In a surprising turn of events, the White House has announced today President Trump’s intent to nominate current OFCCP Director Craig Leen to the position of Inspector General of the Office of Personnel Management.

There were not details around timing or potential OFCCP Director candidates provided in the release.  He would need to be confirmed by the Senate before moving into the role.

We will provide more details as soon as they are known.

The recently updated Construction Contractors Technical Assistance Guide (“TAG”) provides construction contractors substantial guidance in understanding their AAP obligations and how to fulfill those obligations.  Helpfully, the TAG addresses both technical compliance as well as best practices to achieve the spirit of the relevant statutes.

The TAG is organized coherently and practically, beginning with an explanation of the Office of Federal Contractor Compliance’s (“OFCCP”) mission and the laws it has been charged to enforce: Executive Order 11246, Section 503 of the Rehabilitation Act of 1973 (“Section 503”), and Vietnam Era Veterans’ Readjustment Assistance Act of 1974 (“VEVRAA”), and their enforcing regulations.

Executive Order 11246 Obligations

The TAG explains how a covered construction contractor must “take affirmative action” through postings, notices, and taglines in job postings, including:

  • EEO and Pay Transparency Postings and Notices
  • Notice to Unions
  • Job Advertisement Taglines
  • Listing Jobs with the Employment Service Delivery System
  • Notification to OFCCP of Construction Contract Award
  • Mandatory Notices in Bids and Contracting Documents

The TAG next details construction contractors’ mandatory record keeping obligations; specifically, what to keep, for whom records are required to be kept, the acceptable format of record keeping, and how long records must be maintained.

Unlike traditional affirmative action planning, construction contractors are not required to conduct a “utilization analysis” of females and minorities in its workforce.  Instead, the TAG explains the regulatory requirement for construction contractors to develop participation goals for women and minorities. The TAG provides how the goals are established and directs contractors to resources to help assess adherence to the established goals. Notably, the Executive Order requires construction contractors to analyze the relevant onsite construction workforce by project, rather than by establishment.

Additionally, under Executive Order 11246, construction contractors are not required to prepare written affirmative action plans (“AAPs”); rather, they must adhere to sixteen affirmative action steps (and properly document the steps taken). In a helpful and logical way, the TAG organizes the steps outlined in the regulations according to the step’s place in the employment life cycle (not necessarily in the order they appear in the regulations): Recruitment Practices, Training, EEO Policy and Implementation, Personnel Operations, and Contracting Activity. These sixteen steps make up the bulk of the construction contractor’s affirmative action obligations.

Section 503 and VEVRAA Obligations

Not to be overlooked, and somewhat confusingly, construction contractors and supply & service contractors share the same obligations with respect to veterans and individuals with disabilities under VEVRAA and Section 503.  Section 503 and VEVRAA regulations obligate all contractors to prepare written, establishment-based affirmative action plans with specific components.  Thus, Section 503 and VEVRAA plans include both construction and non-construction workers.   As such, construction contractors need to evaluate which establishment their onsite construction workforce should “roll up to” for these plans. Generally, an individual worker will roll up through his or her supervisor’s reporting chain to determine the appropriate establishment for Section 503 and VEVRAA AAP purposes.

The TAG provides fundamental information regarding construction contractors’ options in preparing their plans (for example, combining the Section 503 and VEVRAA plans into a single AAP or developing plans either by geographical area or company-wide), and proceeds to detail what the regulations require and what the OFCCP recommends regarding various written AAP components:

  • EEO Policy
  • Disseminate EEO Policy Internally and Externally
  • Review of Personnel Processes
  • Review of Mental and Physical Job Qualifications
  • Reasonable Accommodations
  • Develop and Implement Procedures to Prevent Harassment
  • Undertake Outreach and Positive Requirement
  • Design and Implement an Audit and Reporting System
  • Designation of Responsibility
  • Training
  • Data Collection Analysis

Final Thoughts

The guide concludes with a reminder of contractors’ mandatory annual reporting obligations, and notably and perhaps most helpfully, how to prepare for a compliance evaluation. The TAG outlines the OFCCP’s purpose in conducting compliance evaluation, what compliance officers are likely to ask for, and how a construction contractor can proactively prepare an answer for such inquiries. Lastly, the TAG has robust appendices including glossaries of terms and abbreviations, sample mandatory notices and invitations to self-identify, frequently asked questions, and participation goals for women and minorities.

Now that the TAG has been issued it will be interesting whether we start to see more construction contractors appear on OFCCP’s CSAL lists going forward.

While it feels like we just finished the EEO-1 reporting season, the time is here again to start preparing for filing of the “traditional” annual EEO-1 survey.  As it has for years, EEOC will again this year look to collect race and gender data from eligible employers.  Component 1 of the EEO-1 (not to be confused with the controversial and litigation-embroiled pay data Component 2) is currently due to be filed with the EEOC by March 31, 2020.  However, the EEO-1 reporting portal is not yet opened.

As a reminder, last year, in the height of the Component 2 pay data reporting frenzy, EEOC submitted a request to the Office of Management and Budget (OMB) seeking approval to continue to collect the historical Component 1 report without again collecting the pay data report that is Component 2.  EEOC is still awaiting a response to its request.  As a result, the EEO-1 Survey portal remains closed.  The following message appears on the 2019 EEO-1 Survey Portal:

The 2019 EEO-1 survey is not yet opened. The EEOC is currently in the process of seeking approval under the Paperwork Reduction Act (PRA) to collect the EEO-1 survey for 2019, 2020, and 2021.  The EEOC is seeking to collect Component 1 of the survey and to discontinue the collection of Component 2 pay data.  See, EEO-1 60-Day PRA Notice. The opening of the collection will be announced by posting a notice on the EEOC home page and sending a notification letter to eligible EEO-1 filers. When the survey opens, the EEOC will provide online resources to assist filers with their submissions and the EEOC’s helpdesk will be available to respond to filer inquiries and to provide additional filing assistance (including, for example, guidance on processing mergers and acquisitions and other corporate changes).

The timeline for the opening of the portal is unknown at this time.

As for Component 2, the reporting portal remains open. EEOC has requested, and is still awaiting guidance from the court as to when the reporting obligation should be deemed satisfied allowing the agency to close the reporting portal.

We will provide any updates on either of the reports as soon as we have additional information.

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

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

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

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

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

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

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

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

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

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

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

Director Craig Leen believes the proposal

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

The proposal seeks to do this by

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

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

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

Statistical & Non-Statistical Evidence Requirements

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

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

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

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

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

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

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

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

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

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

What this appears to mean is that:

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

Procedures for PDNs, NOVs and Conciliation Agreements

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

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

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

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

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

What Does This All Means for Contractors?

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

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

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

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

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

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

 

 

Via Federal Register notice, OFCCP has officially stated the Agency

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

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

The notice reflects that OFCCP

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

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

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

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

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

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

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

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

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

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

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

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

OFCCP drafted the 157-page guide as a

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

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