Since 2013, OFCCP has revised its Functional Affirmative Action Plan (FAAP) Directive several times, most recently to make it easier for covered federal contractors and subcontractors to obtain its permission to create AAPs by functional unit. 

AAP regulations require establishment AAPs but allow for the option to prepare plans by separate “functional units,” provided each functional unit has its own “managing official” and has 50 or more employees.   

Functional or Business Unit – A component within an organization. A functional or business unit should also have identifiable personnel practices or transactional activities specific to the functional or business unit (e.g., applicant flow, hires, promotions, compensation determinations, terminations, etc.) that are distinguishable from other parts of the contractor. Functions or business units should be identified and defined based on the organization’s existing business operations, personnel practices, and management structures.

While the Agency could amend the regulations to favor FAAPs over establishment plans, it has instead issued Revision 3 to Directive 2013-01 Functional Affirmative Action Programs – effective September 21, 2022 – as an enticement to FAAPs.  OFCCP also published FAQs with the revised Directive. 

In summary, Revision 3 says a contractor seeking a FAAP Agreement with OFCCP must:

Request a FAAP Agreement by submitting the ten items of information in Attachment A, including,

  • An organizational chart that clearly identifies all the proposed functional or business units to be covered by the requested FAAP and how they are related to each other within the corporation’s overall structure.
  • A narrative description of the “business or function” of each proposed FAAP unit and how it meets the definition of a functional or business unit set forth above.

Notably, “approval of FAAP agreement requests by OFCCP is not automatic… Generally, OFCCP makes this decision within 60 calendar days of the request if all the required information is provided. OFCCP may require additional time if more information is needed.” 

OFCCP also characterizes FAAP application as a “negotiation process” the “discussion items” for which are outlined in Attachment B. 

  • The reporting hierarchy of the functional or business units.
  • Personnel procedures, including recruitment, hiring, promotion, compensation, termination, and record retention and data analysis as they apply to each functional or business unit, including identification of units that have differing personnel or compensation practices.
  • How the contractor anticipates complying with the affirmative action requirements of Executive Order 11246, Section 503, and VEVRAA.
  • How each functional unit manages its human resources and equal employment opportunity responsibilities.
  • Notify OFCCP of FAAP changes to the FAAP structure within 60 days.  For dynamic organizations, this may be a considerable burden, requiring the contractor to essentially negotiate with OFCCP over a new FAAP structure each time there is a change to an existing functional unit. 

  • Notify OFCCP within 60 calendar days of any changes to the primary corporate contact identified in the FAAP Agreement. 
  • Request renewal of the FAAP Agreement at least 120 days prior to expiration of the five-year term of a FAAP Agreement.  The renewal process may essentially entail re-applying for a FAAP Agreement. 

It is undoubtedly true that securing a FAAP Agreement is more efficient than it has ever been, but in addition to the foregoing requirements, FAAPs pose another challenge because FAAPs may be larger in terms of workforce headcount and personnel activity than establishment plans.  Any time we must submit more data to the Agency during a compliance review, the risks increase.  Thus, a primary consideration for any contractor considering FAAPs is whether its organizational structure is amendable to manageably-sized functional units, each with its own managing official.

There are advantages to engaging in affirmative action via FAAPs because they may better align with how a contractor does business and conducts affirmative action.  However, Revision 3 does not entirely ease the administrative burden of applying for, updating, renewing, or maintaining a FAAP Agreement with OFCCP and does not address the main drawback to FAAPs:  size.

OFCCP has announced it is extending the deadline for contractors to respond to the Agency’s August 19, 2022 Notice of Request Under the Freedom of Information Act for Federal Contractors’ Type 2 Consolidated EEO-1 Report Data.  The new deadline by which affected contractors need to submit objections is October 19, 2022 to “ensure that Covered Contractors have time to ascertain whether they are covered and submit objections.”

In addition to extending the deadline, OFCCP has indicated it will now be emailing contractors that OFCCP believes are covered by this FOIA request, using the email address provided by contractors that have registered in OFCCP’s Contractor Portal and the email addresses provided as a contact for the EEO-1 report  in an attempt to assist contractors determine whether they are included in the universe of Covered Contractors during the requested timeframe.

As a reminder, OFCCP has created a OFCCP Submitter Notice Response Portal for submission of objections.  The website also contains FAQs and alternative methods for contacting OFCCP.

Specially, OFCCP indicates contractors may contact the OFCCP FOIA Help Desk by phone or email with any questions related to this process that it has not covered in its frequently asked questions.  The Agency asks that

[w]hen calling about technical issues or other questions, please specify that you are calling in reference to the Submitter Notice Response Portal. Only responses or inquiries for the purpose of responding to the Federal Register Notice should be sent to the email address below. Responses sent elsewhere may not be acknowledged or accepted. If a company has filed EEO-1 Reports in the past, the EEO-1 Component 1 Reports from 2016-2020 are available in the EEO-1 Online Filing System. If you still need to contact OFCCP to determine whether your company’s data is subject to this request, please email OFCCP at OFCCP-FOIA-EEO1-Questions@dol.gov.

 

OFCCP’s regulations were designed for the typical private sector contractor.  As a result, higher educational institutions, particularly colleges and universities, often struggle with fitting their “round pegs” processes into the “square holes” that OFCCP designed.  OFCCP’s Contractor Portal is no exception.

The Portal identifies employer establishments based on EEO-1 Reports filed from 2018.  But higher educational institutions file Integrated Postsecondary Education Data System (IPEDS) Reports, not EEO-1 Reports.  This disconnect left many educational institutions to apply their best judgement to define its establishments when registering in the Portal—and increased the burden on these contractors when creating new accounts within the Portal.

Perhaps to address such issues, on August 25, OFCCP issued updated guidance that better fit its requirements to higher educational institutions’ processes.  Under this new guidance, higher educational institutions should register in the Portal using their IPEDS Unit Identification, rather than the unit identifier from an EEO-1 Report.

The Agency has also updated its Contractor Portal User Guide with a new “Educational Institutions Registration” section and nine new “Figures” to assist educational institutions in the Portal’s administrative process.

OFCCP has also issued a new FAQ to assist educational institutions navigate the process:

4. How do educational institutions register in the Contractor Portal?

Educational institutions register using their Integrated Postsecondary Education Data System (IPEDS) unique identification number (UNITID or IPEDS ID) and Employer Identification Number (EIN). Educational institutions may develop a single AAP or multiple AAPs, depending on their organizational structure. To account for these flexibilities and possible variations in AAP development, educational institutions will certify compliance for all AAPs associated with their 6-digit IPEDS ID.

Interestingly, this procedural guidance also reinforces other substantive guidance for educational institutions.  For example, this new FAQ confirms the guidance from OFCCP’s Educational Institutions Technical Assistance Guide and campus-like setting guidance that campus environments may appropriately be considered separate establishments—therefore, permitting multiple AAPs to cover a single campus.

As a result, educational institutions may want to consider whether their operations would support—and their organizational objectives may strategically benefit from—developing multiple affirmative action programs and certifying each separately in OFCCP’s Portal.

If you have any questions about this new guidance or strategic approaches to educational institution affirmative action planning, please contact a member of our Affirmative Action Compliance, OFCCP and Government Contractor Practice Group.

OFCCP announced today it will launch the Notification of Construction Contract Award Portal (NCAP) on August 26, 2022.  While the NCAP is not yet live, OFCCP has launched an NCAP informational page with background information.  The page will eventually include FAQs, how-to videos, and a User Guide.

The purpose of the NCAP is distinct from the supply and service Contractor Portal for AAP certification (which does not apply to construction contractors) and the new “OFCCP Submitter Notice Response Portal” for submission of federal contractor objections to disclosure of EEO-1 Reports under the Freedom of Information Act (FOIA).

The NCAP is specifically designed to be a more efficient way for federal construction contractors and subcontractors (and others) to fulfill their obligations under OFCCP construction contractor regulations (41 C.F.R. § 60-4.2 Solicitations) to provide notice of contract and subcontract awards of $10,000 or more.

NCAP provides contracting officers, contractors, and applicants seeking federal assistance for construction projects (such as state DOTs), a more efficient and secure electronic means to submit a notice to OFCCP within 10 working days of an award of a federal or federally assisted construction contract or subcontract in excess of $10,000. These notification requirements can be viewed at 41 CFR 60–4.2.

For federal construction contractors and subcontractors, the notice obligation is triggered by a covered contract, which should include the following section of the “Notice of Requirement for Affirmative Action To Ensure Equal Employment Opportunity (Executive Order 11246):”

The Contractor shall provide written notification to the Director of the Office of Federal Contract Compliance Programs within 10 working days of award of any construction subcontract in excess of $10,000 at any tier for construction work under the contract resulting from this solicitation. The notification shall list the name, address and telephone number of the subcontractor; employer identification number of the subcontractor; estimated dollar amount of the subcontract; estimated starting and completion dates of the subcontract; and the geographical area in which the subcontract is to be performed.

Although it may be rare for this notice obligation to apply to non-construction federal contractors, it can in a limited circumstance:

All nonconstruction contractors covered by Executive Order 11246 and the implementing regulations shall include the notice in paragraph (d) of this section [Notice of Requirement for Affirmative Action To Ensure Equal Employment Opportunity (Executive Order 11246)] in all construction agreements which are necessary in whole or in part to the performance of the covered nonconstruction contract… nonconstruction contractors shall give written notice to the Director within 10 working days of award of a contract subject to these provisions. The notification shall include the name, address and telephone number of the contractor; employer identification number; dollar amount of the contract, estimated starting and completion dates of the contract; the contract number; and geographical area in which the contract is to be performed.

OFCCP explains the purpose of these notice requirements and the NCAP:

Considering the federal government’s historic investments in the country’s infrastructure, this information will play a critical role in enabling OFCCP to more efficiently schedule and perform compliance reviews to ensure that companies doing business with the federal government fulfill their equal employment opportunity commitments.

We will continue to monitor this and share additional thoughts after the NCAP goes live on August 26th.

According to OFCCP, on June 2, 2022, the Center for Investigative Reporting sent OFCCP a request for the disclosure of

 . . .Type 2 EEO-1 reports for all federal contractors, including first-tier subcontractors, from 2016-2020….

The Center for Investigative Reporting, and other persons and organizations, have a history of requesting EEO-1 reports for various employers and/or industries.  Importantly, this most current request is specifically for the EEO-1 Type 2 reports  – the Consolidated EEO-1 report (as opposed to a headquarters (Type 3) or individual establishment report (Type 4) and is not a request for contractor’s Component 2 pay data.

Under the Freedom of Information Act (FOIA), on which the Center for Investigative Reporting is relying to request the information, requestees are entitled to object to the disclosure of the requested EEO-1 Reports.  The published notice states:

OFCCP has reason to believe that the information requested may be protected from disclosure under FOIA Exemption 4, which protects disclosure of confidential commercial
information, but has not yet determined whether the requested information is protected from disclosure under that exemption. OFCCP is requesting that entities that filed Type 2
Consolidated EEO-1 Reports as federal contractors at any time from 2016-2020, and object to the disclosure of this information, submit those objections to OFCCP within 30 days of the date
of this Notice.

To facilitate noticing contractors of the request and to handle objections, OFCCP has publicly published a Notice of the Request, as well as launched a Response Portal via which federal contractors can submit objections.   The website also includes helpful FAQs.

As OFCCP explains in its Notice of Request, “Exemption 4 to the FOIA protects against the disclosure of ‘trade secrets and commercial or financial information obtained from a person [that is] privileged or confidential.’ 5 U.S.C. 552(b)(4).”  If a federal contractor objects to release of an EEO-1 Report, it is “required to submit a detailed written statement as to why the information is a trade secret or commercial or financial information that is privileged or confidential.”  OFCCP will evaluate the contractor’s responses received to determine whether the requested information includes confidential trade secret, commercial, or financial information that should be withheld pursuant to FOIA Exemption 4.  If a contractor does not object, OFCCP will not have a basis to withhold the information.

In order to facilitate their review, OFCCP advises that objections submitted via the Response Portal must include:

  • The contractor’s name, address, contact information for the contractor (or its representative);
  • Should, at minimum, address the following questions in detail so that OFCCP may evaluate the objection to determine whether the information should be withheld or disclosed pursuant to FOIA Exemption 4:
    • What specific information from the EEO-1 Report does the contractor consider to be a trade secret or commercial or financial information?
    • What facts support the contractor’s belief that this information is commercial or financial in nature?
    • Does the contractor customarily keep the requested information private or closely-held?
    • What steps have been taken by the contractor to protect the confidentiality of the requested data, and to whom has it been disclosed?
    • Does the contractor contend that the government provided an express or implied assurance of confidentiality? If no, were there express or implied indications at the time the information was submitted that the government would publicly disclose the information?
    • How would disclosure of this information harm an interest of the contractor protected by Exemption 4 (such as by causing foreseeable harm to the contractor’s economic or business interests)?

Some federal contractors and subcontractors already share EEO-1 Report data with stakeholders and/or the public which may likely impact a decision to object, or to successfully argue that these data are confidential. For those federal contractors and first-tier subcontractors who do not already share EEO-1 data, the Center for Investigative Reporting and others continued pursuit of EEO-1 Report data may bring to a focal point what organizations want to, and can do, about sharing EEO-1 with the first consideration being whether the contractor wants to object and then the implications of objecting.

For those contractors who wish to object to disclosure it is imperative they submit the requested information by the September 19, 2022 deadline. If a contractor does not object, OFCCP will not have a basis to withhold the information.  Thus, the decision should be based on careful consideration of individual contractor situations; a review of EEO-1 Report data; as well as on the advice of legal counsel

We will continue to monitor this situation and provide any notable updates.

There has been lot of talk in the months since OFCCP released Directive 2022-01: Advancing Pay Equity Through Compensation Analysis, with the topic of attorney-client privilege being the primary topic of concern.  So much so that OFCCP Director Jenny Yang addressed the issue in her remarks last month at the NILG National Conference.  Today, OFCCP  released a revised version of Directive 2022-01 that addresses the issue further and describes additional types of documentation contractors can provide in the course of an audit to demonstrate compliance with their obligation to review their “compensation system(s)” under 41 CFR 60-2.17(b)(3), including submission of a detailed affidavit in lieu of producing an analysis.

Director Yang shared in a blog post the major changes of the revised directive:

  1. It explicitly reaffirms the agency’s position that it does not require the production of attorney-client privileged communications or attorney work product.
  2. It  identifies the documentation that OFCCP requires from a contractor to determine that the contractor has satisfied its obligation to perform a compensation analysis.
  3. It explains the documentation required from a contractor when its compensation analysis identifies problem areas to demonstrate that it has implemented action-oriented programs.

In addition, Director Yang explained

(i)n addition, although the original Directive used the phrase “pay equity audit” to refer to contractors’ obligations under 41 CFR 60-2.17(b)(3), this revised Directive instead uses the term “compensation analysis” to avoid any confusion regarding the nature of a contractor’s obligations.

With respect to acceptable documentation demonstrating compliance “[i]f a contractor believes its full compensation analysis contains privileged attorney-client communications or attorney work product” , the Directive provides that contractors now have three options to demonstrate compliance:

  1. A contractor may make available a redacted version of its compensation analysis, provided that the non-redacted portions include the required facts described below.
  2. A contractor may conduct a separate analysis during the relevant AAP period that does not implicate privilege concerns and provide that analysis to OFCCP in full.
  3. A contractor may generate a detailed affidavit that sets forth the required facts described below but does not contain privileged material.

At a minimum, contractors must provide the following details to OFCCP to demonstrate compliance:

  1. when the compensation analysis was completed;
  2. the number of employees the compensation analysis included and the number and categories of employees the compensation analysis excluded;9
  3. which forms of compensation were analyzed and, where applicable, how the different forms of compensation were separated or combined for analysis (e.g., base pay alone, base pay combined with bonuses, etc.);10
  4. that compensation was analyzed by gender, race, and ethnicity; and
  5. the method of analysis employed by the contractor (e.g., multiple regression analysis, decomposition regression analysis, meta-analytic tests of z-scores, compa-ratio regression analysis, rank-sums tests, career-stall analysis, average pay ratio, cohort analysis, etc.).

In the course of the review, if a contractor’s compensation analysis identifies any problem areas (including gender-, race-, or ethnicity-based pay disparities), the Directive explains OFCCP will require documentation that demonstrates compliance with the regulations at 41 CFR 60-2.17(c) that require the contractor to develop and execute action-oriented programs to correct them.  To demonstrate compliance, OFCCP will require at minimum:

  1. the nature and extent of any pay disparities found, including the categories of jobs for which disparities were found, the degree of the disparities, and the groups adversely affected;
  2. whether the contractor investigated the reasons for any pay disparities found;
  3. that the contractor has instituted action-oriented programs designed to correct any problem areas identified;
  4. the nature and scope of these programs, including the job(s) for which the programs apply and any changes (e.g., pay increases, amendments to compensation policies and procedures) the contractor made to the compensation system; and
  5. how the contractor intends to measure the impact of these programs on employment opportunities and identified barriers.

The intent of OFCCP is not to obtain contractor’s privileged analysis, but the Directive makes it clear that

if a contractor does not provide OFCCP with documentation sufficient to demonstrate its compliance with 41 CFR 2.17(b)(3) on the basis that the required categories of information outlined in Section 7(b) are subject to the attorney-client privilege or work-product doctrine, OFCCP will find the contractor has not satisfied its obligations under 41 CFR 60-2.17(b)(3) and 41 CFR 60-2.10(c). OFCCP will not require the production of privileged attorney-client communications or attorney work product.

We will continue to analyze the Directive and share any further insights and clarifications as they develop.

It’s been a busy morning for government contractors!  As the NILG 2022 National Conference in Boston, Massachusetts was coming to a close and EEOC was releasing the NAS study on the EEO-1 Component 2 pay data collection tool, OFCCP was communicating with contractors about the OFCCP Contractor Portal.

In an e-mail communication, OFCCP provided a number of clarifications and additional information about the portal.

First, the Agency confirmed

OFCCP has not extended the June 30 deadline. Contractors that have not yet registered and certified whether they are in compliance with their AAP obligations should do so as soon as possible.

Second, OFCCP warned that

[c]ontractors that have not certified will be more likely to appear on OFCCP’s scheduling list than those that have certified their compliance with AAP requirements. Contractors that have not certified compliance include those that have not utilized the Portal to certify whether they are meeting their AAP requirements, as well as those contractors that have certified they have not developed or maintained an AAP.

Additionally, the notice reported, as reported by OFCCP Director Jenny Yang during her NILG National Conference keynote speech, that

contractors that have not certified compliance by September 1, 2022, will be included on a list provided to federal agency contracting officers. The purpose of this list is to enable contracting agencies to notify contractors of their certification obligations, thereby assisting OFCCP in securing compliance.

OFCCP continues to offer technical assistance for contractor who have not yet certified.  OFCCP offers a user guide and frequently asked questions and directs contractors to contact the OFCCP Contractor Portal Technical Help Desk  or call 1-800-397-6251 with any questions.

As announced, as the 2022 NILG National Conference was coming to a close, EEOC released the long-awaited National Academy of Sciences report on the EEOC’s Pay Data Collection Completed in 2020. The study, titled Evaluation of Compensation Data Collected Through the EEO-1 Form, is a dense read at over 275 pages.

The high level conclusion from EEOC’s perspective is the study

confirms pay data collection is a key tool to fight discrimination.

The report found however, that the process of collection, as well as the actual data to be collected had flaws.  The report also recommends EEOC embark in a trial to field test the process if  decides to roll out a nationwide data collection tool.

Former EEOC Commissioner Vicki Lipnic, who previously addressed pay equity at previous NILG National Conferences and was on stage as part of the conference’s wrap up, offered her insight that the process to develop, test and implement a new pay data collection tool is a lengthy process that can take years to complete.

There will undoubtedly be a variety of thoughts, opinions and take-aways from the report shared by many in the coming days and weeks.  We will be reviewing the detailed report and will be back with our insights.

The National Academies’ webinar about the report will be held on August 2 from 1 pm – 3 pm (ET), and people can register here.

 

 

The final day of the NILG 2022 National Conference is upon us.  As has become  tradition, conference attendees heard from a panel of the OFCCP Regional Directors who shared insights from their respective regions and provided thoughts and recommendations for contractors.

The themes of early resolution, continued focus on systemic pay and hiring cases and increasing resources as well as cross-region coordination in audits prevailed in the RDs comments.

The Director’s reported the continued work on proactive communications and analysis by contractors is appreciated and helpful during the audit process.

Following a presentation about Thompson Island, the destination of the conference’s gala, the 2022 conference concluded with a recap discussion by the NILG’s Advisory Committee.

As this year’s conference comes to a close, we reflect on the good times reconnecting with friends, the information sharing amongst the agency and contractors and Boston’s hospitality.

We look forward to seeing everyone next year in Phoenix, Arizona!

During her keynote speech to open the second day of the NILG 2022 National Conference, EEOC Vice Chair Jocelyn Samuels hinted that an announcement involving the Agency and pay equity would be coming soon.

True to her word, this afternoon EEOC announced it will be holding a press conference tomorrow at 12:00 ET to discuss the results of an independent study conducted by the National Acad­emies of Sciences, Engineering, and Medicine’s Committee on National Statistics.  As a reminder, following the contentious collection of pay data in 2020, the EEOC commissioned the study to examine the EEO-1 Component 2 pay data reporting and recommend the most effective use for the pay data as well as identify areas of improvement for future collections.  The release of the report has been anticipated for months.

With respect to pay data collection, the Vice Chair explained  the tool is intended to assist employers identify issues to allow them to address pay discrimination.

Vice Chair Samuels also shared with conference attendees the Agency’s thoughts on the impact of COVID on workforces, its position on vaccines and testing as well as its stance on COVID related accommodations.  She spoke about the impact of recent U.S. Supreme Court cases on gender identify, sexual orientation and non-binary individuals and pregnancy discrimination.  She also spoke to the Agency’s Artificial Intelligence strategic initiative and enforcement of retaliation and harassment.  She noted that the Agency is in the process of updating its Strategic Enforcement plan and is planning to seek input from stakeholders into its development.

Noting that

[e]quity is the rising tide that lifts all boats.

Vice Chair Samuels’ message shared the sentiment and the overall theme and focus of the conference.

Stay tuned for more updates tomorrow!