In this article, we’re going to provide an overview of what occurred at the conference and a review of select sessions from the conference. Many thanks to Sally Buzdum, Zach Olsen, and Mitchell Chamberlin at HR Analytical Services who provided input for this article. The general feedback that we collectively received about the conference was very positive and we believe that the conference provided valuable information to those attending.
Keynote Session with OFCCP Director Patricia Shiu
On Wednesday, August 3, the head of the U.S. Department of Labor’s Office of Federal Contract Compliance Programs (OFCCP), Patricia Shiu, gave her final address to an ILG conference. She highlighted the significant number of regulatory changes that have occurred under her watch, most notably the passage of the revised regulations regarding protected veterans and individuals with a disability. She also mentioned the new regulations her agency has adopted regarding sexual orientation and gender identity, pay transparency, and sex discrimination.
Ms. Shiu also stated that there has been a dramatic change in how OFCCP works during her seven years in office. Along with the extensive changes to the regulations that the agency enforces, Ms. Shiu noted that her agency has redoubled its efforts to ensure that the affirmative action regulations are effectively enforced. She focused on the fact that over 28,000 facilities with over 12 million workers have undergone compliance reviews during her tenure, noting that over $75 million in back pay settlements have been collected on behalf of applicants or employees during this time. Ms. Shiu mentioned OFCCP’s new class member locator, which is one of the means that the agency is using to “make aggrieved individuals whole.”
Ms. Shiu stated that “pay discrimination is a high priority at OFCCP because it is a high priority for the Obama administration.” She mentioned that women currently earn 82 cents for every dollar earned by men, and that a pay gap exists for minorities, members of the LGBT community, and individuals with disabilities as well. She stated that federal “contractors must pay workers fairly,” and to that end OFCCP has prioritized systemic pay discrimination as a subject during compliance evaluations.
Ms. Shiu expressed her frustration with federal contractors and their representatives who were not being cooperative during compliance reviews. She strongly encouraged organizations undergoing review to provide all documents requested by the agency, and to avoid providing information in a piecemeal fashion.
Ms. Shiu concluded her remarks by encouraging conference attendees to engage their senior business leaders in supporting affirmative action and diversity initiatives. She suggested that organizations review their demographics in regard to all groups now protected by the federal affirmative action regulations. In closing, she stated that organizations should “do [their] best to advance diversity and inclusion at all levels of the workforce.”
Keynote Session with EEOC Commissioner Victoria Lipnic
On Thursday, August 4, Commissioner Victoria Lipnic from the Equal Employment Opportunity Commission (EEOC) provided her thoughts. Ms. Lipnic has served on the EEOC since 2010, and was reappointed for a second term that will keep her on the commission until 2020. Ms. Lipnic spent much of her presentation discussing the conclusions drawn from a workplace harassment study that EEOC released in June. She noted that 30% of EEOC charges included allegations of harassment, most of which were based on race, gender, or disability. Ms. Lipnic also discussed other current topics of interest to EEOC including criminal background checks, LGBT issues, and the commission’s updated guidelines regarding religious discrimination.
While Commissioner Lipnic touched on many subjects, the topic of greatest interest to conference attendees involved the proposed revisions to the EEO-1 report that would change the report to include pay information. When asked for her opinion on the revisions to the EEO-1 report, Ms. Lipnic stated that she could not speak on behalf of the entire commission, but that she had voted against the revisions and that she does not believe that the revised report will be an effective tool in rooting out pay discrimination. She stated that pay disparities between men and women do exist, but she believes there are a variety of causes for this pay gap, including the fact that women tend to leave the workforce for extended periods of time to be care-givers for children and elderly family members. She also felt that another reason for the pay gap is that women tend to select lower-paying jobs.
She concluded her remarks regarding the proposed versions to the EEO-1 report by stating that money spent by employers changing their systems to provide data for the revised EEO-1 report could be better spent on providing on-site childcare or hiring more employees. She mentioned that a revised EEO-1 report will not solve the pay gap issue, that the costs to employers do not outweigh the benefits of the revised report, and that there are better ways to address the pay gap issue.
General Session with John Fox and Candee Chambers
On Wednesday, John Fox of Fox, Wang & Morgan gave a presentation on what is occurring at OFCCP. He was joined by Candee Chambers of DirectEmployers. Mr. Fox noted that OFCCP has a limited amount of time to push through any additional regulatory actions. While the current Director of OFCCP may remain in place until January 20, 2017, there is a practical sense in which any additional regulatory initiatives will need to be completed well before Election Day in 2016.
OFCCP has faced budget reductions for the last few years, and will continue to face budget cuts during the upcoming fiscal year. Congress has expressed its strong displeasure with OFCCP, and in federal fiscal year 2016 the agency’s budget was reduced by $1 million. In federal fiscal year 2017, Congress may reduce the agency’s budget by an even greater amount. These budget cuts have affected overall staffing at the agency, with the size of the OFCCP staff declining from approximately 790 in federal fiscal year 2010 to approximately 615 in the current federal fiscal year.
With these budget cuts and OFCCP’s intensive focus on investigating compensation disparities, the number of compliance reviews has dramatically decreased during the last few years. While the agency has typically done about between 4,000 and 5,000 compliance reviews every fiscal year, OFCCP only did 2,500 compliance reviews during federal fiscal year 2015 and the agency is likely to complete even fewer compliance reviews during the current fiscal year.
Mr. Fox noted that even with the budget cuts and a reduction in agency staff during Ms. Shiu’s tenure, the amount of change at the agency since 2009 has been monumental. OFCCP has released a variety of very significant new and revised regulations, and has fundamentally changed the way it approaches compliance reviews. The agency is now looking for results rather than good faith efforts, as exemplified by the lack of any reference to good faith efforts in the revised regulations regarding protected veterans and individuals with disabilities. Director Shiu will leave her mark on the agency in a number of ways, including through her appointments at the agency, as she has appointed all of the current OFCCP regional directors.
Mr. Fox spent time talking about compensation discrimination during his presentation, but noted that OFCCP has been unable to find extensive compensation discrimination despite its on-going efforts to do so. In fact, compensation investigations have yielded a very small percentage of the back pay awards assessed by OFCCP each year. Mr. Fox advised federal contractors and subcontractors to avoid doing extensive regression analyses on compensation, since it would be almost impossible to collect and analyze all the data variables that should drive such an analysis.
Rather than spending time on extensive evaluations of compensation, Mr. Fox suggested that federal contractors and subcontractors should monitor their recruitment and selection processes. He noted that every year, most of the back pay settlements OFCCP initiates involve entry-level hiring. One of the major causes of these back pay settlements involves the misuse of “evergreen” requisitions, where requisitions remain open throughout the course of a year and candidates are continually hired into these requisitions.
Update on OFCCP Enforcement Data with David Cohen
On Wednesday, David Cohen, President of DCI Consulting Group, gave his annual update on enforcement trends at OFCCP. He noted that corporate scheduling announcement letters (also known as pre-scheduling notices) have not been issued since late 2014. OFCCP has instead been bogged down during compliance reviews in the enforcement of technical issues and the investigation of minor violations of the federal affirmative action regulations. Mr. Cohen stated that compliance officers are also bogged down by having to review progress reports from audits that resulted in conciliation agreements for technical violations. Mr. Cohen estimated that the agency is on pace to complete less than 1,500 compliance reviews during federal fiscal year 2016. The agency addressed this in their 2017 budget request submitted to Congress, stating that the agency was moving away from defined time frames for audits in favor of increasing audit quality.
Mr. Cohen highlighted trends from recent OFCCP compliance reviews as well. One of the main issues Mr. Cohen noted was OFCCP’s desire to aggregate data from multiple years. Mr. Cohen indicated that federal contractors and subcontractors are receiving additional data requests from OFCCP based on findings from this aggregated data, even when this aggregated data allowed for less meaningful statistical analyses. He urged organizations to inquire why the agency needs the additional information from previous years. However, Mr. Cohen indicated that organizations should not categorically deny OFCCP access to records. He indicated that organizations undergoing a compliance review should be open with the agency, but that these organizations should attempt to narrow the scope of any request for information.
Mr. Cohen also discussed OFCCP’s results in terms of financial settlements. As of July 2016, OFCCP had recovered $6.4 million from financial settlements during federal fiscal year 2016. A huge majority of these dollars are a result of failure to hire cases. In fact, only one case included a financial remedy for pay discrimination. Interestingly, 40% of the discrimination cases brought by OFCCP involved men, and 28% involved whites.
There were a significant number of sessions at the 2016 ILG national conference that were focused on compensation. Speakers at various sessions indicated that OFCCP has dramatically increased its efforts to find compensation discrimination. While Mr. Fox may have discouraged attendees from spending excessive energy on compensation studies, there were a number of speakers who strongly encouraged federal contractors and subcontractors to pay close attention to their pay practices and decisions. There was general agreement that if any type of comprehensive pay equity study is to be done, that outside legal counsel should be involved so that the results of these studies could be protected by attorney-client privilege.
While in the past OFCCP has generally focused on base pay, speakers indicated that OFCCP is now seeking information on all forms of pay. The agency may ask for information on bonuses, commissions, overtime, and other forms of compensation during a compliance review. The agency may also conduct interviews with compensation managers and other representatives of the organization under review to gather additional information on an organization’s pay policies and practices.
OFCCP’s efforts to collect compensation information are part of a broader movement by various units of government to eliminate pay inequity. EEOC is attempting to add a compensation component to the annual EEO-1 report, which would require employers to submit compensation data annually by EEO-1 category and within established pay bands. Actions are also being taken by individual states to combat pay inequities, most recently with Massachusetts passing legislation forbidding employers from inquiring about an applicant’s salary history. The White House has also announced an “equal pay pledge” that urges companies to commit to providing equal pay for employees. Activist investors and shareholders are also putting pressure on organizations to conduct pay equity analyses and to make their pay practices more transparent. All of these initiatives should cause organizations to more closely review their pay practices and decisions.
Sessions on Recruitment and Hiring
While not as abundant as sessions on compensation, there were a number of sessions on recruitment and hiring practices at the 2016 ILG national conference. Speakers routinely reminded attendees that disparities involving the race, ethnicity, and/or gender of one or more groups of applicants remains the number one area where OFCCP is able to secure back pay settlements. Speakers indicated that OFCCP has become more sophisticated in its understanding of applicant tracking systems and often requests additional information about applicants when it finds disparities in reports that are initially submitted at the start of a compliance review. OFCCP is also beginning to investigate whether the agency’s Internet Applicant rule is being properly used by federal contractors and subcontractors. OFCCP has asked certain organizations to provide data on candidates who supposedly were not viable candidates under the Internet Applicant rule in order to ensure that the rule was being properly used. Presenters strongly encouraged conference attendees to review their selection processes and to ensure that candidates are being effectively dispositioned in order to prove that candidates were properly considered.
There were also a number of sessions that discussed steering. “Steering” refers to a policy or practice where applicants or employees who are part of a particular protected class are directed or placed into certain areas within an organization rather than being considered for a broader set of openings. While OFCCP often suggests that steering is a compensation issue, steering situations actually are more closely aligned with ineffective selection processes. The sessions that touched on this topic acknowledged that this is one area where the OFCCP is having success in reaching financial settlements. Presenters frequently noted that the best defense to allegations of steering is to show that candidates are allowed to choose the positions in which they are interested. However, organizations must have effective documentation as to how selection decisions are made as well as effective documentation on the manner in which candidates are considered for particular positions.
Other Themes of the 2016 ILG National Conference
There was a significant focus on compensation during the 2016 conference, and a focus on how federal contractors and subcontractors should do more to analyze their selection processes. However, there were a number of other themes that sounded at the conference:
- OFCCP expects results – A number of presenters echoed Pat Shiu’s suggestion that good faith efforts are no longer sufficient, and that OFCCP expects results. While this is clearly the case in regard to protected veterans and individuals with disabilities, OFCCP has come to expect results as well when organizations are attempting to hire and promote minorities and females. The agency will raise questions when placement goals are not met, and the agency will ask for documentation that demonstrates there were specific, targeted efforts to draw minorities, females, protected veterans, and individuals with disabilities into applicant pools.
- OFCCP expects that organizations are implementing the new federal regulations – While the number of OFCCP compliance reviews has decreased during the last few years, these reviews have become more intensive. The agency is now investigating whether federal contractors and subcontractors are fully implementing all of the new regulations that the agency has published in the last few years. For example, the agency is examining advertisements and job postings for EEO taglines, and the agency is asking for proof that open positions have been listed with the relevant state employment service delivery system (ESDS).
- OFCCP compliance reviews are lengthy and unpredictable – With OFCCP’s decision to limit the number of compliance reviews and give more attention to each review, compliance reviews tend to last longer and include unexpected questions and requests for information. For example, some organizations have been asked to produce extensive information on promotion and termination decisions, while other organizations have been asked to provide information on accommodation for religious observances.
- There are new issues awaiting attention from OFCCP and EEOC – There were several presentations that broached new topics that may be of interest to OFCCP and EEOC. For example, there was an excellent session examining the many issues associated with the use of temporary services and staffing agencies. OFCCP has provided no clear guidance on how federal contractors should deal with persons who apply and are hired through these types of organizations, and thus organizations must make decisions on how to track data relating to these individuals. One clear piece of advice was to have strong contracts with temporary services and staffing agencies that clarify the responsibilities these organizations have in helping a federal contractor meet its regulatory requirements. There was also a session that discussed the use of ratingless performance management systems and the effect such a system could have on an evaluation of employee compensation.
The 2016 ILG national conference concluded with a panel of experts providing their key takeaways from the conference. All of the experts agreed that under this OFCCP administration, the regulatory landscape pertaining to affirmative action has become more complicated and challenging.
There were many effective presentations by thoughtful speakers at the 2016 ILG national conference. The keynote sessions by Randy Lewis of Walgreens, former Navy Seal Kristin Beck, and the founder of Black Girls Rock!, Beverly Bond, were all well received. Randy Lewis talked about the effectiveness of Walgreens’ efforts to increase the number of individuals with disabilities in its organization. Kristin Beck talked about her gender transition and the importance of supporting LGBT employees. Beverly Bond talked about the importance of promoting a positive image of diversity in the workplace and the importance of mentoring.
Overall, the 2016 ILG national conference was a major success, filled with important content and fresh ideas to help federal contractors and subcontractors not only fulfill their affirmative action obligations, but also to build diverse workforces. The conference also provided federal contractors and subcontractors with an opportunity to express their concerns regarding the burdens associated with the federal government’s affirmative action initiatives. Though OFCCP’s enforcement statistics would suggest the agency has been less active during the last few years, federal contractors and subcontractors came to understand that OFCCP has been anything but dormant. With a parade of new regulations and the agency’s intense focus on compensation, the federal contractor community has experienced significant difficulties in keeping up with their regulatory obligations.
With the end of the 2016 conference, we can now start to look forward to the 2017 ILG national conference which will be held in San Antonio, Texas from August 1 through 4. More information about next year’s conference can be found at http://ilgconference.com/2017/. We encourage readers to attend the 2017 and 2018 ILG national conferences, and to begin planning for the 2019 ILG national conference in Milwaukee, Wisconsin!
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. 2016. All materials associated with particular presentations remain copyright of the respective parties. Any misrepresentations of presentations by OFCCP representatives or others are completely unintentional.