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.

As the calendar turns over and employers start preparing for 2022, the annual EEO-1 reporting obligation may or may not be on the top of the “To-Do” list, and understandably so.  However, it should be.

The EEOC has provided recent updates about timing of the required filing and announced the discontinuation of the use of Type 6 reports for multi-establishment employers.

In an announcement posted on the EEO-1 reporting website, EEOC reiterated the “tentatively scheduled” opening of the 2021 EEO-1 Component 1 data collection portal to be April 12, 2022 with the deadline for filing to be May 17, 2022, just 6 weeks later.   No explanation was provided for the shortened reporting window.  However, the reporting deadline has been subject to limited extension in past years.

In addition to providing the update on the portal opening and reporting deadline, the most recent update announced EEOC’s discontinuation of the Type 6 Establishment Report for employers who have establishments with fewer than 50 employees.  Instead, employers will now be required to use the Type 8 report.  Citing the Agency’s continuing efforts of “modernization” and work to improve the quality of data, the EEOC says the change will

allow the EEOC to collect more accurate employee demographic data in support of the agency’s mission to prevent and remedy unlawful employment discrimination and advance equal opportunity for all in the workplace.

Type 6 reports allowed employers to report only the total number of employees at an establishment with fewer than 50 employees, in lieu of providing demographic data by EEO-1 category for each location.  By comparison, the Type 8 Report requires submission of demographic data for an employer’s small establishments.  See EEOC’s updated Fact Sheet for more information on the various types of EEO-1 Reports.

The discontinuation of the Type 6 is not wholly unexpected after the Agency curtailed the availability of the report during the 2019 and 2020 reporting periods to only those employers who had previously submitted Type 6 Reports.  The notice states

All filers who were permitted to submit a Type 6 Report for the 2019/2020 EEO-1 Component 1 data collections have been notified via email regarding the discontinuation of the Type 6 Report so these filers may prepare for the opening of the 2021 EEO-1 Component 1 filing using Type 8 Reports.

We will continue to monitor this situation and provide any new updates.

The U.S. Department of Labor, including OFCCP, recently issued its Fall 2021 Regulatory Agenda, which identifies the regulatory goals the Agency would like to achieve during the fiscal year and beyond.  While OFCCP may not complete all (or even any) of these goals during the current fiscal year, the Agenda provides insights into the Agency’s objectives.

The following are the more important and substantive items in OFCCP’s Agenda.

  • Proposal to Rescind Implementing Legal Requirements Regarding the Equal Opportunity Clause’s Religious Exemption

As reflected in an earlier blog post, OFCCP has previously announced its intention to rescind the “problematic” Religious Exemption Rule that the Trump administration implemented.

  • Notification of Supply and Service Subcontract Awards

OFCCP has long been interested in better identifying for audit covered subcontractors and has previously proposed collection of this information as part of the revised scheduling letter (a suggestion it ultimately abandoned) as well as a suggestion it would implement a requirement for subcontractor disclosure as part of the AAP certification process.  The current proposal would add language to the Executive Order 11246 regulations to require contractors notify OFCCP when they award supply and service subcontracts. “The notice would include information currently unavailable to OFCCP, enabling it to schedule supply and service subcontractors for compliance evaluations.”

In conjunction with the AAP certification requirement, this requirement could significantly change the compliance landscape for covered subcontractors by making them more susceptible to OFCCP compliance reviews.  On the other hand, this might also assist employers to better identify if they are, in fact, covered subcontractors.  As it stands now, some employers are uncertain whether they provide supplies or services to prime federal contractors or upper-tier subcontractors that are “necessary to the performance of” those contracts and subcontracts, triggering AAP obligations.   This proposal will likely draw significant feedback when proposed.

  • Access to Records Regulatory Updates

This proposal would make changes to 41 CFR parts 60-1 and 60-40 in order to bring OFCCP’s Freedom of Information Act regulations in line with relevant legal authorities and precedential case law, and to ensure consistency among OFCCP’s regulations on access to records.

Although it is not clear what regulatory changes would be made, it appears this Agenda item relates to public access to EEO-1 Reports that OFCCP collects during compliance reviews.  OFCCP currently does not provide public access to EEO-1 Reports in its files, but evolving caselaw may require a change.

  • Modernizing Affirmative Action Programs, Recordkeeping, and Other Components of the Executive Order 11246 Supply and Service Obligations for Federal Contractors and Subcontractors

This broad item could cover a host of changes, none of which is particularly clear in OFCCP’s description, but is consistent with previous remarks from OFCCP Director Jenny Yang about her desire and efforts to modernize the agency.  OFCCP says it:

… will propose changes to modernize its Executive Order 11246 compliance program for federal supply and service contractors and subcontractors, including but not limited to recordkeeping and affirmative action program obligations.  In addition, the proposal will consider modifications in light of Executive Order 13988, Preventing and Combating Discrimination on the Basis of Gender Identity or Sexual Orientation.

Based on the reference to Executive Order 13988, OFCCP might require more robust affirmative action obligations regarding the LGBTQ+ community.

  • Modification of Procedures to Resolve Potential Employment Discrimination

This Agenda item could also prove to be significant for contractors in that it appears OFCCP would like to undo the Agency’s efforts under former Director Craig Leen to clarify and make more regimented the processes OFCCP must follow when asserting discrimination during an audit.

This proposal would modify certain provisions set forth in the November 10, 2020 final rule, Nondiscrimination Obligations of Federal Contractors and Subcontractors: Procedures To Resolve Potential Employment Discrimination (85 FR 71553) and make other related changes to the pre-enforcement notice and conciliation process. The proposal will promote effective enforcement through OFCCP’s regulatory procedures.

As discussed in an earlier blog, the final rule made a number of changes, that:

  • Clarify that evidentiary standards that OFCCP must meet for a Pre-Determination Notice (PDN) must also be met for a Notice of Violation (NOV).
  • Establish the use of the terms “qualitative” and “quantitative” evidence to describe the type of evidence OFCCP must identify in support of a PDN or NOV. Specifically, replacing reference to non-statistical and statistical evidence with these broader, more encompassing terms.
  • Codify the use of the Agency’s consideration of practical significance in assessing potential violations and “help the agency ensure it is directing its efforts effectively.”
  • Identify and differentiate procedures and burdens for disparate treatment versus disparate impact cases. This includes the requirement that OFCCP provide qualitative evidence for all disparate treatment cases and identify a policy or practice causing adverse impact with factual support for disparate impact cases.
  • Establish that OFCCP must explain the basis for its findings, and for pay allegations provide the model, variables used and explanation why variables were excluded from its analysis upon request of the contractor.
  • Provide the framework for contractors and OFCCP to explore early resolution procedures currently in use by OFCCP, as specifically set out in the Early Resolution Procedures program, during a review.

The final rule was largely seen as a positive development for the contractor community because it addressed criticisms around transparency and certainty that have plagued the Agency for years.

When (and if) OFCCP takes steps to propose regulations or modifications to existing regulations, we will blog about those proposals.

Thankfully, the Office of Management and Budget has quickly issued guidance on the impact of yesterday’s federal court ruling enjoining the Biden Administration’s federal contractor vaccine mandate.  The guidance, as reported on the Safer Federal Workforce Task Force website, states for existing contracts that include Executive Order 14042 implementing language:

The Government will take no action to enforce the clause implementing requirements of Executive Order 14042, absent further written notice from the agency, where the place of performance identified in the contract is in a U.S. state or outlying area subject to a court order prohibiting the application of requirements pursuant to the Executive Order . . .

The Task Force explains:

The Office of Management and Budget has issued guidance on implementing requirements of Executive Order 14042 while ensuring compliance with applicable court orders and injunctions, including those that are preliminary and may be supplemented, modified, or vacated, depending on the course of ongoing litigation.

Thus, it seems OMB has crafted this guidance to allow for potential changes in the applicability of the current injunction order and/or future litigation impacting the enforceability of the Executive Order.  Remember, in addition to this nationwide injunction, there still remains the three-state injunction issued prior to yesterday’s order in a separate litigation challenging the Executive Order.

It is important to keep in mind however, that ” federal agency COVID-19 workplace safety protocols for Federal buildings and Federally controlled facilities still apply in all locations. Contractor employees working onsite in those buildings and facilities must still follow Federal agency workplace safety protocols when working onsite.”

As always we will continue to monitor the situation as provide regular updates.