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OFCCP: The New Compliance Landscape

The everchanging OFCCP compliance landscape can be difficult to navigate on your own, particularly when it comes to onboarding and individuals with disabilities and military veterans. One of the more recent changes includes “focused reviews”, deep dive audits into employers’ hiring and promotion practices for these specific groups. RecruitMilitary and Fortney Scott, Attorneys at Law are here to bridge the gap. Join our free live webinar On September 19 from 2:00-3:00 pm ET and learn about:

  • How the new rules and important changes are being
    enforced by OFCCP, and what can be done now to protect your organization
  • Best practices to “move the needle” on employing individuals with disabilities and veterans
  • What your organization can do better, more strategically and more efficiently
    to ensure compliance
  • And more.

CLICK HERE to register for the event.

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.

 

Breaking OFCCP News

Directive (DIR) 2018-08 addresses transparency by the OFCCP in all stages of compliance activities to help contractors comply with their obligations and understand their expectations during a compliance evaluation. The Directive instructs OFCCP staff, from the regional level to the national office, to take measures to be as transparent as possible during each stage of the evaluations, beginning with the scheduling and ending with the conciliation efforts.  For a copy of this Directive, click here.

Directive (DIR) 2018-09 reveals a plan to implement an Ombud Service in the OFCCP’s national office to facilitate the “fair and equitable resolution” of specific types of concerns raised by external stakeholders, which would include federal contractors and subcontractors and law firms. This plan stems from feedback received by the various stakeholders during the past year and is an effort by the OFCCP to increase transparency and improve communication. For a copy of this Directive, click here.

OFCCP Issues CSALs & New Extension Requirements

On September 7, 2018, OFCCP announced that it mailed 750 new Corporate Scheduling Announcement Letters (“CSALs”) to federal contractors as a supplement to the Fiscal Year 2018 Scheduling List released on March 19, 2018.  The agency stated that the CSALs are a “45-day” courtesy notice prior to sending the OMB-approved scheduling letters. 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. Therefore, according to OFCCP, “all contractors on the current list are receiving a minimum of 75 days advance notice to have their AAPs ready.”

In a change outlined in an FAQ entitled “Requesting Extensions to Submit AAP(s) and Supporting Data,”

OFCCP reinforced that contractors are obligated to submit their EO 11246, VEVRAA and Section 503 AAPs and supporting data within 30 days of the receipt of 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 and explain allowable extensions for the AAPs and supporting data.

With respect to allowable extensions, OFCCP will grant a one-time 30-day extension for 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.

The FAQ makes clear that OFCCP will generally not allow extensions for the submission of EO 11246, Section 503 and VEVRAA AAPs, or allow extensions for supporting data if requested after the submission date for the AAPs has passed although it reserves discretion to grant such extensions in extraordinary circumstances.  Failure to submit AAPs and/or supporting data timely, with approved extensions, will result in an immediate Show Cause Notice.

In a separate release, the OFCCP provided an updated version of its Methodology for Developing the Supplement to the FY 2018 Supply & Service Scheduling List.

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.

OFCCP Issues New Compensation, Recognition and Certification Directives

On August 24, 2018, OFCCP issued three new Directives, the most important of which rescinded the Obama Administration’s Directive 307, “Procedures for Reviewing Contractor Compensation Systems and Practices.”  The agency also issued Directives creating a program to certify that contractors have prepared an Affirmative Action Plan (AAP) and are in compliance with federal affirmative action program requirements, and an initiative establishing a recognition program for contractors with high-quality and high-performing compliance programs and initiatives.

According to the agency, these Directives are part of the Department’s efforts to maximize the effectiveness of compliance assistance outreach.

  • Clear Guidance for Contractor Compensation Practices:  The new Compensation Directive, Directive 2018-05, rescinds Directive 307 (which had been renamed as 2013-03). Principally, the agency’s compensation analysis will now “mirror a contractor’s compensation system” when the contractor provides sufficient information.  The Directive provides transparency to contractors on OFCCP’s approach to conducting compensation evaluations by further outlining the agency’s practices and approaches to similarly-situated employees, creating pay analysis groups, conducting statistical analysis and modeling, and other analytical matters relevant to conducting sound, compensation compliance evaluations and contractors’ self-audits. The Directive also emphasizes that where OFCCP “believes there are indicators of disparate impact in compensation, it will work collaboratively with the contractor to understand any defense that a policy or practice that caused the disparate impact is job-related and consistent with business necessity, and will fully consider supporting evidence the contractor provides.”  The Directive takes effect for “all reviews scheduled on or after August 24, 2018 and they apply to open reviews to the extent they do not conflict with OFCCP guidance or procedures existing prior to the effective date.”  Directive 2018-05 specifically outlines when information provided to OFCCP will be released as there have been some unauthorized releases of information about ongoing audits.  Specifically, Paragraph 8 states “OFCCP does not release data obtained during the course of a compliance evaluation until the investigation and all subsequent proceedings, if any, are complete.”
  • Affirmative Action Program Verification Initiative: Directive 2018-07 implements a verification process with the objective of ensuring that all covered federal contractors are meeting the most basic equal employment opportunity (EEO) regulatory requirement, namely, the preparation of a written AAP and annual updates to that program.
  • Contractor Recognition ProgramsDirective 2018-06 is re-establishing its contractor recognition program that will now include awards that highlight implementable best or model contractor practices, a contractor mentoring program that uses contractors to help their peers improve compliance, and other initiatives that provide opportunities for contractors to collaborate or provide feedback to OFCCP on its compliance assistance efforts.

The team at FortneyScott is reviewing these Directives in detail and determining what impact these new policies will have on federal contractor compliance and, more importantly, what next steps contractors should take to ensure compliance with the three new directives. Please contact your FortneyScott attorney or send an email to info@fortneyscott.com for more information.

OFCCP Issues Two New Directives Addressing Religious Freedom Protections and Announcing New Focused Reviews

On August 10, 2018, OFCCP’s Acting Director Craig Leen issued two new policy directives aimed at protecting Americans’ religious freedom and announcing new focused reviews. The directives call for protecting the rights of religion-exercising organizations and individuals and more comprehensive reviews of contractor compliance, respectively.

Directive (DIR) 2018-03 instructs OFCCP staff to take into account recent U.S. Supreme Court decisions and White House Executive Orders that protect religious freedom and afford broad anti-discrimination protections to religion-exercising organizations and individuals under the United States Constitution and federal law. The Directive incorporates recent developments in the law regarding religion-exercising organizations and individuals. OFCCP staff are instructed to take these legal developments addressing religious freedoms into account in all their relevant activities, including when providing compliance assistance, processing complaints, and enforcing the requirements of E.O. 11246. For a copy of this Directive, please click here.

Directive (DIR) 2018-04 provides that the 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). To ensure compliance, OFCCP will conduct the focused reviews by going onsite and performing a comprehensive review of the particular authority at issue. For example, if it is a Section 503 focused review, the compliance officer would review policies and practices of the contractor solely related to Section 503 compliance. The review would include interviews with employees affected by the policies, as well as those responsible for equal employment opportunity and compliance. OFCCP would also look to evaluate hiring and compensation data. This type of review would be used in each of the three types of focused reviews to ensure compliance with anti-discrimination obligations and equal employment opportunity. For a copy of this Directive, please click here.

The OFCCP’s News Release can be found here. The team at FortneyScott is reviewing these directives in detail and determining what impact these new policies will have on federal contractor compliance and, more importantly, what next steps contractors should take to ensure compliance with the two new directives. Please contact your FortneyScott attorney or send an email to info@fortneyscott.com for more information.

OFCCP Director Ondray Harris Leaves – What to Expect from OFCCP Next?

As July was coming to an end, the U.S. Department of Labor announced that Ondray Harris would leave his role as OFCCP Director, effective July 27.  Thereafter, Deputy Director, Craig Leen, was appointed the Acting Director of OFCCP.  The news came a week before federal contractors and OFCCP representatives gathered in Anaheim, California at the 2018 Industry Liaison Group National Conference. Acting Director Leen took center stage and was the lead spokesperson for the agency at the National ILG Conference.

Acting Director Leen opened the Conference by outlining the agency’s four areas of focus: Transparency, Certainty, Efficiency, and Recognition.  He provided some detail with respect to these general areas.  Leen also discussed his commitment to affirmative action generally.  However, as a strong advocate for individuals with disabilities, he announced that in 2019, the agency will begin conducting focused reviews of contractors’ compliance with Section 503’s affirmative action requirements.  Leen also discussed the contractor’s “Bill of Rights,” which OFCCP issued on August 1.  The Bill of Rights constitutes a significant change in the agency’s stance toward contractors, giving substance to prior promises of greater transparency and consistency and signals an end to the OFCCP’s adversarial approach to compliance evaluations.  Additionally, Leen confirmed that pay equity remains a focus of the agency, announced that OFCCP is in the process of implementing an annual AAP certification, and is considering re-instituting a contractor award program.  Finally, Leen committed to moving compliance reviews more quickly.

Stay tuned for more FortneyScott updates, specifically with regard to official confirmation of a new OFCCP Director, and any further updates on the direction the agency will take moving forward.