The 2014 National Industry Liaison Group (NILG) conference was held in Washington, D.C. during the first week of August. At the conference, much of the focus was on recent initiatives by the U.S. Department of Labor’s Office of Federal Contract Compliance Programs (OFCCP) concerning veterans, individuals with disabilities, and compensation. OFCCP released revised regulations for veterans and individuals with disabilities during 2013, and these revised regulations are now coming to fruition. During the time that the conference was being held, OFCCP released a proposed new tool to annually collect compensation information from federal contractors and subcontractors. This placed even more emphasis on issues concerning compensation.
While much of the discussion at the conference surrounded the revised regulations and OFCCP’s approach to compensation, there were also sessions concerning various other issues of interest to federal contractors and subcontractors. One of the topics that received some attention was hiring. As several speakers noted, OFCCP collects almost all of its financial remedies after a finding discrimination in the hiring process. For example, in a recent settlement in June of 2014 growing out of an OFCCP compliance review, a company paid $1 million to a group of African-American applicants who were not hired for entry-level production positions. There are very few financial remedies following OFCCP reviews associated with compensation or anything other than hiring.
What Areas Receive Too Much Attention from Federal Contractors and Subcontractors?
In my most recent article for The OFCCP Digest, I suggested that federal contractors and subcontractors need to focus on issues where there may be long-lasting and significant ramifications. It was interesting to hear this thought echoed in a number of presentations at the NILG conference. When I presented at the conference, I noted that the following may be receiving too much attention from contractors and subcontractors, taking time away from issues that have greater significance.
- Placement Goals – Federal contractors and subcontractors are required to establish placement goals in their affirmative action plans (AAPs) for minorities and females. Some companies rely on these placement goals to drive their affirmative action and diversity efforts, especially when it comes to making outreach efforts to find candidates. Yet, placement goals may be the result of many factors including a lack of openings in job groups with goals, failure to promote employees into job groups with goals, failure to retain minorities and females in job groups with goals, and poor census data on the actual number or percentages of minorities and females available for certain positions.
- Issues Concerning Veterans and Individuals with Disabilities – Throughout the last five years, OFCCP has routinely inquired about efforts that companies are making to recruit and hire veterans and individuals with disabilities. The agency’s interest in these two groups culminated in the revised regulations that were released in 2013. Yet, the agency rarely finds any type of discrimination involving these two groups during compliance reviews. Currently, most of the citations that appear in conciliation agreements regarding these two groups involve the failure to list openings with the local employment service delivery system offices, or the failure to do sufficient outreach. The remedy for these situations is to list all future openings and to do additional outreach. While this may create more work for companies, these kinds of actions are not comparable to back pay settlements growing out of failure-to-hire situations.
- Compensation – There is no question that compensation is a major priority for OFCCP. There is also no question that OFCCP has spent significant time and resources on this issue without actually finding extensive compensation discrimination among federal contractors and subcontractors. The number of dollars growing out of OFCCP compliance reviews that has been awarded to employees based on a finding of pay discrimination is minuscule compared to the dollars awarded to applicants and employees based on hiring disparities.
This is not to say that companies should ignore any of these subjects. Placement goals and issues concerning veterans and individuals with disabilities can certainly be important during OFCCP compliance reviews. Questions about compensation can be particularly problematic if companies give no attention to this issue.
Understanding the Roles That People Play in Making and Analyzing Hiring Decisions
At the recent NILG conference, even speakers who were focused on compensation or issues concerning veterans and individuals with disabilities tended to acknowledge that companies need to give continuing attention to their hiring practices and to the data on hiring presented to OFCCP. If there is general agreement that issues concerning hiring are a crucial part of every OFCCP compliance review, why do so many companies have problems explaining their hiring decisions to OFCCP? In my presentation, I suggested that there is often a lack of communication among the various people who are involved in the hiring process and in the process of providing information on hiring to OFCCP.
There may be multiple people who influence the hiring information that is presented to OFCCP. Among the people who may be directly involved in the hiring process are recruiters, HR managers, and other managers at a company. These people serve various roles in finding, evaluating, and selecting candidates for hire. Later, when a company is completing its AAPs or preparing for a compliance review, HR information systems (HRIS) managers and others may be involved in providing data for submission to OFCCP. At smaller companies, one person may handle many activities. For example, an HR manager may be involved in recruiting, working with hiring managers on selecting candidates, and preparing data for an AAP. In larger organizations, areas such as recruiting, compliance, and HR systems may be handled by separate people.
For organizations where there are different people handling recruiting, HR systems, general human resources, and compliance activities, the compliance manager needs to understand the competing pressures faced by those who are not routinely involved in compliance matters.
- Recruiters – Recruiters play a key role in hiring, and thus a key role in OFCCP compliance reviews. Recruiters are generally responsible for determining what sources are contacted, evaluating candidates, and dispositioning candidates. However, recruiters are typically not measured by their success in meeting compliance objectives, but by the cost associated with hiring new employees and the time to fill open positions.
- HRIS Managers – HRIS managers play a role in ensuring that information on employees and on applicants can be provided to OFCCP. However, HRIS managers are again not typically measured by their success in meeting compliance objectives, but by their ability to control costs associated with the systems they oversee and by their ability to provide reports to various parts of the organization.
- Other HR Managers – HR managers throughout an organization may have a role in compliance reviews. In regard to hiring, they may be involved in setting initial compensation for new employees, determining whether and how internal candidates are considered, training other managers on employment issues, and so on. These HR managers are typically measured by their success in achieving the various responsibilities that may be assigned to them, and compliance is likely to be one small part of their duties.
In large and small organizations, there are barriers to getting employees to give sufficient attention to OFCCP-related issues.
- In small organizations, the person handling compliance activities is likely to be handling multiple other responsibilities that often take precedence over compliance.
- In large organizations, multiple employees may have responsibilities for compliance activities, and compliance is generally not the activity used to measure their performance.
Communication is the Key to Success
In order to have successful OFCCP compliance reviews, company representatives need to understand why these reviews are important. Company representatives also need to know how they can help to create an environment for success. Conversely, those responsible for compliance activities must understand that others in the organization who have an impact on compliance reviews tend to have responsibilities that are often more critical to them than the things that matter to OFCCP.
The easiest way to make company representatives aware of the importance of OFCCP is to provide information on the settlements that have occurred when OFCCP has found hiring disparities during a compliance review. Each month seems to bring a new announcement on OFCCP’s website of a significant financial settlement that a company has made to resolve a claim of hiring discrimination. There are certainly costs associated with OFCCP’s other priorities, including costs for systems changes associated with the revised regulations for veterans and individuals with disabilities, and costs for updating policies and procedures associated with the revised regulations. However, the most obvious and direct costs that can be easily catalogued are those growing out of a finding of hiring discrimination. This includes the costs associated with a very visible press release suggesting that the company has been discriminating against a group of applicants or employees.
Those involved in compliance activities need to help others understand that there are basic things that can be done to increase the chances of a successful compliance review.
- Recruiters need to understand the importance of helping to create a process where candidates are properly considered for open positions.
- HRIS managers need to understand the importance of making data available in a way where it can be reviewed to see if there are disparities that might draw the attention of OFCCP.
- Other HR managers need to understand that there may be times they will be asked to provide information that will be presented to OFCCP.
It is especially important for those involved in recruiting to be aware of the following:
- There should be pre-established basic and preferred qualifications for open positions. Candidates who are hired must meet the pre-established basic qualifications.
- There should be a defined process used to build candidate pools for open positions. All candidates should then be required to use this process to express interest.
- All candidates should be properly dispositioned for positions in which they express interest. Dispositions should provide as complete a picture as possible of the reason why a candidate was not selected for an opening.
Since recruiters are going to be measured on metrics regarding cost-of-hire and time-to-fill, those involved in compliance need to help recruiters, hiring managers, and others understand how a poor compliance review may adversely affect the company.
While there needs to be communication among all the internal parties that may be involved in an OFCCP compliance review, there also needs to be more communication with OFCCP itself. OFCCP tends to assume that compliance is a high priority at all companies, and that companies have the time and resources necessary to fully implement the agency’s regulations. For most companies, these assumptions are simply not true. Those involved in the compliance process need to help OFCCP understand that companies face many competing priorities, and that compliance with the affirmative action laws is only one small part of what people involved in HR activities must cope with every day. While OFCCP compliance officers may believe that the agency’s regulations should be the top priority of every federal contractor and subcontractor, they are more likely to understand a company’s actions when they realize the limited resources that companies actually have for various HR activities.
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