OFCCP’s second Directive under the leadership of Director Jenny Yang addresses audit practices and rescinding four Directives issued by former OFCCP Director, Craig Leen.  This Directive comes on the heels of another new Directive 2022-01-Pay Equity Audits and a notice of the Agency’s intention to rescind a Leen-era regulation – Nondiscrimination Obligations of Federal Contractors and Subcontractors: Procedures to Resolve Potential Employment Discrimination.

The more notable aspects of Directive 2022-02 – Effective Compliance Evaluations and Enforcement, include:

  • Elimination of Extensions of Audit Submission Deadlines in all but “Extraordinary” Circumstances: 

If you’ve gotten used to extra time for the often-heavy lift of retrieving and preparing AAP data for submission, those days are gone.  “Where a contractor needs additional time, OFCCP may grant an extension” but now it will only be for “extraordinary circumstances.” Examples of extraordinary circumstances include, but are not limited to:

  1. Extended medical absences of key personnel;
  2. Death in the immediate family of key personnel;
  3. Localized or company-specific disaster affecting records retrieval such as a flood, fire, or computer virus;
  4. Unexpected military service absence of key personnel; and
  5. Unexpected turnover or departure of key affirmative action official.”
  • Elimination of 45-Day Scheduling Delay after CSAL: 

While OFCCP states it will continue to issue CSALs and disclose its audit selection methodology, “OFCCP may begin scheduling contractors upon the publication of the CSAL.”  While the apparent intent of the CSAL is to provide advance notice, those who are scheduled for an audit on the heels of a new CSAL do not receive that benefit under this new Directive.

  • Access to Witnesses: 

OFCCP may decide to no longer going to rely on contractors for assistance in scheduling employee interviews.  Rather, OFCCP establishes in this directive

OFCCP may directly contact [employees] without the contractor serving as an intermediary.

OFCCP asserts that this step is necessary “[t]o ensure witnesses are comfortable communicating with OFCCP without the fear of reprisal…”

During these investigations, OFCCP states it will request that contractors provide the agency with unredacted contact information such as telephone numbers, mailing addresses, email addresses, and even social security numbers for these individuals.  The Directive does not address the lengths the Agency will go to ensure this information is kept secure.

  • Contractor Portal “Certification” Means “Complete” AAPs:

The Directive also takes the opportunity to address the newly minted obligation for contractor certification in the newly developed OFCCP Contractor Portal. Notably, OFCCP’s Supporting Statement for the Contractor Portal states that certification entails:

  1. Entity has developed and maintained affirmative action programs at each establishment, as applicable, and/or for each functional or business unit.  See 41 CFR Chapter 60.

The Contractor Portal is now live for certification and the required certification recites the above language.  However, the new Directive appears to attempt to clarify, if not expand, the meaning of certification in the new Directive:

Through DIR 2022-02, OFCCP clarifies that when covered contractors use OFCCP’s Contractor Portal to register and annually certify compliance with their AAP obligations, they are certifying that they have developed and maintained complete AAPs.

The endnote to this sentence states: “For further details on the complete AAP components and obligations, see 41 CFR part 60-2, subpart B; 41 CFR part 60-300, subpart C; and 41 CFR part 60-741, subpart C.”

In addition to the foregoing, the Agency has rescinded four Directives that provided specific guidance for transparency and certainty in the OFCCP audit process, while vaguely reaffirming “its commitment to providing transparency, efficiency, and clarity…” without providing much substance or issuing revised guidance on how it intends to carry out that commitment.

While the Agency has removed these Directives from the Agency’s Directive website, they are available in archives.

The bottom line for covered federal contractor is that the current OFCCP administration is taking a more hardline approach to enforcement.  While federal contractors are in favor of effective and efficient audits, it seems the current administration feels many of the advancements of the prior administration do not fit with or assist their enforcement agenda.

Directive 2022-02: Effective Compliance Evaluations and Enforcement issued March 31, 2022 is intended to

strengthen OFCCP compliance evaluations and reduce delay by promoting the timely exchange of information

It also sets a number of expectations for contractor conduct and compliance during reviews, rescinding a number of previous Directives that set out transparency and expectations and timelines for submission of information – commonly known as previous OFCCP Director Craig Leen’s Four Pillars.

Per OFCCP this new Directive:

  • updates agency policies regarding the scheduling of contractors for compliance evaluations, including enhancing the agency’s neutral scheduling procedures to reach a broader universe of federal contractors, and eliminating delays in scheduling.
  • establishes contractors’ obligations regarding timely submission of Affirmative Action Programs (AAPs) and support data, supplemental information, and access to employees, applicants, and other witnesses.
  • increases contractor accountability through the Contractor Portal, by makes stating that when covered contractors use OFCCP’s Contractor Portal to annually certify compliance with their AAP obligations, contractors are certifying that they have developed and maintained complete AAPs in compliance with OFCCP’s requirements.

This new directive explicitly rescinds:

  1. DIR 2018-06, Contractor Recognition Program (Aug. 24, 2018);
  2. DIR 2018-08, Transparency in OFCCP Compliance Activities (Sept. 19, 2018);
  3. DIR 2020-02, Efficiency in Compliance Evaluations (Apr. 17, 2020);
  4. DIR 2021-02, Certainty in OFCCP Policies and Practices (Dec. 11, 2020)

While the Agency has removed these Directives from the Agency’s Directive website, they are available in archives.

We are unpacking this new directive and will be back with further details.

As anticipated, OFCCP has released its proposal to revise the Agency’s Rule on Nondiscrimination Obligations of Federal Contractors and Subcontractors: Procedures to Resolve Potential Employment Discrimination.  The final rule, published in November 2020, codified the used of The Predetermination Notice and the Notice of Violation as part of OFCCP’s enforcement activities.

In today’s message from OFCCP announcing the release of the Notice of Proposed Rulemaking (“NPRM”), OFCCP described the 2020 rule as “imposing inflexible requirements” and explained its belief that

[t]he rigid evidentiary standards and definitions imposed by the 2020 rule impede OFCCP’s ability to provide contractors with early notification of indicators of discrimination. They also unnecessarily divert agency and contractor resources away from addressing discrimination.

As a result, OFCCP is proposing to:

  • rescind these rigid evidentiary standards, while OFCCP would continue to issue a Predetermination Notice describing the preliminary indicators of discrimination and other potential violations.
  • clarify the use of the Predetermination Notice and the Notice of Violation as part of OFCCP’s pre-enforcement notice and conciliation procedures.
  • return the Predetermination Notice response period to the 15-calendar day period in effect prior to the 2020 rule (which OFCCP may extend for good cause).

The proposed rule also seeks to “retain the regulatory language regarding early resolution, which provides that contractors may waive notice procedures to enter directly into a conciliation agreement.”

We are in the process of digesting the NPRM and will be back with more details and insights in the coming days . . . stay tuned.

In addition to digesting OFCCP’s release of a new directive on compensation, government contractors may soon see new regulations around inquiries into and the use of prior salary information.  In conjunction with Equal Pay Day, President Biden signed a new Executive Order on Advancing Economy, Efficiency, and Effectiveness in Federal Contracting by Promoting Pay Equity and Transparency.

In the Order, President Biden directs the Federal Acquisition Regulatory Council, in consultation with the Secretary of Labor to “consider issuing proposed rules to promote economy, efficiency, and effectiveness in Federal procurement by enhancing pay equity and transparency for job applicants and employees of Federal contractors and subcontractors.”  Specifically, the President instructs the FAR Council to

consider whether any such rules should limit or prohibit Federal contractors and subcontractors from seeking and considering information about job applicants’ and employees’ existing or past compensation when making employment decisions.

Prohibitions on the reliance on prior salary history are not new, but up to this point have not been legislated at the federal level, and have come through state and municipal action.

We will keep our eyes open for proposed rulemaking and will follow up as more details become available.

Hot off the press on Equal Pay Day (the day that symbolizes how far into the year women must work to earn what men earned in the previous year) OFCCP has released a new compensation directive.  Directive 2022-01: Pay Equity Audits does little to set out how contractors should be looking at their pay systems and instead focuses on OFCCP’s review of, and right to request, the analysis.

The Directive explains, that in addition to following Directive 2018-05,

OFCCP will also look broadly at a contractor’s workforce (across job titles, levels, roles, positions, and functions) to identify patterns of segregation by race, ethnicity, and gender, which may result from assignment, placement, or upgrading/promotion barriers that drive pay disparities. Where possible, OFCCP will use regression and other systemic analyses to look for disparities in patterns of assignment or in salary paid across similar functions and positions.

With respect to the Agency’s authority to confirm compliance with contractors’ obligations to review their compensation systems pursuant to 41 CFR 60-2.17(b)(3), the directive states

 OFCCP will request that the contractor provide a complete copy of the pay equity audit(s) conducted pursuant to 2.17(b)(3) that shows all pay groupings that were evaluated, any variables used, and the results of the analyses, including any disparities found.

OFCCP recognizes many contractors conduct pay equity analyses under attorney privilege.  However, the new directive explicitly states OFCCP’s position that

 Contractors cannot withhold these documents by invoking attorney-client privilege or the attorney work-product doctrine. OFCCP has the authority under its regulations to request the analyses the contractor has conducted to comply with OFCCP regulations.

The directive goes on to explain that contractors may conduct separate analyses, under privilege, but

 [i]n the event a contractor conducts a dual-purpose pay equity audit or analysis of employment processes − i.e., one that implicates both legal concerns and OFCCP compliance − OFCCP may request those records in appropriate circumstances.

We are still in the process of reviewing this new directive and will be providing additional insights and updates soon.

OFCCP’s contractor portal is new for everyone, and we are all learning how to use it.

But it presents a unique and interesting inflection point for higher education employers.

Let us explain . . .

OFCCP uses EEO-1 reports to identify the scope of potential contractor establishments for audit.  Because higher education contractors do not file EEO-1 reports, OFCCP has less visibility into those institutions and more importantly, less access to the data used to select contractors for audit.  As a result, the Agency has fewer higher education ping pong balls to draw from in its annual audit selection “lottery.”  It also results in OFCCP sending audit letters to often obscure divisions of a university that house the specific departments that entered into the federal contracts—and not more common addresses for a campus.

The contractor portal, however, might open the door to change higher education audit selection. Why is that? 

When registering for the portal, contractors (including colleges and universities) must identify each of their establishments to OFCCP.  They must disclose each establishment’s headcount, and they must certify that each establishment is covered by an affirmative action program.  These disclosures provide OFCCP with direct (and current) information on how a university sees its workforce.  They provide “better” addresses for audit selection.  And they can shed light on a university’s affirmative action program and workforce – which gives OFCCP “better” data to leverage to focus their higher education selections for audit.

What does that mean? With the certification deadline on the horizon, higher education contractors have a choice.

On one hand, they may report to OFCCP that they have a single establishment—the entire campus.  This will suggest to OFCCP that the campus has one affirmative action plan and that an audit will include every campus employee.  Simply put, if selected this will likely be a large audit, covering the entire system and all that a large-scale OFCCP audit entails.

On the other hand, consistent with OFCCP’s Technical Assistance Guide, a campus employer may conduct OFCCP’s fact-based assessment to determine whether its campus environment can support multiple establishments.  If it can, the employer may prepare a separate affirmative program for each establishment.  This targeted approach can focus affirmative action analyses and efforts, instill more ownership over plan results with decentralized leaders, and create less potential risk should an audit arise.

Why does this matter?  Well, the workforce within each establishment would include more similarly situated employees—and provide more meaningful insights for Department Chairs.  The hiring, promotion, termination, and compensation decisions for a single establishment will generally be made by a smaller number of common managers.  And because OFCCP considers workforce size in selecting contractor establishments for audit, any individual establishment would include fewer employees and, thus, may be less likely to be selected for audit than an overall campus.

Okay, how?  OFCCP’s guidance explains that some campus employers may have multiple buildings or schools that each can properly constitute separate establishments.  And therefore, each would appropriately be covered by a separate affirmative action plan.  In both its Educational Institutions Technical Assistance Guide and FAQs, OFCCP instructs that in making this assessment contractors should consider the following factors:

  • What is the function of the building, and how do the employees in the building interact with employees in other buildings?
  • Are employees across different buildings part of the same organizational unit, such as department, division, section, branch, group, job family, or project team?
  • Are the hiring, compensation, and other personnel decisions handled separately at each building or are those functions consolidated across the entire contractor or across multiple buildings on one campus?
  • Does each building handle its own recruitment or is that function consolidated across multiple buildings?
  • Do the buildings recruit from the same labor market or recruiting area?
  • To what extent are other human resources and Equal Employment Opportunity compliance functions operationally distinct for each building or group of buildings?
  • To what extent are other human resources and Equal Employment Opportunity compliance functions operationally distinct for each building or group of buildings?

Under this Agency guidance, if the factors balance such that different schools or colleges are sufficiently separate, a campus employer may prepare separate plans for each establishment on campus.  Even so, we have seen inconsistent responses in audits for employers who have relied on it.  In some instances, OFCCP has expected a single plan for the whole campus and pushed back, requiring a broader plan for audit.  In others, OFCCP has accepted the more limited submission without raising any questions.  Agency priorities can shift over time, so things may change.

But for now, one thing is clear:  the Contractor Portal will give educational institutions the opportunity to tell OFCCP how they believe their AAPs should be structured and how OFCCP should select its establishments for audit.   So, it is wise to think about it now—before certification.

For more information on the OFCCP contractor portal, please register here for our March 16, 2022 webinar, Navigating the OFCCP Contractor Portal: Registration and AAP Certification.

OFCCP’s Contractor Portal, which will be used for certifying AAP development, as well as for uploading documents and data during a compliance review, opened for registration (not AAP certification) on February 1.  If you’ve tried to register as a federal contractor or subcontractor at the OFCCP Contractor Portal, you may have encountered some “challenges.”  We have.

For example:

  • EEO-1 Company Number:  the system told us that the pre-populated employer company identification was associated with another employer.  Turns out, the company number is only the first six digits for Portal registration, not the complete seven digits that appear in your 2018 EEO-1 report.  OFCCP clarified this point this week in a mass e-mail:
    • Enter only the first six digits of the 2018 EEO-1 identifiers when completing the fields “Headquarter/Company Number” and “Establishment/Unit Number.” Each identifier you enter must be a six-digit number. If an EEO-1 identifier has more than six digits, enter only the first six digits of the number.
    • Enter EEO-1 identifiers from the 2018 EEO-1 report only. The Contractor Portal’s registration process is configured to work only with information from the 2018 EEO-1 report. At this time, no other versions of the EEO-1 report are supported.
  • DUNS number:  we found that to register, we needed a “0” as the first digit in the DUNS.  Without the “0,” we received an error message with no guidance as to how to correct the issue.
  • Establishment Information:  when we attempted to modify Establishment information, we encountered an error regarding the Company Number, without any guidance.  However, when we deleted the pre-populated Company Number, we were able to edit the Establishment information.

It appears that there will be challenges to Contractor Portal registration and that OFCCP will provide guidance as it becomes aware of the issues.  Likewise, as we encounter issues or tips, we will supplement this blog.  Stay tuned!

It’s here!  As we’ve been discussing, the Agency announced today during a live webinar the opening of the Contractor Portal, which will be used for AAP certification, as well as submission of data and documents during compliance reviews.  However, construction contractors will not be required to register in the Portal or certify AAP development – largely because such contractors are not required to prepare written AAPs under Executive Order 11246.

Between February 1 and March 30, 2022, the Portal will be open for registration only.  The Portal will not allow actual certification until March 31.

The deadline for existing contractors and subcontractors – those subject to Executive Order 11246, Section 503 and/or VEVRAA – to certify AAP development is June 30, 2022, although the Portal will remain open past June 30 for late registration.  Contractors will certify that they have or do not have current AAPs in place as of the certification date.  For example, a contractor with May 1, 2021 AAPs in place, can certify on April 1, 2022 that it has current AAPs in place because those May 1, 2021 plans have not yet expired.

New federal contractors and subcontractors will have 120 days from entering a covered contract to prepare written AAPs – according to existing regulations – and 90 days from then to register and certify in the Portal.

The Agency spent much of the webinar conducting a live walk-through of the registration process, which appears to be reasonably user-friendly.  The Portal also includes a User Guide and Updated Frequently Asked Questions.  There is also a  Contractor Portal Technical Help Desk available to assist with any questions.

What about Data security?  The Agency touted that the Portal follows applicable data security standards issued by the National Institute of Standards and Technology (NIST).

OFCCP will conduct another webinar – focused on certification – on March 31, the day the Portal will be open for certification.  Thus, today’s Agency webinar did not address more substantive questions about AAP certification.  One question the Agency did answer is, what are the consequences of failing to timely certify AAP development?  The answer goes to one of the objectives of Portal certification:  to identify non-compliant contractors and subcontractors for audit.  Those contractors/subcontractors who do not timely certify will be “more likely” to be selected for a compliance evaluation.

That answer begs the question of whether and how the Agency will be able to identify covered contractors and subcontractors who fail to timely file.  OFCCP says it will use (outdated) 2018 EEO-1 reports to notify existing contractors and subcontractors of the certification obligation and prepopulate registration data.  However, there will be procedures for updating relevant information before certification.

Parent companies can add users for subsidiary entities that are responsible for developing and certifying their own AAPs.  The Portal will allow contractors to register and certify consistently with the way it prepares and files EEO-1 Reports, but parent entities are ultimately responsible for certification by their subsidiaries.

Significantly, a covered contractor/subcontractor that does not receive an OFCCP notice email is still obligated to register and certify.

While the Agency has a good handle on identification of prime contractors, it acknowledges it does not have a comprehensive way of identifying covered subcontractors.  To that end, included in OFCCP’s latest Regulatory Agenda is a proposal to require prime contractors to notify OFCCP of covered subcontracts.  For some employers, it is difficult at best to determine if it has covered federal subcontracts.  OFCCP has little guidance for such employers, except to provide coverage guidance at its website.  This may leave some employers with a register-or-not conundrum.

In an e-mail delivered after the webinar, OFCCP “strongly” urged covered contractors and subcontractors to register as soon as possible so that they may also timely certify their AAPs by June 30.

Stay tuned for more substantive information regarding AAP certification.

And the twists and turns keep coming . . .

The federal court that issued a nationwide injunction of Executive Order (EO) 14042, “Ensuring Adequate COVID Safety Protocols for Federal Contractors,” has issued a new Order stating that it enjoined only the vaccine requirement of the EO’s implementing tool: the Safer Federal Taskforce Guidance.

The Administration, however, has not yet updated its guidance to reflect this new development.

Read our most recent client alert for all of the details.

As previously reported, President Biden’s Federal Contractor Vaccine mandate is under a nationwide injunction and that does not look to be changing anytime soon.

In December 2021, the Administration filed their appeal of the preliminary injunction ruling to the 11th Circuit Court of Appeals and requested a stay of the injunction. On December 17, 2021, the 11th Circuit denied the motion to stay the preliminary injunction, stating that the government failed to establish that it would be irreparably injured absent a stay. On December 21, 2021, the Court pushed back the briefing schedule by roughly two weeks and set oral argument for the week of April 4, 2022. On December 22, 2021, the Parties filed an unopposed motion to expedite oral argument, scheduling it for no later than the end of February 2022. The 11th Circuit denied the Parties’  motion to expedite oral argument, claiming that the Court had already “expedited briefing and oral argument” (despite the fact that the Court had delayed the briefing schedule on December 21, 2021).  As a result, the current schedule is as follows:

  • January 18, 2022 – Deadline for Defendants to file initial brief
  • February 8, 2022 – Deadline for Plaintiffs to file answer
  • February 22, 2022 – Deadline for Defendants to file reply
  • April 4, 2022 – Oral argument

Today, January 21, 2022, Judge Jeffrey Brown from the Southern District of Texas granted a separate nationwide injunction of the federal employee Vaccine mandate Executive Order 14043 in the case of  Feds for Medical Freedom et al v. Biden, S.D. Tex., No. 3:21-cv-00356.  Judge Brown specifically ordered the government is “enjoined from implementing or enforcing Executive Order 14043 until this case is resolved on the merits.”

Stay tuned for any new developments.