Get a jump start on the year and come learn what you need to know about all of the new and upcoming obligations for federal contractors.  Join us at The OFCCP Institute’s first conference of 2015 in San Francisco on February 25th and 26th.

We will do a deep dive into the many new obligations emerging from President Obama’s recent series of executive orders. We also will examine and explain the OFCCP’s latest enforcement trends, including the new Scheduling Letter.

As you know in 2014 the President signed several executive orders imposing significant new requirements on employers that do business with the federal government, either as direct “prime” contractors or as subcontractors. These new executive orders will require a quick review and often wide-ranging changes to your employment and human resources policies and practices. In addition, OFCCP recently revised its Scheduling Letter and  is embarking on a wave of compliance audits during which the Agency will for the first time enforce the new veterans and disability regulations and continue its rapidly changing approach to investigating your pay systems for potential discrimination.

It’s time to get educated about the still- changing (and expanding) obligations of government contractors.  So come join me and a distinguished faculty of speakers in San Francisco for The OFCCP Institute’s Compliance Conference on February 25-26.

For the conference agenda and to register, click here.  Hope to see you in San Fran.

As we previously reported, OFCCP published the Executive Order 13672 Final Regulations regarding sexual orientation and gender identity discrimination on December 9, 2014 without the public notice and comment period typically required by the Administrative Procedure Act (APA), such as with the veteran and Section 503 regulations.

Since then some confusion has arisen as to whether OFCCP has opened the Final Regulations for public comment in response to Congressional pressure.  It has not.

Here’s the story.  On December 3, 2014, OFCCP released the Final LGBT Regulations stating its position that the Regulations fall within an exemption to the APA’s notice and comment requirement.  As set forth in an OFCCP FAQ:

President Obama’s Executive Order was very clear about the steps the Department of Labor was required to take, and left no discretion regarding how to proceed. In such cases, principles of administrative law allow an agency to publish final rule without prior notice and comment when the agency only makes a required change to conform a regulation to the enabling authority, and does not have any discretion in doing so.

This position was also set forth in the Regulations themselves.  79 FR 72987.  Ahead of the publication of the Final Regulations, the Committee on Education and the Workforce of the House of Representatives, which has oversight of OFCCP, sent a  letter to Director Shiu urging OFCCP to allow public comment pursuant to the APA.  The Committee has requested a response from OFCCP by this Wednesday, December 17.

During a Webinar on December 5 regarding the Final Regulations, OFCCP stated its intention to publish the Final Regulations in the Federal Register on December 9, 2014.  In addition, OFCCP mentioned it would also be publishing a Notice requesting comment on potential information collection aspects of the Final Regulations but that the Notice would not affect the Final Regulations.

As represented, OFCCP published the information collection Notice in the Federal Register on December 8 and the Final Regulations on December 9.  The Notice refers to the Final Regulations being published concurrently, and requests comment on only certain aspects of the Regulations which might be interpreted as information collection requirements.  79 FR 72703.  The Final Regulations also refer to the concurrent publication of the Notice regarding information collection.  79 FR 72992.      The information collection notice is not a Notice of comment for the final LGBT rules.

As such, the Final Regulations are not currently open for comment and are set to go into effect on April 8, 2015 as published.

Stay tuned for more as OFCCP responds to the Committee on Education and the Workforce of the House of Representatives inquiry into these Final Rules.

As a follow up to a story from earlier this year, the D.C. Circuit court has rejected the Associated Builders and Contractors, Inc. (ABCs) challenge of the requirements under the revised regulations implementing Section 503 of the Rehabilitation Act.

In November 2013, ABC filed suit alleging OFCCP issued its recently revised regulations pertaining to individuals with disabilities in violation of the Rehabilitation Act, the Administrative Procedures Act, as well as the Regulatory Flexibility Act.

In March 2014, days before the regulations became effective, ABC’s challenge was denied by a lower court and the regulations went into effect as scheduled.

In this latest round of challenges, ABC appealed the lower court’s ruling to the D.C Circuit Court.  The D.C. Circuit court found OFCCP did not exceed its authority in promulgating the new rules.

Whether ABC decides to appeal this latest decision remains to be seen; but as of now, the regulations stand intact and contractors are required to adhere to the provisions as set forth in the final rule.

In FAQs released yesterday, OFCCP addressed requirements under the new Scheduling Letter for contractors to provide updated data collected pursuant to the revised Veterans and Individuals with Disability regulations if the contractor is more than six months into its current AAP plan year upon receipt of a Scheduling Letter.

OFCCP has previously indicated a contractor’s compliance with Subpart C of the new regulations does not go into effect until the contractor first updates its AAP after the March 24, 2014 effective date for the regulations.

Thus, contractors who are not yet subject to Subpart C of the new regulations are not required to provide the six month updates on itemized listing items under VEVRAA or Section 503 until they are more than six months into their plan year after they become subject to Subpart C.

Adding to the FAQs previously released, OFCCP has released additional guidance addressing audit submission requirements under the new Scheduling Letter for contractors more than six months into their plan year when the Scheduling Letter is received.

Items 9 and 13 of the Scheduling Letter require contractors to provide documentation of the computation or comparisons called for in section .44(k) of the VEVRAA and Section 503 regulations.   These sections require data collection on the number of job openings, jobs filled, total applicants and hires, and total disabled/protected veteran applicants and hires.  The new FAQs clarify that if a contractor is more than six months in their AAP plan year when they receive a scheduling letter, the contractor must provide this information for the first six months of their plan year.

The same is true in connection with item 10 of the itemized listing which addresses evaluation of the company’s utilization of individuals of disabilities.  If a contractor is more than six months into their plan year when they are scheduled for a compliance review, the contractor is required to submit the utilization for the first six months of the plan year, or in the alternative, provide OFCCP with the information so that OFCCP can perform the analyses.

Finally, in the third FAQ issued today, OFCCP clarified that for contractors scheduled for a compliance review more than six months into their plan year, the contractor need only “provide documentation of the benchmark adopted for the current AAP.”  The contractor does not have to analyze or compare the hiring rate of protected veterans to the adopted benchmark.

As OFCCP continues to initiate and undertake compliance reviews under the new Scheduling Letter we expect additional guidance to be released.  We’ll provide updates as they become available.

We learned today OFCCP is considering dispensing with the twice-a-year advance audit notification frequency, in exchange for notifying smaller groups on a more frequent basis about their establishments’ selection for an upcoming OFCCP compliance review.

For the past several years, OFCCP has issued Courtesy Scheduling Announcement Letters (CSALs) twice a year.  It is our understanding that OFCCP is now considering sending the advance notices letters more often, commencing with a batch of letters going out in January of 2015.

Whether OFCCP finalizes these plans, and any impact of more frequent notifications remains to be seen.  We’ll be sure to update you when we learn more.

As we alerted you to earlier today, OFCCP has issued its final rule implementing Executive Order 13672, providing non-discrimination protection for individuals on the basis of sexual orientation and gender identity.

There was early speculation that this rule might involve soliciting of LGBT status from applicants or employees as well as a requirement for some type of data analyses.  That is not the case.  The rule instead take a more “minimalist approach” in implementing the President’s Executive Order, requiring that contractors include gender identity and sexual orientation as prohibited bases of discrimination through inclusion in the Equal Opportunity Clause.

Rule Finalized Without Notice and Comment

OFCCP addresses its decision to implement the rule without public comment in a FAQ.  On this point the Agency says:

 “President Obama’s Executive Order was very clear about the steps the Department of Labor was required to take, and left no discretion regarding how to proceed. In such cases, principles of administrative law allow an agency to publish final rule without prior notice and comment when the agency only makes a required change to conform a regulation to the enabling authority, and does not have any discretion in doing so.”

The fact that there are no recordkeeping or solicitation obligations may provide the Agency with a stronger footing to rebut potential challenges to its decision to finalize these rule without putting them out for notice and comment.

Religious Exemption

As publicized when it was first executed, Executive Order 13672 does not contain a religious exemption.  Consistent with this, OFCCP’s final rule implementing the order does not provide for an exemption from adherence with the Final Rule on religious grounds.  The Agency explains in an FAQ that the new Executive Order (and implementing rule) do not change the existing religious exemption to Executive Order 11246.  This exemption was added to Executive Order 11246 by President Bush in 2002 and allows religiously affiliated contractors to favor individuals of a particular religion when making certain employment decisions.

Despite this existing exemption, and in light of the fact the it does not address the exemption of religious organizations based on the beliefs of the organization, the Agency could see legal challenges involving implementation and compliance with this rule.

The final rule is expected to be published in the Federal Register on December 5, 2014.  The rule will become effective on April 4, 2015, 120 days from publication.

Now that the final rule has been released, contractors should take the time before they become effective to ensure their policies, contract language and other materials are up-to-date as well as take the time to train and educate managers and hiring personnel on the implications of these new protections.

As scheduled, OFCCP has announced issuance of its final rules implementing the President’s recent Executive Order prohibiting discrimination for on the basis of sexual orientation and gender identity.

As we previously mentioned, OFCCP is releasing the final rule without a public comment period.

The final rules are not yet available for public review.   However, OFCCP has released FAQs which provide insight into the requirements of the final rules, such as the following:

  • The Final Rule will become effective 120 days after publication in the federal register and will apply to federal contracts entered into or modified after that date.
  • The Final Rule will not require contractors to collect any information about applicants’ or employees’ sexual orientation or gender identity.
  • The Final Rule will not require contractors to conduct any data analysis with respect to the sexual orientation or gender identity of their applicants or employees.

We will make sure to provide an update as soon as the Final Rule is available for review.

According to the DOL’s semi-annual regulatory agenda, OFCCP intends to issue as early as December, final rules implementing Executive Order 13672, providing non-discrimination protection to individuals on the basis of sexual orientation and gender identity.

Our understanding is that OFCCP does not intend to publish the regulations in the federal register for public notice and comment prior to final implementation.  As a result, the assumption is the regulations will become effective upon issuance.

Given this, employers should soon review their policies for compliance and consider training in connection with these new non-discrimination obligations.

We will make sure to alert you once the final regulations have been released.

One of the biggest changes to OFCCP’s recently revised scheduling letter is the requirement that employers must now submit employee-level pay data at the outset of an OFCCP audit.  As the Agency puts 2,500 establishments on notice of upcoming audits, and in response to contractor questions and requests for guidance on the new scheduling letter, OFCCP has published thirteen FAQs addressing the requirements of pay data submissions under Item 19 of the new letter.

Specifically, OFCCP provided guidance on the employee population employers need to include in Item 19 submissions, stating

Contractors must provide employee–level compensation data for all of the employees included in the AAP workforce analysis/organizational display.   The term “employee,” as used in the AAP regulations in 41 C.F.R. part 60–2, is broad enough to include part–time, temporary and full–time employees. . . .Item 19 seeks compensation data for “contract, per diem, or day laborers” as categories of temporary employees on the contractor’s payroll.

OFCCP also clarified the time frame of compensation data which employers should report, stating

For all employees, compensation must include base salary and/or wage rate and hours worked in a typical workweek.  Other compensation or adjustments to salary such as bonuses, incentives, commissions, merit increases, locality pay or overtime should be identified separately from base salary/wage for each employee.

In a later FAQ OFCCP specifically addressed the issue of “other compensation”, stating

for each employee in the workforce analysis/organizational display contractors should provide the actual amount paid in other compensation or adjustments to salary during the 12–month period preceding the date of the analysis/display.

Additionally, OFCCP confirmed that

OFCCP will accept AAPs and supporting records that reflect the five race and ethnicity  categories outlined in 41 CFR Part 60–2 or the seven used in the EEO–1  Report.

As OFCCP undertakes audits under the revised scheduling letter it may put out additional guidance, so stay tuned for further updates.