As yet another confirmation that pay equity will be a priority for the Biden-Harris administration, the proposed Paycheck Fairness Act has been reintroduced in the U.S. House of Representatives as H.R. 7.  The proposed legislation has a long history but has never been given a vote in the Senate – it last passed in the House of Representatives in 2019.

In summary, the current version of the Act would address the gender wage gap by amending the equal pay provisions of the Fair Labor Standards Act of 1938 to:

  1. restrict the bases on which pay disparities may be legally justified and exclude “any factor other than sex”;
  2. enhance nonretaliation prohibitions,
  3. make it unlawful to require an employee to sign a contract or waiver prohibiting the employee from disclosing information about the employee’s wages, and
  4. increase civil penalties for violations of equal pay provisions.

Notably, this version of the Act would require OFCCP to:

implement a survey to collect compensation data and other employment-related data (including hiring, termination, and promotion data) and designate not less than half of all nonconstruction contractor establishments each year to prepare and file such survey, and shall review and utilize the responses to such survey to identify contractor establishments for further evaluation and for other enforcement purposes as appropriate.

It seems this new OFCCP obligation could supplement OFCCP plans to require contractors to annually certify their AAP compliance, and seeks to fill the gap while EEOC studies the viability of collecting pay data for all employers through the EEO-1 reporting mechanism. For those of you who recall, this has remnants of the retired EO survey of years past.

There will likely be changes to the bill as it passes through the legislative process.  As always, we will keep you updated with further developments.

OFCCP has published a notice in the Federal Register extending the public comment period on its proposal to require federal contractors to submit an annual certification of their AAP compliance.  The new comment deadline is January 28, 2021.  While this notice does not state the reason for the extension, it appears the Agency received only 15 comments by the November 13, 2020 deadline.

As reflected in OFCCP’s original notice, it seeks regulatory authority to:

  • Require federal contractors to annually certify they have prepared AAPs via an online interface; and,
  • Institute “a secure method” to electronically submit AAPs when contractors are scheduled for an audit.

In a supporting document, OFCCP says it will use an online platform – the Affirmative Action Program Verification Interface (AAP-VI) – to execute a GAO recommendation “to collect and monitor Affirmative Action Programs (AAP) from covered federal contractors and subcontractors on a regular basis.”  This recommendation stems in part from GAO’s observation that OFCCP audits only about 2% of federal contractor locations each year.

OFCCP designed AAP-VI to increase contractor compliance by creating an annual certification process and to optimize the compliance review process by creating a tool for scheduled contractors to upload their AAPs electronically for OFCCP’s review.

AAP-VI will have five user interfaces for federal contractors, including an AAP Upload Interface and an Annual Certification interface.  Federal contractors would receive an OFCCP email with AAP-VI user registration instructions, which would also be posted on OFCCP’s website.

Once the process is effective, federal contractors would have 90 days to complete the certification process.   “After the initial certification year, OFCCP will set a date by which all existing contractors must renew their annual certification.”  New contractors would  have 90 days from development of their AAPs to make the certification.

The proposed certification process would require each federal contractor to annually select one of the following options in the AAP-VI interface:

  1. Entity has developed and maintained affirmative action programs at each establishment, as applicable, or for each functional or business unit. See 41 CFR Chapter 60.
  2. Entity has been party to a qualifying federal contract or subcontract for 120 days or more and has not developed and maintained affirmative action programs at each establishment, as applicable. See 41 CFR Chapter 60.
  3. Entity became a covered federal contractor or subcontractor within the past 120 days and therefore has not yet developed applicable affirmative action programs.  See 41 CFR Chapter 60.

Additionally, it is proposed that when scheduled for an audit, contractors would use AAP-VI to upload the applicable AAP(s) for the “scheduled establishment(s), functional business unit, or corporate headquarters.”

By January 28, 2021, OFCCP is seeking comments on a number of topics, including:

  • The frequency of the certification (the proposal is for annual certification, but some comments suggest every other year);
  • The type of information and level of detail to be required in the certification;
  • Whether certification would be practically useful to OFCCP in service of its mission, as compared to the burden on contractors; and,
  • Whether the estimated burden on contractors (36 minutes to certify) is accurate.

Contractors can submit their input to OFCCP via the federal e-Rulemaking portal at https://www.regulations.gov/ .

 

On September 22, 2020 President Trump issued an Executive Order “on Combating Race and Sex Stereotyping” (“September 22 EO”) covering government contractors and certain grant recipients that outlines what those organizations cannot include in employee training. It appears, the September 22 EO covers all federal contractors and subcontractors and will require contracting agencies to insert a contract clause in contracts (presumably, from the language of the EO new contracts only) entered into 60 days from September 22, 2020 addressing race and sex stereotyping.

Stemming from the belief that

[i]nstructors and materials teaching that men and members of certain races, as well as our most venerable institutions, are inherently sexist and racist are appearing in workplace diversity trainings across the country

the Order establishes a requirement that contractors and grant recipients not use any workplace training that

“inculcates in its employees” any form of race or sex stereotyping or any form of race or sex “scapegoating”

This includes prohibition on the following concepts:

  • one race or sex is inherently superior to another race or sex;
  • an individual, by virtue of his or her race or sex, is inherently racist, sexist, or oppressive, whether consciously or unconsciously;
  • an individual should be discriminated against or receive adverse treatment solely or partly because of his or her race or sex;
  • members of one race or sex cannot and should not attempt to treat others without respect to race or sex;
  • an individual’s moral character is necessarily determined by his or her race or sex;
  • an individual, by virtue of his or her race or sex, bears responsibility for actions committed in the past by other members of the same race or sex;
  • any individual should feel discomfort, guilt, anguish, or any other form of psychological distress on account of his or her race or sex; or
  • meritocracy or traits such as a hard work ethic are racist or sexist, or were created by a particular race to oppress another race.

Given this, the Executive Order could severely limit and curtail diversity and inclusion, sexual harassment, and related EEO training contractors and government grant recipients are allowed to provide to their employees.

Interestingly, the September 22 EO does not include a provision that regulations be issued to implement its requirements.   However, importantly, the Office of Federal Contract Compliance Programs has been tapped as the Agency to enforce the Executive Order.  Per the Order, the Director of OFCCP is required to publish a request for information within 30 days of September 22 seeking from federal contractors and subcontractors information regarding training, workshops or “similar programming” provided to employees, and interesting, that those materials, as well as information about the expense, frequency, duration of the trainings be provided to OFCCP.  There is no detail or instruction as to what OFCCP is required to do with the submissions. However, the executive order states violators can be subject to contract suspension or termination and the contractor may be subject to suspension or debarment.

In addition, the September 22 EO requires all federal agency heads to review their grant programs, and identify in a report to be provided to the Director of the Office of Management and Budget (“OMB”) within 60 days of issuance of September 22, programs that the agency determines as a condition of receiving grant monies that the recipient certify that it will not use federal funds to “promote the concepts” identified above with respect to federal government contractor prohibitions in training and related materials.

If fully implemented, the requirements of the Executive Order could require significant modifications to the content of trainings on race and sex including, diversity and inclusion and unconscious bias, that have become the mainstay for many employers, including contractors and grant recipients.  Some of these trainings are, or may be, required by other federal or state requirements, which could pose a conflict for contractors.

We anticipate challenges to this Executive Order.  We will be following this closely and will be back with future insights and developments.

As reported in today’s Federal Register, OFCCP is seeking regulatory authority to:

  • Require federal contractors to annually certify they have prepared AAPs via an online interface; and,
  • Institute “a secure method” to electronically submit AAPs when contractors are scheduled for an audit.

As we reported nearly a year ago, because OFCCP cannot conduct a compliance review of every federal contractor location every year, OFCCP wants an efficient alternative method to ensure all federal contractors are regularly preparing annual AAPs.  OFCCP’s desire for an annual certification process stems directly from a pre-COVID-19 Government Accountability Office (GAO) criticism that 85% of contractors do not timely submit AAPs within the 30-day deadline.  According to the GAO, that statistic “suggests that OFCCP processes do not ensure that all contractors are complying with their obligation to complete and annually update an AAP.”  Due to the COVID-19 pandemic, that percentage may now be even higher.

The Federal Register notice is short on details.  Instead, OFCCP is soliciting your input regarding, among other topics:

  • The frequency of the certification (the proposal is for annual certification);
  • The type of information and level of detail to be required in the certification;
  • Whether certification would be practically useful to OFCCP in service of its mission, as compared to the burden on contractors; and,
  • Whether the estimated burden on contractors (36 minutes to certify) is accurate.

The notice does appear to propose that contractors upload AAPs annually as part of the certification process, a possibility floated in the GAO’s 2016 report.

Contractors can submit their input to OFCCP on or before November 13, 2020 via the federal e-Rulemaking portal at https://www.regulations.gov/ .

As we receive more detail and assess the possibilities for the certification process, we will make sure to bring you our insights and updates.

In its most recent required status report to the court, filed September 27, 2019, the EEOC reports:

[s]o long as the Court’s order is in effect stating that the collection will not be complete until it reaches what the Court has determined to be the target response rate, the EEOC will continue to accept Component 2 data for 2017 and 2018.

The Component 2 filing website has also been updated with the following message:

In a September 27, 2019 Status Report that was filed in the lawsuit discussing post-September 30th activities, the EEOC stated that so long as the Court’s order is in effect stating that the collection will not be complete until it reaches what the Court has determined to be the target response rate, the EEOC will continue to accept Component 2 data for 2017 and 2018. EEO-1 eligible employers should continue to submit and certify their Component 2 EEO-1 reports for 2017 and 2018 as soon as possible.

As an update to its previous report, the EEOC is reporting that as of September 25, 39.7% of eligible filers have completed submission of the Component 2 data.

As soon as additional information is known about how long EEOC expects to continue to collect data we will let you know.

 

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.

 

As we announced Friday, OFCCP has issued three new Directives in furtherance of its efforts to make the Agency more transparent and efficient.  New Directive 2018-07Affirmative Action Program Verification Initiative,” is aimed at expanding OFCCP’s enforcement reach and was previewed by Acting Director Leen at last month’s ILG National Conference.

 As we like to say, we can’t predict when OFCCP will select a contractor’s establishment for audit, and OFCCP likes it that way because it keeps contractors on their toes in anticipation of an audit.  But, the Agency is

concerned many federal contractors are not fulfilling their legal duty to develop and maintain AAPs

and instead playing the odds they won’t get audited. 

According to the General Accounting Office (“GAO”) in its September 2016 report roughly 85 percent of contractor establishments do not submit a written AAP within 30 days of receiving a scheduling letter.  OFCCP cited this statistic in the Directive to suggest some contractors are not preparing AAPs until OFCCP selects them for audit.  Because, in the words of the Directive, there is “a small likelihood of discovery” if a contractor does not timely prepare AAPs, OFCCP needs to bring additional compliance pressure to bear on these contractors.      

While the Directive is short on details, the initiative “squarely addresses this barrier to achieving comprehensive compliance by establishing a program for verification of compliance by all contractors with AAP obligations.”

 This verification would

initially take the form of OFCCP review of a certification, followed by potential compliance checks, and could later take the form of annual submission of AAPs to OFCCP for review.

 In order to facilitate the possible submission of AAPs, OFCCP will in the coming months be working on, “development of information technology to collect and facilitate review of AAPs provided by federal contractors.”  The Directive notes OFCCP is reviewing “whether there is an existing certification made as part of the procurement process that would be sufficient to allow OFCCP to implement the program without requiring a separate certification directly to OFCCP.”

Will the certification program have teeth?  According to the Directive, yes, because a contractor’s failure to certify compliance will be incorporated into the methodology for neutrally selecting contractors for audit “so that entities that have not developed and maintained AAPs are more likely to be scheduled.”  

 OFCCP says it will flesh out the details as well as “prepare a public outreach and education campaign on this initiative.”  We’ll report back with additional details as they become available.  In the meantime, we continue to suggest staying on top of timely preparing (and implementing) your AAPs.

 

In connection with the publication of the NPRM on the pay data reporting tool last week, today the proposed Equal Pay Report (Equal Pay Report) and Instructions, as well as a Supporting Statement, were released to the public.  The Equal Pay Report is to be filled annually by employers through a yet-to-be released online filing system.

As set forth in the proposed regulations, the form is designed to collect summary pay data by EEO-1 category for males and females by race/ethnicity. Race, ethnicity and job categories are the same as in the EEO-1 Report.

Additional details are as follows:

  • The filing period for the Report is January 1 to March 31 of each year.  The Report must be submitted annually to OFCCP no later than March 31 of each year.
  •  The Report must include total W-2 Wage and Tax Statement (W-2) earnings and total work hours for the calendar year, January 1 – December 31, for all employees included in your most recent EEO-1 Report.
  • The Report must include all employees whether or not they are still employed on December 31st.
  • Total work hours means all work hours for each employee in each race/ethnicity and job category during the calendar year.

Work hours are calculated as follows:

  • For salaried workers actual hours of work must be provided, if available.  Otherwise, you may use 2,080 hours for full-time employees and 1,040 for part-time employees.
  • For hourly workers, provide actual hours of work.
  • Reported hours may also be adjusted for part year work using date of hire or dates of absence (e.g., vacation or leave), but this is not required.

As with the EEO-1 Report, the EPR will require employers to provide Dun and Bradstreet numbers as well as North American Industry Classification System (NAICS) codes.  OFCCP has indicated its plans to make data received in the EPRs public by industry.

Similar to the EEO-1 Report, employers have the option to file a single-establishment report or multiple-establishment reports for each establishment “regardless of the establishment’s size” as well as a headquarters report.  There is no “consolidated report” requirement as is the case with the EEO-1.

The report will also require employers to certify the accuracy of the report prior to submission.

The window to submit public comments on the NPRM and associated form and instructions will remain open until early November.

In preparation for the 2013 EEO-1 reporting period, set to open in July, the U.S. Equal Employment Opportunity Commission (EEOC) has reset the passwords for all users of the online system “for security and confidentiality purposes.”  Reporting companies will receive “notification letters” that will contain their new password.

Users who need to access the system prior to receiving the 2013 notification letter may obtain their password by sending an email to e1.lostloginpassword@eeoc.gov.  The email request must come from the company’s EEO-1 contact or certifying official and must contain the company’s name and log-in identification.  If the certifying official no longer is with the company, the request also should include the name of the former certifying official and a request to transfer access to the new contact.

 

WHO MUST FILE EEO-1 REPORTS

The Employer Information Report EEO-1, known as the EEO-1 Report, must be filed annually with the EEOC’s EEO-1 Joint Reporting Committee.  The filing deadline for the 2013 EEO-1 Report is September 30, 2013.

Employers subject to Title VII of the Civil Rights Act with at least 100 employees and federal contractors and subcontractors with at least 50 employees and a federal contract or subcontract of $50,000 or more must file EEO-1 Reports.  The EEO-1 Report requires submission of workforce demographics (race, ethnicity and gender of all employees) by job category.

Single establishment employers file a single EEO-1 Report.  However, employers with multiple establishments generally must file several types of reports:  (1) a headquarters report, and (2) separate reports for each establishment of 50 or more employees, and (3) either separate reports for each establishment of less than 50 employees or a list, including name, address, total employment and major activity, of each establishment of less than 50 employees, and (4) a consolidated report of all employees in the entire organization.  Employers must use employment data from any one payroll period in July, August or September of the current reporting year.