Government Contractor Compliance & Regulatory Update

OFCCP Announces 2019 Veteran Hiring Benchmark

On March 27, 2019 the Office of Federal Contract Compliance Programs (“OFCCP”) released its 2019 Vietnam Era Veterans’ Readjustment Assistance Act (“VEVRAA”) Benchmark. Effective March 31, 2019 the new benchmark is 5.9%, a slight decrease from 2018’s 6.4% benchmark. This is OFCCP’s fifth 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)).

In announcing the revised benchmark, OFCCP also noted that it “plans to incorporate VEVRAA Focused Reviews into the Corporate Scheduling Announcement List” next fiscal year. As we previously reported, focused reviews are compliance evaluations focusing on one element of OFCCP’s jurisdiction. This year OFCCP introduced Section 503 Focused Reviews, which focus on the OFCCP’s requirements with respect to individuals with disabilities. Contractors should review their processes for compliance with VEVRAA and OFCCP’s VEVRAA-related regulations to ensure they are prepared.

BREAKING: OFCCP Selects Contractors For 2019 Audits

On March 25, 2019 OFCCP posted the 2019 CSAL list on its FOIA website, identifying contractors selected for compliance evaluations.

Contractors should check OFCCP’s FOIA website immediately to confirm if they have been scheduled for a compliance review, a Section 503 Focused Review, or an Affirmative Action compliance check. As we have previously reported, contractors will no longer receive notification that they have been selected for a compliance review through the mail.

If you have any questions or concerns regarding any of the above mentioned forms of review, please feel free to contact Guy Brenner at: Gbrenner@proskauer.com.

EEOC Ordered To Provide EEO-1 Pay Data Guidance By April 3

According to published reports, the federal judge who ordered the EEOC to reinstitute the stayed compensation portion of the EEO-1 report (referred to as “Component-2 data”) has given the EEOC until April 3 to provide guidance about if, when and how it will collect Component-2 data from employers.

 

See original post from our Law and the Workplace blog here.

EEOC Opens EEO-1 Portal

As we previously reported, a federal judge has lifted the stay issued by the Office of Management and Budget (“OMB”) that halted implementation of the EEOC’s revised EEO-1 form that would have added compensation data to the annual EEO-1 survey submission (the “Revised EEO-1”). In so ruling, the judge ordered “that the previous approval of the revised EEO-1 form shall be in effect.”

 

See original post from our Law and the Workplace blog here.

OFCCP Announces New York City Town Hall Meetings

On March 11, 2019 OFCCP announced that, “[i]n order to continue to enhance the scope and quality of OFCCP’s compliance assistance materials” and to “to build on the success of [previous] town halls,” it will be holding two town hall meetings in New York City in April 2019. The first meeting will focus on the financial industry, while the second will focus on the legal industry. The meetings will be open to the public.

OFCCP notes that the meetings will “be of particular interest to human resource managers, equal employment opportunity specialists, chief compliance officers, and other personnel in the legal and financial industries who are directly involved with ensuring their company’s compliance with OFCCP’s requirements.”

Each organization is only allowed two tickets to each town hall meeting, and tickets are assigned on a first come, first serve basis. The dates, times and registration links to the town halls are detailed below:

  1. Date: April 9, 2019 Time: 8:30 AM to 1:00 PM City Location: New York, NY Registration Link: https://www.eventbrite.com/e/ofccp-town-hall-financial-industry-related-fields-tickets-58112751805
  2. Date: April 10, 2019 Time: 8:30 AM to 1:00 PM City Location: New York, NY Registration Link: https://www.eventbrite.com/e/ofccp-town-hall-legal-industry-related-fields-tickets-58117930294

OFCCP has also announced, but not yet scheduled, town hall meetings in Phoenix, Arizona and in Washington, DC. The meetings will focus on Native American Outreach and VEVRAA respectively.

OFCCP Provides Anticipated Guidance On Section 503 Focused Reviews

Quick Hit: As we previously reported, OFCCP is about to introduce “focused reviews” – compliance evaluations focused on a particular area of OFCCP enforcement – and its upcoming publication of the 2019 CSAL list will include Section 503 Focused Reviews. In advance of the launch of focused reviews, OFCCP has established a Section 503 Focused Reviews webpage (“Section 503 webpage”). The Section 503 webpage provides contractors with resources aimed at assisting with Section 503 focused reviews, including: a Section 503 FAQ page, a copy of the Section 503 Focused Review Scheduling Letter, and “OFCCP compiled disability related best practices to assist federal contractors with compliance.”

Key Takeaway:

Contractors should familiarize themselves with the contents of Section 503 webpage, which provides some useful guidance.  Of particular note, the FAQ page provides helpful answers for some common questions about the focused reviews as well as new insights.  For example:

  • Although the Section 503 Focused Review Scheduling Letter requests a copy of the contractor’s EO 11246 Affirmative Action Program, the document is not reviewed as part of the focused review; rather, it will be used to help the compliance officer understand the contractor’s organizational structure and compliance efforts.
  • Contractors will not be scheduled for full compliance evaluations while undergoing a Section 503 Focused Review (but will not be immune from investigations into individual complaints alleging violations of the laws OFCCP administers);
  • For now, Section 503 Focused reviews will be conducted only at contractors’ corporate headquarters locations.

OFCCP provides other resources as well, including links to its best practices with regard to recruiting, hiring, and retaining disabled individuals, which should help contractors anticipate the practices that OFCCP will be looking for during a focused review.

More Detail: On March 8, 2018 OFCCP published its Section 503 webpage.  OFCCP intends the Section 503 webpage “to provide contractors with helpful information and assistance in implementing best practices and increasing the employment of individuals with disabilities[]” and to “serve as a resource center for contractors.”  The Section 503 Webpage can be accessed here.

The Section 503 webpage provides a number of resources, including:

  • Directive 2018-04 (which establishes focused reviews);
  •  A sample Section 503 Focused Review Scheduling Letter so contractors can know what OFCCP will request if they are selected for such a review;
  • Section 503 Focused Reviews Frequently Asked Questions where OFCCP has posted 12 questions and answers about Section 503 Focused Reviews;
  • Section 503 regulations
  • OFCCP’s “Best Practices” for Section 503 compliance;
  • Section 503 resources “providing help, assistance, guidance, support and advice”; and
  • The voluntary self-identification form for individuals with disabilities.

BREAKING: Judge Lifts Stay On EEO-1 Pay Data Submission

Quick Hit: A federal judge has issued an order lifting the stay issued by the Office of Management and Budget (“OMB”) that halted implementation of the EEOC’s revised EEO-1 form that would have added compensation data to the annual EEO-1 survey submission (the “Revised EEO-1”). In so ruling, the judge ordered “that the previous approval of the revised EEO-1 form shall be in effect.”

See original post from our Law and the Workplace blog here.

OFCCP Announces CSAL List Coming in March 2019

OFCCP has announced that its next Corporate Scheduling Announcement Lists (CSALs) are expected to be published on its FOIA Library in “mid-to-late March 2019.” As we have previously reported, OFCCP will not mail out CSALs to contractors but will instead publish the lists on its website.

OFCCP also shared that the lists will include Section 503 Focused Reviews and Affirmative Action Program Compliance Checks. OFCCP additionally promised to provide more Section 503 contractor compliance resources on its website in anticipation of the upcoming focused reviews.

Key Takeaways: The OFCCP’s short announcement provides a few interesting kernels of information for contractors.

First, because CSALs typically are issued in February, OFCCP’s announcement provides contractors some comfort as to when to expect the CSALs to issue. In addition, OFCCP will issue an announcement once the list is posted so contractors can stop constantly checking the OFCCP’s website. We will receive that announcement and will promptly report when the lists are issued on our blog.

Second, the announcement notes that Section 503 focused reviews will be part of this fiscal year’s compliance evaluations. Given that the announcement does not reference VEVRAA or Executive Order 11246 focused reviews, it appears that such focused reviews will not be commenced in the near future.

Finally, the announcement curiously notes that the list will include “compliance checks as outlined in our Affirmative Action Program Verification Initiative Directive.” The AAP Verification Initiative Directive (the “Directive”) mentions compliance checks as a component of the verification initiative that is to be created by OFCCP, but those checks are supposed to confirm the veracity of a contractor’s certification that it has complied with its AAP obligations. As the Directive states: “This [AAP compliance] verification would initially take the form of OFCCP review of a certification, followed by potential compliance checks…” The agency has not provided any information about actual implementation of a certification program, or a compliance check follow up procedure. As such, the reference to “compliance checks” in the recent CSAL announcement is noteworthy. As we learn more details about the compliance checks, we will publish them here.

OFCCP Reveals Development of Voluntary Enterprise-Wide Review Program

Quick Hit: OFCCP’s Directive 2019-04 reveals the development a Voluntary Enterprise-Wide Review Program (“VERP”). Once established, contractors will be able to voluntarily participate in the program, submitting themselves to an expanded compliance evaluation as part of an application process and, upon admittance to the program, will be removed from the pool of contractors in the evaluation scheduling process for either 3 or 5 years. According to the OFCCP, VERP’s purpose is to “focus on recognizing contractors that have comprehensive, corporate‐wide inclusion and compliance programs” and “facilitate…compliance by high performing contractors and those who wish to reach the top”.

Key Takeaways: The Directive continues the recent trend of OFCCP initiatives expanding the reach of its compliance programs and working to maximize its enforcement efficiency. Much like the Early Resolutions Procedures Directive, which we reported on here, the VERP directive seeks to “help[] OFCCP be more effective in achieving its mission to protect workers, promote diversity, and enforce the law.”

The carrot that VERP offers to contractors—avoiding the uncertainty of the evaluation scheduling process for either 3 or 5 years—is most likely to entice contractors who are already putting in the work to meet their compliance obligations. Unlike a typical compliance evaluation which only examines a single establishment, the VERP application process evaluation examines both a contractor’s headquarters and a sample of their other establishments. Contractors accepted into VERP must provide periodic reports, verifying their maintenance of a discrimination free and inclusive workforce, for the duration of their participation in the program.

While VERP contends that it will offer “meaningful cost‐saving compliance incentives to federal contractor participants”, the true motivation behind the program appears to be the financial and enforcement benefits OFCCP will enjoy from the program. By eliminating contractors that are meeting their compliance obligations from the evaluation scheduling process, the remaining pool of contractors becomes more concentrated with contractors who are likely not meeting their compliance obligations. A 2016 Government Accountability Office report found that only 2% of OFCCP compliance evaluations result in findings of discrimination. As such, OFCCP has recently been looking for ways to use its budget dollars more effectively. By weeding out compliant contractors, OFCCP, is more likely spend its evaluation resources on contractors in violation of OFCCP regulations.

Like most recent OFCCP Directives, the VERP Directive makes sense for OFCCP. But does it make sense for contractors? At this point, it is difficult to say as the Directive merely announces the development of the program – details will follow. As such, at this point we do not know what requirements VERP will impose on contractors during the application process, the evaluation process, or in the agreement contractors enter into as part of their removal from the evaluation scheduling process. The Directive does not specify the quantitative or qualitative aspects of participating contractor’s self-reporting obligations. Nor does the Directive explain what criteria a contractor must meet for admittance to VERP. Details such as these are crucial to the cost benefit analysis of contractor participation in VERP.

More Detail: On February 13, 2019 OFCCP issued Directive 2019-04 which presents the framework for VERP. VERP “enables OFCCP to blend its compliance evaluation and compliance assistance activities to work with high‐performing contractors toward a mutual goal of sustained, enterprise‐wide (corporate‐wide) compliance, outside of OFCCP’s neutral establishment‐based scheduling process.”

The VERP Directive envisions two tiers of contractor participation. The top tier will consist of top performing contactors who have implemented “corporate wide model diversity and inclusion programs.” Admittance to the top tier requires meeting a set of (yet to be established) “more stringent” criteria. Non-top tier contractors are those that are compliant with OFCCP requirements, but wish to receive “individualized compliance assistance to become top performers.”

The application process will require, at least, that contractors undergo an expanded compliance evaluation of both their headquarters and a subset of their other establishments. Contractors must demonstrate that they meet OFCCP’s basic compliance requirements and demonstrate application of, and commitment to, corporate-wide equal employment opportunity programs.

OFCCP will enter into an agreement with every successful applicant that removes that contractor from the compliance evaluation scheduling process for the duration of the contractor’s participation in the program. Top tier contractors may remain in the program for five years, with the ability to remain in the program after re-evaluation, while non-top tier contractors can remain in the program for three years. The exemption from compliance evaluations will not, however, deprive OFCCP of the right to conduct investigations into complaints submitted by individual or third party complainants. To remain in the program, contractors will have to submit “period reports and information” to OFCCP to confirm that they “maintain a workforce free of discrimination or other material violations.” Exactly what these reports will require and how often they will have to be submitted is not detailed in the Directive.

Addressing what is likely to be a concern among contractors, the Directive states that OFCCP will not automatically place contractor applicants rejected from VERP on a compliance evaluation scheduling list. Rather, rejected applicants will simply return to the compliance evaluation scheduling pool where they may or may not be selected for evaluation.

The VERP directive notes, however, that the agreement between OFCCP and participating contractors is conditional on the contractor abiding by all of the agreement’s terms. Contractors failing to maintain VERP’s requirements may have their agreements terminated and be returned to the compliance evaluation scheduling pool.

We will continue to advise our readers of developments on this initiative as more details are made available.

[Podcast]: What Government Contractors Should Expect in 2019

the proskauer brief logo imageIn this episode of The Proskauer Brief, partners Harris Mufson and Guy Brenner discuss the Office of Federal Contract Compliance Programs (OFCCP).  Harris and Guy highlight OFCCP’s recent activities and discuss what government contactors should expect in 2019.

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Listen to the podcast.

 

View the transcript on our Law and the Workplace blog.

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