The U.S. Department of Labor’s Office of Federal Contract Compliance Programs is a busy place. The agency has announced a multitude of priorities that affect federal contractors and subcontractors. Among these priorities are the following:
- Issues concerning veterans
- Issues concerning individuals with disabilities
- Use of criminal records in the selection process
There were new regulations or directives issued on each of these subjects during 2013.
Along with these priorities, OFCCP is interested in outreach efforts made to find minorities and females, actions taken to accommodate the religious observances of employees, and efforts made to comply with the Executive Order requiring that notifications are provided to employees about their collective bargaining rights. During affirmative action compliance reviews, OFCCP may ask questions about job listings with the employment service delivery system (ESDS) offices, specific accommodations made for individuals with disabilities, pay disparities that appear in preliminary compensation reports provided to the agency, record-keeping inconsistencies regarding applicant, hire, and other data, and so on and so forth.
Of course, OFCCP may ask about none of these things, focusing on some entirely different issue.
Affirmative action compliance reviews have always been somewhat unpredictable, but there is now no way to determine where OFCCP may focus its attention during any particular compliance review. OFCCP simply has too many initiatives and too many priorities to know where the focus in any compliance review may lie.
It appears this situation will not be improving any time soon. In the last few days, President Obama issued revisions to Executive Order 11246 that add protections for applicants and employees based on sexual orientation and/or gender identity. OFCCP will be preparing new regulations to implement these revisions in the coming months. At the same time, the agency is working on new regulations to implement President Obama’s memorandum requiring that federal contractors and subcontractors provide compensation data to the government on an annual basis.
On top of all these new priorities, OFCCP is struggling to provide effective guidance to the compliance officers at the OFCCP district offices who must conduct affirmative action reviews. Compliance officers are being asked to examine compliance with the revised regulations regarding veterans and individuals with disabilities without receiving extensive training on what these regulations mean and how these regulations are to be implemented. Compliance officers are also being asked to gather additional compensation information during compliance reviews without being provided sufficient instruction on who will examine this information or how it will be examined.
All of these new initiatives and priorities at OFCCP are creating chaos in the regulatory review process. Federal contractors and subcontractors have no clear idea on how they should prioritize their affirmative action efforts. OFCCP compliance officers have no clear idea on which items should be the top priorities during any particular compliance review. And every time it appears the landscape is clearing somewhat, OFCCP introduces a new priority or initiative to further muddy the waters.
A Lack of Information Makes Compliance Reviews More Difficult
We know that OFCCP is very interested in issues regarding veterans and individuals with disabilities from the agency’s revised regulations that were published in September of 2013. What we don’t know is what portions of these revised regulations are most critical to OFCCP, and how certain sections of these regulations should be implemented. While OFCCP may tell us that “every part of the revised regulations are important,” the revised regulations are lengthy enough and the number of new regulations sizable enough that compliance officers will be unable to review every last component of these regulations during any particular compliance review. OFCCP’s answers to frequently asked questions (FAQs) that appear on the agency’s website have given us some insight into the agency’s thinking, but at times have also clouded the issue at hand. For example, in regard to the data to be collected from applicants and employees, the FAQs suggest that data on persons who are “hired” is to include information on both internal and external selections (i.e. data on both promotions and external hires). This is at significant variance with OFCCP’s past practice, where data on hires and promotions was collected and counted separately. As another example, the FAQs suggest that employees who fail to respond with a “yes” or “no” answer to an inquiry about disability status should be counted as “not disabled.” This is also somewhat at variance with OFCCP’s past practice, where applicants who failed to respond with race, ethnicity, and/or gender data were counted as “unknown” in the relevant class rather than being artificially added to a particular category.
The situation is even murkier when it comes to OFCCP’s investigations into compensation. OFCCP’s compensation directive from 2013 gives the agency very significant latitude to ask questions about a company’s compensation policies, practices, and decisions. This directive suggests the agency may look at compensation issues by comparing small groups of similarly situated employees to each other, or by comparing a large number of employees who are part of a “pay analysis group.” The term “pay analysis group” is poorly defined in the directive, and the directive itself provides little effective guidance on how companies (or OFCCP) should specifically examine compensation data to determine whether there are issues that require attention.
The lack of information from OFCCP extends to all parts of the compliance review process. While OFCCP updated its Federal Contract Compliance Manual (FCCM) in 2013, the revisions to the FCCM were made BEFORE the revised regulations for veterans and individuals with disabilities were published. Thus, the manual was outdated only months after the most recent revisions were made. The revised FCCM certainly provides some guidance to compliance officers and federal contractors and subcontractors on what can be expected during a compliance review, but it does not explain the manner in which OFCCP will prioritize the questions to be asked or the specific areas that should be the particular focus of a review. Some of the previous guidance that OFCCP provided to compliance officers and contractors through agency directives was lost when OFCCP withdrew a whole series of directives in 2013. Among the directives that were abandoned was a directive that instructed companies to avoid guessing on the race, ethnicity, and gender of applicants who failed to provide information through an applicant survey form. Thus, it is no longer clear whether OFCCP expects companies to avoid guessing on race, ethnicity, and gender, whether companies are now REQUIRED to guess on these demographic characteristics, or whether this will be dealt with on some kind of case-by-case basis.
Setting Priorities During a Time of Chaos
Clearly, federal contractors and subcontractors cannot focus on every new priority that OFCCP announces. This will ultimately be self-defeating for two reasons:
- OFCCP has too many priorities for any company to realistically implement programs for each and every priority. Issues concerning veterans, individuals with disabilities, compensation, criminal records, religious accommodation, sexual orientation and gender identity are all going to theoretically require attention from federal contractors and subcontractors. In the midst of this, some attention will need to be paid to traditional issues concerning race, ethnicity, and gender.
- OFCCP changes priorities routinely and without notice. While OFCCP has had a somewhat consistent interest in issues concerning veterans, individuals with disabilities, and compensation since President Obama took office, the specific areas that were to receive attention regarding these subjects has changed routinely from year to year and compliance review to compliance review. During some compliance reviews, OFCCP has shown significant interest in whether placement goals for minorities and females are being met, and then has abandoned this interest during other reviews. Recently, we have seen some significant interest in issues concerning accommodation for religious observances (which falls within OFCCP’s jurisdiction under a certain part of the federal affirmative action regulations). How long this interest will last is unclear.
Since federal contractors and subcontractors cannot reasonably focus on every priority and initiative coming out of OFCCP, where should they focus their efforts? Here is some practical advice.
- Focus on issues where there may be significant and long-lasting ramifications. Companies should review data that might be submitted during an affirmative action compliance review to determine if there are any areas where there may be a finding of potential discrimination. Hiring issues involving race, ethnicity, and gender continue to have the greatest impact during OFCCP compliance reviews. Technical issues such as the requirement in the revised veterans regulations that federal contractors and subcontractors list openings with the relevant employment service delivery system office may get significant attention from OFCCP, but failure to do so will only result in a requirement to properly list the openings. This is effectively a “hand slap” issue. Conversely, if OFCCP discovers a significant disparity in how a company’s hiring practices affect a group protected by the federal affirmative action regulations, there may be a serious monetary settlement that would include a press release issued to the general public.
- Take action on items that are clearly required under the federal regulations. There may be many areas where the requirements under OFCCP’s regulations are murky, but there are other items where OFCCP’s expectations are relatively clear. Two of these relatively clear items are related to OFCCP’s revised regulations for veterans and individuals with disabilities. As noted above, failure to properly list openings with the relevant employment service delivery system office may be a “hand slap” issue, but it IS clear from the regulations that these listings are required for almost all positions. More importantly, it is clear from the revised regulations that companies are required to make outreach efforts to recruit veterans and individuals with disabilities, even if it is not clear exactly what kind of outreach efforts must be made. Companies should be sure to take action on these kind of clear requirements in order to demonstrate an interest in effectuating the affirmative action regulations.
- Keep good records. The value of having good records cannot be understated. Having good information on selection and hiring processes and having effective applicant data can be a life-saver when questions arise about possible disparities in regard to the hire of some group protected by the affirmative action regulations. Similarly, having good records concerning specific outreach efforts made to find minorities, females, veterans, and individuals with disabilities can make any OFCCP compliance review go smoother. With OFCCP’s current interest in issues concerning individuals with disabilities, having good records on accommodation requests made by applicants and employees and the responses to these accommodation requests can be very important. Good records can frequently save the day during a difficult compliance review.
- Consider how the company will respond to questions regarding compensation. It is simply impossible to know the specific questions that OFCCP may ask concerning compensation during a compliance review. However, companies should develop a game plan as to how questions will be answered and who will be involved in answering these questions. If compensation is controlled at a local level by individual hiring managers, these hiring managers will need to understand the kind of questions that may be raised during a compliance review. If compensation is controlled by a compensation manager with support from the human resources staff, questions concerning compensation should be funneled through the compensation manager and the compensation manager should understand OFCCP’s interests. It is more important to have a basic understanding of where issues may exist and how the company will respond to inquiries about these issues than it is to prepare extensive regression analyses and other statistical reports that may not lead to any concrete action.
- Pay attention to information being released by OFCCP. OFCCP rather routinely places new information on its website. While any individual item on the site may not be helpful (e.g. the answer to any particular FAQ), it IS useful to monitor trends and general themes emerging from the website and various OFCCP publications and pronouncements. For example, OFCCP routinely points to its revised regulations on veterans and individuals with disabilities as a key accomplishment, and yet many of the agency’s postings under “Latest Events and News” discuss back pay settlements regarding hiring disparities discovered during compliance reviews. By following trends and major themes found on the website and in other OFCCP pronouncements, companies can get a better sense of where to focus their time and attention.
The chaos at OFCCP will not end soon. The agency’s current focus areas may change again with the release of the president’s executive order on sexual orientation and gender identity and with the additional emphasis being placed on compensation issues. The Department of Labor’s regulatory agenda for OFCCP suggests that OFCCP will soon be issuing revised regulations regarding sex discrimination and revised regulations for companies that are doing construction projects for the federal government. These revisions may or may not occur, and they may or may not be a focus for the agency.
There is no good way to predict exactly where OFCCP will be at any given moment. The most that companies can do is focus on what is really important, make efforts where possible, and pay attention to what is occurring at the agency.
For more information on what is occurring at OFCCP, please contact Bill Osterndorf at email@example.com
Please note: nothing in this article is intended as legal advice or as a substitute for any professional advice about your organization’s particular circumstances. All original materials copyright © HR Analytical Services Inc. 2014