OFCCP Issues Three New Directives

Today, the U.S. Department of Labor’s Office of Federal Contract Compliance Programs (OFCCP) made a significant announcement affecting federal contractors.  First, under a new directive, DIR 2019-01, OFCCP rescinded Active Case Enforcement for compliance reviews.  Second, DIR 2019-02 outlines new Early Resolution Procedures which will offer a five-year break from agency audits in exchange for reporting certain employment data to resolve audits.  Finally, OFCCP officially stated that it will be issuing opinion letters that offer compliance guidance.

The new DIR 2019-02, Early Resolution Procedures (ERP), offers five years of respite from audits to contractors who are settling bias claims with the OFCCP, in exchange for contractors reporting hiring, pay, and other employment data to the agency.  The ERP provides the mechanism by which OFCCP staff may resolve violations and work with the contractor to develop corporate-wide corrective actions.

  • For nonmaterial violations found, which can be corrected immediately during an audit, the OFCCP can resolve the evaluation during the desk audit with compliance assistance resulting in the issuing of a closure letter referencing the nonmaterial violations and their remedies.
  • For material violations not involving discrimination and for material violations involving discrimination found during an audit OFCCP will agree to a five-year moratorium on audits at that establishment if the contractor agrees to an Early Resolution Conciliation Agreement with Corporate-Wide Corrective Action (ERCA). The ERCA requires the contractor to review all or a negotiated subset of its establishments for violations similar to those found in the initial audit and to implement of any corrective action including job offers. The ERCA also requires the contractor to submit progress reports on the results of its analysis, findings, corrective actions and all supporting documents reasonably related to the review for up to five years.

OFCCP also issued DIR 2019-03 in which it announced that it will begin issuing opinion letters, similar to the Labor Department’s Wage & Hour Division, offering guidance on how contractors can comply with their affirmative action and nondiscrimination obligations based on specific factual scenarios.  It also outlined plans to enhance its current Help Desk capabilities.  The Directive also states that OFCCP may consider whether a contractor’s actions are consistent with an opinion letter, FAQ, or help desk advice when considering whether to cite the contractor for a violation.

Finally, the agency issued Directive 2019-01, rescinding Active Case Enforcement (ACE), DIR 2011-01.  According to Directive 2019-01, the agency’s recent directives on Transparency in OFCCP Compliance Activities, DIR 2018-09; Affirmative Action Program Verification Initiative, DIR 2018-07; and Focused Reviews, DIR 2018-04 have embedded the most effective parts of ACE and ACM into its standard operating policies and procedures, so the ACE directive is no longer necessary.

BOTTOM LINE: While the new directives provide welcome new ways to resolve issues with the OFCCP, the question will be whether the “new” OFCCP will be any more reasonable in resolving those issues than the “old” OFCCP.  How these directives will be implemented remains to be seen.  The attorneys at FortneyScott will monitor implementation of the new directives and keep you informed of on ongoing developments. If you have any questions, contact your FortneyScott attorney.

 

Federal Contractors Stay Alert!

Paid Leave

On and after January 1, 2017, new solicitations and resulting covered
contracts (mainly those under the Service Contract Act and Davis-Bacon Act) can
include a clause obligating contractors to provide 56 hours of paid sick leave
to employees working on covered contracts.  Leave will be accrued at the rate of 1 hour for
every 30 hours worked.  The new paid
leave requirements do not apply to pre-existing contracts that are in effect in
2017.  The required leave must be in
addition to
vacation time provided under a Wage Determination.

As the Paid Leave rule is the product of an Executive Order (E.O.13706),
it can be rescinded by President Trump, should he decide to do so.  However, there is ambiguity about his Administration’s
plans for paid leave, in general, and whether this form of Paid Leave is part
of those plans.

Pay Transparency

Although the
most onerous elements of the “blacklisting” regulations were enjoined, the new
paycheck transparency requirements under the “Fair Pay and Safe Workplaces”
Executive Order (E.O. 13673) were NOT enjoined and will be effective beginning
January 1, 2017. The requirements will apply to all new federal
procurement contracts and subcontracts of $500,000 or more. Covered
contractors must inform employees of hours worked, overtime hours (for
non-exempt employees) by workweek and totaled for pay period, pay, deductions,
and must identify exempt employees and independent contractors.  Contractors already complying with state laws
with comparable disclosure requirements (such as California and D.C.), are
considered in compliance with the new federal pay transparency standard.

 “Fair
Pay and Safe Workplaces” Executive Order is also subject to rescission and is
likely to be acted on.  However, the injunction
may delay executive action.

If you have
any questions, please contact Burt Fishman (bjfishman@fortneyscott.com) or your FortneyScott
lawyer.  We will be keeping you apprised
of any new developments.

Supreme Court Has the Opportunity to Narrow Affirmative Action

The Supreme Court heard contentious arguments this morning in the case of Fisher v. The University of Texas at Austin, Case No. 14-981 (Dec. 9, 2015) (“Fisher II”). Before an eight-Justice panel (due to a recusal by Justice Elena Kagan), the parties addressed whether the use of racial preferences in undergraduate admissions decisions was valid under the Court?s decisions interpreting the Equal Protection Clause of the Fourteenth Amendment. During the 90-minute hearing, the Court and the counsel engaged in a heated exchange over four possible outcomes: (1) whether the case should be affirmed; (2) whether it should be remanded for further review; (3) whether any affirmative action admissions program is constitutional; or (4) whether this particular program is constitutional. As U.S. Solicitor General Donald B. Verrilli, Jr. noted, this ruling may have significant implications outside higher education, especially for affirmative action in hiring by private employers.

This is the second time the Supreme Court has heard oral argument in this case. In Fisher I, The Court analyzed whether the scope and application of the University?s affirmation action admission policy were sufficiently, narrowly tailored to avoid violating the Fourteenth Amendment?s protections. At that time, the Court remanded the case, ruling that the Fifth Circuit failed to adequately apply the strict scrutiny test in its decision endorsing the University?s admissions policy.

Today?s oral argument in Fisher II addressed the issue of whether race could be used as a factor in a holistic review of an applicant?s qualifications for admissions, as part of an effort to achieve racial diversity. Several Justices voiced hostile opposition to the University?s position, arguing that race should never be factor in the admissions process because it would be difficult to determine when race becomes the deciding factor. On the other hand, other Justices suggested that to meet the standard articulated by the Court in Grutter v. Bollinger, requiring a showing of a compelling need for diversity, the University must use race as a factor. Although concern was continually raised throughout the hearing that there was insufficient evidence to reach a decision, several Justices indicated that a remand was unlikely when the University could not point to any additional evidence that could impact the current facts.

Neither of the oral arguments presented a clearly dominant position; thus, we must wait and see how affirmative action admissions policies will fare, post-Fisher II. The final opinion is expected at the end of the Court?s term in late June 2016. If you have questions regarding this case or would like a copy of the transcript, please contact your FortneyScott attorney.

Trump Will Name Andy Puzder as Secretary of Labor

It was announced on December 8 that President-elect, Donald Trump, will name Andy Puzder as the new Secretary of Labor.  Andy Puzder is currently the CEO of CKE Restaurants, which is the parent company to burger chains Carl’s, Jr. and Hardee’s. 

Puzder has been a long-standing vocal opponent of many of President Obama’s employment initiatives including the controversial overtime rule.  He has also testified against the NLRB’s joint employer standard and he has voiced strong opposition to an increase in the minimum wage to $15.  He is a lawyer and co-author of a book entitled, Job Creation: How It Really Works and Why Government Doesn’t Understand It.

BREAKING NEWS: DOL Appeals Ruling of Nationwide Injunction on Overtime Regs

The U.S. Department of Labor filed a Notice of Appeal in the 5th Circuit on December 1, 2016.  The DOL is appealing the federal judge Amos Mazzant’s  ruling in State of Nevada v. U.S. Department of Labor
(E.D. Texas) granting a nationwide injunction enjoining the U.S. Department of
Labor’s (DOL’s) new overtime regulations scheduled to take effect on December
1, 2016.

Proposed FAR Rule to Permit and Encourage Effective Communication Between Government and Industry

On November 29, 2016, the Federal Acquisition Regulation
(FAR) Council issued a proposed rule to carry out the requirements of Section
887 of the National Defense Authorization Act and make clear that “agency
acquisition personnel are permitted and encouraged to engage in responsible and
constructive exchanges with industry, so long as those exchanges are consistent
with existing law and regulation and do not promote an unfair competitive
advantage to particular firms.”  81 Fed.
Reg.  85914. 

In issuing the proposed rule, the FAR Council is seeking
comments on the parameters for such exchanges – which phases of the federal
acquisition process would benefit from more exchanges, which currently pose
barriers to effective communication, and whether greater discussions with
offerors would benefit competition in high dollar acquisitions.  As members of the public you can submit
comments on this proposed rule and the questions posed by the FAR Council;
comments are due on or before January 30, 2017.

TAKEAWAYS:

  • While the proposed rule encourages exchanges
    between government and industry, there are statutory and regulatory provisions
    that limit when and under what circumstances you can engage in communications
    with government personnel about government contracting matters.
  • There also are rules that prohibit you, during
    the conduct of a Federal procurement, from seeking, using or disclosing certain
    information that would be considered procurement sensitive.
  • It is important to know these rules before you attempt
    to communicate with the Government and other Industry members during the
    conduct of a Federal procurement.

 
If
you have questions about the Federal government contracting rules on the communications
and information exchanges, including questions about how to properly raise
concerns regarding a particular procurement, contact Susan Ebner or your FS
counsel.

BREAKING NEWS: Nationwide Injunction Issued on OT Regs by Texas Judge

In Brief:

  • A Federal judge in
    Texas granted a nationwide injunction blocking
    the Department of Labor’s new overtime rule from going into effect as scheduled
    on December 1, 2016
  • The drastic
    increase to the salary-level threshold unlawfully circumvented Congressional
    intent and created a “de factor salary-only test” for overtime eligibility
  • Judge Mazzant’s
    decision completes a trifecta of rulings in Texas federal courts in the past 30
    days blocking the implementation of controversial labor rules issued by the
    Obama administration (earlier rulings enjoined the Persuader and Fair Pay and
    Safe Workplaces (“blacklisting”) regulations)


BREAKING NEWS: Persuader Rules Permanently Blocked by Texas Judge

As mentioned in a previous posting, a preliminary injunction was issued for the implementation of the Persuader rules by a Texas federal judge in June.  On Wednesday, November 16, this same judge issued an order permanently blocking the U.S. Department of Labor from enforcing the new Persuader rules. 

The Persuader rules would have required employers, and their attorneys
and consultants, to file with DOL, for public disclosure, all agreements and
all payments to attorneys and consultants for providing advice and assistance
for the purpose of maintaining nonunion status. The new Rule would have  reversed 57 years of law that law firm and consultant
assistance to employers on how lawfully to maintain nonunion status was exempt
from such reporting under the “legal advice” exception of the Labor Management
Reporting & Disclosure Act of 1959. 
 

Judge Grants Preliminary Injunction Blocking Implementation of Fair Pay and Safe Workplaces Rule

On October 24, 2016, Judge Marcia A. Crone issued a
nationwide preliminary
injunction
in Associated Builders and
Contractors of Southeast Texas v. Rung
(E.D. Texas, No 1:16-CV-425) blocking
the implementation of the Fair Pay and Safe Workplaces final rule. Specifically,
the injunction blocks the implementation of the rule’s requirements that contractors
self-disclose labor law “violations” and that they eliminate provisions in
their arbitration agreements restricting lawsuits for Title VII or sexual
assault allegations. The injunction does not, however, affect the Executive
Order’s “paycheck transparency” requirements, which will take effect on January
1, 2017.

For federal contractors, the injunction was granted in the
nick of time-just one day before the self-disclosure and arbitration
requirements were scheduled to take effect.

The preliminary injunction will last until a final decision
is reached in the case, although the government will likely ask the judge to
reconsider her decision and ultimately appeal to the federal Court of Appeals
for the Fifth Circuit and possibly the U.S. Supreme Court. If the injunction is
upheld, it remains to be seen whether the government will attempt to revise and
significantly reduce the rule to address the legal and constitutional shortcomings
identified in the court’s ruling.

Finding that the plaintiff contractors demonstrated both a
“substantial likelihood of success on the merits of their case” and risk of irreparable
injury, the court heaped derision on the Executive Order, final rule, and DOL
guidance as having:

  • Imposed “complex, cumbersome, and costly
    requirements . . . which hamper efficiency without quantifiable benefits;”
  • Violated contractors’ First Amendment rights by
    forcing them to “publicly condemn” themselves for allegations that may
    ultimately have no merit;
  • Violated contractors’ due process rights by
    forcing them to report and defend against non-final agency allegations without
    a hearing; and
  • Violated the Federal Arbitration Act.

The court repudiated the new class of reportable
“administrative merits determinations” as “nothing more than allegations of
fault asserted by agency employees and [which] do not constitute final agency
findings of any violation at all.”

The court’s injunction is the latest by a Texas federal district
court barring the implementation of a controversial labor regulation. In June,
the Northern District of Texas blocked the DOL’s “persuader rule.” A challenge
to the DOL’s new overtime regulations is currently pending in the Eastern
District of Texas.

If you have any further questions, please contact your FortneyScott attorney, or e-mail us at info@fortneyscott.com

OFCCP Director Patricia Shiu to Leave Agency

Patricia A. Shiu, Director of the U.S. Department of Labor?s Office of Federal Contract Compliance Programs, will be leaving the agency, according to information announced today during a public meeting held by the U.S. Equal Employment Opportunity Commission. Director Shiu was appointed as Director of OFCCP in 2009 by the Obama Administration.

The announcement of Director Shiu?s departure comes shortly after the EEOC announced that David Lopez, general counsel of the EEOC since 2010, would be leaving the agency in early December. Mr. Lopez leaves as the longest-serving general counsel in the history of the EEOC.