Government Contractor Compliance & Regulatory Update

Breaking News From The ILG Conference: OFCCP To Bring Back Focused Section 503 Reviews

On August 2, 2018, during an impassioned speech at the National Industry Liaison Group’s annual conference in Anaheim, California, OFCCP Acting Director Craig Leen announced that the agency will bring back “focused reviews” looking at contractors’ Section 503 compliance.

He made his remarks during the “Leading Practices in Disability Inclusion” break out session at the conference, at which he shared his personal experiences and why he is so committed to eliminating disability discrimination. He explained that the focused review would include an onsite visit and interviews with managers and the contractor’s ADA coordinators. Acting Director Leen stated he would also like the reviews to look at hiring practices, the contractor’s efforts to meet the 7% benchmark, and how the contractor handles requests for reasonable accommodations.

To emphasize his point, Acting Director Leen stated that “compliance with Section 503 is a priority of” OFCCP, and this focus has the support of Secretary of Labor Acosta.

Key Takeaway. Compliance with Section 503 and its implementing regulations is now clearly a focus of OFCCP. Even if contractors are not chosen for a focused review, they can expect that compliance with OFCCP’s disability discrimination and affirmative action requirements will be a focus of any compliance evaluation. For this reason, contractors are well advised to ensure that (1) they are tracking and are undertaking affirmative efforts to achieve the 7% benchmark; (2) they have adopted and implemented effective disability accommodation and discrimination policies; (3) they are performing annual reviews of job requirements; (4) they are undertaking and documenting the interactive process for accommodating employees with disabilities; and (5) their facilities comply with ADA accessibility requirements.

OFCCP Issues “What Contractors Can Expect” Guidance

On August 2, 2018, OFCCP issued a new publication entitled “What Contractors Can Expect .” The publication coincided with OFCCP Acting Director Craig Leen’s well-received presentation at the National Industry Liason Group’s national conference in Anaheim, California, where Proskauer partners Connie Bertram and Guy Brenner are in attendance.

OFCCP had promised the “What Contractors Can Expect” publication in its May 1, 2018 Town Hall Action Plan . The document states that it provides “the general expectations that often guide interactions between federal contractors and OFCCP.” Although the document uses the term “expectations” as opposed to “rules” or “rights,” the publication clearly aims to address contractors’ concerns about dealing with the agency and foster better relations between OFCCP and the contractor community. The expectations include:

  • Access to Accurate Compliance Assistance Material. OFCCP states that it is “committed to providing clear, concise, and practical compliance assistance” in the form of “technical assistance guides, factsheets and brochures, ‘Frequently Asked Questions’ or FAQs, guidance documents, directives, webinars, and email.”
  • Timely Responses to Compliance Assistance Questions. OFCCP, as part of its effort to increase the compliance assistance part of its mission, is committed to providing more timely responses to inquiries. It states that “[c]ontractors can typically expect a reply to Help Desk inquiries and emailed compliance assistance questions within 3-4 business days.” Where more time is needed, OFCCP provides that contractors “can expect that OFCCP will provide notice of the delay and assurance that OFCCP’s reply, when provided, is responsive to the issues raised.”
  • Opportunities to Provide Meaningful Feedback and to Collaborate. OFCCP states that contractors “can expect OFCCP to provide them with opportunities to submit feedback on the quality and quantity of the agency’s compliance assistance offerings and, periodically, on their experiences during their most recent compliance evaluations.” OFCCP also indicates that it will engage with contractors “on the development of new compliance assistance material, contractor training, and other matters that may support contractor compliance.” Consistent with this expectation, Ms. Bertram was consulted during the conference by a member of OFCCP’s National Office regarding Ms. Bertram’s experiences working with the member’s program and how the program’s performance could be improved.
  • Professional Conduct by OFCCP’s Compliance Staff. In response to criticism about what many contractors perceive to be heavy-handed tactics, OFCCP makes clear that in interacting with the agency contractors “can expect to receive prompt, courteous, and accurate information during compliance evaluations and complaint investigations.” However, OFCCP notes that professional courtesy is a two way street, as “the perceived quality of an engagement with OFCCP staff can be influenced by several factors, including the specificity and accuracy of the information contractors provide, and the timeliness and thoroughness of their responses to document production requests during compliance evaluations and complaint investigations.”
  • Neutral Scheduling of Compliance Evaluations. OFCCP states that contractors “can expect OFCCP to use a neutral selection system to identify contractors for compliance evaluations.” Addressing concerns raised at its recent town hall meetings, OFCCP states that “Individual contractors are never ‘targeted’ though OFCCP may focus its resources on particular industries or sectors, geographic regions, or types of employment practices,” and that “OFCCP never schedules a contractor for a compliance evaluation because that contractor sought compliance assistance.”
  • Reasonable Opportunity to Discuss Compliance Evaluation Concerns. Responding to concerns about lack of transparency during compliance evaluations, OFCCP states that contractors “can expect to have a reasonable opportunity to discuss issues that may affect the progress or results of their compliance evaluation or complaint investigation.” OFCCP encourages these discussions to take place with the relevant compliance officer in the first instance, but “recognizes that some issues may warrant elevating a discussion to a higher level with management in the district office and then, if necessary, the regional office,” and even the national office. OFCCP believes that such interactions “can remove uncertainty and clarify areas of misunderstanding.”
  • Timely and Efficient Progress of Compliance Evaluations. Among other things, OFCCP provides that contractors should expect that when asked for information they will be provided with “reasonable production timelines … as determined in light of all relevant facts and circumstances.” OFCCP also commits to providing “clear explanations of OFCCP’s compliance evaluation processes and periodic status or progress updates as evaluations progress.” The agency does note that its ability to conduct timely and efficient compliance evaluations is “greatly influenced by the level of cooperation OFCCP receives, and the quantity, quality, and timeliness of the information that contractors provide.”
  • Confidentiality. OFCCP states that contractors “can expect that the information they provide during a compliance evaluation will be kept confidential. OFCCP keeps this contractor information, including but not limited to personnel records and salary data, confidential to the maximum extent allowed by law.”

OFCCP Director Resigns

Ondray T. Harris, Director of the Office of Federal Contractor Compliance Programs (“OFCCP”), resigned on July 27, 2018. No public explanation for his resignation has been provided, which came only eight months after he assumed the position.

Reports indicate that Craig Leen, Senior Advisor to the OFCCP, will step into the role as Acting Director of the agency. On July 25, 2018, OFCCP’s updated its website’s personnel page to refer to Mr. Leen as its “Deputy Director.” Both Mr. Harris and Mr. Leen are credited with taking steps to improve relationships between the OFCCP and the federal government contracting community, and Mr. Harris’ resignation is not expected to lead to a change in this new approach.

The announcement came just over one week before Mr. Harris was slated to speak about the OFCCP at the National Industry Liaison Group’s annual conference. On July 27, 2018, the NILG announced that Mr. Leen would replace Mr. Harris as the keynote speaker at the event.

Proskauer Publishes Article on Federal and State Laws Addressing the #MeToo Movement

Connie Bertram published an article in the June issue of OFCCP Digest titled “Federal Tax Reforms and Proposed State Laws Try to Address the Concerns Raised by the #MeToo Movement.” The article focuses on the more than 125 bills that have been introduced in 2018 aimed at eliminating sexual harassment and abuse in the workplace. As discussed in more detail in the article, federal, state, and local efforts to discourage – or even prohibit – settlement agreement provisions or arbitration agreements limiting an employee’s right to publicly disclose and/or pursue sexual misconduct claims are changing the employment landscape in important ways and quickly gaining momentum nationwide.

OFCCP Issues “Town Hall Action Plan” Announcing Three Initiatives

On May 1, 2018, the OFCCP issued a Town Hall Action Plan (the “Plan”).  The Plan is the result of OFCCP’s “town hall meetings” held in late 2017 and early 2018 , which were conducted in order to address the findings of the Government Accounting Office’s September 2016 review of the agency .  The Plan identifies “three general areas of focus:  training, communication, and trust,” which OFCCP plans to achieve through three initiatives:  (1) reviewing and enhancing contractor compliance assistance materials; (2) assessing and improving the quality of contractor and compliance officer training and education; and (3) increasing transparency and communication with the contractor community.

A review of the initiatives show that they are aimed at standardizing OFCCP processes, providing useful compliance tools to contractors, and improving transparency in the compliance evaluation process. Details on each are summarized below.

Review and Enhance Contractor Compliance Assistance

The Plan recognizes that OFCCP’s existing technical assistance guides are “outdated.” As such, OFCCP plans to create “three comprehensive technical guides” to replace its outdated resources:  a Supply & Service Technical Assistance Guide; a Construction Technical Assistance Guide; and an Academic Institutions Technical Assistance Guide.  OFCCP intends for the new guides to be user-friendly compliance resources for contractor personnel.

In addition, as part of this initiative, OFCCP will be redesigning its webpage, updating the New and Small Federal Contractors Assistance Guide, developing new infographics on the internet applicant definition, recordkeeping, and posting and notice requirements, and updating the “OFCCP At A Glance” brochure.

Finally, OFCCP will develop a recognition program to “recognize publicly one or more sound and successful equal employment opportunity and nondiscrimination compliance programs.”

Assess and Improve the Quality of Contractor and Compliance Officer Training and Education

The Plan implicitly recognizes what has been a common criticism of OFCCP – inconsistent enforcement by OFCCP’s compliance officers. OFCCP announced a plan to improve the quality of compliance officer training and education.  This initiative will include a review of the existing training program, assessing current OFCCP’s staff members’ skills and addressing gaps, standardizing training materials, adopting a competency model that clearly identifies the skills, knowledge and abilities all compliance officers should possess, and creating and implementing a plan of action for seeking third party accreditation for OFCCP’s national office training program.

OFCCP notes that by improving training, contractors should see improved compliance assistance from the agency. In addition, OFCCP anticipates that this initiative will result in an improvement in the quality and timeliness of compliance evaluations.

Increase Transparency and Communication

OFCCP noted that a “common thread” in the town hall meetings was contractors’ desire to have written expectations during compliance evaluations to ensure transparency and consistency. OFCCP apparently agrees, and will create a written guide to the compliance evaluation process for contractors.  OFCCP states that such a document will “enhance communications between contractors and OFCCP, improve transparency in OFCCP’s work, and begin to address trust issues.”

As part of this initiative, OFCCP will develop policy guidance that will increase transparency around issues such as OFCCP’s identification of indicators of violations, the basis for its requests for supplemental data, and how to conduct a “meaningful compensation self-assessment.” OFCCP will also develop a document titled “What Contractors Can Expect,” which it characterizes as a “Bill of Rights” styled document providing contractors with OFCCP principles contractors can “expect to exist during an engagement with OFCCP.”  The document will address matters such as timeliness, accuracy, communication, confidentiality, and professionalism.

The Plan states that the desire for increased transparency and communication led the agency to require last month  that Predetermination Notices (“PDNs”) be issued to contractors before any Notices of Violation may be issued.  In describing the new policy, the Plan emphasizes that it is also intended to ensure uniformity, noting that “[r]egional discretion is no longer permitted and the national office will review all PDNs to ensure appropriate consistency and uniformity.”

Finally, OFCCP promises to use online tools to increase communication with contractors.

Other Projects

The Plan also shares that the OFCCP is contemplating reviving its ombudsman program. Such a program would provide the agency with an impartial and independent perspective on issues such as communication and trust issues.

The Plan also notes that OFCCP will encourage the use of apprenticeship programs by contractors to “create a pipeline of diverse and qualified talent.” The Plan notes that such programs can not only address contractors’ outreach, recruitment and equal employment opportunity commitments, but can also address the need to train skilled workers.  The Plan does not state how the agency will encourage the use of apprenticeship programs.

Key Takeaways

More than a year into the Trump Administration, the Plan provides more evidence that the OFCCP is planning significant changes. Although the Plan does not itself represent any concrete change, it does reflect that the OFCCP is interested in improving relations with government contractors.  By producing a list of key deliverables developed out of the town hall meetings, OFCCP has signaled that it is listening to contractor concerns and plans to act upon them.

The Plan provides contractors with a way to gauge whether this new approach represents just talk or true change. Although the devil is in the details, if the Plan is realized, contractors should experience more transparency and fairness in their interactions with OFCCP, and more helpful compliance guidance.

OFCCP Announces 2018 Veteran Hiring Benchmark

On March 30, 2018, the Office of Federal Contract Compliance Programs (“OFCCP”) released its 2018 Vietnam Era Veterans’ Readjustment Assistance Act (“VEVRAA”) Benchmark. Effective March 31, 2018, the new benchmark is 6.4%, slightly lower than the previous year’s 6.7% benchmark. This is OFCCP’s fourth reduction of the benchmark, which has steadily declined since its inception in 2014.

The VEVRAA Benchmark is the figure which federal contractors must use to assess the effectiveness of their outreach programs for the hiring of veterans. Contractors may either use OFCCP’s national benchmark, or establish their own benchmark using applicable statistics and other metrics set forth in OFCCP’s regulations (41 CFR § 60-300.45(b)(2)).

OFCCP Announces New Compliance Evaluation Experience Survey

This week, the Office of Federal Contract Compliance Programs (“OFCCP”) announced that it will be sending a survey to federal contractors in an effort to “continue improving communication, transparency, and timeliness during [its] compliance evaluations.” OFCCP’s survey appears to be the latest effort by the agency to establish a more cooperative relationship with the government contractor community and address contractors’ concerns.

According to OFCCP, contractors who completed a compliance evaluation between October 1, 2012 and September 30, 2017 will be receiving the survey via email in the next two weeks. The survey, which can be completed anonymously, will collect information concerning contractors’ experiences during compliance evaluations. The survey will also allow contractors to provide suggestions to OFCCP for improving the compliance evaluation process.

OFCCP’s announcement emphasizes that it will not schedule a contractor for a compliance evaluation based on its participation in the survey. And, because the survey is anonymous, a contractor’s participation in the survey will not have an impact on any compliance evaluation that is already underway. Contractors with questions about the survey can email OFCCP at OFCCP-Customer-Exp-Survey@dol.gov.

Humana Settles Pay Bias Claims for $2.5 Million

Earlier this week, the Office of Federal Contract Compliance Programs (“OFCCP”) announced that it entered into a conciliation agreement with Humana Inc. (“Humana”) to resolve allegations that Humana paid hundreds of women at its Louisville, Kentucky headquarters less than their male coworkers.

OFCCP asserts that in 2011 and 2012, Humana paid 753 women in consulting, project manager, and manager positions less than similarly situated men.  Under the terms of the conciliation agreement, Humana will pay $2.5 million in back pay and interest.  Humana will also institute certain pay adjustments and review its compensation practices to ensure compliance going forward.

The Humana settlement reflects that, under the Trump Administration, OFCCP is continuing to focus on equal pay issues, specifically systemic pay discrimination.  As a result, it is more important than ever for contractors to undertake a privileged self-audit of their compensation and of policies that may contribute to compensation disparities, including hiring practices, training and promotion opportunities, and performance management.

OFCCP ISSUES FIRST DIRECTIVE UNDER TRUMP ADMINISTRATION

Since the beginning of the Trump Administration, federal contractors have been waiting to see what changes the new administration would make to the Office of Federal Contract Compliance Programs (“OFCCP”). Thus far, the greatest change has been more style than substance, with OFCCP officials expressing a desire to have a better relationship with the government contractor community.  Late last month, however, OFCCP issued its first new directive since President Trump took office.  In announcing the change, OFCCP stated that the new policy is part of a broader effort to “increase transparency of preliminary findings with federal contractors, and to achieve consistency across regional and district offices.”

OFCCP’s new Directive 2018-01 (the “Directive”) requires OFCCP offices to adopt a uniform approach to Predetermination Notices (“PDNs”) in compliance evaluations. Pursuant to the new PDN, published with the Directive, OFCCP will:  (1) inform the contractor of the agency’s preliminary findings of employment discrimination; and (2) provide the contractor with 15 days to rebut OFCCP’s preliminary findings.

Prior to the Directive, OFCCP reserved use of the PDN for systemic discrimination cases. OFCCP also afforded regional and district offices the discretion to issue a PDN prior to issuing a Notice of Violation (“NOV”).  Under the new Directive, regional and district offices are required to issue PDNs for preliminary findings identified during the course of compliance evaluations, regardless of whether system discrimination is found.  The Directive also provides increased oversight by OFCCP’s national office of potential violations before a final decision is made.  Going forward, the appropriate regional Office of the Solicitor must review all PDNs before they are submitted to OFCCP’s national office for a review and final decision.

The Directive, which goes into effect immediately, will serve as an interim guidance until OFCCP amends its Federal Contract Compliance Manual.

Directive 2018-01 is a welcome development and the first concrete sign that OFCCP wants to do more than just talk about improving its relationship with the government contractor community. Many contractors have faced circumstances where, after months of silence, OFCCP suddenly issues an NOV during a compliance evaluation.  Because the contractor was not contacted before the issuance of the NOV, the NOV can be based on incorrect findings or assumptions that could have been corrected with additional input from the contractor.  However, once an NOV is issued, OFCCP is often reluctant to reconsider the findings in them.  The Directive provides a mechanism to facilitate the exchange of information and potentially avoid erroneous NOVs.  The fact that PDNs will be subject to regional and national-level review before issuance is a positive sign that the Directive will also improve consistency in enforcement actions across the agency’s regions.

We will continue to monitor and report on developments.

Proskauer Publishes Article on Federal Tax Bill’s #MeToo Provision

Connie Bertram and Emilie Adams published an article in the February issue of OFCCP Digest titled “Federal Tax Bill Offers a Nod to the #MeToo Movement.”  The article focuses on a provision in the recently-passed Tax Cuts and Jobs Act that addresses corporate settlements involving claims of sexual harassment and abuse.  The provision prohibits companies from deducting settlement payments to employees for such claims – and attorneys’ fees and costs incurred in defending those claims – if the settlement is subject to a nondisclosure agreement.  As discussed in more detail in the article, however, the provision is already raising a number of significant questions and practical concerns that will likely affect the way most employers approach settlement agreements with current or former employees going forward.

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