OFCCP Releases New Enterprise-wide Voluntary Compliance Program

On the eve of St. Valentine’s Day, OFCCP is wanting contractors to feel the love.  In its fourth directive of fiscal year 2019, OFCCP has unveiled a Voluntary Enterprise-wide Review Program, otherwise referred to as VERP.  Directive 2019-04 states 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 directive highlights that the new program is intended to compliment the goals of the Agency’s Early Resolutions Procedures Directive released in December of last year.

While the directive does not formally set out the requirements of the program, it provides the “framework” by which OFCCP will develop and implement the program.

First, the program will recognize two tiers of contractors, with the top-tier having a more stringent set of requirements.  The framework contemplates that Contractors qualifying for the top tier can remain in the program for a period of five years and will then be re‐evaluated to stay in the program.  The subsequent tier provides for a three-year participation timeframe with compliance assistance to progress to the top-tier.

According to the framework set out in the directive,  if successful, the program will officially recognize the outstanding efforts of its top‐performing contractor participants and participants will be removed from the pool of contractors scheduled for compliance evaluations.  However, participation is not without cost.  Entities interested in participating in the process will need to apply (beginning in FY 2020) and allow OFCCP to audit their headquarter location as well as a sample or subset of their establishments.  The framework did not specify how many additional audits would be scheduled.

The Directive goes on to state that in order to remain in VERP, OFCCP will

expect contractors to maintain a workforce free of discrimination or other material violations, and provide periodic reports and information to OFCCP through which OFCCP can confirm these efforts.

If a contractor applies for VERP recognition but is not successful, OFCCP will return to the pool of contractors that OFCCP may schedule for compliance evaluations through OFCCP’s neutral selection process, though the Agency is careful to note the contractor would not be immediately scheduled for review.

Ultimately, OFCCP believes this new program will provide “meaningful cost‐saving compliance incentives to federal contractor participants, and recognizes that some contractors excel in their corporate‐wide compliance with OFCCP’s requirements.”

We will continue to report as we learn more of the details and analyze the implications of this new program, so stay tuned.

OFCCP Receives Approval for Section 503 Focused Review Scheduling Letter

Last August we reported on OFCCP’s announcement  (DIR 2018-04) that starting in 2019 it would be conducting truncated “Focused Reviews” that centered on compliance with AAP requirements under Section 503 (Individuals with Disabilities) and VEVRAA (Veterans).

If everything goes according to OFCCP’s plan, the next round of CSALs will include notices for these more limited Focused Reviews under Section 503.  In total, OFCCP expects to conduct 500 focused reviews in FY2019.  While Director Leen had previously indicated the CSAL list would be released in February, we’ve learned he now believes it will likely not be released until further into the Spring.

In preparation for this, OFCCP requested approval for a “Non-material change request” for a Scheduling Letter for Focused Reviews (OMB form 1250-0003). OMB approved the new form in late November.

Takeaways:

  • The revised Scheduling Letter contains no additional formal requirements for contractors to complete. The Focused Review Scheduling Letter is simply a pared down version of the standard OFCCP Scheduling Letter
  •  The revised Scheduling Letter approved by OMB only includes requests for Section 503 data with the notable exception of requesting a copy of the contractor’s Executive Order 11246 affirmative action plan (not including itemized listing data) as well as 3 years of EEO-1 reports. 
    • It is not clear how these two specific items will further OFCCP’s review of a contractors compliance with the disability regulations as they pertain to, and contain only, race and gender information.
  • The Focused Review Scheduling Letter is set to expire on 6/30/2019.  This is likely because the standard OFCCP Scheduling Letter must be renewed/reviewed at the same time as part of the regular 3-year process.
  •  According to the Agency’s request to OMB, “OFCCP will not conduct a greater number of compliance evaluations as a result of the implementation of the focused reviews as they will not be conducted in addition to, but in lieu of, compliance reviews in a number of instances.”

Overall, this comes as good news for contractors who are trying to proactively prepare for a potential focused review.  Though our advice is not to lose focus and to continue to evaluate your compliance.

EEO-1 Filing Deadline Extended

The EEOC announced on February 1, 2019 that due to the partial government shutdown, the 2018 EEO-1 filing  portal will open “in early March” for filing of 2018 reports.  As a result of the delayed opening, EEOC has extended the filing deadline by two months.  The new deadline by which to file is May 31, 2019.

As a refresher, the typical EEO-1 filing deadline was changed to the first quarter of each year (from the third quarter) in connection with the proposed changes to add compensation information the EEO-1 report back in 2016.  Though the proposed changes to the report have been postponed indefinitely, the changes to the EEO-1 reporting deadline remain in effect. 

 

OFCCP Opinion Letters – The Agency Wants To Answer Contractors’ Questions

As part of OFCCP’s continuing efforts at transparency, the Agency in late-November 2018 issued a Directive stating it would develop “a dynamic and searchable publically available source of Help Desk questions and answers to assist contractors.”  Moreover, the Directive announced OFCCP would issue Opinion Letters to provide guidance on specific topics, either in response to Help Desk inquiries or in response to direct requests for Opinion Letters.     

 OFCCP is now actively seeking input from federal contractors and their attorneys.  The communication asked folks to  

Please reach out through the Help Desk portal to submit suggestions for issues that you would like to see addressed in specific Opinion Letters.  You may also email OFCCPOpinionLetters@dol.gov or mail your suggestions to the address below.

OFCCP intends to make responses to at least some of the Help Desk inquiries public so through the database and thus encourages contractors and their counsel to participate so everyone can benefit. Help Desk question and answer database will be anonymous, as will Opinion Letters based on Help Desk questions.  Direct requests for Opinion Letters are not entirely anonymous.  Based on information available about the process, a contractor or lawyer requesting an opinion must at least supply Zip Code, Email or Phone Number, State, and County information.  That’s not to suggest that providing identifying information will have any negative consequences.  However, OFCCP has said it will consider whether a contractor acted consistently with an Opinion Letter or Help Desk answer when determining whether to issue a violation.  Thus, it will be important for contractors to stay up to speed on the Agency’s publicly available answers as well as consider the implications of requesting a response to a directed inquiry.   

We will continue to monitor developments in this area and will provide updates with any new or additional information.

 

OFCCP Looking to Hire for Ombudsperson

As OFCCP heads into 2019, with an official Director in place, the Agency is looking towards implement many of its new Directives released in the second half of 2018. Back in September, we discussed OFCCP Directive 2018-09: OFCCP Ombud Service, one of the number of policy changes OFCCP hoped to develop to increase a sense of transparency and impartiality between it and government contractors. On December 21, OFCCP took the first step in following through on this plan by posting an opening for the Ombud position.

Developed in response to a series of stakeholder meetings in 2017 and 2018, OFCCP describes the role of the Ombud as a liaison between the Agency and the regulated community who will:

  • Listen to external stakeholder concerns about OFCCP matters and suggestions for improvements;
  • Promote and facilitate resolution of OFCCP matters at the district and region office level;
  • Work with OFCCP district and regional office as a liaison to resolve certain issues after stakeholder have exhausted district and regional office channels;
  • Refer stakeholders to the OFCCP Help Desk for routine compliance and technical assistance inquiries;
  • Accept and review matters referred directly by the national office; and
  • Have the discretion to reject a referral in appropriate circumstances.

The Ombud position will be housed in the Washington D.C. Office and will be a career staff position, meaning that the eventual hire may have considerable independence as he or she would not be automatically replaced when OFCCP leadership changes. The position is scheduled to be open until the end of the week – January 18 – so make sure to apply if you are interested.

We will continue to cover the development and rollout of this and other new OFCCP Directives as they are implemented so as always, stay tuned.

Craig Leen to Officially Head Up OFCCP

As reported by Bloomberg Law, and reflected on OFCCP’s website, former OFCCP Acting Director Craig Leen has now been formally named Director of OFCCP.  Since being placed in the acting role this past Summer when the position was vacated by Ondray Harris, Leen has overseen the release of ten new directives and has worked tirelessly to rebuild the relationship with the Agency and the contractor community focusing on four pillars of transparency, certainty, efficiency and recognition.

We extend our sincere congratulations to Director Leen and look forward seeing his continued transformation of the Agency.

DOL Announces Recipients of HIRE Vets Demonstration Award

In preparation for the 2019 launch of its veteran hiring initiative, the Department of Labor announced a list of award recipients for its pilot “HIRE VETS Medallion Program Demonstration Award” on Wednesday, December 19.

President Trump signed the HIRE (Honoring Investments in Recruiting and Employing American Military Veterans) Vets Act on May 5, 2017. HIRE required the DOL to establish rules for an award program that recognizes employers who make extra efforts to recruit, hire, and retain veterans.  In October, DOL released additional information on the Medallion Awards Program, which recognizes those employers who demonstrate dedication to hiring and retaining qualified veterans during the previous calendar year and offer certain veteran-specific employee programs. The HIRE Act establishes two tiers of recognition: Gold and Platinum, with varying requirements depending upon employer size.

DOL anticipates that the benefits to employers will include reputational recognition and the ability for employers to market themselves as a “veteran friendly employer and be able to attract more veterans for job openings.” Employers who have been cited for or who have admitted to violating their obligations under USERRA or VEVRAA during the previous 12 month are ineligible.

Category Employees Entry Fee
Small Employers <50 $90
Medium Employer 50-499 $190
Large Employer 500+ $495

 

Participation in the HIRE Vets Medallion Program is voluntary and open to employers of all sizes. Interested employers must submit applications with the applicable entry fee between January 31 and April 30, 2019. The initial 2019 VETS Medallion Awards recipients will be announced to coincide with Veterans’ Day.

As we’ve reported in the past few months, OFCCP has also announced its intention to recognize government contractors with outstanding comprehensive outreach programs and innovative targeted outreach to individuals with disabilities.

‘Tis the Season for Budget Negotiations: What is the Potential Impact of Another Government Shutdown?

With less than a week left on the December 21st deadline to reach a spending deal and avoid another government shutdown, tensions are high in Washington D.C.  On Tuesday, President Trump stated he would refuse to sign a spending bill that did not contain a $5 billion allocation for a border wall.  It is questionable, however, whether such a bill would pass in the House or Senate. Thus, it is possible we will see the third shutdown of certain government agencies in this presidential term.

As background, Congress previously approved, and President Trump signed into law, five spending bills providing funding for about 75 percent of the federal government, including defense, education, labor, health and human services, the legislative branch, energy and water, military construction, and veterans affairs.  There are still seven other spending bills that need legislative agreement, including those that provide funding for agriculture, commerce, justice, science, interior and environment, state and foreign operations, Homeland Security, financial services, general government, transportation, and housing and urban development. Thus, certain agencies (such as the EEOC) are still at risk of shutdown and according to a fact sheet released by the Senate Appropriations Committee staff, more than 420,000 essential government workers would be expected to work without pay if a partial shutdown occurs.   However, based on the previous funding agreements, even if there is a government shutdown, OFCCP (which is under the Department of Labor) will keep running.

So, while other agencies of the government may feel the effects of a government shutdown, OFCCP and the federal contractors they regulate, should not be impacted if a funding agreement is not reached.

 

OFCCP Continues Increased Transparency and Certainty by Announcing Use of Opinion Letters and Help Desk

As we reported on Friday, November 30, OFCCP began it’s 2019 fiscal year by releasing a rash of new directives. On Monday, we looked at the rescission of Obama Administration’s Active Case Enforcement (ACE) directive. Yesterday, we reviewed OFCCP’s new guidance on Early Resolution Procedures. Today we review the third Directive – Directive 2019-03: Opinion Letters and Help Desk.

Under Directive 2019-03 (effective November 30, 2018), OFCCP continues its trend towards increased transparency and certainty – two of the Agency’s four pillars described by Acting Director Leen earlier this year –  by unveiling two new agenda items. First, OFCCP announced it would begin issuing Opinion Letters, and second, OFCCP plans to modify and improve the convenience of its Help Desk resources for easier use by the regulated community.

Opinion Letters

As Director Leen hinted at this summer, OFCCP will be following in the footsteps of other Agencies within the Department of Labor by using Opinion Letters to address issues that are unclear in the regulations and answer other compliance questions. Specifically, OFCCP intends to use its opinion Letters to provide

 fact-specific guidance about OFCCP’s jurisdictional coverage or application of guidance.

The precise process for requesting an Opinion Letter is not yet available, but the Directive provides both employers and employees may request Opinion Letters, the requestor(s) will remain anonymous, and the resulting guidance may address an “individual contractor, an industry, a category of contractors, all contractors as well as a particular category of employees such as Protected Veterans.”

Prior to issuance, the Office of the Solicitor will review the guidance to ensure consistency with applicable laws and regulations. Once issued, these Letters are intended to reduce uncertainty for compliance in unusual situations.

However, as might be expected, Opinion Letters are not a get-out-of-jail-free-card. The Directive specifies that OFCCP will not issue Opinion Letters that address matters currently under litigation or for a contractor currently undergoing a compliance review.

Help Desk

OFCCP already provides technical assistance to contractors who call or e-mail its Help Desk for assistance with technical compliance issues. Additionally, OFCCP occasionally releases official FAQs along with responses to provide guidance on repeated requests.  In order to improve the quickness and ease of addressing compliance issues., OFCCP announced through the Directive that it would be expanding its Help Desk functionality by

making certain Help Desk inquires and responses dynamically available and searchable as a self-service option on OFCCP’s website.

For Contractors

Directive 2019-03 sends a twofold message to the contracting community. First, increased transparency and public information may (and theoretically should) assist employers in resolving sticky issues not clearly addressed on the face of the regulations. Second, employers have an incentive to stay apprised of the latest developments.  As the Directive notes, during an enforcement action,

OFCCP will consider whether a contractor has acted consistently and in good faith with an Opinion Letter, Directive, FAQ, Help Desk answer, or other OFCCP guidance… .

While sub regulatory, and without the force of law, the message is clear; OFCCP may give more of the benefit of the doubt to contractors who rely on the Agency’s guidance.

As we have previously reported, OFCCP announced plans to increase the number of audits significantly in 2019 as well as institute compliance verification procedures.  This Directive reiterates the importance of getting up to speed on regulatory obligations and preparing now for the greater likelihood of facing a compliance review.

Stay tuned, as Jackson Lewis will continue to monitor and analyze new developments as OFCCP implements this new directive and issues its first Opinion Letters.

 

OFCCP Incentivizes Employers to Choose Early Resolution of Audits

As we reported last Friday, OFCCP has kicked-off 2019 with a bang – issuing three directives in a single day.

Yesterday we reported on the first of three new Directives OFCCP issued to kick off fiscal year 2019. Today we cover the second Directive – Directive 2019-02: Early Resolution Procedures.

Under Directive 2019-02 (effective November 30, 2018), OFCCP will offer contractors the opportunity to voluntarily remedy compliance deficiencies found in establishment-based compliance evaluations, in exchange for avoiding additional, non-voluntary OFCCP audits for 5 years. OFCCP’s goal with this program is to promote early compliance, increase Agency efficiency and limit the taxpayer and contractor resources being spent on lengthy OFCCP investigations. However, the 5-year “get out of audit free” card may not be enough to incentivize contractors to allow OFCCP to expand its jurisdiction beyond the establishment under audit.

The Directive established new Agency processes for the early resolution of three types of establishment-based audit violations:

  1. Non-Material, Non-Discrimination Violations – Small issues, without serious compliance violations, that can be corrected during the desk audit stage. Potential qualifying violations may include failing to list supervisors on workforce analysis reports or failing to identify how employees know they have access to view AAPs. Under the new Directive, these violations should be resolved in the audit closure letter without a conciliation agreement or any progress reporting.
  2. Material, Non-Discrimination Violations – For more serious, non-monetary violations that cannot be corrected during the desk audit stage, such as recordkeeping, applicant tracking and failing to conduct self-analyses, OFCCP will offer the contactor the opportunity to enter an Early Resolution Conciliation Agreement with Company-Wide Corrective Action (“ERCA”). Under an ERCA, the contractor would be required to investigate whether the discrepancy impacted other parts of the organization and if so, apply corrections throughout. In exchange, OFCCP would not audit the establishment under review for 5 years, though other establishments could still be audited.
  3. Material, Discrimination Violations – OFCCP will seek voluntary, company-wide relief for material, discrimination violations. If the contractor agrees, OFCCP has established a 60-day process for data exchange, analysis refinement and conciliation of an ERCA to cover the entire company or an appropriate subset. Under the ERCA, OFCCP would monitor compliance and require progress reporting for a 5-year period, during which all establishments covered by the ERCA are free from new OFCCP audits.

This approach is consistent with the OFCCP’s theory that systemic or system-based violations found in an establishment-based review likely have an impact beyond the establishment under review. Incentivizing contractors to remedy such issues voluntarily would be the most efficient and reliable way to address the problem, but will the incentive offered be enough for contractors?   As OFCCP begins implementing ERCA in 2019, contractors will have to pay close attention to certain questions:

  • If a material technical or discrimination violation is found, but the contractor declines to extend the investigation to cover additional establishments, what happens?  Will the contractor face an increased likelihood of being selected for additional audits?
  • What is to prevent a contractor from rejecting an ERCA and remedying issues privately before any additional OFCCP audits?
  • While a contractor under an ERCA may be free from additional audits for 5 years, what involvement will OFCCP have in scrutinizing the potentially enterprise-wide compliance corrections and progress reporting? And what happens if additional issues are discovered by OFCCP during that non-audit review?
  • What happens if there is a change in the White House? If a contractor provides OFCCP with company-wide data now and enters an ERCA, will an Agency under new leadership honor its commitments not to commence new audits?

Jackson Lewis will continue to monitor and post developments on these and other important questions under the new ERCA program.

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