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

By Laura A. Mitchell and James D. Mackey

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

By Scott M. Pechaitis and Sabrina L. Brown

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.

OFCCP Issues First Directive of FY 2019: Formally Rescinds Previous Enforcement Procedures

Elizabeth P. Hernandez contributed to this post.

Last Friday, OFCCP kicked off the 2019 fiscal year with its first of three new Directives: “Directive 2019-01 – Compliance Review Procedures,” which rescinds the Obama Administration’s Active Case Enforcement (ACE) approach to audits – Directive 2011-01. The ACE Directive was itself a replacement of the Bush Administration’s Active Case Management Directive (ACM).

What does all this mean? In summary, the ACM Directive emphasized abbreviated, more frequent OFCCP audits, focused on identifying indicators of systemic discrimination. If OFCCP did not find potential indicators during the desk audit, it tended to address technical violations informally and close the audit. In contrast, ACE signaled a fundamental shift in OFCCP’s approach: fewer but deeper-dive audits that tended to take considerably longer, even if OFCCP ultimately identified no issues.

Those currently at the helm of OFCCP are aiming to combine the best aspects of both ACE and ACM. As the new Directive states:

Under the ACE procedures, OFCCP has identified and remedied a high rate of affirmative action violations… OFCCP also has remedied systemic discrimination in a variety of industries and across a variety of employment practices. However, the number of OFCCP compliance reviews gradually declined and overall processing time increased under ACE.

By increasing the number of compliance evaluations, shortening desk audits and conciliating issues more efficiently, OFCCP is maximizing its resources by proceeding with the most effective aspects of ACM and ACE. Therefore, there is no longer the need for the ACE directive as a freestanding guidance document.

How has OFCCP combined the best of ACM and ACE? OFCCP lists the following measures:

  • Embedded valuable components of ACE and ACM into the 2014 revisions to the Federal Contract Compliance Manual (FCCM);
  • Posting OFCCP’s methodology for audit selection and an update on its website and in Directive 2018‐09;
  • Shortening the time to complete a full desk and taking a more collaborative approach to resolving issues more informally and quickly – Directive 2018‐09;
  • Beginning to develop a system through which contractors can annually certify AAP compliance, which would allow OFCCP to focus on contractors who have not certified compliance, as set forth in Directive 2018‐07; and,
  • Improving OFCCP transparency and compliance assistance efforts, as reflected in Directive 2018-08.

Stay tuned for future posts on OFCCP’s additional new directives.

 

BREAKING NEWS: OFCCP Rescinds ACE, Issues Additional New Directives

Today, on the last day of the month, OFCCP has released three new directives – the first three of the Agency’s 2019 Fiscal Year – and continues the string of directives issued by the new administration, bringing the number to an even dozen.

Directive 2019 -01: Compliance Review Procedures rescinds the Directive 2011-01 which set out the Active Case Enforcement compliance review procedures implemented under former Director Patricia Shiu and states reviews will be conducted in accordance with the Agency’s Federal Contract Compliance Manual (FCCM).

Directive 2019-02: Early Resolution Procedures is intended to create a path to “help contractors and OFCCP achieve their mutual goal of equal employment opportunity in federal contracting and reduce the length of compliance evaluations through early and efficient resolutions.”

Directive 2019-03:  Opinion Letters and Help Desk sets forth the Agency’s intention to enhance is technical assistance tools by development of a searchable Help Desk question repository.  The Directive also formally sets forth OFCCP’s intention to start issuing Formal Opinion letters.

We are in the process of digesting these directives and will follow up with more in-depth analysis and insights in the coming days.

OFCCP’s Agenda for 2019: More Audits and Increased Transparency

By Laura A. Mitchell, James D. Mackey, and Suzanne Donnelly Corwin

As contractors start to see new scheduling letters arrive from OFCCP’s latest round of advance notification letters, OFCCP has new opportunities to  demonstrate its commitment to transparency, through implementation of the Agency’s recently released Directive 2018-08: Transparency in OFCCP Compliance Activities. The Agency’s stated philosophy is that transparency should “guide OFCCP staff during every stage of the compliance evaluation, from beginning to end” and the Directive sets out the Agency’s roadmap for transparency in audits.

And it sounds like the Agency is preparing for more opportunities to test drive their road map.  In recent testimony given to the U.S. Commission on Civil Rights, which is currently evaluating federal civil rights enforcement agencies, Acting Director Craig Leen shared his plans to increase the number of audits performed by the agency considerably this fiscal year – from fewer than 1,000 to around 3,500, and include focused reviews. Leen testified he hopes up to 500 of the reviews in the coming year will be focused reviews.  As a reminder, OFCCP’s fiscal year runs from October 1 through September 30 each year.

Transparency Directive

As we previously shared, the Transparency Directive is a detailed explanation of roles, responsibilities and expectations for OFCCP and contractors going through OFCCP compliance reviews and addresses the following components of the audit process:

Scheduling:

OFCCP will delay issuing Scheduling Letters until at least 45 days after issuing Corporate Scheduling Announcement Letters (“CSALs”) in order to afford contractors additional time to prepare for audit. Note, this means that for the most recent CSALS issued on September 7, OFCCP could have started issuing Scheduling Letters as soon as October 22 and we are aware of letters dated October 31, 2018.

Pre-Desk Audit:

Setting a collaborative tone from the start, OFCCP has committed to contacting contractors 15 days after issuing a Scheduling Letter to establish the point of contact, offer technical assistance, and explain what to expect during the audit. Importantly, upon request, contractors may take advantage of a one-time 30-day extension for submission of supporting data, provided that they submit the basic EO 11246, Section 503, and VEVRAA AAPs within the original 30-day timeline. However, contractors should note the directive points out that extensions for basic affirmative action plans will not be granted except in “extraordinary” circumstances.

Finally, OFCCP’s more generous timeline comes with a catch. Failure to submit AAPs or supporting data in a timely fashion will now result in the automatic and immediate issuance of a procedural Notice to Show Cause, which does not require approval from the National Office. While a Notice to Show Cause will not necessarily result in a Conciliation Agreement, any failure to submit materials in a timely manner must be documented in the Closure Letter.

Desk Audit:

Perhaps the most impactful change in the new Directive involves the streamlining of the Desk Audit stage. Where there are no indicators of discrimination, OFCCP aims to complete audits quickly: ideally, and in the majority of cases, within 45 days. In order to accomplish this goal, per the directive, OFCCP should initially limit information requests to those that “fulfill, and if necessary, clarify” data originally requested by the Scheduling Letter.

Notably, requests for information beyond the requirements of the Scheduling Letter and Itemized Listing should only occur after completion of the desk audit.

Pre-Onsite:

Should OFCCP find indications of discrimination during the Desk Audit, the compliance evaluation proceeds to the “Pre-Onsite” stage. OFCCP will make subsequent information requests to refine and analyze indicators. Contractors should be aware that these additional information requests “must include the basis for the request, be reasonably tailored to the areas of concern, and allow for a reasonable time to respond.” At this point, OFCCP must also provide the contractor with a high-level summary of preliminary indicators in its on-site confirmation letter.

Interestingly, OFCCP does not provide new guidance with respect to the on-site stage of the compliance evaluation.

Offsite Review:

After the on-site takes place, OFCCP will begin the Offsite review. Making clear its desire to be more collaborative and increase transparency, Compliance Officers are required to reach out to contractors at least once every 30 days to keep them apprised of the status of the audit.

Conciliation:

OFCCP also intends to take a collaborative approach to resolve the audit. Importantly, this includes “sharing information and essential source data in electronic format” to allow the contractor to understand and replicate OFCCP’s findings, as well as making good faith efforts to engage with contractors to support conciliation efforts. Here, OFCCP suggests that it may entertain “innovative remedies including apprenticeship programs and proactive corporate-wide solutions.”

 

Event Time
 

Time between Issuing CSALs to Scheduling Letter

 

Minimum of 45 Days

OFCCP Contacts Contractor to Establish Primary Contact, provide opportunity for technical assistance 15 Days after issuing Scheduling Letter
Additional Time for Supporting Data Submission 30 Days Upon Request
Time to Respond to Incomplete AAP Submission 15 Additional Days
Time to Respond to a Notice to Show Cause 30 Days from Receipt

The bottom line: per the Directive, contractors should expect additional transparency and certainty when undergoing an audit, as well as a more efficient, collaborative OFCCP. OFCCP’s new Directive presents a clear roadmap from CSAL to Desk Audit to Onsite to Resolution. While contractors have additional tools, increased transparency, and a more collaborative Agency than employers have seen in recent years, they should still work proactively to achieve and maintain compliance.

For the latest updates in OFCCP Compliance, please stay tuned.

OFCCP Seeks Public Comment on Leadership in Equal Access and Diversity Award

By Laura A. Mitchell and Suzanne Donnelly Corwin

Late last week, OFCCP published a notice in the federal register seeking public comment regarding its proposed Leadership in Equal Access and Diversity (“LEAD”) Award.  The LEAD award will

 recognize federal contractor and subcontractor establishments that have developed and successfully implemented comprehensive equal employment opportunity and nondiscrimination programs.

OFCCP and the Department of Labor’s Women’s Bureau are partnering to create this award.

This, and the agency’s previously announced Disability Inclusion Recognition Program, comes as no surprise given the recent release of Directive 2018-06, which announced the Agency’s intention to develop such programs. 

The public comment period for the LEAD award closes on December 18, 2018.

 

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.

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