Rounding out the Agency’s efforts to beef up its Technical Assistance Guides (TAGs) for different types of federal contractors, OFCCP recently published a “Small Contractor” TAG.  TAGs can be helpful resources for both new and experienced federal contractors, and the aim of this TAG is to guide those small contractors with limited resources through the maze of affirmative action obligations.

In particular, the Small Contractor TAG provides guidance for contractors with supply or service contracts or subcontracts, as well as construction contractors and subcontractors.  OFCCP explains that the TAG can be used as a “self-assessment tool” for compliance with all three affirmative action laws:  Executive Order 11246, Section 503 and VEVRAA.

Small contractors would be well-served by relying on the TAG as a checklist for their compliance efforts.

As anticipated, on December 7, 2020, OFCCP published on its Website a lengthy final rule clarifying the religious exemption found at Section 204(3) of Executive Order (EO) 11246 and codified at 41 C.F.R. 60-1.5(a)(5) (the Exemption).

The purpose of this final rule is to clarify the contours of the E.O. 11246 religious exemption and the related obligations of federal contractors and subcontractors to ensure that OFCCP respects religious employers’ free exercise rights, protects workers from prohibited discrimination, and defends the values of a pluralistic society.  This is the final version of OFCCP’s proposed rule published in August 2019.

Importantly, the rule specifically acknowledges that

[t]he rule does not affect the overwhelming majority of federal contractors and subcontractors, which are not religious, and OFCCP remains fully committed to enforcing all E.O. 11246 nondiscrimination requirements, including those protecting employees from discrimination on the bases of sexual orientation and gender identity. Even for religious organizations that serve as government contractors or subcontractors, they too must comply with all of E.O. 11246’s nondiscrimination requirements except in some narrow respects under some reasonable circumstances recognized by law.

The final rule is a culmination of a multi-year effort by OFCCP to reconcile the Exemption with Supreme Court cases, including those cited in the final rule:

  • Masterpiece Cakeshop, Ltd. v. Colo. Civil Rights Comm’n, 138 S. Ct. 1719, 1731 (2018) (holding the government violates the Free Exercise Clause of the First Amendment when its decisions are based on hostility to religion or a religious viewpoint);
  • Trinity Lutheran Church of Columbia, Inc. v. Comer, 137 S. Ct. 2012, 2022 (2017) (holding the government violates the Free Exercise Clause of the First Amendment when it decides to exclude an entity from a generally available public benefit because of its religious character, unless that decision withstands the strictest scrutiny);
  • Burwell v. Hobby Lobby Stores, , 573 U.S. 682, 719 (2014) (holding the Religious Freedom Restoration Act applies to federal regulation of the activities of for-profit closely held corporations);
  • Hosanna-Tabor Evangelical Lutheran Church & Sch. v. EEOC, 565 U.S. 171, 196 (2012) (holding the ministerial exception, grounded in the Establishment and Free Exercise clauses of the First Amendment, bars an employment-discrimination suit brought on behalf of a minister against the religious school for which she worked);
  • Bostock v. Clayton Cnty., 140 S. Ct. 1731, 1754 (2020) (“[T]he promise of the free exercise of religion . . . lies at the heart of our pluralistic society.”);
  • Little Sisters of the Poor Saints Peter & Paul Home v. Pennsylvania, 140 S. Ct. 2367, 2379–84 (2020) (holding the Departments of Labor, Health and Human Services, and the Treasury had authority to promulgate religious and conscience exemptions from the Affordable Care Act’s contraceptive mandate);
  • Espinoza v. Mont. Dep’t of Revenue, 140 S. Ct. 2246 (2020) (a state “cannot disqualify some private schools [from a subsidy program] solely because they are religious” without violating the Free Exercise clause); and,
  • Our Lady of Guadalupe Sch. v. Morrissey-Berru, 140 S. Ct. 2049, 2069 (2020) (holding the ministerial exception applies “[w]hen a school with a religious mission entrusts a teacher with the responsibility of educating and forming students in the faith”).

None of these cases specifically addressed the Exemption applicable to federal contractors, and some address the ministerial exception that is not part of the EO 11246 Exemption.  Moreover, the 2020 cases were decided after OFCCP issued its initial proposed rule in August 2019.  Nonetheless, OFCCP found a reconciliation of these cases and the Exemption to be necessary to protect religious organizations that may be reluctant to do business with the federal government.  OFCCP specifically stated that the rule

is intended to correct any misperception that religious organizations are disfavored in government contracting by setting forth appropriate protections for their autonomy to hire employees who will further their religious missions, thereby providing clarity that may expand the eligible pool of federal contractors and subcontractors.

The primary clarifications of the Exemption are via new terminology definitions, including defining “particular religion” and “religious corporation, association, educational institution, or society,” “exercise of religion” and “sincere.” The final rule also provides a few examples of application of the exemption.

Finally, the Exemption is amended to dictate that it “be construed in favor of a broad protection of religious exercise, to the maximum extent permitted by the U.S. Constitution and law, including the Religious Freedom Restoration Act of 1993, as amended, 42 U.S.C. 2000bb et seq.”

OFCCP has also published FAQs addressing the finalize rule.

The Exemption, albeit having a significant potential impact in individual instances, is theoretically narrow in application from OFCCP’s perspective.  EEOC has weighed in on the topic separately and issued its own guidance.  As noted in OFCCP’s discussion of the many comments it received in response to the proposed rule, many groups opposed the proposed rule arguing, for example, that an expansion of the Exemption is but “a  pretext to permit discrimination against or harm others.”  Given this, the publication of the final rule may prompt formal challenges.

It remains to be seen, of course, how OFCCP under a new presidential administration will interpret and enforce the final rule.   We will keep you updated on any developments along this, or any other, front.

In December 2018, the EEOC created the Office of Enterprise Data and Analytics (OEDA). Since its inception, the OEDA has been working on modernizing EEO data availability. On December 2, 2020 EEOC launched EEOC Explore, which aggregates publicly available EEO-1 data (currently limited to EEO-1 data sets from 2017 and 2018) into a series of interactive dashboards.

Our Data Analytics Group shares its thoughts on EEOC Explore in a recent Data Intelligence Reporter blog post.

 

The Department of Defense has published a Memo and provided the Clause which its contracting agencies are now required to include in new contracts after the November 21, 2020 effective date of Executive Order 13950 – Combating Race and Sex Stereotyping.  The notice identifies this as a “class deviation”  that is “effective immediately” and “remains in effect until it is incorporated in the FAR or otherwise rescinded.”

As a reminder, section 4 of the President’s Executive Order provides that except for exempt contracts, “all Government contracting agencies shall include in every Government contract hereafter entered into the following provisions: …” (Emphasis added).  The new Department of Defense Clause acts to operationalize the requirement – instructing contracting agencies to use [the provided clause] in solicitations and contracts, when a contract is contemplated that will include the clause at Federal Acquisition Regulation (FAR) 52.222-26, Equal Opportunity.

The Order also provides that contractors with contracts in which the Clause appears shall include (“flow down”) in the language in subcontracts “that exceed $10,000”.

In addition to including the Clause in covered subcontracts, contractors also

… shall send, to each labor union or representative of workers with which it has a collective bargaining agreement or other contract or understanding, the notice provided below advising the labor union or workers’ representative of the Contractor’s commitments under this clause, and post copies of the notice in conspicuous places available to employees and applicants for employment.

The somewhat lengthy labor union notice is included in the Clause released by the Department of Defense.

Notably, the Memo also directs Department of Defense contracting officers to amend solicitations issued prior to November 20, 2020, to include the notice “in any resultant contract award expected to occur on or after November 20, 2020.”

 

While this Executive Order may eventually be rescinded by the new administration, that may take some time after the January 20, 2021 inauguration.  Thus, contractors should begin looking for the Clause in solicitations and contracts, and be prepared to include the Clause in any covered subcontracts.  As a reminder, OFCCP takes the position, that even without the contract clause, Executive Order 11246 prevents race and gender stereotyping and the Agency will investigate complaints, or evidence, of violations.

We will be sure to provide updates in this area as they develop.

As we previewed last week, OFCCP’s rule codifying procedures for resolving allegations of potential discrimination through the use of a Pre-Determination Notice (PDN) or Notice of Violation (NOV) has been officially published in the Federal Register.

The main purpose of rule is to codify practices to “provide contractors with greater certainty” about the procedures OFCCP follows during compliance evaluations. Some of these procedures were previously were imbedded in the sub-regulatory Federal Contractor Compliance Manual (FCCM) and other agency directives.  The new rule also clarifies and explains the different types of evidence the Agency uses to support a PDN or NOV, as well as codifies the option available to contractors to expedite the conclusion of a compliance evaluation before a PDN or NOV is issued.

The final rule contains several substantive changes from the rule the Agency proposed in 2019.  These changes:

  1. Clarify the evidentiary standards that OFCCP must meet for the PDN must also be met for the NOV.
  2. 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.
  3. 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.”
  4. 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.  The proposed rule required qualitative (or anecdotal) evidence in cases only when the standard deviation was less than three.  The final rule removes that threshold.
  5. Establish OFCCP must explain the basis for its findings, and provide the model, variables used and explanation why variables were excluded from its analysis upon request of the contractor.
  6. 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 Agency was clear to point out that the final rule does not codify the process or the procedures themselves.

The final rule is largely seen as a positive development for the contractor community and goes to address the criticisms around transparency and certainty that have plagued the Agency for years.  And, it may in fact prove to provide helpful guidance and support for contractors who are now faced with a change of administration looming on the horizon.

With the countdown to the anticipated “changing of the guard” underway, OFCCP is not sitting idly by.  We expect to see additional rulemaking (specifically around religious exemptions) and other activities in the weeks to come so, as always, stay tuned for more.

 

OFCCP has released a final rule formally codifying two notices used by the Agency to resolve potential findings of discrimination: the Predetermination Notice (PDN) and the Notice of Violation.  The Rule is the final version of the proposed rule published at then end of last year.

OFCCP stated in its press release that it believes

[t]he final rule will help OFCCP continue increasing the number of contractors that the agency evaluates and focus on resolving stronger cases of potential discrimination through the strategic allocation of limited agency resources.

We are in the process of digesting the rules and will be providing insights and details in the coming days.

As we noted in our August 2019 post, one of OFCCP Director Craig Leen’s priorities has been to update the Agency’s website with assistance materials for contractors – including Technical Assistance Guides (TAGs).  OFCCP announced today that it has updated the TAG for contractors and subcontractors with covered supply or service contracts.

TAGs can be very helpful, especially for new federal contractors navigating affirmative action obligations for the first time, as well as for more seasoned contractors looking for insights into how the Agency may address compliance issues.

The new TAG appears to be comprehensive, covering topics ranging from written AAP organization to “Preparing for a Compliance Evaluation” and including Appendices, such as an AAP Checklist.

OFCCP notes the following highlights of the revised guide:

  • Revisions to reflect regulatory changes to Executive Order 11246, Section 503 of the Rehabilitation Act, and the Vietnam Era Veterans’ Readjustment Assistance Act
  • Outlines the equal employment opportunity obligations for federal contractors
  • Lists the required components of affirmative action programs and related information
  • Discusses what to expect during OFCCP compliance evaluations

The Supply and Service TAG is now available alongside a Construction Contractor TAG, a TAG for Educational Institutions, and one for Small Contractors.

Our previous blog posts have delved into the Educational Institutions TAG, as well as the Construction Contractors TAG.

We will review this newest TAG and share our insights in future blog posts.

As directed in the recent controversial Executive Order (EO) 13950– Combatting Race and Sex Stereotyping, OFCCP is publishing in the Federal Register a request for information (RFI) seeking to collect information regarding training materials that may contain “divisive concepts” or promote sex and race stereotyping or scapegoating. The Agency also held a public Stakeholder Call to provide RFI guidance and address questions regarding the new EO.

As a reminder, the EO directs OFCCP to collect “information from Federal Contractors … regarding the training, workshops, or similar programming provided to employees” and should

request copies of any training, workshop, or similar programing having to do with diversity and inclusion as well as information about the duration, frequency, and expense of such activities.

The RFI encourages contractors and their employees to submit training materials in order to receive compliance assistance.  During the Agency’s stakeholder call addressing the RFI, OFCCP Director Craig Leen reiterated the purpose of the RFI is to obtain relevant training material so the Agency can provide compliance assistance, and “not for enforcement.”

The RFI makes clear that participation by federal contractors is “strictly voluntary” and there are “no adverse consequences for choosing not to participate.”  The details of the RFI provide more detail and perspective, as follows:

  • According to the RFI, if a contractor submits materials that OFCCP deems are not compliant with EO 13950 and EO 11246, OFCCP will provide compliance assistance and not to bring an enforcement action.
  • Interestingly, the RFI sets out that Contractors may take advantage of this incentive only if training materials are submitted “by one of the contractor’s or subcontractor’s executives, owners or legal representatives with actual authority to legally bind the” company.
  • If OFCCP deems the information to be non-compliant, provides technical assistance and the contractor refuses to correct the issues, OFCCP may take enforcement action if the Agency later receives the materials from a separate source – such as during an audit or from an employee.

During the Stakeholder Call, Director Leen said the Agency is “hoping for a very significant response” to the RFI and that submission of training materials “can only help the company because it will not lead to enforcement.”

The risk of not providing materials hinges not only on whether OFCCP receives substantially the same materials from another source at a later time, but also on whether OFCCP could proceed directly to enforcement. It seems unlikely that would be the case.  Rather, it would appear that a contractor who did not submit materials would still have the opportunity to conciliate a subsequent alleged violation and revise its training materials to address the Agency’s concerns.

Shortly after President Trump issued the EO, OFCCP set up a hotline and website to receive complaints regarding training materials, and has already started to receive, and investigation claims as potential violations of EO 11246.  Director Leen emphasized in the stakeholder call that such efforts are consistent with the November 21 effective date of the EO because EO 11246 is consistent with EO 13950 in that both prohibit discrimination based on race or sex in the guise of affirmative action.  While diversity actions consistent with EO 11246 are encouraged and required, discrimination is not permitted.

We want to continue to emphasize that the EO does not ban training – only specific divisive concepts.  We suggest federal contractors carefully review and revise their training materials, as necessary, as well as “train the trainer” regarding the parameters of the EO.

We will continue to provide updates as discussions continue and additional information and insights are learned.

As promised, OFCCP has released a handful of Frequently Asked Questions (FAQs) addressing the President’s Executive Order Combating Race and Sex Stereotyping (Executive Order 13950).

While limited in nature, the FAQs confirm what OFCCP has been expressing regarding the executive order, including the fact that the Order does not outright prohibit unconscious bias training but instead, clarifies that the training is prohibited

 . . . to the extent it teaches or implies that an individual, by virtue of his or her race, sex, and/or national origin, is racist, sexist, oppressive, or biased, whether consciously or unconsciously.

The FAQs specifies that

Training is not prohibited if it is designed to inform workers, or foster discussion, about pre-conceptions, opinions, or stereotypes that people—regardless of their race or sex—may have regarding people who are different, which could influence a worker’s conduct or speech and be perceived by others as offensive.

OFCCP again emphasizes that while the Executive Order does not become effective until after November 21, 2020 for the federal contractor notice and contract provisions,

OFCCP may investigate claims of sex and race stereotyping pursuant to its existing authority under Executive Order 11246.

As this is a currently developing story we will continue to update with new information and additional insights.

 

As instructed by last week’s Combatting Race and Sex Stereotyping Executive Order, OFCCP has set up a hotline to receive complaints of unlawful stereotyping.  The executive order directs OFCCP to

establish a hotline and investigate complaints received under both this order as well as Executive Order 11246. . .  .

Notably, the hotline is currently active (allowing callers to leave a message or submit a complaint via specific complaint e-mail), despite the fact the EO does not become effective for federal contractors unless or until a new contract is entered into after November 21, 2020.  OFCCP explains in its press release announcing the hotline that any training that violates the EO, also violates a contractor’s current obligations under EO 11246, explaining specifically that

[w]hile the order is effective immediately, its specific requirements for Federal contractors apply only to those with Federal contracts entered into 60 days after the date of the order, or Nov. 21, 2020. However, training programs prohibited by the new Executive Order may also violate a contractor’s obligations under the existing Executive Order 11246, which prohibits discrimination based on race, color, religion, sex, sexual orientation, gender identity, national origin, and for inquiring about, discussing, or disclosing your compensation or the compensation of others.

The press release (and the hotline message) also provides information regarding how to file a complaint at OFCCP’s website.

Thus, while the EO is not effective until November 21, contractors should be aware that employees may file complaints and OFCCP can investigate violations at any time starting immediately.  Given this, we suggest contractors carefully review existing training materials, and stay tuned here for further developments.