Report from the ABA/ Labor and Employment Meeting: Dir. Leen’s Plans for OFCCP Focused Reviews

OFCCP Director Craig Leen presented at the American Bar Association’s Annual Meeting of the Labor and Employment Section in New Orleans on November 8. Leen’s comments centered on 503 and VEVRAA focused reviews. That same day, OFCCP issued a second 2019 Corporate Scheduling Announcement Lists that included 500 VEVRAA focused reviews. Here are the key takeaways from Leen’s presentation:

  • 503 and VEVRAA focused reviews will include an analysis of “systemic” discrimination in promotions, terminations, and compensation. Leen stated that the agency will conduct regression analyses in order to ferret out such discrimination. Because most establishments do not employ a sufficient number of Individuals with Disabilities (IWDs) or protected veterans to conduct a statistical analysis, in all likelihood, an analysis of compensation or promotion practices will likely be based on individual comparators and anecdotal evidence. Leen also reported that all focused reviews, VEVRAA and 503, will include an on-site. He estimated the on-sites would last three to five days.
  • OFCCP plans to post on its website a list of the contractors who successfully completed a 503 or VEVRAA focused review without any adverse findings, as well as best practices identified in each review.
  • Leen urged attendees to review the list of 503 best practices posted on the agency’s website and considering implementing some or all of them. The 503 focused reviews will include an assessment of whether the contractor implemented any of the best practices. Leen also noted that OFCCP will be taking a hard look at the impact of assessments, particularly those using artificial intelligence, on IWDs and the basis for denying a requested accommodation. Leen asserted that virtually all requests should be granted since most accommodations cost less than $500. Finally, Leen wants to see an Accessibility Coordinator in every workplace.
  • Compliance officers conducting 503 focused reviews will ask for, at least, the following documentation:
    • Termination records
    • Personnel files
    • Flexible workplace polices
    • Response rate for self-identification surveys
    • Contractor’s efforts to increase self- id response rates
    • Job descriptions

Although Leen specifically referenced this list in connection with Section 503 focused reviews, this list could also apply to a VEVRAA review.

  • A revised version of the 503 self-identification form is pending approval with the Office of Management and Budget (OMB). The intent of the revisions is to make the form more welcoming to IWDs in an effort to increase response rates.
  • Leen’s comments focused primarily of compliance with Section 503. However, he did stress a new focus with respect to VEVRAA compliance – discrimination against military spouses. The VEVRAA regulations include a prohibition against associational discrimination similar to the Section 503 and the ADA. 41 CFR 60-300.21(e)

Leen also stated that contractors may implement hiring preferences for IWDs and Veterans. According to Leen, such programs are not discriminatory. This position appears to be contrary to the EEOC’s guidance on voluntary preferences. Before implementing such a hiring preference, please consult with counsel.

  • Finally, Leen announced that next year, OFCCP will launch additional types of focused reviews on disability accommodations and religious accommodations. Eventually, Leen also plans to implement compensation and promotion focused reviews.

For more information on preparing for or responding to a focused review, please contact your FortneyScott attorney or send us an e-mail with your questions.

Trump Rescinds Obama Executive Order Requiring Successor Employers to Offer Employment to Service Workers

On October 31, 2019, President Trump issued a new Executive Order that rescinded President Obama’s Executive Order 13495 (EO)—Nondisplacement of Qualified Workers Under Service Contracts—and its implementing regulations. The now rescinded EO required successor contractors to offer positions to qualified service workers and to provide employee notifications and workplace notice postings.

Additional Information on the Rescinded EO.      The recession is effective immediately. The former EO required that any contract or subcontract entered into by the federal government or its contractors covered by the McNamara-O’Hara Service Contract Act (SCA) include a clause that qualified workers currently on a covered contract be given the right of first refuse for employment with a successor contractor. The EO prohibited a successor contractor performing the same or similar services at the same location from hiring any new employees until qualified workers performing the prior contract were provided an opportunity to accept a job with the successor. The EO also required the predecessor contractor to provide written notice to eligible employees by either conspicuous workplace posting or by individual notices to employees. Federal contractors will no longer be required to post or provide EO notices as well.

Trump’s rescission order specifically terminates immediately any existing investigations or compliance actions based on EO 13495, and directs the Secretary of Labor and other heads of government agencies to promptly move to rescind any orders, rules, regulations, guidelines, programs or policies implementing or enforcing Obama’s executive order.

Of the three Executive Orders issued by President Obama which federal contractors sought to reverse—(1) Fair Pay and Safe Workplaces, (2) Nondisplacement of Qualified Workers under the Service Contracts and (3) Paid Sick Leave—only the Paid Sick Leave Executive Order is still in effect.

Contact your FortneyScott attorney who advises your company or email us at info@fortneyscott.com for additional information about the rescinded EO, and for advice on the impact that these changes have on your federal contracting compliance obligations.

OFCCP Issues Technical Assistance Guide for Educational Institutions

Today, OFCCP issued its long-anticipated Educational Institutions Technical Assistance Guide (“TAG”), designed to assist educational institutions with federal contracts “understand their obligations under the laws and regulations OFCCP enforces and to help them prepare for compliance evaluations.”

Acknowledging that educational institutions may face “unique challenges” in their compliance efforts, the TAG addresses a number of key issues, including:

  • Guidance for determining whether the institution should develop a single AAP (g., for the campus or the university) or multiple AAPs;
  • Clarification on when student employees should be included in, or excluded from, AAPs;
  • Methods for developing job groups for instructional and non-instructional employees;
  • Best practices for developing action-oriented programs;
  • Discussion of how OFCCP will review promotion data; and
  • Overview of OFCCP’s compensation analysis methodology.

While the TAG is useful, educational institutions must identify any content that goes beyond the regulatory requirements of Executive Order 11246, Section 503, and VEVRAA. OFCCP, as a matter of law, only can enforce the regulatory requirements, and the Agency cannot enforce any expanded obligations included in the TAG.

FortneyScott will provide a more in-depth analysis of the TAG for clients prior to the October 23, 2019 Town Hall OFCCP is holding for educational institutions.

For more information on the TAG or how educational institutions should respond to OFCCP compliance review, please contact your FortneyScott attorney or send us an e-mail with your question.

EEO-1 Component 2 Deadline Extended

Although the EEOC was scheduled to end the Component 2 data collection on Monday, September 30, 2019, the EEOC plans to keep the portal open in accordance with the district court’s order until it reaches approximately 72% of the employers who normally file EEO-1 Reports. On Friday, September 27, 2019 in its Status Report to the district court discussing post-September 30th activities the EEOC announced its plan to continue to accept Component 2 data for 2017 and 2018 in accordance with the judge’s order.  EEOC said that EEO-1 eligible employers should continue to submit and certify their Component 2 EEO-1 reports for 2017 and 2018 as soon as possible.

For more information on Component 2 pay data collection, see the EEOC’s portal for Component 2.

DOL Issues Long-Anticipated Update to Overtime Rule

This morning, the U.S. Department of Labor’s Wage & Hour Division (WHD) announced a final rule updating the overtime eligibility requirements for workers under the federal Fair Labor Standards Act (FLSA).

Most notably, the final rule bumps up the minimum salary threshold required for workers to be exempt under the FLSA’s “white-collar” exemptions—that is, the executive, administrative, and professional exemptions. The new threshold of $35,568 is a significant increase from the previous threshold of $23,660, an amount which has not been revised since 2004. However, the new threshold falls far short of the $47,476 level proposed in a scuttled Obama-era rule in 2016.

Very importantly, the final rule makes no changes to the current “duties test” for exemptions—a hotly debated subject during the rulemaking process. Nor does the final rule call for an automatic update of the salary threshold, another controversial feature in the blocked Obama rule.

Other significant components of the final rule include:

  • Updating the salary threshold for the “highly compensated employee” exemption from $100,000 to $107,432 per year;
  • Allowing employers to use nondiscretionary bonuses and incentive payments (including commissions) that are paid at least annually to satisfy up to 10 percent of the standard salary level; and
  • Revising the special salary levels for workers in U.S. territories and in the motion picture industry.

According to a WHD press release, the final rule will make an additional 1.3 million American workers eligible for overtime pay.

Next Steps

While the rule is scheduled to go into effect on January 1, 2020, it is widely expected that it will be challenged immediately in federal courts by Democrats and worker advocate groups, with the intent of enjoining and invalidating the rule in favor of one more akin to the Obama rule.

The final rule’s release coincides with a Senate committee confirmation vote today on Trump nominee for Labor Secretary, Eugene Scalia. Scalia is expected to clear the committee vote and ultimately win confirmation by the Republican-controlled Senate.

FortneyScott will keep you updated on the status and impact of this final rule. If you have any questions, please contact your FortneyScott attorney, or e-mail FortneyScott.

OFCCP Issues FAQs for “Campus-Like Settings”

The Department of Labor’s Office of Federal Contract Compliance Programs (“OFCCP”) provided guidance on how an “establishment” should be determined in a campus-like setting, such as a higher education institution or an office park.

Understanding what constitutes an “establishment” is the cornerstone of federal contractors’ EEO and affirmative action compliance obligations. Federal contractors, generally, are required to develop Affirmative Action Plans (“AAPs”) for each “establishment.” AAPs are proactive tools that monitor most personnel activity (e.g., hiring, promotions, compensation and terminations) to determine areas of potential discrimination and areas in which additional diversity efforts need to be focused. OFCCP conducts compliance evaluations and related enforcement activity based on individual “establishments” by reviewing the AAP and related supporting materials. When multiple buildings in a campus-like setting are combined in a single AAP, contractors risk including a larger number of dissimilar employees into a single AAP. This could reduce the effectiveness of the proactive analyses as well as create additional challenges during OFCCP audits.

Key Takeaways: Federal contractors with campus-like settings, including clustered office buildings and higher education campuses, should evaluate whether their AAP structures comport with the factors included in OFCCP’s guidance to minimize the risk of a challenge to the AAP structure and coverage by OFCCP. In particular, higher education federal contractors need to carefully evaluate whether to use a campus-wide approach for developing an AAP, or whether grouping buildings by departments or other related organizational units or functions is appropriate for AAPs. The development of AAPs is a critical component in a federal contractor’s compliance strategy, and federal contractors should secure legal advice on how their AAPs should be structured based on their specific facts and with appropriate consideration of OFCCP’s new guidance.

Additional Information for Higher Education Federal Contractors: OFCCP, in particular, focuses on assessing compliance by higher education federal contractors which began during the Obama Administration. Many reviews of the higher education contractors still are pending. Why? Because OFCCP and the higher education community cannot agree on a fundamental compliance point – the definition of an “establishment.”

“Establishment” is not defined in OFCCP’s regulations. Case law, OFCCP’s compliance manual, trial testimony of a Regional Director, and the agency’s long-standing practice, however, define an “establishment” as a brick and mortar building. Curiously, OFCCP has repeatedly, but not consistently, taken a different position when it comes to higher education contractors. According to OFCCP practice, typically an “establishment” in the context of a college or university is the entire campus.

Last Spring, OFCCP Director Craig Leen promised to issue technical assistance guidance (TAG) for colleges and universities covering a range of issues, including the scope of a higher education AAP. It appears, OFCCP has abandoned – or at least delayed – its promise of a comprehensive TAG in favor of FAQs for Campus-Like Settings generally. These FAQs apply more broadly than just higher education. The FAQs apply to any contractor with multiple buildings in a campus-type setting.

While the sub-regulatory guidance provided in the FAQs is generally phrased in the permissive – “OFCCP may consider” or “Contractors may determine,” the guidance sets forth several factors contractors “should” consider when determining whether multiple buildings “should” be in a single AAP (FAQ 4). Such factors include:

  • What is the function of the building, and how do the employees in the building interact with employees in other buildings?
  • Are employees across different buildings part of the same organizational unit, such as department, division, section, branch, group, job family, or project team?
  • Are the hiring, compensation, and other personnel decisions handled separately at each building or are those functions consolidated across the entire contractor or across multiple buildings on one campus?
  • Does each building handle its own recruitment or is that function consolidated across multiple buildings?
  • Do the buildings recruit from the same labor market or recruiting area?
  • To what extent are other human resources and Equal Employment Opportunity compliance functions operationally distinct for each building or group of buildings?
  • To what extent do certain employees perform work functions across various buildings?

OFCCP does not cite to any authority, legal or otherwise, to support these factors or the definition of an “establishment” as a group of buildings located in the same area. These FAQs are sub-regulatory guidance and, as such, it does not bind the contractor community or OFCCP. The structure and scope of an AAP is a critically important compliance decision. Contractors should certainly consider the various options available for structuring their AAPs – grouping multiple buildings in a single AAP per these FAQs; an AAP per building based on OFCCP’s long standing practice; or a Functional AAP per the regulations (41 CFR 60-2.1(d)(4)).  Specifically, in our experience involving higher education institutions, there have been limited instances in which OFCCP has accepted AAPs based on sub-campus groupings by departments or functions. OFCCP, however, generally expects that a single, campus-wide AAP will be prepared for colleges and universities, notwithstanding the lack of specific legal authority compelling such an AAP structure.

Please contact your FortneyScott attorney or email us at info@fortneyscott.com for more information about how the new OFCCP guidance applies to your AAP design and related matters.

 

EEOC to Begin Contacting Employers Regarding EEO-1 Component 2 Submissions

With only three weeks remaining for employers to submit their EEO-1 Component 2 compensation data, the EEOC will begin reaching out to employers to remind them of their filing obligations. To date, only 13.4% of employers have provided the required information through the EEOC’s online portal, meaning approximately 37,000 employers are yet to submit their data. As a result, the contractor responsible for the agency’s data collection will begin calling any employers which have not yet submitted data, registered with the online portal, or requested assistance from the agency to ensure that these businesses are aware of the approaching September 30th deadline.

As the Component 2 filing date approaches, we will continue to update you.

Employers Face Issues Submitting EEO-1 Component 2 Reports

As you are likely aware, employers with 100 or more employees are required to submit EEO-1 Component 2 W-2 pay and hours worked data for 2017 and 2018 by September 30, 2019.  Employers must submit their Component 2 Reports through the Component 2 EEO-1 Online Filing System which is separate from the EEO-1 Component 1 portal.  The Component 2 Portal run by the EEOC’s contractor, NORC, provides two methods to report 2017 and 2018 pay and hours worked data either by: (1) manually entering data into an online form, or (2) uploading data via a CSV data file consistent with the EEOC’s specifications.  However, with the submission deadline quickly approaching, some employers are reporting issues with the Online Filing System.

First, we have received reports that uploading data through the Online Filing System is taking significantly longer than expected.  We anticipate that this issue will only be exacerbated by increased traffic in the days leading up to the September 30th deadline.  Accordingly, employers should plan ahead when submitting their data, and make sure that they allow sufficient time for the data upload to be completed.

Second, employers are not receiving confirmation that their data was submitted.  As a result, we recommend that employers take a screenshot of the submission page with the date and time.  Furthermore, as employers will also be unable to view or download draft or final Component 2 Reports once they are uploaded to the Online Filing System, employers should retain an exact copy of the uploaded data for their records.

As the Component 2 filing date approaches, we will continue to update you.

New DOL Opinion Letter on Compensability of Sleep Time for Truck Drivers

The U.S. Department of Labor issued an opinion letter, FLSA2019-10, that provides new guidance on the compensability of time that a driver spends in a truck’s sleeper berth while otherwise relieved from duty. In FLSA2019-10, DOL’s Wage and Hour Division (“WHD”) follows a straightforward reading of the plain language of the applicable regulation, concluding that the time during which drivers are relieved of all duties and permitted to sleep in a sleeper berth is presumptively non-working time that is not compensable.

However, where a driver who retires to a sleeping berth is unable to use the time effectively for his or her own purposes, time spent in the sleeper berth will be compensable. For example, a driver who is required to remain on-call or do paperwork in the sleeping berth may be unable to effectively sleep or engage in personal activities; in such cases, the time is compensable for hours worked.

This new opinion letter effectively repeals WHD’s prior opinion letters on this issue. Previously, WHD concluded that while sleeping time may be excluded from hours worked where “adequate facilities” were furnished, only up to 8 hours of sleeping time could be excluded on a trip that is 24 hours or longer, and no sleeping time may be excluded for trips under 24 hours.

Please contact David Fortney (dfortney@fortneyscott.com), or the FortneyScott attorney with whom you work, for additional information.

Labor Secretary Resigns

Secretary of Labor, Alex Acosta resigned from his post amid pressure from the public due to the plea deal he negotiated with Jeffery Epstein while U.S. Attorney in the Southern District of Florida. In a press conference in the White House Rose Garden, President Trump announced that the Deputy Secretary of Labor, Patrick Pizzella will assume the role of Acting Secretary of Labor starting July 19, 2019. Pizzella was confirmed by the Senate in a 50-48 vote.

FortneyScott will continue to monitor any leadership changes within the DOL.