Today, OFCCP under new Director Jenny Yang published a 2022 Corporate Scheduling Announcement List (CSAL) identifying those establishments of federal contractors and subcontractors that it will schedule for compliance evaluations – more commonly known as “audits” – over the next year or more.  Included with the new CSAL is OFCCP’s methodology for selecting contractors for audit.

New for this CSAL is OFCCP’s Directive that contractors may not enjoy a 45-day grace period before the Agency begins to schedule the audits, as has been the case for years.  Directive 2022-02 – Effective Compliance Evaluations and Enforcement provides that “OFCCP may begin scheduling contractors upon the publication of the CSAL.”  While the apparent intent of the CSAL is to provide advance notice, those who are scheduled for an audit on the heels of this 2022 CSAL may not receive much of a heads up.  Nonetheless, it remains to be seen whether the Agency will immediately begin scheduling audits from the 2022 CSAL, given that it is still working to schedule or complete audits from the 2021 CSALs.

Generally speaking, OFCCP will schedule new audits from the 2022 CSAL as District Offices have capacity to handle them, which means the timing of the receipt of a “scheduling letter” triggering the audit is unpredictable.  However, OFCCP will often reach out to the contractor shortly before the sending a scheduling letter to confirm contact information for the company official to whom the scheduling letter will be sent.

Where possible, identified contractors should use the advance notice to ensure that their AAP compliance efforts are in order and that data will be ready to supply to OFCCP.

That is especially true now, given that automatic 30-day extensions of the data submission deadline are a thing of the past.  As also included in Directive 2022-02 – Effective Compliance Evaluations and Enforcement, OFCCP will now grant deadline extensions only in  “extraordinary circumstances.”

The June 30, 2022 deadline is quickly approaching for covered supply and service federal contractors and subcontractors to certify in the Contractor Portal they have developed and maintained AAPs.  This week, OFCCP added an option allowing bulk upload and modification of establishments and functional affirmative action plan (FAAP) business units.

Notably, OFCCP limits this functionality to contractors with 100 or more establishments or FAAP business units:

Companies with 100 or more establishments or functional/business units may request to have their establishments or functional/business units modified or uploaded in bulk by using the Bulk Upload/Modification Template.

Also notable is that this option is not self-executing.  Rather, any contractor wishing to use the bulk option must complete the data template and “Email the completed Bulk Upload/Modification Template as an attachment to OFCCPAppsSupport@dol.gov. In the subject line enter ‘Bulk Upload/Modification Request’.”  The contractor must also request bulk upload on company letterhead and include contact information for a responsible company representative.

OFCCP will then notify the contractor by email when the upload is complete, at which point the contractor must, “Register the Parent Company again using the ‘Identifiers Known Path’” and then check for and remove any establishments that have closed since the contractor filed its 2018 EEO-1 Report.  Even though those establishments will not appear in the bulk upload template, OFCCP will not remove them from the Portal.

Thus, while the bulk upload/modification option is more cumbersome than it might be, it may still offer some efficiencies to contractors with 100 or more establishments or FAAPs.

In support of this option, OFCCP has offered:

We will continue to provide updates and insights as we learn of them.

 

Speaking to the Institute For Workplace Equality during its 2022 Annual Summit in Washington D.C., personnel from the U.S. Department of Labor Solicitor’s office (OFCCP’s attorneys) clarified the intent of the Agency’s new Compensation Directive 2022-01.  Speaking to conference attendees, Beverly Dankowitz, Associate Solicitor for the Civil Rights and Labor- Management, explained the purpose of Directive 2022-01: Pay Equity Audits is to promote greater attention to proactive audits, sharing that the Directive was in no way intended to chill contractors’ work on pay equity.

Acknowledging some confusion stemming from the Agency’s Directive, Beverly also clarified OFCCP’s intent around the issue of contractors’ privileged proactive pay equity analyses, reporting that OFCCP does not want contractors’ privileged studies.  Instead, OFCCP is looking for, and entitled to, demonstration of compliance with 41 CFR 60-2.17(b)(3) which requires an in-depth analysis to evaluate contractor compensation systems to determine whether there are gender-, race-, or ethnicity-based disparities.  To be clear, the Solicitor’s office does not believe this requires disclosure of privileged analyses – if OFCCP can confirm, likely through some question asking, that the study is privileged, OFCCP “will not ask for the study.”

The key here though is contractors need to be able to demonstrate compliance  – and Bev provided guidance on this point as well.  OFCCP has not told contractors what analysis is required – at least not yet.

You don’t have to do a regression, no advanced statistics, you just have to do something.

To be clear, the “something” should rise above the level of perfunctory – it has to at least demonstrate “evaluation of gender-, race- or ethnicity-based disparities.”

Another important take away from the presentation was the confirmation that Directive 2018-05 is still in effect and on which contractors should rely for information as to how OFCCP is evaluating contractor pay.  As a reminder Directive 2018-05 states

If a contractor provides its compensation hierarchy and job structure in the submission to the Itemized Listing, OFCCP will attempt to design its analysis based on that structure. Nevertheless, this assumes that the structure provided is reasonable,11 that OFCCP can verify the structure as reflected in the contractor compensation policies, if necessary, and that the analytical groupings are of sufficient size to conduct a meaningful systemic statistical analysis.12

In the absence of information about a contractor’s compensation system, OFCCP will conduct its preliminary desk audit analysis using either EEO-1 or AAP job groups, provided they are reasonable,13 meet the requirements of 41 C.F.R. § 60-2.12, and are of a sufficient size to conduct a meaningful systemic statistical analysis. OFCCP will control further for sub-job groupings, functions, units, or titles, as appropriate. During the preliminary analysis, OFCCP will also control for tenure, full-time status as well as other factors, as appropriate.

We anticipate continued developments and discussions regarding OFCCP’s evaluation and enforcement of contactor compensation obligations for stay tuned for more!

The 2021 EEO-1 Component 1 reporting period is currently underway.  Most employers with 100 or more employees (and most federal contractors with 50 or more employees) must submit their 2021 EEO-1 Component 1 Report by Tuesday, May 17, 2022.  In past years, for various reasons, the EEOC has extended this deadline to permit additional time, sometimes, like last year, extending the deadline many times.  The EEOC’s Frequently Asked Questions on EEO-1 Reporting suggest  we should no longer expect extended reporting periods.

A new FAQ explains that EEOC will permit employers to submit their EEO-1 Reports after the May 17, 2022 deadline—during what EEOC is calling the “failure to file” phase, stating

All filers who have not submitted and certified their mandatory 2021 EEO-1 Component 1 Report(s) by the Tuesday, May 17, 2022 published deadline will receive a notice of failure to file instructing them to submit and certify their data AS SOON AS POSSIBLE, and NO LATER THAN TUESDAY, JUNE 21, 2022. This additional time, through Tuesday, June 21st, 2022, will be available to ALL filers who have not submitted and certified their 2021 EEO-1 Component 1 Report(s) by the May 17, 2022 published deadline.

The FAQ goes on to warn:

Please be advised that AFTER the June 21, 2022 deadline passes, NO additional 2021 EEO-1 Component 1 Reports will be accepted, and eligible filers will be out of compliance with their mandatory 2021 EEO-1 Component 1 filing obligation.

Despite this potential extra time, the official submission deadline remains May 17.

So to ensure compliance employers should continue to prepare their reports with urgency.  But this additional breathing room will come as welcome news for employers that are unable to submit in the next two weeks.

As we reported the 2021 EEO-1 reporting portal is now open.

More employers are collecting non-binary gender data from employees.  The EEOC however, is not authorized to require collection, or reporting, of non-binary employee data.  The current EEO-1 reporting form has fields only for the reporting of employee binary gender data.  So what are employers who give employees the option to identify as non-binary to do?

The following FAQ sets out the only reporting option currently available for employers:

Our company is now collecting gender beyond the male/female binary. We would like to report this for the EEO-1 Component 1 2021 data collection. How do we report it?

Filers may choose to report employee counts for non-binary gender employees by job category and race/ethnicity in the comments box on the Certification Page in the EEO-1 Component 1 Online Filing System. Please preface this data with the phrase “Additional Employee Data:”. For example, “Additional Employee Data: 1 non-binary gender employee in Job Category Administrative Support Workers; Race/Ethnicity: White (Not Hispanic or Latino). 3 non-binary gender employees in Job Category Professionals; Race/Ethnicity: Employee 1 – Black or African American (Not Hispanic or Latino), Employee 2 – Hispanic or Latino, Employee 3 – Two or More Races (Not Hispanic or Latino).”

EEOC and OFCCP are considering more formal collection/reporting obligations but until that time, this is what employers have to work with.

Stay turned for additional updates on this year’s EEO-1 Data collection.

EEOC has announced the opening of the 2021 EEO-1 Component 1 Data Collection platform.  The deadline to complete filing this year is May 17, 2022 – giving employers only 5 weeks to complete the reporting.  In an e-mail message announcing the opening, the  Agency encouraged filers to begin the filing process “as soon as possible.”    This is not the only government reporting deadline looming for federal contractors.  As a reminder, the deadline for OFCCP contractor verification is June 30, 2022.

The Agency noted improvements have been made to improve the process by “making it more user-friendly and streamlining functions, including additional self-service options, and providing a new Filer Support Team Message Center for filer support.”

The new resources can be found on the Agency’s dedicated EEO-1 Component 1 website.

As a reminder,  the EEO-1 reporting obligation applies to all private sector employers with 100 or more employees and federal contractors with 50 or more employees meeting certain criteria, and contains  workforce demographics including data by race/ethnicity, sex, and job categories.

As it has done annually since its inception, OFCCP has released a new veteran hiring benchmark.  Effective March 31, 2022 the new veteran hiring benchmark (the percentage of total hires who are protected veterans that the contractor seeks to hire in the following AAP year) is 5.5%.  This is a 0.1% decrease from the 5.6% mark set last year and continues the trend of reduced benchmarks.  The database with previous benchmarks can be found here.

As a reminder,

Contractors required by the Vietnam Era Veterans’ Readjustment Assistance Act (VEVRAA) to develop a written affirmative action program (AAP) must also establish a hiring benchmark for protected veterans every year, or adopt the national benchmark provided by the Office of Federal Contract Compliance Programs (OFCCP) each year, as part of their AAP update. Under either approach, contractors must compare the percentage of hires who are protected veterans in each of their written AAPs to the hiring benchmark set for that AAP. Contractors should use the result of this comparison when assessing the effectiveness of their veteran outreach and recruitment efforts.

OFCCP’s second Directive under the leadership of Director Jenny Yang addresses audit practices and rescinding four Directives issued by former OFCCP Director, Craig Leen.  This Directive comes on the heels of another new Directive 2022-01-Pay Equity Audits and a notice of the Agency’s intention to rescind a Leen-era regulation – Nondiscrimination Obligations of Federal Contractors and Subcontractors: Procedures to Resolve Potential Employment Discrimination.

The more notable aspects of Directive 2022-02 – Effective Compliance Evaluations and Enforcement, include:

  • Elimination of Extensions of Audit Submission Deadlines in all but “Extraordinary” Circumstances: 

If you’ve gotten used to extra time for the often-heavy lift of retrieving and preparing AAP data for submission, those days are gone.  “Where a contractor needs additional time, OFCCP may grant an extension” but now it will only be for “extraordinary circumstances.” Examples of extraordinary circumstances include, but are not limited to:

  1. Extended medical absences of key personnel;
  2. Death in the immediate family of key personnel;
  3. Localized or company-specific disaster affecting records retrieval such as a flood, fire, or computer virus;
  4. Unexpected military service absence of key personnel; and
  5. Unexpected turnover or departure of key affirmative action official.”
  • Elimination of 45-Day Scheduling Delay after CSAL: 

While OFCCP states it will continue to issue CSALs and disclose its audit selection methodology, “OFCCP may begin scheduling contractors upon the publication of the CSAL.”  While the apparent intent of the CSAL is to provide advance notice, those who are scheduled for an audit on the heels of a new CSAL do not receive that benefit under this new Directive.

  • Access to Witnesses: 

OFCCP may decide to no longer going to rely on contractors for assistance in scheduling employee interviews.  Rather, OFCCP establishes in this directive

OFCCP may directly contact [employees] without the contractor serving as an intermediary.

OFCCP asserts that this step is necessary “[t]o ensure witnesses are comfortable communicating with OFCCP without the fear of reprisal…”

During these investigations, OFCCP states it will request that contractors provide the agency with unredacted contact information such as telephone numbers, mailing addresses, email addresses, and even social security numbers for these individuals.  The Directive does not address the lengths the Agency will go to ensure this information is kept secure.

  • Contractor Portal “Certification” Means “Complete” AAPs:

The Directive also takes the opportunity to address the newly minted obligation for contractor certification in the newly developed OFCCP Contractor Portal. Notably, OFCCP’s Supporting Statement for the Contractor Portal states that certification entails:

  1. Entity has developed and maintained affirmative action programs at each establishment, as applicable, and/or for each functional or business unit.  See 41 CFR Chapter 60.

The Contractor Portal is now live for certification and the required certification recites the above language.  However, the new Directive appears to attempt to clarify, if not expand, the meaning of certification in the new Directive:

Through DIR 2022-02, OFCCP clarifies that when covered contractors use OFCCP’s Contractor Portal to register and annually certify compliance with their AAP obligations, they are certifying that they have developed and maintained complete AAPs.

The endnote to this sentence states: “For further details on the complete AAP components and obligations, see 41 CFR part 60-2, subpart B; 41 CFR part 60-300, subpart C; and 41 CFR part 60-741, subpart C.”

In addition to the foregoing, the Agency has rescinded four Directives that provided specific guidance for transparency and certainty in the OFCCP audit process, while vaguely reaffirming “its commitment to providing transparency, efficiency, and clarity…” without providing much substance or issuing revised guidance on how it intends to carry out that commitment.

While the Agency has removed these Directives from the Agency’s Directive website, they are available in archives.

The bottom line for covered federal contractor is that the current OFCCP administration is taking a more hardline approach to enforcement.  While federal contractors are in favor of effective and efficient audits, it seems the current administration feels many of the advancements of the prior administration do not fit with or assist their enforcement agenda.

Directive 2022-02: Effective Compliance Evaluations and Enforcement issued March 31, 2022 is intended to

strengthen OFCCP compliance evaluations and reduce delay by promoting the timely exchange of information

It also sets a number of expectations for contractor conduct and compliance during reviews, rescinding a number of previous Directives that set out transparency and expectations and timelines for submission of information – commonly known as previous OFCCP Director Craig Leen’s Four Pillars.

Per OFCCP this new Directive:

  • updates agency policies regarding the scheduling of contractors for compliance evaluations, including enhancing the agency’s neutral scheduling procedures to reach a broader universe of federal contractors, and eliminating delays in scheduling.
  • establishes contractors’ obligations regarding timely submission of Affirmative Action Programs (AAPs) and support data, supplemental information, and access to employees, applicants, and other witnesses.
  • increases contractor accountability through the Contractor Portal, by makes stating that when covered contractors use OFCCP’s Contractor Portal to annually certify compliance with their AAP obligations, contractors are certifying that they have developed and maintained complete AAPs in compliance with OFCCP’s requirements.

This new directive explicitly rescinds:

  1. DIR 2018-06, Contractor Recognition Program (Aug. 24, 2018);
  2. DIR 2018-08, Transparency in OFCCP Compliance Activities (Sept. 19, 2018);
  3. DIR 2020-02, Efficiency in Compliance Evaluations (Apr. 17, 2020);
  4. DIR 2021-02, Certainty in OFCCP Policies and Practices (Dec. 11, 2020)

While the Agency has removed these Directives from the Agency’s Directive website, they are available in archives.

We are unpacking this new directive and will be back with further details.

As anticipated, OFCCP has released its proposal to revise the Agency’s Rule on Nondiscrimination Obligations of Federal Contractors and Subcontractors: Procedures to Resolve Potential Employment Discrimination.  The final rule, published in November 2020, codified the used of The Predetermination Notice and the Notice of Violation as part of OFCCP’s enforcement activities.

In today’s message from OFCCP announcing the release of the Notice of Proposed Rulemaking (“NPRM”), OFCCP described the 2020 rule as “imposing inflexible requirements” and explained its belief that

[t]he rigid evidentiary standards and definitions imposed by the 2020 rule impede OFCCP’s ability to provide contractors with early notification of indicators of discrimination. They also unnecessarily divert agency and contractor resources away from addressing discrimination.

As a result, OFCCP is proposing to:

  • rescind these rigid evidentiary standards, while OFCCP would continue to issue a Predetermination Notice describing the preliminary indicators of discrimination and other potential violations.
  • clarify the use of the Predetermination Notice and the Notice of Violation as part of OFCCP’s pre-enforcement notice and conciliation procedures.
  • return the Predetermination Notice response period to the 15-calendar day period in effect prior to the 2020 rule (which OFCCP may extend for good cause).

The proposed rule also seeks to “retain the regulatory language regarding early resolution, which provides that contractors may waive notice procedures to enter directly into a conciliation agreement.”

We are in the process of digesting the NPRM and will be back with more details and insights in the coming days . . . stay tuned.