The most recently authorized version of the National Defense Authorization Act (NDAA) includes a provision that will limit the ability of federal contractors to inquire into the criminal backgrounds of certain potential employees.  Beginning in December 2021, the Fair Chance Act will prohibit federal contractors from inquiring about a job applicant’s criminal background in certain cases in the initial stages of the application process.

It is not new for the NDAA to be used to promulgate obligations and rules for federal contractors.  (Remember the part the NDAA played in the TRICARE drama years ago?)

Click here for our full length article on the NDAA’s new limitation for federal contractors.

Checking off another of the Agency’s “To Dos”, OFCCP has published revisions and updates to the Federal Contractor Compliance Manual (FCCM).  The manual is the Agency’s “instruction manual” providing

guidance for OFCCP’s compliance officers in conducting compliance evaluations and complaint investigations . . .

Revisions to the guide have been promised for years, and the Agency under the leadership of Director Craig Leen has finally accomplished it in furtherance of its commitment to transparency to the contractor community.

The Agency has made changes to a good number of the Manual’s sections but they’ve emphasized highlight the following changes:

  • Revisions to align with the Agency’s new directives
  • Addition of protected bases to align with OFCCP’s authority
  • Updated language and direction with respect to disability and veteran requirements

The Agency has published a list of the changes but encourages review of “the entirety of the referenced section(s) in which an update occurred . . . in order to better understand the full context of the update.”

We are in the process of digesting and comparing the this new version of the manual to the previous edition and will be back soon with more specific insights.

OFCCP has published a Notice of Proposed Rulemaking (NPRM or Proposed Rule) proposing to codify procedures the agency uses to resolve potential violations of the affirmative action laws the agency enforces.  If approved, the regulation would significantly clarify (if not alter) both the procedures and substantive rules according to which OFCCP seeks to resolve allegations of discrimination in employment decisions, including pay practices.

Director Craig Leen believes the proposal

aims to provide greater certainty and transparency about the procedures that OFCCP follows during compliance evaluations to resolve employment discrimination and other material violations.

The proposal seeks to do this by

  • clarifying the strength (and type) of evidence agency staff must find before issuing a PDN  or NOV, and
  • codifying procedures for the two formal notices, the Predetermination Notice (PDN) and Notice of Violation (NOV), that OFCCP uses when the Agency finds potential violations.

As we noted in mid-November, OFCCP is seeking to translate its Directive 2018-01 – Use of Predetermination Notices (PDN) into a more durable set of regulatory requirements that would be harder for a subsequent administration to undo.  Consistent with the agency’s overarching objectives, the current effort appears to be one to make the resolution of discrimination allegations more transparent and efficient.

However, as discussed in greater detail below, the Proposed Rule is in some respects much broader than the PDN Directive.

Statistical & Non-Statistical Evidence Requirements

In a so-called discretionary limitation of its own practices, the Proposed Rule states that OFCCP will require “corroborating nonstatistical evidence” of discrimination in all instances where statistical indicators of discrimination are between 2 and 3 standard deviations – roughly equivalent to a probability value (p value) below .05 but above .01.

In other words, unless a selection or compensation disparity reaches, 3 standard deviations, OFCCP is proposing to not issue a PDN without bolstering the statistical indicator with some other evidence of “an intent to discriminate”.  As OFCCP explains in footnote 11:

The proposed rule clarifies that, absent nonstatistical evidence, OFCCP will only pursue a matter when discrimination is indicated by statistically significant evidence at the 99 percent confidence level (i.e., three standard deviations, or a p value of 0.01 or less).

However, where the statistical evidence is “very” or “exceptionally strong” – at or above 3 standard deviations (below a p value of .01) – OFCCP proposes it may issue a PDN and pursue enforcement without any corroborating non-statistical evidence.  Before issuing a PDN, the proposed rule sets out that the agency may also considers whether nonstatistical evidence, such as a cohort analysis, demonstrates an intent to discriminate.

The Proposed Rule also defines statistical and non-statistical evidence as the following:

Statistical evidence means hypothesis testing, controlling for the major, measurable parameters and variables used by employers (including, as appropriate, other demographic variables, test scores, geographic variables, performance evaluations, years of experience, quality of experience, years of service, quality and reputation of previous employers, years of education, years of training, quality and reputation of credentialing institutions, etc.), related to the probability of outcomes occurring by chance and/or analyses reflecting statements concluding that a difference in employment selection rates or compensation decisions is statistically significant by reference to any one of these statements:

(1) The disparity is two or more times larger than its standard error (i.e., a standard deviation of two or more); (2) The Z statistic has a value greater than two; or (3) The probability value is less than 0.05.

Nonstatistical evidence may include testimony about biased statements, remarks, attitudes, or acts based upon membership in a protected class; differential treatment through review of comparators, cohorts, or summary data reflecting differential selections, compensation and/or qualifications; testimony about individuals denied or given misleading or contradictory information about employment or compensation practices; testimony about the extent of discretion or subjectivity involved in making employment decisions; or other anecdotal or supporting evidence.

OFCCP notes some exceptions to these limitations.  For example, OFCCP may pursue indicators of discrimination below 3 standard deviations (above a p value of .01) without corroborating non-statistical indicators if it finds “similar patterns of disparity in multiple years or at multiple establishments of a federal contractor…”  In footnote 11 to the Proposed Rule, OFCCP further clarifies:

that for multiple findings of discrimination without nonstatistical evidence present at a given contractor establishment, or at multiple facilities of the same contractor, OFCCP may issue a PDN where at least one finding is supported by statistically significant evidence at the 99 percent confidence level and may include additional findings that are supported by statistically significant evidence at the 95  percent confidence level (i.e., two standard deviations, or a p value of 0.05 or less) or above.

What this appears to mean is that:

  1. Patterns of disparities (below 3 standard deviations) across multiple years or multiple establishments may suffice as corroborating evidence to issue a PDN for alleged discrimination without non-statistical evidence; and,
  2. Where there appear to be patterns of discrimination across years or establishments without any corroborating non-statistical evidence, OFCCP may pursue a PDN if there is at least one statistical indicator at 3 standard deviations or above.

Procedures for PDNs, NOVs and Conciliation Agreements

 OFCCP’s effort to put the procedures for issuing PDNs and Notices of Violations (NOV) into regulations is no less significant.  Consistent with the substantive thresholds discussed above, OFCCP may issue a PDN only after considering these factors:

  • Whether a statistical disparity is “both practically and statistically significant”;
  • Whether, when required, corroborating non-statistical evidence “demonstrates an intent to discriminate”; and,
  • Whether the statistical indicator is at or above 3 standard deviations (p value less than .01).

Noticeably absent is the requirement present in the PDN Directive that the Office of Solicitor and OFCCP National Office review and approve all PDNs before they are issued.  Nonetheless, we hope OFCCP will continue to follow this aspect of the Directive absent codification, although leaving this requirement out of the regulation would make it susceptible to rescission by another administration.

Regarding NOVs, the first aspect of the Proposed Rule (and Directive) is that OFCCP cannot issue an NOV for alleged discrimination unless it first issues a PDN.  In contrast, OFCCP may skip the PDN and go straight to an NOV for material violations which did not include allegations of discrimination.

The Proposed Rule does not substantively modify the existing regulation regarding conciliation agreements, except to add a provision that contractors may waive the foregoing PDN and NOV procedures in favor of entering directly into a conciliation agreement.

What Does This All Means for Contractors?

  1. Opportunity to Comment
    • As with any proposed rule, OFCCP may modify this Proposed Rule based on consideration of public comments, as well as further reflection on the most efficient methods to achieve its objectives.  In that regard, contractors and other interested parties may submit public comments until January 29, 2020 at the regulations.gov website.
  2. Earlier Insight into Audit Findings
    • Perhaps most significantly, the Proposed Rule would codify the requirement that OFCCP issue PDNs in cases of alleged discrimination, thus giving contractors the opportunity to better understand and respond to OFCCP’s allegations before receiving an NOV.  Such transparency may also facilitate earlier resolution of alleged discrimination indicators.  For whatever reason, OFCCP had for many years fallen out of the practice of issuing PDNs, despite the fact they are set forth in OFCCP’s own manual for conducting audits – the Federal Contractor Compliance Manual (FCCM).  Approval of the Proposed Rule would elevate the binding effect of these procedures.
  3. Transparency and Guidance around Statistical Thresholds
    • As for OFCCP’s decision to require “corroborating nonstatistical evidence” where statistical indicators fall below 3 standard deviations, this appears to be a step towards streamlining OFCCP’s focus on more problematic indicators of potential discrimination.  That could prove to be a benefit to contractors.  However, given that 1.96 standard deviations is the well-accepted threshold for statistical significance, statisticians may argue that the 3 standard deviation threshold is arbitrary, and could/should justifiably be set at 4 or more standard deviations.
    • Moreover, there is a legal argument that OFCCP’s decision to dispense with the need for corroborating non-statistical evidence to demonstrate discriminatory intent is contrary to some Title VII case law requiring some measure of anecdotal evidence of intent in all Title VII cases.  It may be that OFCCP means that statistical indicators of 3 standard deviations and above may be sufficient only to state a prima facie claim of intentional discrimination (“pattern or practice” of discrimination), but not necessarily to prove such a claim.
    • Practically speaking, it remains to be seen how OFCCP would implement these thresholds and requirements during compliance evaluations.  For example, to what extent will OFCCP investigate disparities below 3 standard deviations where there is no clear non-statistical evidence?  The answer to that question will likely dictate whether or not the proposed thresholds lighten the burden on federal contractors or, possibly, increase the burden as OFCCP searches for non-statistical evidence through interviews and document requests.
    • Perhaps more importantly, while the Proposed Rule would require OFCCP to consider practical significance (in addition to statistical significance), it does not define practical significance.  Practical significance is addressed only in footnote 6 and in reference to sub-regulatory Frequently Asked Questions on the OFCCP website.  Because OFCCP has not sought to codify definitions or types of practical significance, this significant concept could be severely limited by subsequent administrations.

Please consider submitting comments regarding the Proposed Rule and check back for updates on this and other OFCCP topics.

EEOC has filed another Motion with the court seeking an Order deeming Component 2 pay data collection complete.  In its most recent filing, EEOC requests the Court to revisit its previous decision and deem the collection obligation satisfied or, in the alternative, provide clarification “regarding the response rate at which the Court will deem the EEOC’s collection to be complete.”  As a reminder, EEOC’s previous motion requesting the permission to close the portal was denied.  Instead Judge Chutkan ordered the agency to keep the portal open until at least January 2020 to allow for additional data collection.  EEOC reports it is costing approximately $150,000 a week to maintain the site.

As of October 8, 2019, 75.9% of eligible filers had submitted the requested data.  As of December 18, 2019, EEOC reported that 85.6% of eligible files have submitted the Component 2 data.  EEOC calculates the average response rate for reporters who submitted EEO-1 data within the grace period (rather than at the deadline) in previous years is 84.5%.  Thus, at this point EEOC is reporting that it has collected Component 2 data at a rate that exceeds the average EEO-1 response rate, taking into consideration additional time for submission, and believes therefore, the collection should be deemed complete.

EEOC’s filing indicated Plaintiffs in the matter oppose the motion.

We’ll provide further updates as they happen so stay tuned.

 

 

Via Federal Register notice, OFCCP has officially stated the Agency

will not request, accept, or use Component 2 data, as it does not expect to find significant utility in the data given limited resources and its aggregated nature, but it will continue to receive EEO-1 Component 1 data.

The notice is a welcomed confirmation for federal contractors that had concerns about OFCCP’s intentions with respect to the recently filed compensation data.

The notice reflects that OFCCP

reviewed the parameters of the EEO-1 Component 2 data collection and has determined that it does not find Component 2 data necessary to accomplish its mission to ensure federal contractors are not engaged in unlawful pay discrimination.

While the use of the collected pay data seems settled for OFCCP, at least at this point, the future of pay data reporting in general remains up in the air.

This week EEOC held a public hearing on the matter, where the Commission heard testimony and feedback on the current EEO-1 Component 2 Pay Data collection form and reporting of pay data in general.

In addition, as ordered, EEOC continues to collect and analyze pay data as part of its evaluation of the utility of the Component 2 collection and potential modifications to the process and form.

As we learn more about EEOC’s intentions and new developments we will continue to bring you updates – so as always, stay tuned for more!

In a welcome turn for federal contractors, OFCCP last week submitted a proposed regulation to codify Directive 2018-01 – Use of Predetermination Notices (PDN).  The regulation would require OFCCP to issue a Predetermination Notice (PDN) in every audit summarizing the Agency’s preliminary “discrimination” findings before issuing a Notice of Violation (NOV).

Regular issuance of PDNs, after approval from the Solicitor’s Office and the National Office of OFCCP, provides transparency to contractors and facilitates resolution of alleged violations before OFCCP issues an NOV.

The proposed regulation is not, yet, publicly available but can be tracked at the Office of Information and Regulatory Affairs (OIRA):  RIN 1250-AA10.  Given the current status – awaiting for approval for publication in the federal register for public comment – we do not know what the actual details of the proposal will encompass.

By way of background, OFCCP issued Directive 2018-01 in February 2018, as interim guidance regarding PDNs until it updated the Federal Contractor Compliance Manual (FCCM).  The Directive provides that rather than leaving the issuance of a PDN to the discretion of regional and district OFCCP offices, they must issue PDNs in some instances.  The Directive also provides oversight of regional and district office discrimination allegations via a mandatory pre-issuance review of all PDNs by the regional Office of the Solicitor and the OFCCP National Office.

In October 2019, President Trump issued Executive Order 13892 – Promoting the Rule of Law Through Improved Agency Guidance Documents – making it more difficult for OFCCP and other agencies to issue guidance document without public review and comment.  And also removing the use of sub-regulatory guidance as the basis for enforcement actions.  The Executive Order favors regulation instead of guidance due to the requirement of rigorous government review, as well as public notice and comment before a regulation may go into effect.  Compliance with this Executive Order as well as providing certainty and transparency in enforcement are likely the driving force behind this proposal.

We will be back with updates once OFCCP publishes the proposed regulations so stayed tune.

Furthering the Agency’s commitment to providing contractors with ongoing Technical Compliance Assistance, OFCCP has released a Guide to assist construction contractors navigate compliance with their equal employment opportunity obligations. The Construction TAG has been added to OFCCP’s ever-expanding technical assistance landing page.

OFCCP drafted the 157-page guide as a

self-assessment tool to review the practices [construction contractors] have in place to eliminate discrimination and achieve their equal employment opportunity goals.

We will dig in and be back with further details and insights.

As Veteran’s Day nears, OFCCP is keeping federal contractors busy reviewing the latest efforts the Agency is undertaking to ensure employers are in compliance with non-discrimination and affirmative action obligations for protected veterans.

In addition to releasing a supplement CSAL list for establishments that have been selected for VEVRAA Focused Reviews, OFCCP also publised the first Directive of FY 2020.  Directive 2020-01: Spouses of Protected Veterans was drafted to

ensure that federal contractors are not discriminating against spouses of protected veterans and to provide compliance assistance during compliance evaluations on how contractors can support the families of protected veterans.

Pursuant to the VEVRAA regulations, it is “unlawful” for a contractor to “exclude or deny equal jobs or benefits to, or otherwise discriminate against,” a qualified individual because of the “known protected status of an individual with whom the qualified individual is known to have a family, business, social or other relationship or association.”

The new Directive states that during the onsite investigation OFCCP will “ask questions of Human Resource (HR) staff, managers, and employees.”

For HR and Managers OFCCP will:

  • Offer compliance assistance by providing a sample nondiscrimination policy statement that the contractor may use; and,
  • Ensure that the contractor understands its obligation not to discriminate against qualified individuals whom the contractor knows to be spouses or other associates of a protected veteran.

More specifically for employees, the Compliance Officer will ask the following questions:

  • if they are a spouse of a protected veteran;
  • if they have coworkers who are spouses of protected veterans;
  • any observations they have concerning the treatment of spouses of protected veterans

It is clear that contractors scheduled for the new VEVRAA Focused Reviews should ensure they are prepared for this line of inquiry.  To be clear, however, the Directive does not state its investigations of compliance with this obligation is limited only to VEVRAA focused reviews.  Thus, all contractors should review their practices to ensure they are in compliance.

 

 

As promised, OFCCP has released the list of organizations that have been selected for Vietnam Era Veteran Readjustment Assistance Act (VEVRAA) Focused Reviews.  The list is published in OFCCP’s FOIA Library.

Labeled as a supplement to the existing CSAL list, the new listing contains 500 establishments that will be scheduled for a review focused on compliance with the Agency’s veteran non-discrimination regulations.  OFCCP has also published the scheduling methodology for this supplemental list.

As it did with the announcement of the Section 503 Focused Reviews, OFCCP unveiled a new VEVRAA Focused Review landing page to coincide with the release of the supplemental CSAL list. Among other forms of assistance, the landing page provides guidance on employer best practices for VEVRAA Compliance.

As a reminder, there is a proposed VEVRAA Focused Review Scheduling Letter currently pending with the Office of Management and Budget (OMB).

We will be back with more as additional details are learned.  Stay Tuned.

As previewed earlier this year, OFCCP is scheduled to publish on November 6, 2019 its proposed rule making addressing jurisdiction for TRICARE contractors and subcontractors.  As a reminder, OFCCP has had an audit moratorium in place since 2014 for employers that participate in TRICARE.

The proposed rule making seeks to codify OFCCP’s most recent position that TRICARE contractors and subcontractors should not be subject to OFCCP jurisdiction – or more precisely, that OFCCP

lacks authority over Federal health care providers who participate in TRICARE.

The Notice explains

[t]he proposed rule is intended to increase access to care for uniformed service members and veterans and to provide certainty for health care providers who serve beneficiaries of TRICARE.

This is the latest chapter in a very long, and winding story as to the question of whether OFCCP has jurisdiction over health care providers that receive TRICARE funds as their sole source of federal funding, with OFCCP taking varying positions along the way.

The agency is proposing to revise the definition of “subcontractor” in its regulations to exclude health care providers “with agreements to furnish medical services and supplies to individuals participating in TRICARE.”

In the event that is not an acceptable amendment, OFCCP proposes to establish “a national interest exemption from Executive Order 11246, Section 503 of the Rehabilitation Act of 1973, and the Vietnam Era Veterans’ Readjustment Assistance Act of 1974 for health care providers with agreements to furnish medical services and supplies to individuals participating in TRICARE.”

Today’s proposed rule making reflects OFCCP’s determination that

special circumstances in the national interest justify proposing the exemption as it would improve uniformed service members’ and veterans’ access to medical care, more efficiently allocate OFCCP’s limited resources for enforcement activities, and provide greater uniformity, certainty, and notice for health care providers participating in TRICARE.

To be clear, however, OFCCP’s proposal addresses authority over only TRICARE participants. Specifically, the notice states

OFCCP would nevertheless have authority over health care providers participating in TRICARE if they hold a separate covered Federal contract or
subcontract.

Thus, if they haven’t already done so, health care provides should take steps to understand the sources of their federal revenue to ascertain whether the modification will apply.

When formally published, the proposed rule making will be open for public comment and will remain open for 30 days.