Breaking News: Judge Orders EEOC to Collect Pay Data by September 30th

Judge Tanya S. Chutkan has ordered initial compliance with the EEO-1 pay data reporting obligation by September 30, 2019.

As we previously reported, the EEOC has informed the court it could complete collection of data by September 30th by utilizing the services of a third party vendor, though there would be quality and integrity concerns.  As proposed, the data collection would begin July 15th.

Plaintiffs had urged the court to require collection by May 31 – the deadline for filing of the current Component 1 portion of the form.

Questions remain around the reporting process, including instructions from EEOC about reporting logistics and other practical considerations – like whether it will be collecting 2017 and 2018 data or just 2018 data.  There is also the possibility of an appeal in the current litigation which may impact the reporting deadline.  But based on Judge Chutkan’s order today, however, employers will need to start working on complying with the reporting obligations for this year.

We will continue to analyze and interpret the written order and forthcoming information from EEOC and provide additional insights in the coming days.

OFCCP Establishment Review Scheduling Letter Updates

This, our third and final blog in a series discussing the proposed changes to OFCCP’s scheduling letters, takes a look at the Agency’s proposed changes to the establishment review letter and itemized listing.

With the appearance of Focused Reviews and Compliance Checks on this year’s CSAL, contractors have been abuzz about their obligations associated with these “new” reviews. Though the vast majority of contractors will undergo a standard establishment review, these have not garnered much attention given the relative “routine” nature of the audits. Yet, as we previously indicated, OFCCP has recently released a proposed establishment review scheduling letter and itemized listing, which would change a number of the requirements that contractors have come to know and expect.

While the majority of the proposed changes appear in the itemized listing, there is one notable change to the scheduling letter. OFCCP requires in the new letter a list of the contractor’s largest subcontracts based on value. The likely rationale for this item is because, historically, and admittedly, OFCCP has had difficulty identifying and extending its compliance reach to subcontractors. Contractors identifying their largest subcontractors for OFCCP would likely allow the Agency a means of better tracking, and more easily monitor, subcontractor compliance.

Below is a summary of the most significant changes to the proposed itemized listing.

  • Sub-Minority Utilization & Availability Data (Item 6): The proposed itemized listing requires information on the sub-minority self-identification of each employee in an AAP and applicable labor markets. OFCCP’s purpose here is to be able to determine whether there were substantial disparities in the utilization of any one particular minority group, or in the utilization women of a particular minority group, such that separate placement goals may be necessary. OFCCP cites 41 § CFR 60-2.16(d) as its authority for this requirement, but note the permissive language of this regulation: “a contractor may be required to establish separate goals for those groups” (emphasis added). It is currently unclear what standard OFCCP may apply to determine when the expressly required minority and female goals are insufficient and a contractor is to establish sub-minority goals.

 

  • Placements by Sub-Minority Group (Item 16): Keeping with the theme of evaluating goals at a sub-minority level, the proposed listing also requires contractors provide personnel activity, or “placement,” data by sub-minority group. This would permit OFCCP to evaluate the progress made on any underutilization sub-minority goals they may determine are required. Again, it is unclear whether setting sub-minority goals is a regulatory requirement.

 

  • Compensation Analyses (Item 7): While little has changed to the proposed submission of compensation data, the proposed listing separately requires contractors to provide “[r]esults of the most recent analysis of the compensation system(s) to determine whether there are gender-, race-, or ethnicity-based disparities” (emphasis added). The regulations, however, require that contractors “evaluate [applicable] compensation system(s) to determine whether there are gender-, race-, or ethnicity-based disparities.” 41 CFR § 60-2.17(b)(3) (emphasis added). Note that the regulations require an “evaluation” not an “analysis” so compliance with this item – if it is approved – may impose an additional, implicit burden beyond what the regulations require and may implicate production of analyses covered by the attorney-client privilege.

 

  • Employee Promotion “Pools” (Item 17): For those long-time OFCCP request watchers, the proposed listing again requests that contractors “provide the pool of candidates from which the promotions were selected by gender and by race/ethnicity.” The last time this was proposed, OFCCP withdrew its request due to the public comments. See Supporting Statement final 09 11 2014 (2011), at 20 (“While OFCCP believes records of employment activity, including promotions and terminations, are essential tools in investigating potential discrimination, the agency acknowledges challenges that contractors face in providing pools of candidates for promotions and terminations. Thus, OFCCP is eliminating the pool data requirements for promotion and termination activity.”). However, OFCCP’s current justification explains this new request to eliminate burden of post submission follow-up requests that “may” arise. See S and S Supporting Statement (2019), at 9.

 

  • Involuntary Terminations Summary Data (Item 17): The proposed listing requires contractors break out summary terminations data to identify which terminations were voluntary and which were involuntary. This change may materially reduce post-submission audit follow-up, and likely carries very little additional burden.

 

  • Expanded Data Submission Requirements (Items 9, 12, 17): Under the proposed listing, contractors who receive a scheduling letter more than 6 months into their plan year would have to submit additional personnel activity data and veteran and disability summary data for every completed month of the AAP plan year — not just data for the first six months, which could require contractors to engage in monthly data pulls instead of annual or six-month update collections.

As a reminder, OFCCP is requesting public comment on this and the other proposed scheduling letters. Comments will be accepted until June 11, and the existing letters are set to expire at the end of June. The changes to these letters are significant and will undoubtedly impact contractor preparation and production in a compliance review. Take advantage of this opportunity to be heard and provide feedback on these proposed changes.

OFCCP Proposes Revised Scheduling Letter for Compliance Checks

This is the second in our series of blogs on OFCCP’s proposed changes to its various scheduling letters.

Our previous publication focused on the Agency’s new Section 503 and VEVRAA Focused Reviews.  In addition to rolling out the new Focused Reviews, OFCCP has also revived the Compliance Check, which has not been used in recent years. There were 500 Compliance Checks on OFCCP’s recent CSAL list, published in March. Intended to evaluate whether contractors have maintained records consistent with their regulatory obligations, Compliance Checks are expected to be the least invasive of the OFCCP reviews and are “more limited in scope than a compliance review.”

Nevertheless, just as contractors began to acquaint themselves with the requirements under the Compliance Check scheduling letter, OFCCP has proposed a new version of the letter.

Though the existing and proposed letters are quite similar, the proposed letter contains small, but meaningful, changes that contractors should not overlook.

  • Item 1: While the existing letter requests “AAP results for the preceding year,” the new letter asks for           “[w]ritten AAPs” prepared in accordance with EO 11246, Section 503, and VEVRAA. In both versions, the regulatory cites refer to contractors’ record-keeping obligations, and a narrow reading suggests that contractors may not be required to submit quantitative analysis. However, the spirit of the request may be broader. OFCCP’s expansion of the request in the proposed scheduling letter to include “the written AAP,” rather than “results of the preceding year” seemingly provides additional insight into what OFCCP may be expecting with this item. However, since OFCCP has not used Compliance Checks in the past several years, what the current Agency expects – both under the existing and proposed scheduling letters – remains to be seen.

 

  • Item 3: Importantly, if the proposed letter is approved, OFCCP will require contractors to submit “[r]equests made for accommodations for persons with disabilities, whether the requests were denied or granted.” This differs from the language in the existing letter, which simply asks for examples of accommodations provided. Given the Agency’s heightened interest in Section 503, the expansion of this request comes as no surprise.

The second item, which requests examples of job advertisements, including listings with state employment services, remains unchanged, as is the option to either send the requested information to OFCCP or make it available on-site for OFCCP to review.

OFCCP is reporting it estimates it will take contractors

approximately 2 hours to retrieve and supply the requested information

in the revised compliance check letter.

Again, we encourage you to review this scheduling letter and, if you would like to, provide comments by June 11th.

Stay tuned for our next blog in this series which will discuss proposed changes to the establishment review scheduling letter.

Details about OFCCP Proposed Focused Review Scheduling Letters

As we reported last week, OFCCP published in the Federal Register for Notice and Comment revised scheduling letters for Section 503 and VEVRAA Focused Reviews, Compliance Checks, and regular establishment compliance reviews. As a reminder, scheduling letters initiate a compliance review and set forth the required items contractors must provide to OFCCP in an audit. Over the next several days, we will post additional blogs about the proposed scheduling letters and the key changes that may affect contractors undergoing audits.

This discussion dives into the Section 503 and VEVRAA Focused Review scheduling letters (Focused Review Letters). Mirroring Section 503 and VEVRAA’s regulations, these proposed scheduling letters are nearly identical. The primary difference is that the Section 503 letter would require contactors submit their disability utilization analysis, while the VEVRAA letter would require contractors submit their veteran hiring benchmark.  OFCCP has not yet started scheduling contractors for VEVRAA Focused Reviews but has plans to do so starting next Fiscal Year.

Just months ago, the Agency received approval for a Section 503 Focused Review Scheduling Letter. Despite its recent approval and release, OFCCP is already proposing significant updates. We discuss those differences below.

  • NewApplicant and Employee Level Employment Activity Data (Items 8 and 11): The Focused Review Letters require individual level applicant, hiring, promotion, and termination data that include veteran and disability personnel activity data by job title and job group. This is far more detailed data than the OFCCP currently receives at the outset of any audit and would allow the Agency to conduct hiring, promotion, and termination adverse impact analyses for veterans and individuals with disabilities. If this is approved, proactive disability and veteran adverse impact analyses may be essential in each audit submission. Further, the Letters require employers submit a single unique identifier to permit OFCCP to track an applicant and/or employee across all reports. This may seem small, but it could present a significant burden since most contractors use separate applicant tracking and HRIS which likely assign different applicant and employee identification numbers.

 

  • New – Employee Level Compensation Data (Items 8 and 12): As with the establishment review compensation requirements, the Focused Review Letters request employee level compensation for all employees, including base salary/wage rate, hours worked in a typical week, and other types of compensation, such as bonus, incentive, commission, merit increase, locality pay, and overtime. This request would align with the employee level compensation data submission in an EO 11246 AAP, which has led to protracted, aggressive evaluations of employer compensation. With this similar request, we can be sure the Agency plans to analyze disability and veteran compensation. This raises an interesting question given an individual’s choice to self-identify is completely voluntary and employers are not permitted to require individuals to respond to the survey – resulting in data that is likely not an accurate representation of an employers’ disability or veteran population.

 

  • New – Executive Order (EO) 11246 AAP (Item 1): The proposed Focused Review Letters require contractors submit the current EO 11246 (race and gender) AAP for the selected establishment. OFCCP explains however, that despite collecting the AAPs, it will not review the EO 11246 AAP during a focused review and will not analyze its data “to look for discrimination based on sex or race and ethnicity.” Instead, OFCCP will only use the AAP to better “understand the contractor’s organizational structure, confirm Section 503 job groups, and understand generally how the Section 503 compliance strategies fit with the contractor’s other affirmative action efforts.” It is currently unclear what must be submitted under this proposed requirement. We hope the additional insights will be learned following the notice and comment period.

 

  • New – 6 Months or More Into AAP Year (Items 4 and 11): If approved, the Focused Review Letters would require contractors to submit more than the current 6 months of additional personnel activity data if the scheduling letter arrives more than 6 months into an AAP plan year, as currently required. Instead, contractors would need to submit personnel activity and applicant data for every completed month of the current AAP year.

 

  • Removed – EEO-1 Reports: Absent from the proposed scheduling letter is a request for copies of 3 years of EEO-1 reports. Since EEO-1 reports do not include disability information, EEO-1 reports would not assist OFCCP with its review of contractors’ Section 503 compliance, thus this deletion makes sense.

We encourage you to review the new scheduling letters and, if you would like to, provide comments to the Office of Management and Budget about the burdens that these proposals impose. Comments are due June 11th.

Be on the lookout for our next blogs in this series, as we dive into the proposed compliance check and regular establishment review scheduling letters.

EEO-1 Pay Data Update: No Decision Yet

At the end of today’s hearing regarding employers’ EEO-1 pay data reporting obligations, Judge Tanya S. Chutkan entered an Order giving the parties until the end of the day on Monday, April 22 to file summaries of the day’s hearings and proposed Orders with corresponding case law for her to review.

EEOC has proposed to start collecting the data through the use of a third-party with a September 30, 2019 deadline.

Employers are awaiting Judge Chutkan’s decision as to when they will be required to start reporting pay data on the EEO-1 reports in compliance with her original order reinstating the reporting obligation.

We will continue to update as information becomes available.

OFCCP and ODEP Provide Insights for Good Disability and Inclusion Practices

Last Week, OFCCP Director Craig Leen and Deputy Assistant Secretary of the Office of Disability Employment Policy (“ODEP”) Jennifer Sheehy, joined with the National Industry Liaison Group to discuss disability and inclusion.

With 500 Section 503 Focused Reviews on OFCCP’s March 2019 CSAL list, the timing was perfect to hear directly from the OFCCP Director on his expectations from contractors on disability and inclusion issues.

Before diving into Section 503 Focused Reviews, Director Leen started the presentation off by reconfirming his commitment to improving OFCCP’s relationship with the contracting community through the 4 principles announced last year: Transparency, Certainty, Efficiency, and Recognition.

The primary focus of the webinar was, of course, Section 503 Focused Reviews and assistance available from ODEP for employers seeking to improve their disability and inclusion programs. Director Leen said he wants to emphasize more compliance assistance and other programs, rather than enforcement, to achieve the Agency’s disability and inclusion goals,mentioning the Agency’s LEAD (Leadership in Equal Access and Diversity Award) and Excellence in Disability and Inclusion Award programs.

Citing the low labor participation rate for individuals with disabilities compared to the general population and the large disability wage gap, Director Leen confirmed there will be Section 503 Focused Reviews in every OFCCP CSAL list moving forward.

Director Leen also previewed what turned out to be the Agency’s imminent publication in the Federal Register of a proposed Section 503 Focused Review Scheduling Letter which would allow OFCCP to analyze personnel activity and compensation data for individuals with disabilities. On April 12th, OFCCP also posted in the Federal Register revised Scheduling Letters for Compliance Checks and Establishment Reviews each to include additional required data requirements under VEVRAA and Section 503.

To prepare for a Section 503 Focused Review, Director Leen encouraged contractors to visit OFCCP’s Section 503 Resource Page as well as engage with ODEP to put into place best practices.

Deputy Assistant Secretary Sheehy described the services ODEP can provide to companies to ensure they are meeting the best practices Director Leen articulated including ODEP’s Job Accommodation Network and the AskEarn program, which provides support and assistance to employers.

It is clear Section 503 compliance is both a passion and a priority for Director Leen and, as a result, an enforcement priority for the agency, as reflected in the proposed changes to the scheduling letters. It is imperative you are prepared if you’ve been selected for a Section 503 Focused Review.

For more information on how to prepare for your Focused Review and the other types of OFCCP audits before they begin, please join us on April 17th for our webinar “OFCCP’s Audit Plate is Full and You’ve Been Invited to Dinner – Are You Ready?” – click here to register.

Breaking News: OFCCP Proposes Revised Scheduling Letters for Section 503 and VEVRAA Data

On April 12, 2019, OFCCP posted on the Federal Register for Notice and Comment revised scheduling letters for Section 503 and VEVRAA Focused Reviews, Compliance Checks and regular establishment compliance reviews. The proposed Establishment and Focused Review scheduling letters significantly increase the data submission required for veterans and individuals with disabilities, including hiring and compensation information. Comments are due June 11, 2019.

We are still digesting this and will provide more detail soon.

Judge Orders Hearing in EEO-1 Pay Data Reporting Case

It appears employers will need to wait a bit longer to learn when they will be required to file their EEO-1 pay data.

In an order filed April 11, Judge Tanya S. Chutkan set a hearing for 2:00 p.m. Eastern on April 16, 2019 for the parties to present their cases regarding the government’s compliance with her order to reinstate the EEO-1 pay data reporting obligation.  Judge Chutkan ordered that

Defendants shall have representatives from EEOC, OMB, and any other agency or department present at the Hearing on April 16, 2019 who have particularized and thorough knowledge of all the issues addressed and questions raised in the parties Submissions, … , including all efforts since September 29, 2016 to effectuate the Component 2 pay data collection.

The April 11th Order also granted the pending motions for leave to file Amici Curiae  (friend of the court) briefs filed by DirectEmployers Association, Inc., American Society of Employers and Chamber of Commerce of The United States of America.  The briefs, filed in connection with the motions, provide information and facts about the burden and impact of the pay data reporting obligation on employers.

We will be sure to provide any updates in this developing story as they become available so stay tuned.

 

 

OFCCP Proposes Construction Compliance Check Letters

In furtherance of its work as an enforcement agency and its commitment to conduct reviews of more contractors, OFCCP posted in the Federal Register on Monday, April 8, 2019 its proposal for a series of compliance check audit letters for construction contractors. The agency is request feedback on two proposed construction compliance check letters  – federally assisted versus a direct federal contract.

OFCCP proposes those construction companies that hold direct federal contracts will be required to submit:

  • Personnel records that “list construction trade employment activity (applicants, hires, promotions, layoffs, recalls, voluntary terminations, and involuntary terminations), including the name, job classification, gender, race and/or ethnic designation for each employee or applicant”
  • Payroll records
  • Job advertisements,
  • Section 503 and VEVRAA affirmative action plans,
  • Section 44(k) veteran and disability analytics,
  • Requests for accommodations
  • Veteran hiring benchmark

The submission for federally assisted contractors would include only:

  • Personnel records that “list construction trade employment activity (applicants, hires, promotions, layoffs, recalls, voluntary terminations, and involuntary terminations), including the name, job classification, gender, race and/or ethnic designation for each employee or applicant”
  • Payroll records
  • Job advertisements
  • Requests for accommodations

Comments on the proposal are due on June 7, 2019.

EEO-1 Pay Data Reporting Update

In a status update filed April 3, 2019, the government informed the court that EEOC could complete collection of the required EEO-1 Component 2 pay data by September 30, 2019, but only if it utilized a third party data collector to do so.

The update was filed in response to Judge Tanya S. Chutkan’s request that the government provide the court with its plan to comply with her March 4, 2019 ruling that over-turned the stay on the pay data reporting obligation.

The filing notes it would take “nine months to modify the EEOC’s current processes to support the collection of large amounts of sensitive Component 2 pay data from 2018” and as a result, the Agency determined that

modifying its current processes is not currently a viable option for collecting Component 2 data from employers.

Therefore, the Agency concluded

utilizing a data and analytics contractor is the only alternative.

The update notes that while it can utilize a third party for the collection of the data, it would be at a cost in excess of $3 million and notes the Agency’s Chief Data Officer, Samuel (Chris) Haffer, warns

there is a serious risk that the expedited data collection process may yield poor quality data because of the limited quality control and quality assurance measures that would be implemented due to the expedited timeline.

There is no mention in the submission of when the pay data collection process would start.  Importantly, September 30, 2019 is the date when OMB approval for the pay data collection report expires.

We now have to wait for Judge Chutkan to assess the government’s response and issue a ruling on whether the Agency’s plan is acceptable.

Note – the current deadline to submit the “traditional” race and gender (Component 1) data remains May 31, 2019.

Stay tuned.

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