OFCCP Seeking Comment on Contractor Disability Inclusion Recognition Program

Appearing in today’s federal register is OFCCP’s request for comment on the proposed structure and details of the agency’s new Excellence in Disability Inclusion Award.  The award

will highlight successful practices and strategies of contractors that have expanded and improved recruitment, hiring, retention, and promotion opportunities for individuals with disabilities.

In August, at the ILG National Conference, Acting Director Leen announced the Agency’s intention to develop programs to recognize contractors for their excellence in affirmative action.  Following the announcement, OFCCP released Directive 2018 -06 which formalized OFCCP’s intention to develop such programs.  We understand OFCCP intends to implement a separate recognition award for programs focusing on race, gender and veteran inclusion.

Through today’s Notice, the Agency is seeking feedback on the draft award nomination form and instructions to be considered for the award.  As proposed, there are four threshold criteria to being eligible for consideration and seven required elements to the nomination submission.

This is OFCCP’s first policy initiative under Harvey Fort, who moved into an Acting Director role of OFCCP’s Office of Policy and Development following Debra Carr’s departure from the agency at the end of last month.

The public comment period ends December 4, 2018.

OFCCP and National Industry Liaison Group Enter into Memorandum of Understanding

In continued commitment to restoring the Agency’s relationship with the contractor community, OFCCP recently announced it has entered into a three-year Memorandum of Understanding (“MOU”) with the National Industry Liaison Group (“NILG”) in order to foster collaboration between the federal contractor community and OFCCP.

For those not familiar with the organization, the NILG is a non-profit organization formed in 1992 that focuses on affirmative action and equal employment opportunity for federal contractors and other employers.  The NILG Board supports approximately 61 Industry Liaison Groups (“ILGs”), which are comprised of small, mid-sized and large federal contractors and subcontractors across the country. Local ILGs operate in every OFCCP region. “Because of its unique function as a facilitator of wide–ranging dialogue between federal agencies and the regulated community, the NILG is well–positioned to address important compliance and other issues regarding affirmative action and equal employment opportunity.”

Specifically, the MOU, contemplates a number of objectives:

  • Exploring and resolving contractor compliance challenges that may be obstructing affirmative action and equal employment opportunity;
  • Publicizing successful apprenticeship programs as a means to develop a pipeline of diverse workers; and,
  • Improving OFCCP’s contractor education and compliance tools and resources, including an ongoing dialogue on providing more transparency to federal contractors regarding OFCCP’s compliance review process and procedures.

As part of the MOU, both parties have committed to foster the achievement of its objectives.  For example, OFCCP commits to:

  • An annual meeting with the NILG to review the implementation of the MOU;
  • Participate in NILG’s annual conference; and,
  • Outreach initiatives that encourage NILG and local ILG members to provide constructive feedback on OFCCP’s compliance evaluation process, education, outreach, and compliance assistance activities.

Some of the NILG’s commitments include:

  • Using the annual OFCCP meeting to constructively identify and explore concerns raised by contractors related to OFCCP’s compliance evaluation process and the training and education barriers that effect contractor compliance;
  • Working cooperatively with OFCCP to ensure the usefulness of regional or local ILG–OFCCP meetings as compliance assistance opportunities; and,
  • Proactively informing members of local ILGs of OFCCP initiatives, events, and other opportunities that provide contractors an opportunity to give OFCCP constructive feedback about its program.

We look forward to this renewed spirit of cooperation between OFCCP, the NILG and the contractor community.

OFCCP Revises Latest CSAL List

It appears OFCCP has made some updates to its latest Corporate Scheduling Announcement List release.  When accessing the current publicly available list through OFCCP’s website, the resulting file now displays a header which indicates the file contains “addresses updated as of September 24, 2018.”  Upon close review and comparison with the original list posted last week, it seems OFCCP has updated city and state information for some the establishments selected as part of the supplemental selection process.  For example, initially, an establishment in Irvine, CA appeared on the list for a particular company.  On the revised supplemental list, while the street address for the establishment remains the same, the city and state are now be reported as Hampton, VA. There are a handful of other updates, like filling in or correcting a parent company or unit name, but the vast majority appear to be address modifications.

If any of your company’s establishments appeared on the supplemental list, it is a good idea to revisit the list to confirm the location or locations selected for review.

 

OFCCP Makes CSAL List Supplement Publicly Available

Wondering whether your organization has been selected for an upcoming audit as part of OFCCP’s recent Corporate Scheduling Announcement Letter (CSAL) list supplement?  Well, wonder no more.  OFCCP has made publicly available its most recent CSAL supplement as well as the two previous CSAL lists (2017 and 2018).

As a reminder, CSALs are a “courtesy notification to an establishment selected to undergo a compliance evaluation” and are sent in advance of the actual scheduling letter that initiates the audit.

Under The Freedom of Information Act (FOIA) a person has the right to request access to federal agency records or information. As a federal agency the Department of Labor (DOL) is required to disclose records requested in writing by any person, unless the information is protected by one of the exemptions provided for in the FOIA statute.  By making this information available for public consumption, proactively, without the need for a FOIA request, OFCCP seems to be taking the position that the information is (1) of public interest, (2) sought often enough to warrant proactive disclosure, and (3) not protected by any of the available FOIA Exemptions.

Breaking News: OFCCP Releases Compliance Transparency and Ombud Service Directives

There is no rest for the weary at OFCCP.  Continuing the steady flow of Directives and proposals as well as audits coming out of Washington D.C., the Agency has released two additional directives in furtherance of the Administration’s commitment to transparency and certainty.

The first, Directive 2018-08: Transparency in OFCCP Compliance Activities  will “ensure transparency in all stages of OFCCP compliance activities to help contractors comply with their obligations and know what to expect during a compliance evaluation, and to protect workers from discrimination through the consistent enforcement of OFCCP legal authorities.”  The detailed directive sets out roles and responsibilities for OFCCP and contractors during a compliance review as well as policies and procedures to be followed.  The Directive also includes a model on-site letter that will be used by OFCCP to request an on-site review.

OFCCP also released Directive 2018-09: OFCCP Ombud Service that announces the planned implementation of an Ombud Service in the national office of OFCCP.  The service will

facilitate the fair and equitable resolution of specific types of concerns raised by OFCCP external stakeholders in coordination with regional and district offices.

We will be digging into each of these directives further and will provide our thoughts and insights in the coming days.

 

OFCCP Seeks to Favorably Tweak Requirements to Encourage Contractors to Consider Functional Affirmative Action Plans

Has your organization ever considered switching from “establishment” AAPs to functional affirmative action plans (“FAAPs”)?  OFCCP wants contractors to consider moving to FAAPs and, in that spirit, is looking to make FAAPs more attractive by proposing new FAAP requirements that would lighten the burden for those who apply for, and those that already have, FAAP agreements with OFCCP.  OFCCP last modified the FAAP requirements in 2016 but the program was significantly changed in 2013 to its current structure.

Generally, covered federal contractors are required to have a written AAP for each “establishment” with 50 or more employees. This baseline requirement presumes a contractor’s personnel activity decisions and AAP compliance efforts are centered around a physical establishment. That’s not always the case. As the Agency acknowledges

an affirmative action program only covering employees in one building at a specific geographical location does not always reflect how business actually operates.

Rather, it may make better sense for some contractors to prepare AAPs for each of the company’s autonomously operating functional units.

For example, a contractor may have manufacturing, sales and marketing, corporate, and service delivery functions and sub-functions that span multiple locations, in different geographic regions. If those functions/sub-functions operate “autonomously,” and 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,” the contractor may seek OFCCP approval to prepare FAAPs according to those functions, as opposed to an establishment-based AAP.

To foster consideration of FAAPs, OFCCP is sweetening the pot by making the FAAP option more desirable and less burdensome. Among its new proposals, set forth in the proposed FAAP Directive and a Supporting Statement, OFCCP would loosen the rules in some notable respects:

  • Require contractors to renew a FAAP Agreement every five years, rather than the current three years, in order to reduce the burden on FAAP contractors;
  • Eliminate the requirement that FAAP contractors undergo at least one compliance evaluation during the term of their agreements. Apparently, this proposed revision means there is a possibility that a FAAP contractor could go without any FAAP audit during the entire five-year tenure of the FAAP agreement. This is interesting and sounds attractive but given the relatively low number of FAAP contractors (currently, 71 contractors, 1,932 FAAPs), we wouldn’t count on this; and,
  • Removal of the requirement that FAAP contractors provide OFCCP with an annual update regarding its FAAP structure. OFCCP would, however, retain the existing requirement that contractors provide OFCCP notice of significant changes to its FAAP structure within 60 days of the effective date of those changes.

Contractors interested in commenting on these and the other proposed changes may submit comments by November 13, 2018 according to the procedures set forth in OFCCP’s Federal Register notice.

For certain, there are positives and negatives to a FAAP structure as compared to a routine establishment-based AAP structure. Any contractor considering a move to FAAPs should carefully weigh the implications for its organization. As always, we are here to assist with any questions you may have.

 

Complimentary Webinar: What You Need to Know About OFCCP’s New Compensation Directive

It’s been a little more than two weeks since OFCCP released its new Compensation Directive.  While we don’t yet have answers to all of the questions surrounding the Directive, we do have thoughts about what will likely change, and what will not, for federal contractors during compliance reviews. Since OFCCP has just released another round of advance notice letters about upcoming audits, time is of the essence to wrap your arms around how the agency will be looking at your pay.

Join me and my colleague, Scott Pechaitis, at 2:00 Eastern on September 19th for a complimentary webinar, as we discuss the implications of the new Directive with one of our Lead Statisticians, Krystal Welland.  Hope you can join us!

Additional Information on OFCCP’s Latest Round of CSALs

As we reported last week, OFCCP has released a supplemental list of contractors who have been selected for audit by the Agency.  In addition to releasing information about the supplemental list of CSALs, OFCCP also published a new FAQ addressing requests for extensions and a supplement to its recently disclosed scheduling methodology.

Request for Extension FAQ

One of the items raised in the GAO review of OFCCP was the rate of untimely audit submissions by contractors.  While looking for alternative ways to ensure contractors prepare the required affirmative action plans, OFCCP has released a new FAQ addressing requests for extensions of time to respond to an OFCCP scheduling letter.   In the FAQ, OFCCP states it will provide a 30-day extension for the submission of supporting data in connection with contractors AAPs if two criteria are met.  The extension will be granted only if:

(1) the contractor requests the extension prior to the initial 30-day due date for the AAPs, and

(2) the contractor timely submits the basic EO 11246, Section 503 and VEVRA AAPs within the initial 30-day period after receiving the Scheduling Letter and Itemized Listing.

To reiterate, the 30-day extension will be granted for supporting data only, not for what OFCCP considers the “basic” AAPs which “contractors are required to maintain and updated annually.”  The FAQ does not explain what constitutes a “basic” AAP.

The FAQ goes on to state failure to submit either the basic AAPs, or the supporting data timely, with the approved extension. “will result in an immediate Notice to Show Cause.”  It also highlights that

[a] procedural Notice to Show Cause for failure to submit AAPs and/or supporting data does not require OFCCP National Office approval.

Finally, the FAQ notes that the extension policy is applicable for reviews scheduled on after September 7, 2018.  Even though OFCCP states it will grant extensions for submissions, with the above caveats, it is also clear they expect contractors to comply with the reporting requirements in a timely fashion.

Scheduling Methodology Supplement

In connection with release of the supplemental CSAL list, and in an effort for continued transparency, OFCCP also released an explanation of the scheduling methodology for the supplemental list.  The impetus behind the supplemental CSAL list was to ensure “the agency’s district and area offices have a sufficient number of available establishments to schedule for compliance reviews until OFCCP releases a new scheduling list.”  According to the Agency, the supplemental list was taken from the “pool” of eligible establishments created from the FY 2018 scheduling methodology.  Establishments with contracts expiring on or before December 31, 2018 were removed from the list.  Notably, and consistent with what we’ve been seeing in the field, OFCCP prioritized establishments with higher employee counts.  OFCCP also applied criteria to regulate the number of establishments, and types of audits (FAAPs and CMCEs) assigned to the district offices.

OFCCP makes it clear this is a supplement to the FY 2018 scheduling list and that a new scheduling list is “expected in early 2019.”

BREAKING NEWS: OFCCP Issues New Round of CSALs

OFCCP has been busy, and they are not slowing down.  Today, OFCCP issued an additional 750 Corporate Scheduling Announcement Letters (CSALs) to federal contractors providing advance notification of compliance reviews, in order to make sure the district and area offices “have a sufficient number of available establishments to schedule for compliance reviews until OFCCP releases a new scheduling list.”

Consistent with the previous round of CSALs issued under the current administration, OFCCP states it will not start issuing actual scheduling letters for this “supplemental” CSAL list for at least 15 days.

As reported, the CSAL list includes:

  • 445 companies,
  • 69 CMCEs, and
  • 66 FAAP functional units

Notably, OFCCP states “universities were not included in this supplement due to currently available compliance workload.”

OFCCP further clarified

[n]o establishment that received a CSAL, concluded a review, or concluded progress report monitoring resulting from a conciliation agreement or consent decree, within the last five years, is included on this supplement.

Additionally, OFCCP reported that it limited scheduling to no more than ten (10) establishments of any parent company and no more than four (4) establishments of a single contractor in a single district office.

OFCCP’s New Compensation Directive – What Does it Really Mean For Contractors?

There’s been a lot of discussion in past days about OFCCP’s new Compensation Directive, which describes the Agency’s approach to investigating pay discrimination.  We’ve spent some time digging into the details of the directive.  We’ve previously shared our thoughts about the Directive’s commitment to transparency, and now, as promised, want to share our thoughts about the nuts and bolts of the Directive. In summary, while the Directive is certainly transparent and descriptive and contains clarifications, it is by no means the “windfall” for contractors as some may be reporting.

The Directive breaks down, in much appreciated detail, the Agency’s approach to (1) creation of pay groupings for analysis, including insights into how the Agency defines “similarly situated” and, (2) statistical modeling.

Pay Analysis Groups (PAGs) are Here to Stay

The contractor community was first introduced to PAGs when OFCCP released the now rescinded Directive 307 in 2013.  Since that time contractors have struggled to understand, and predict, how OFCCP groups their workforces for pay analyses.  In its new Directive, the Agency takes steps to provide insight into its grouping philosophy.  First, the Agency states directly that it “aligns its compensation compliance evaluation procedures with principles under Title VII.”  Specifically, with respect to groupings, the Directive states OFCCP defines similarly-situated employees as those who would be expected to be paid the same based on:

  • job similarity (e.g., tasks performed, skills required, effort, responsibility, working conditions and complexity); and
  • other objective factors such as minimum qualifications or certifications.

While the Directive states it is

 OFCCP’s objective to use PAGs that mirror a contractor’s compensation system,

the Directive also provides OFCCP the latitude to disregard the contractor’s structure if  (1) OFCCP determines the structure is not “reasonable,” (2) cannot “verify the structure as reflected in the contractor compensation policies” and (3) “the analytical groupings are of insufficient size to “conduct a meaningful system statistical analysis.” In an important footnote to the Directive OFCCP expands on these caveats (and its latitude) to say

[t]here is no bright-line rule, and professionals may disagree, about what constitutes sufficient size for a meaningful systemic statistical analysis of an employer’s compensation system.  In its preliminary analysis, OFCCP generally seeks to evaluate groups containing employees under a similar pay system performing broadly similar job functions, regardless of group size.

(emphasis added).  The Directive further clarifies that OFCCP may “broaden or narrow” its preliminary PAGs based on information received during the review.  In the absence of information about a contractor’s compensation system, the Directive states “OFCCP will conduct its preliminary desk audit using either EEO-1 or AAP job groups” where OFCCP will control for “sub-groupings, functions, units or titles, as appropriate. Thus, while it’s goal is to use mirror contractor compensation systems, the Directive certainly contemplates, as a default, OFCCP developing large, and broad, groupings for analysis.

OFCCP’s Statistical Methodology and Modeling

After discussing the development of pay groups, the Directive moves on to detail the principles OFCCP will use to analyze the groupings. Utilizing technical terminology, OFCCP lays out how it will analyze pay, the variables it may use to build its regression model for the purposes of analyzing pay, and how it may treat those variables in the model.  The principles the Agency will apply include:

  • Separately analyzing base and total compensation
  • Transforming salary to the natural log (which will help account for different pay distributions within a pay group)
  • Controlling for time variables separately (e.g. analyzing time in job separate from time in company)
  • Considering squaring tenure variables (which will allow the model to take into consideration the natural growth, and eventual stagnation, of earning potential)
  • Considering education and performance ratings
  • Considering combining categories of variables to better capture pay differentials (e.g. analyzing the impact of PhD and Master degree requirements together versus lesser education requirement instead of analyzing the impact of each degree separately)

Again, while the transparency is welcomed, and overdue, the Directive does not require the Agency to utilize the principles or build its model in a specific way.  Thus, the Agency will continue to have the latitude and autonomy to develop its methodology on a case-by-case basis.  What remains to be seen is how much input OFCCP will allow contractors in this process and how much transparency the Agency will give into the methods and modeling it concludes are appropriate.

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