The 2012 National Industry Liaison Group (NILG) conference was held August 27-31 in Waikoloa, Hawaii. The conference location was beautiful, and the conference planning committee made sure that the conference ran smoothly. However, this was a difficult year to gain many new insights into what is occurring at the U.S. Department of Labor’s Office of Federal Contract Compliance Programs (OFCCP). There were a number of effective speakers (including two of the frequent contributors to The OFCCP Digest, John Fox and Sandra Ziegler), but much of the information presented at the conference had either already been made available through various sources or had been previously presented in other forums.

The conference was somewhat hampered by the absence of OFCCP officials. There were several sessions in which OFCCP representatives appeared via interactive broadcast, but unlike recent NILG conferences, there were no actual OFCCP officials formally present in Hawaii. OFCCP Director Patricia Shiu presented prepared remarks via a broadcast that provided no significant insight into OFCCP’s focus points or direction. There was no panel of OFCCP Regional Directors at the conference, and the few OFCCP officials who did presentations basically gave a recap of where OFCCP has been over the last few years.

New Initiatives Stalled

One of the most important points made at the conference is that OFCCP is currently in a holding pattern on many of its proposed new initiatives. Among the initiatives on hold are the following:

  • The April 2011 proposed revisions to the regulations regarding veterans
  • The September 2011 proposed changes to the letter that opens a compliance review (i.e. the “scheduling letter”) and the itemized listing that accompanies the scheduling letter
  • The December 2011 proposed revisions to the regulations regarding persons with disabilities
  • The proposed changes to the federal contract compliance manual that have been in the works for several years (and that were reportedly complete as of the July 2011 NILG conference in New Orleans)
  • The possible changes to OFCCP’s guidance regarding compensation as suggested by the advanced notice of proposed rulemaking released in August 2011

There are two additional initiatives on hold where there has been no formal proposal from OFCCP. These initiatives are as follows:

  • Changes to the regulations regarding construction contractors
  • Changes to OFCCP’s regulations on sex discrimination

While there was speculation among several of the presenters that the veterans regulations may be released prior to the November presidential election, most of the presenters were in agreement that none of these initiatives are likely to move forward until after the election. There was some feeling among the presenters that certain of these initiatives will not move forward at all.

Significant Increase in Activity

While OFCCP’s formal initiatives have not moved forward, there has been significant change in focus during OFCCP compliance reviews over the last few years. OFCCP has been much more aggressive in seeking information from contractors. There have been a number of court cases and administrative decisions that have given OFCCP significantly more latitude in requesting data on a variety of topics. Representatives from OFCCP and the Department of Labor made it clear that OFCCP now has the authority to request extensive additional data without the presence of any type of formal indicator of discrimination, and the agency has the authority to request data that extends beyond the receipt date of the scheduling letter. While there continue to be a number of legal challenges to OFCCP’s authority to gather all of the data it is currently requesting, for the moment the agency has significant latitude in all areas.

During compliance reviews, OFCCP has been aggressively seeking additional information regarding issues concerning veterans and persons with disabilities. OFCCP compliance officers have demanded extensive information on outreach efforts made to find veterans and persons with disabilities. Several presenters commented that OFCCP expects federal contractors will make personal contacts with recruitment sources. OFCCP is checking to ensure that companies are listing openings with the relevant state employment service, and is investigating whether companies have provided appropriate accommodation to persons with disabilities.

During compliance reviews, OFCCP is continuing to investigate situations where it believes there is discrimination, especially in hiring. Several presenters noted that entry-level hire cases continue to be OFCCP’s “bread and butter” in terms of back pay settlements made with federal contractors. Following on points made at the 2011 NILG conference, a number of commentators noted that OFCCP is routinely investigating discrimination involving one or more racial subgroups, including whites. Several presenters mentioned the recent FedEx cases, where FedEx made settlements to members of all genders and race classes as an outgrowth of various compliance reviews around the country.

Compensation

Compensation was the topic that received the most attention at the 2012 NILG conference. There was widespread agreement among presenters and OFCCP representatives that compensation will continue to be a matter of significant interest to the agency in the coming year. However, there was also widespread agreement among presenters that OFCCP’s recent compensation investigations have resulted in very little return for the extensive effort being put into these investigations. Aside from the Astrazeneca case, where there was a $250,000 settlement, it appears that most of the 27 compensation settlements that occurred during the federal fiscal year have involved sums of less than $10,000.

The fact that OFCCP has had little success in finding compensation discrimination is not deterring the agency in its efforts to review compensation. A panel presentation by OFCCP staff members and other representatives of the Department of Labor made it clear that compensation will continue to be a key area of interest during affirmative action compliance reviews. Panel members indicated that OFCCP will be examining all forms of compensation, and not just base wages. (Various presenters at the conference discouraged federal contractors from providing information on other forms of compensation, however.) One of the difficulties in analyzing compensation involves the difficulty in placing employees into groups that allowed for meaningful statistical analyses. The panel indicated that OFCCP has been forced at times to rely on cohort (i.e. one-to-one) analyses rather than more sophisticated statistical models to examine pay.

The panel discussed a number of concerns it had growing out of specific types of issues. Panel members stated that one of the major areas of concern for OFCCP involves situations where there had been a merger or acquisition. Various disparities can grow out of the failure to properly merge payroll systems, the failure to align compensation philosophies, and other aspects of a merger or acquisition. One of the panel’s other concerns involved situations where employees in specific demographic groups were slotted into lower-paying positions or positions with less potential for income growth. Finally, the panel was concerned about the level of misclassification that occurs in various payroll and HR information systems that potentially masks pay equity issues.

OFCCP clearly has a strong interest in examining pay, but various presenters stressed that OFCCP is not in a good position to move forward with a number of highly-touted initiatives. While OFCCP’s proposed version of its scheduling letter requests line item compensation data on all employees, and OFCCP has suggested that it intends to develop a tool to gather compensation data from all contractors on an annual basis, several presenters made it clear that these initiatives are not likely to move forward. Court cases and administrative decisions give OFCCP significant latitude to ask for additional compensation data, but the agency is unlikely to receive permission to move forward on a whole-sale data collection tool. John Fox noted in his presentation that the National Academy of Sciences’ National Research Council (NRC) is in the process of releasing a study that suggests OFCCP (and other federal agencies) should limit their collection of compensation data until the government knows how this data will be kept safe and how it will be effectively used. This NRC report may act as a significant barrier to the implementation of any new compensation-related initiative.

Concluding Thoughts

There were a number of good presentations by thoughtful speakers at the 2012 NILG Conference. However, the lack of movement on various subjects at OFCCP meant that there wasn’t much new to say about most of these subjects. The absence of OFCCP representatives and the lack of concrete answers by agency representatives were a source of frustration for some attendees.

There were several high points of the conference. Regardless of one’s political perspective, Lilly Ledbetter gave a dynamic presentation on the need to consider how women and others in the workforce are paid and treated. Jacqueline Berrien, the Chair of the EEOC, was present in person in Hawaii and gave remarks that reinforced her agency’s commitment to work closely with employers to resolve discrimination issues. Ms. Berrien noted that her agency has done much work to clear the agency’s extensive backlog. She presented a positive perspective on working with NILG members and other employers to resolve issues.

My personal highlight of the conference was the presentation by John Fox on Thursday afternoon. Mr. Fox explicitly recognized the state of conflict that exists between federal contractors and OFCCP. He spent extensive time discussing the NRC report on compensation and its likely effects on OFCCP’s (in)ability to move forward with its planned compensation initiatives. At the end his presentation, Mr. Fox made a statement that many of us have come to believe over the last few years: “OFCCP is broken.” The agency has far too many new initiatives and far too little understanding of the contractor community. In that light, Mr. Fox broached a novel idea: that the contractor community should work closely with OFCCP to re-write regulations, develop new policies and procedures, and otherwise help the agency in its mission to provide equal opportunity in the workplace. Mr. Fox went so far as to say that contractors should support efforts to increase OFCCP’s budget and staffing levels so that the agency can be more effective. He issued a challenge to members of the NILG board and to attendees at the conference to work directly with OFCCP to improve relations with the contractor community and provide OFCCP with the knowledge and expertise that the agency is lacking.

Not everyone will agree with Mr. Fox that contractors should be more involved with OFCCP. However, I agree with John that if OFCCP is truly broken, then efforts should be made to fix the agency and set it on a more effective path. This can only happen if the agency comes to understand the resources available to federal contractors and the challenges contractors face. The agency in turn will only come to understand contractors better if contractors become more engaged with the agency. This may be one of the most important ideas to grow out of the 2012 NILG Conference.

I will be providing information on specific sessions I attended at the 2012 NILG Conference along with some additional thoughts on the conference to our blog site, aaresource.blogspot.com, in the coming days. In the meantime, our thanks to the conference committee for their hard work on the 2012 conference. We’re all looking forward to the 2013 NILG Conference in Indianapolis next summer.

For more information on anything in this article, contact Bill Osterndorf at wosterndorf@hranalytical.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. 2012. All materials associated with particular presentations remain copyright of the respective parties. Any misrepresentations of presentations by OFCCP representatives or others are completely unintentional.