investigation and litigation of whistleblower claims. He assists employers in negotiating and drafting executive agreements and employee mobility agreements, including non-competition, non-solicit and non-disclosure agreements, and also conducts and supervises internal investigations. He also regularly advises clients on pay equity matters, including privileged pay equity analyses.

Guy advises federal government contractors and subcontractors all aspects of Office of Federal Contract Compliance Programs (OFCCP) regulations and requirements, including preparing affirmative action plans, responding to desk audits, and managing on-site audits.

Guy is a former clerk to Judge Colleen Kollar-Kotelly of the US District Court of the District of Columbia.