Office of Federal Contract Compliance Programs (OFCCP) audits can be complex, which is why it’s so important federal contractors understand the latest requirements and trends impacting enforcement. Here are some of the latest OFCCP audit trends and expectations you should be aware of:
Section 503 and VEVRAA Regulation Enforcement
OFCCP is still expecting full compliance to the revisions that were made to the Individuals with Disabilities (IWD) and Protected Veterans (PV) regulations. Current audit activity shows the agency is focusing heavily on these requirements. In fact, actual requests posed by officers in recent reviews are asking for information including:
- A snapshot of the company’s online application system and its flexibility for users
- Documented mandatory job listings
- Verification of outreach activities for the period under review
- List of each job posted during the prior year and current year review period
- Physical or reasonable accommodations made
- Medical examination requirements statement
- Subcontractor/vendor notifications
- Proof of EEO language in job advertisements
The list above is not exhaustive since individual officers and OFCCP offices have a lot of discretion to request additional information during an audit. They may even contact you before you submit your affirmative action plan (AAP) with specific requests.
Outreach and Recruitment Efforts
It’s also clear from audit activity OFCCP is still focusing on hiring/promotion selections and outreach/recruitment activities. Toward the end of 2015, OFCCP was more focused on personnel actions—asking for details about selection decisions in an effort to discover discrimination that could result in a financial settlement. Now, more than ever, it is imperative you examine selection rates and ensure your outreach and recruitment efforts are effective. For example:
- The IWD and PV AAPs now contain applicant and new hire data so contractors (and OFCCP) can assess the effectiveness of your outreach and recruitment efforts, hiring, and selection procedures. This data must be maintained for three years so ongoing efforts can be evaluated over a period of time.
- As noted earlier, an officer may request proof you are engaging in efforts to identify and recruit IWD and PV. This includes proving you made the mandatory job listings with the Employment Service Delivery System offices required by VEVRAA. OFCCP may contact individuals who represent your recruitment and outreach partners to determine the extent of your engagement with them. Are you just pushing out job postings to them? Or, are you interacting and communicating your company’s needs and requirements ensuring you get qualified referrals for open jobs?
- Outreach and recruitment activities in job groups where there are goals for women and minorities are also important. You will be expected to show progress toward those goals and identify what actions you took.
A Focus on Compensation Compliance
OFCCP continues to focus on compensation. Two events have already taken place this year to underscore the importance of fair pay to this administration. First, Executive Order 13665, Pay Transparency, became effective in January and it prohibits federal contractors from taking adverse action against employees or applicants who disclose or discuss compensation information. For more information about this Executive Order click here.
Next, you may have heard the EEOC has proposed revisions to the EEO-1 Report for the 2017 reporting cycle. These revisions would require submission of aggregated compensation data and hours worked by EEO-1 category, race, and gender using salary bands. All federal contractors and private employers with 100 or more employees would be required to submit the reports in the revised format. The comment period closed April 1, 2016, and more details will be available soon.
OFCCP is working with EEOC on this proposal, but the agency does not have to wait for the EEO-1 changes to evaluate a contractor’s compensation practices because employee level compensation data is submitted for a compliance review. Officers continue to evaluate compensation in many ways, including the workforce in total, by grouping similar jobs together by job group, and comparing individuals in the same or similar job titles.
Pat Shiu, OFCCP’s Director, recently commented in a Wall Street Journal article the agency has been focusing on pay discrimination cases involving multiple workers, and it is pursuing “…dozens of very big systemic discrimination cases throughout all kinds of industries. You’ll see a real uptick in 2016, 2017, 2018,” she says. Shiu has made it crystal clear one of OFCCP’s primary roles is to protect workers and believes that ferreting out unexplained differences in pay is a major way to provide this protection.
Contractors are advised to continue to perform annual pay equity analyses to be prepared for challenges to their compensation practices. Recently we have seen an increase in OFCCP requests to interview Compensation Managers and those who make compensation decisions. Interview topics include:
- Starting pay
- Merit increases
- Compensation policy and practice
- Other types of compensation – bonus, commission, awards, overtime, etc.
- Self-audits and adjustments made as a result of a self-audit
Additional Audit Trends
Some additional enforcement trends you should be aware of include:
- Corporate Scheduling Announcement Letter (CSAL)
OFCCP is still scheduling audits for establishments that were on the December 2014 and April 2015 CSAL lists. Now’s the time to dust off those old CSALs to see if there are establishments on them that have not experienced a recent compliance review. You can also find out if an establishment was mailed a CSAL by faxing a written request on company letterhead to the Division of Program Operations at 202-693-1305. There is currently no indication a new scheduling list will be generated in the near future.
- Active Audits
OFCCP is digging deeper into audits that are currently active, sometimes taking up to two or three years to complete. Shiu attributes this to her agency’s thorough examination of pay practices.
- Posting and Notification Requirement Changes
Posting and notification requirements have changed, and officers will look for the following changes and updates during audits:
- Executive Order 13665 has requirements to provide a notice to employees and applicants
- OFCCP has published a supplement to the EEO is the Law poster that must be posted along with the existing version of the poster
- The EO Clause in contracts has been updated
- Gender identity and sexual orientation are protected categories which were added by Executive Order 13672 effective April 8, 2015, and must be listed in your EEO policies and other documents when other protected categories are referenced
- Conciliation Agreements (CA)
For contractors who have Conciliation Agreements (CA) that require periodic reporting, we have seen an increase in scrutiny. Officers are coming back with detailed questions about the data submitted, analyses performed, actions taken, etc. Since the CA reports are in response to a violation found during a compliance review, it makes sense the agency is reviewing them for improvement or compliance. However, this is a break from the traditional response which was to receive the report and respond only when the requirements of the CA were fulfilled.
All signs point to an active year of OFCCP audits with a focus on finding discrimination that can result in violations and/or a financial settlement. You should prepare on multiple fronts including evaluating outreach and recruitment, selection decisions, and compensation. Review your job requirements and pay practices, keep documentation, evaluate your efforts, examine compensation practices, and watch for more information.
To learn more about some of the top compliance trends this year, read this white paper, “New Year, New Compliance: What to Focus on in 2016.”
For information on audit support, or how to ensure your company is meeting the latest requirements, please contact Berkshire Associates at 800.882.8904.