OFCCP issues FAQs on Section 503 focused reviews

On Friday, March 8, OFCCP announced its Section 503 Focused Review Landing Page. The landing page includes information on the Section 503 regulations, the focused review directive, and resources on reasonable accommodations as well as best practices.

Also on that page, OFCCP published long-awaited FAQs on the agency’s Section 503 focused reviews. Three of the most interesting FAQs are:

4. The Section 503 focused review scheduling letter requests our Executive Order 11246 AAP as well. Will OFCCP review the Executive Order (EO) AAP during a 503 focused review?

No. OFCCP will not conduct a review of the Executive Order Affirmative Action Program (AAP) during a Section 503 focused review. While OFCCP will request the EO AAP as part of the Section 503 focused review, the EO AAP will only be used to help the OFCCP compliance officer get a clearer picture of the contractor’s organizational structure, confirm Section 503 job groups, and understand generally how the Section 503 compliance strategies fit with the contractor’s other affirmative efforts. OFCCP will not analyze data contained in the EO AAP to look for discrimination based on sex or race and ethnicity. If elements of the EO AAP document are missing or insufficient on their face, OFCCP will note those issues and take appropriate actions, beginning with technical assistance, to bring the contractor into compliance. For example, if the EO AAP job group analysis does not include a list of the job titles that comprise each job group, OFCCP will provide technical assistance and require the contractor to submit the missing information, which will then be noted in the closure notice.

9. Will OFCCP analyze personnel activity data during a Section 503 focused review?

OFCCP will not require the submission of personnel activity data other than the data described in 60‐741.44(k) at the onset of a Section 503 focused review. However, during the course of the review, OFCCP may request and review this information. OFCCP may request compensation and promotion data for individuals who identified as having a disability, are known to have a disability, and/or employees who requested a reasonable accommodation. Additionally, based on a review of data in response to 60‐741.44(k), OFCCP may request additional applicant flow data for job groups that had applicants with disabilities.

10. Will focused reviews take place at all contractor facilities?

The first round of Section 503 focused reviews will take place at contractors’ corporate headquarters locations. OFCCP will evaluate whether it wishes to schedule other establishments for focused reviews in the future.

Wrap Up

Now that OFCCP has provided its compliance assistance materials on Section 503 focused reviews, FortneyScott understands that the CSALs will be posted imminently.

If you have any questions, please contact your FortneyScott attorney.

U.S. Department of Labor Issues New Overtime Proposal

On Thursday, March 7, 2019 the U.S. Department of Labor (DOL) posted on its website a Notice of Proposed Rulemaking (NPRM) for its new overtime rule. The proposal would raise the salary threshold for employees to be exempt from overtime from the current $455 per week ($23,660 per year) to $679 per week ($35,308 per year).

Other key aspects of the proposal include:

  • Raising the highly compensated employee (HCE) test from $100,000 to $147,414 of which $679 must be paid weekly on a salary or fee basis
  • Inviting public notice and comment to consider updating the standard salary level and HCE total annual compensation threshold every four years through rulemaking
  • Allowing employers to satisfy up to 10 percent of the salary threshold amount of $35,308 by the payment of nondiscretionary bonuses, incentives, or commissions, paid annually or more frequently (although this will not apply to HCEs)

The salary threshold is substantially lower than the salary threshold of $47,476 proposed by the Obama Administration and enjoined by the federal district court in the Eastern District of Texas prior to its effective date. The new proposal would rescind the 2016 Overtime Rule. The proposal does not make any changes the “duties” test which many employers had hoped it would.

Comments will be due 60 days after the NPRM is published in the Federal Register. FortneyScott will keep you informed on any updates made by the DOL.  Contact your FortneyScott attorney if you have any questions or would like to file comments on the proposal.

Federal District Court Reinstates EEO-1 Pay Data Report

On Monday, February 4, 2019, the Federal District Court for the District of Columbia ordered that the EEOC’s EEO-1 pay data collection report be immediately reinstated.

The court ordered the Office of Management and Budget (OMB) to immediately lift its stay on the EEOC’s pay data collection report (known as Component 2), saying the decision to implement the stay was “arbitrary and capricious.”  The effect of this ruling is to permit the EEOC to begin collecting pay data at once.  It remains to be seen if this order is immediately carried out.

In a decision focused on the nuances of administrative law, Judge Tanya S. Chutkan sternly rejected OMB’s arguments that it was authorized to issue its stay on the grounds that changes in EEOC’s formatting requirement for the new pay report were burdensome on employers. Granting summary judgment for the plaintiffs, National Women’s Law Center and the Labor Council for Latin American Advancement, the court said that while there may be times when formatting changes could be considered burdensome, this situation was not it.

The ruling also rejected (1) OMB’s challenge to the plaintiffs’ standing to sue because they could not show the stay caused them any harm and (2) that the OMB’s decision to stay implementation was not reviewable because it was not a “final agency action.” The court found that the decision to stay the data collection was itself a harm and that it was reviewable.

The court concluded that because OMB’s action in staying EEOC’s collection of pay data “was arbitrary and capricious” and “totally lacked the reasoned explanation that the [Administrative Procedures Act] requires,” an immediate reinstatement was ordered.

Takeaways for employers: 

Although the court ordered the immediate implementation of EEOC’s Component 2 pay data collection, it is all but certain that OMB will appeal the decision and seek a stay of the court’s order pending resolution of the case.  In addition, once it has a quorum of Republican Commissioners, expect the EEOC to revise or eliminate the requirement to collect pay data. Janet Dhillon has been nominated as Chair and would be the second Republican on the EEOC; however, it is uncertain as to when the Senate will confirm her. Until she is confirmed, the EEOC does not have a quorum and cannot act.  This ruling may create an incentive for the Senate to act on her nomination promptly.

FortneyScott will keep you informed on how this issue will impact you.

Federal Judge Reinstates EEOC’s Pay Data Collection

On March 4, 2019 U. S. District Court of the District of Columbia ruled that the EEO-1 pay data collection known as Component 2 should go into effect immediately, saying the Office of Management and Budget’s stay of the pay data collection was “arbitrary and capricious.”

Click here for the DC District Court’s opinion.

FortneyScott will keep you informed with any developments to this story.



DOL & EEOC Nominees Nearing Confirmation

The Senate Committee on Health, Education, Labor & Pensions (HELP Committee) moved to send the nominations of Scott Mugno (OSHA), Cheryl Stanton (Wage & Hour), and Janet Dhillon (Chair, EEOC) to the Senate floor in a party line vote.  In the recent past, clearing this hurdle has not always led to quick approval by the Senate.

Nonetheless and depending on the Senate’s legislative schedule, political leaders in these important employment-related agencies may soon be in place. The HELP Committee’s action comes in the wake of growing criticism about the overall lack of confirmed political leadership at DOL and EEOC.

FortneyScott will continue to monitor any updates related to nominations at employment based agencies.

Rulings Establish Precedent, but Judges Aren’t Forever

In a surprisingly narrow (albeit witty) per curiam decision, the Supreme Court vacated a ruling of the 9th Circuit that held it was impermissible under the Equal Pay Act (EPA) to determine a salary differential solely on the basis of prior salary. Fresno County Superintendent of Schools v. Aileen Rizo.

In the original case, the District Court ruled that under the Equal Pay Act “a factor other than sex” included using prior salary to determine pay.  On appeal – and on re-hearing by an en banc panel of 11 judges – the 9th Circuit held that relying on such a factor could not be sustained under the EPA.  Although all the judges on the panel agreed that Rizo’s case should go forward, the court splintered in arriving at a rationale for the decision.  The only opinion that garnered as many as 5 votes held that reliance on prior pay was wrong because it perpetuated sex-based pay gaps when women change jobs.  However, that opinion was written and joined by the late Stephen Reinhardt, who died before the decision could be issued.

That unfortunate event gave the Supreme Court an opportunity to vacate the case without addressing the vexing issue of the meaning of the EPA – an issue that has split a number of appellate circuits and which seems ripe for Supreme Court review.  The grounds on which the Supreme Court’s ruling was based was simply that Judge Reinhardt could not be counted among those who support the 9th Circuit’s ruling because he died before the decision was issued.  This was an impermissible exercise of judicial power from beyond the grave.  As an unidentified wag on the High Court wrote: “federal judges are appointed for life, not for eternity.”

The 9th Circuit will likely appoint a new en banc panel and issue on new ruling, perhaps on similar grounds.  In the meantime, the Supreme Court can continue to evade an important ruling on the reach and meaning of the Equal Pay Act at a time when efforts to amend it are before the Congress – again.

OFCCP to Issue 2019 CSALs; Focused Reviews Are Announced

The OFCCP has just announced that they are, “on schedule to post its next Corporate Scheduling Announcement List (CSAL) in OFCCP’s FOIA Library in mid-to-late March 2019.”  As a result, OFCCP will soon be issuing notices to 3,500 federal contractors in the next month.  In the past, CSALs, which are alerts from OFCCP informing contractors that their establishment has been selected for an audit, were mailed directly to the contractor. Now the agency will post the CSALs on its website with contractors responsible for learning on their own if they are to be audited.

The Agency also announced that 500 of the CSALs would be for a new kind of targeted compliance evaluation – a focused review.  These focused reviews are aimed at ensuring compliance not only with Executive Order 11246 but particularly with Section 503 of the Rehabilitation Act and the Vietnam Era Veterans’ Readjustment Assistance Act (“VEVRAA”), that is, the laws designed, in large part, to protect individuals with disabilities.  The focused review will always include on-site interviews with compliance managers and protected employees, as well as reviewing recruiting, hiring, and accommodations data.  To view a copy of the scheduling letter that will be used for OFCCP’s focused reviews, click here.

Register here to join a complimentary FortneyScott “Lunch & Learn” webinar: Preparing for OFCCP Focused Reviews, to be presented on February 27, 2019 at 12 noon, EST.

There will also be changes to the traditional compliance review.  Once the scheduling letters are received, contractors will have 30 days in which to submit their Affirmative Action Plans (AAPs) and the other items required by the scheduling letter and itemized listing.  In order to facilitate a timely submission, the assigned compliance officer will contact the contractor within 15 days of the contractor’s receipt of the Scheduling Letter to offer technical assistance.

OFCCP will grant a one-time 30-day extension for submission of supporting data related to the EO 11246, VEVRAA and Section 503 AAPs, provided the contractor:

  1. Requests the extension prior to the initial 30-day due date for the AAPs; and
  2. Timely submits the basic EO 11246, Section 503 and VEVRAA AAPs within the 30-day period after receiving the Scheduling Letter and Itemized Listing.

Failure to submit AAPs and/or supporting data timely, with approved extensions, will result in an immediate Show Cause Notice.

Please contact your FortneyScott attorney or send an email to info@fortneyscott.com for more information on this new extension policy or for assistance in preparing AAPs and responses to Scheduling Letters.  As more information about the focused reviews becomes available, it will be posted on this site.

New OFCCP Directive Establishes Voluntary Enterprise-wide Program

The OFCCP issued its latest directive, Directive 2019-04, on February 13, 2019, outlining its new Voluntary Enterprise-wide Review Program (VERP). The new program is designed to facilitate and confirm “enterprise-wide (corporate-wide) compliance by high-performing contractors and those aspiring to reach the top through individualized, corporate-wide compliance assistance.”

Contractors selected to participate in the VERP will be removed from the pool of contractors scheduled for compliance evaluations. There will be two-tiers of contractors: the top tier will include top-performing contractors with corporate-wide Diversity and Inclusion programs; the second tier will be contractors who are OFCCP compliant but need individualized compliance assistance to become top performers.  Criteria for the top tier will be more stringent.

To participate in the program, contractors must demonstrate that they meet established criteria that verify not only basic compliance with OFCCP’s requirements, but a demonstrated commitment to and application of successful equal employment opportunity programs on a corporate‐wide basis. A “top-tier” contractor can remain in the program for a period of five years while those at the second level can remain in the program for three years and receive individualized compliance assistance to become a top performer.  Any contractor selected must agree during that period to provide periodic reports and information to OFCCP through which OFCCP can confirm the contractor maintains a workforce free of discrimination or other material violations and also agree that OFCCP retains the right to conduct individual and/or third party complaint investigations to assure “the contractor abides by all terms of the agreement.”  It is not yet clear how OFCCP will make the distinction between “top-tier” and “second level” contractors.

Beginning in FY 2020, applicants will apply electronically online. They will then be subject to the OFCCP corporate headquarters compliance review and compliance reviews of other establishments. Contractors who do not qualify for the program will be returned to the pool of contractors for audit.

OFCCP states that this directive enables the agency to “blend its compliance evaluation and compliance assistance activities to work with high-performing contractors toward a mutual goal of sustained, enterprise-wide (corporate-wide) compliance, outside OFCCP’s neutral establishment-based scheduling process” as well as complementing the goals in its Early Resolutions Procedures.

House Education & Labor Committee Hosts a Joint Subcomittee Hearing on the Proposed Paycheck Fairness Act

Another important plank in the Democrats’ legislative agenda was given an early hearing on Wednesday, February 13, 2019.  A joint hearing on the proposed Paycheck Fairness Act (H.R. 7, S. 270) was held at that time by the House Subcommittees on Civil Rights and Human Services and on Workforce Protections.  An earlier version of Paycheck Fairness Act was passed by the House in 2008 and 2010, but never passed the Senate.  A similar fate is all but certain in this instance, but one purpose of offering the Act now was to set an agenda for the future.

The latest version of Paycheck Fairness Act would amend the Equal Pay Act of 1963 by substantially limiting the affirmative defenses, increasing protections from retaliation, prohibiting employers from asking for or using prior salary to set current pay, and allowing recovery of compensation and punitive damages. In addition, like its predecessor proposals, it instructs EEOC to collect pay data from employers and also to collect “compensation data and other employment-related data (including hiring, termination, and promotion data) disaggregated by the sex, race, and national origin of employees.” OFCCP is again directed to implement a similar survey to be given to half of its nonconstruction contractor establishments each year. The bill also instructs OFCCP not to use multiple regression or anecdotal evidence in its compensation discrimination cases. It further directs the Department of Labor to establish negotiation training for girls and women and a national pay equity in the workplace award among other salary related requirements.

The hearing included testimony from Rep. Rosa L. DeLauro (D-CT), a co-sponsor of the bill; Rep. Eleanor Holmes Norton (D-DC); and Rep. Don S. Breyer, Jr. (D-Va.); Fatima Goss Graves, CEO and President of the National Women’s Law Center; Camille Olson, Partner at Seyfarth Shaw; Kristin Rowe-Finkbeiner, CEO of Moms Rising, and Jenny Yang, former EEOC Chair and Partner of Working Ideal.

As noted, the bill will in all likelihood pass the House but, as in the past, will fail in the Senate at this time. Click here for written transcripts of the witnesses’ testimony and video of the joint subcommittee hearing.

OFCCP Focused Reviews of Accommodations Compliance Announced

OFCCP Director Craig Leen announced that the agency will be posting 500 Corporate Scheduling Announcement List (CSALs) on its website “in the spring” that will be for “focused reviews” of contractors’ Section 503 and VEVRAA compliance. The focused reviews will aim corporate-wide as opposed to establishment compliance.  FortneyScott has learned that OFCCP recently received OMB approval for a revised scheduling letter for these focused Section 503 reviews and a copy of that scheduling letter is here. The focused review CSALs will be part of the 3500 CSALs to be issued this spring.

Contractors should review the Section 503 focused review scheduling letter now so that they can be prepared if they are on the CSAL list. Remember that contractors will not be receiving CSAL letters but rather will have to check the OFCCP FOIA Library webpage.

The focused review CSAL’s are the product of OFCCP’s Directive 2018-04, issued on August 10, 2018, which stated that OFCCP will conduct focused reviews of contractor compliance with (1) Executive Order 11246, (2) Section 503 of the Rehabilitation Act of 1973 (Section 503), and (3) the Vietnam Era Veterans’ Readjustment Assistance Act of 1974 (VEVRAA). The focused reviews will be based on onsite visits to perform a comprehensive review of, for example, the Self-ID and accommodations process for affected applicants and employees. OFCCP pledges to provide a “standard protocol” for the reviews to be published in FAQs prior to the posting of the next scheduling list.

For more information on focused reviews and the coming CSAL notices contact your FortneyScott attorney.