OFCCP Sends Clear Message with Letters that Audits Will Start Soon

With the new administration still getting its bearings, there was naturally some curiosity as to whether and when the interim director of the Office of Federal Contract Compliance Programs (OFCCP) would continue with issuing Courtesy Scheduling Announcement Letters (CSALs).  The wait for an answer is over as of February 21, 2017, when CSALs signed by interim Director Tom Dowd were sent to the “Human Resources Director” of selected contractors.

CSALs are issued to federal contractors who have been chosen through the national office in Washington, D.C. from the Federal Contractor Selection System (FCSS) using neutral but undisclosed criteria.  They are designed to give the contractor advanced notice of an upcoming audit of the contractor’s compliance.  OFCCP sends out CSALs for several reasons including to allow contractors time to gather their documentation and support for the audit, to conduct self-audits to identify problem areas before OFCCP gets involved, and to take advantage of compliance assistance offered by OFCCP.  Be aware! The OFCCP itself addressed on its website that A contractor establishment should not be scheduled for another compliance evaluation during the 24–month period following the date on which the prior review was closed.  The OFCCP further advised that the establishment’s representative should call the local OFCCP office which issued the scheduling letter to inform them of the pending 24-month period.  Click here for the OFCCP “FAQs”, and scroll down to the last question.

Under the Obama Administration, the last round of CSALs was issued several years ago in 2014.  This is not as surprising considering that these are courtesy notices and not required by law.  The lag of at least two years since the last letters also fueled much of the conjecture as to whether the new administration would continue with the tradition.

Since CSALs are a courtesy, not a formal notice, it is not necessarily the case that a contractor that receives a CSAL will actually be audited.  Similarly, firms that are not issued CSALs may still be audited.  Thus, perhaps their broadest purpose is to put all contractors on alert that OFCCP audits are on the horizon and that while some have been identified, all other contractors are not necessarily going to be overlooked.

Even those firms that are on the list and receive CSALs, there is still a great deal of uncertainty as to the type and scope of the potential audit.  For example, OFCCP conducts audits based on contract award notices, directed reviews, conciliation agreements or individual complaints, or as part of the larger agency Corporate Management Compliance Evaluation (CMCE) or Functional Affirmative Action Plan (FAAP).  Again, therefore, the fact that notices are going out is alone enough to require contractors to begin to review their Affirmative Acton Plans (AAPs), particularly with respect to requirements related to individuals with disabilities and veterans.

As of now, the actual list of contractors – and thus the scope of the audit net – is not known, and therefore, at a bare minimum, all federal contractors should be on the lookout for a CSAL.  For those contractors who have a designated point of contact on the scheduling list that is issued in the scheduling cycle, the letter will likely be addressed to that person.  For all other contractors, it will likely be directed to the generic “Human Resources Director”.  Regardless of the addressee, however, any employees who handle the mail or correspondence should be advised to be on the lookout for the letter so that they can route it to the appropriate person when it comes in.

It is also important to note that the OFCCP may not necessarily send the letter to the headquarters of a contractor.  Rather, CSALs are sent to any establishment on the scheduling list.  If the establishment is not the same as the headquarters, it is the responsibility of the establishment to forward the letter to the headquarters.  Thus, explicit instructions for establishments that may be part of a larger corporation to know to look for CSALs and then to send them on to headquarters is warranted.

Similarly, all contractors should use the time between now and when they may receive the CSAL or a formal audit notice to get prepared.  This means reviewing the contractor’s AAP, identifying potential problem areas, and marshalling resources to be on stand-by in the event of an audit.  This is beneficial even if the contractor does not end up being the subject of an audit as it will put the contractor in a better position for compliance going forward.

We will update as we get more information about the scope and reach of the audits.

For more information, contact Ahmed Younies at 714-884-4610 or ayounies@hrunlimitedinc.com.

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In With the New, But Not Quite Out With the Old

A few weeks after his inauguration in January, Donald Trump appointed the only Republican Commissioner at the Equal Employment Opportunity Commission, Victoria Lipnic, as the acting chair of the Commission.  The question on the minds of many employers and human resource professionals, however, was not who was going to be appointed, but whether the new administration will also mean a new enforcement agenda.  According to Lipnic, the short answer is, “not really.”

At a recent panel discussion, Lipnic stated that while the EEOC will uphold the core mission of the EEOC by pursuing enforcement of the country’s anti-discrimination laws, the focus will shift more towards collaboration with employers to further bolster the Trump Administration’s commitment to job creation and growth.

Of course, how this actually plays out rests a great deal on when the Commission takes action.  Currently, Lipnic is the only Republican Commissioner.  However, with one current vacancy to be filled and another that will open later this year when Jenny Wang’s term expires, the swing from Democrat to Republican on the five-member board will be complete later this year.  Once Lipnic, or whoever is appointed as the permanent chair, has the majority in place, the fireworks may well begin.

The type and ferocity of those fireworks remains to be seen.  The first salvo was launched with Lipnic’s comments on the Strategic Enforcement Plan the Commission adopted in October 2016 for fiscal years 2017-2021.  She indicated that the priorities outlined in the SEP will be retained … for the most part.  Of those enforcement priorities, she did specifically single out systemic initiatives for review.  While systemic initiatives will continue, Lipnic will call for the Commission to seriously evaluate the resources that are being devoted to them.  In contrast, Lipnic opined that it was very important for the Commission to continue to pursue individual cases of discrimination.

For those searching the tea leaves for the true future of enforcement, Lipnic’s comments may not offer much guidance one way or the other.  This is understandable since the new administration is barely three weeks old and she is the acting chair, meaning she could be replaced in a few months.  Given her history of working with Democratic Commissioners, Lipnic may not be Trump’s first choice to head the Commission for the long run.  He may instead seek a Republican more aligned with his pro-business stance.

Lipnic did, however, make her Republic credibility clear by pointing out her prior disagreements with Democratic Commissioners over new changes to the EEO-1 form.  Specifically, she was against the requirement that employers with 100 or more employees also disclose wage data in addition to gender, race, and ethnicity.  She identified this regulation as a classic example of what the Trump Administration was seeking to have reviewed and reconsidered, at a minimum.

Similarly, she was not in favor of allowing the EEOC general counsel – another position that is to be filled – to file suit in district court absent the vote of the Commissioners. She believes that the Commissioners should have some greater oversight over this litigation.  Whether the EEO-1 and general counsel rules will fall by the wayside remains to be seen.

However, it does appear that Lipnic is attempting to not stir up the waters just yet, but is giving enough hints to mollify both employers and workers.  While this is not the modus operandi of the Trump Administration, it is a reflection of her long-standing relationship with the EEOC and her current temporary status.  Stay tuned for further updates!

For more information, contact Ahmed Younies at 714-884-4610 or ayounies@hrunlimitedinc.com.

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LexisNexis Pay Discrimination Identified in OFCCP Investigations

LexisNexis Risk Solutions will pay over $1.2 million in back pay and interest and provide additional relief to resolve allegations of systemic pay discrimination against women at its facilities in Alpharetta, Georgia, and Boca Raton, Florida.

LexisNexis provides computer-assisted legal and business research and risk management services. During fiscal years 2015 and 2016, the company had millions of dollars in federal contracts with the U.S. Departments of Homeland Security, Justice, Transportation and Labor, and the Office of Personnel Management and the General Services Administration.

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Southern Glazer’s Wine and Spirits (LA) Charged by the OFCCP for Hiring Discrimination

A routine investigation by the U.S. Department of Labor’s Office of Federal Contract Compliance Programs found that Southern Glazer’s Wine and Spirits of Louisiana, LLC, systemically discriminated against black applicants in its hiring practices at its St. Rose warehouse facility. The company has entered into a consent decree to resolve the department’s claims.

An OFCCP compliance review found that, from January 2008 to January 2009, the federal contractor discriminated against 467 black applicants for warehouse worker positions in violation of Executive Order 11246. OFCCP also found that the company failed to keep complete and accurate employment records and failed to evaluate its selection procedures as required by law.

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OFCCP Files Lawsuit Against Google Inc. for Compensation Data

The U.S. Department of Labor has filed a lawsuit to require Google Inc. to provide requested compensation data and documents for the multinational company’s Mountain View headquarters as part of a routine compliance evaluation.

The Office of Federal Contract Compliance Programs asked the technology giant to submit information in September 2015 about its equal opportunity program and to provide supporting documents as part of a scheduled compliance review. As a federal contractor, Google must agree to permit the federal government to inspect and copy records and information relevant to its compliance with the equal employment laws administered by OFCCP.

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For more information, contact Ahmed Younies at 714-884-4610 or ayounies@hrunlimitedinc.com.

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How Effective is the OFCCP? Part IV – The Conclusion

Happy New Year! We start 2017 wrapping up our series on the Government Accountability Office (GAO)’s report of the OFCCP’s effectiveness in enforcing Affirmative Action laws and regulations. You may recall that the GAO in its recent report found the OFCCP to be exhibiting five areas of weakness. In the previous parts, we explored the first three areas. We will now discuss the last two. Since you likely have a lot of work to do upon return from your holiday celebrations, let’s not waste any more time. Here they are:

Reported Inconsistencies in Compliance Evaluations May Be Exacerbated by Lack of Training

According to the GAO, Compliance Officers are not receiving the necessary training to obtain, much less maintain, the skills necessary to conduct Compliance Evaluations. This too would tend to lead to inconsistent practices across offices. For example, the OFCCP in 2013 focused its training efforts on recent regulatory changes. OFCCP officials acknowledge that since 2013 they have conducted 23 staff webinars focused on these regulatory changes. The result: Compliance Officers lack access to essential, generalized training and knowledge that enable them to properly address many of the issues that arise during Compliance Evaluations. In fact, the GAO states in its report, that “compliance officers we spoke to in one district office were concerned that the lack of ongoing professional training limited their ability to correctly and consistently conduct compliance evaluations”.

What if anything has the OFCCP done to address this issue? In some offices, managers paired Compliance Officers with less expertise in some areas with more experienced Compliance Officers. While that is certainly a reasonable and sensitive approach, there is one glaring flaw here, too: This approach only occurs in some offices, it lacks the centralized, holistic effort needed, and therefore cannot address the reported inconsistencies in the manner that is truly necessary and appropriate. The GAO also pointed out that the training being given fails to address employees’ career development concerns, as well as needed skill-specific training.

In addition, the training the OFCCP has provided has not been timely.   Agency officials stated that “budget constraints” have made providing timely training difficult. (This statement is curious in light of the fact that the OFCCP in the last few years probably experienced the largest budget allocations ever.) In half the regions the GAO visited, managers admitted that new Compliance Officers did not receive training. In one case, a Compliance Officer stated that s/he had been employed with the OFCCP for 8 or more months before receiving formal training. Compliance Officers in one district office specifically complained they felt unprepared to do their jobs.

Such a glaring deficiency leaves little wonder why the OFCCP’s efforts are at best inconsistent, and, in turn, why its effectiveness may be compromised. The GAO’s recommendation in this regard should therefore come as no surprise:

Provide timely and uniform training to new staff, as well as provide continuing training opportunities to assist compliance officers in maintaining a level of competence to help ensure quality and consistency of evaluations across regions and district offices.

Most Violations Are Resolved Through Conciliation Agreements

According to the GAO, between Fiscal Years 2010 and 2015, the OFCCP resolved 99 percent of its violations through Conciliation Agreements, in which the contractor agrees to take certain remedial actions to address the violation(s) in question.  Those remedies may include injunctive-type relief, where a contractor is required to either refrain from certain practices deemed discriminatory or to implement certain measures, such as an applicant tracking system. Remedies may also include offering jobs to certain rejected applicants, back pay and other money damages.

Is there anything wrong with resolving violations through Conciliation Agreements? Inherently, no. The problem is if that is effectively the only remedy, then many cases will fall through the cracks. For example, what happens if the contractor does not live up to the commitments it made in a Conciliation Agreement? Compliance Officers are supposed to monitor and report progress in compliance with the Conciliation Agreement. When a contractor does not comply with a Conciliation Agreement, the OFCCP may begin an investigation. The GAO notes that “since 2010, OFCCP has referred a small number of cases to the DOL Office of the Solicitor for enforcement through administrative enforcement proceedings… Additionally, OFCCP may refer a case to the Office of the Solicitor in certain other circumstances, such as when an establishment has denied compliance officers access to information or their facilities. When referred a case, the Office of the Solicitor generally reviews the case and may take further action through administrative enforcement procedures.”

What happens then? Administrative sanctions can be imposed, up to and including debarment, where a contractor loses their contract and is ineligible to receive future federal government contracts. However, even the OFCCP admits that debarment is rare. In fact, on average, debarment happened less than once per fiscal year since 2010.  The rarity of this remedy is reflective not of effective enforcement efforts by the OFCCP, but the OFCCP’s reluctance to use it. Why is that? According to the OFCCP, “because contractors who are debarred are no longer under OFCCP’s jurisdiction and not subject to the worker protection requirements the agency oversees.” Here too, it is easy to see where cases of either discrimination or other violations of affirmative action laws and regulations are falling through the cracks.

Oddly enough, the GAO’s remaining recommendations do not address this particular issue. It would seem, however, that the OFCCP needs to re-visit both its methods and its use of available methods. While it did not specifically name these as weaknesses in enforcement efforts, the GAO did include these last two recommendations in its report:

• Review outreach and compliance assistance efforts and identify options for improving information provided to federal contractors and workers to enhance their understanding of nondiscrimination and affirmative action requirements to ensure equal employment opportunities for protected workers.

• Assess existing contractor guidance for clarity to ensure that contractors have information that helps them better understand their responsibilities regarding nondiscrimination and affirmative action requirements to ensure equal employment opportunities for protected workers.

These last two recommendations are the only ones directed at how to work with contractors.

So, there you have it. According to the GAO, the OFCCP needs to take steps to ensure consistency in its offices. That’s the nutshell version. You can read our previous two posts to get a little more in depth and if you want more details, you can access the GAO report here.

Suppose you don’t want to do any of that? What can you take away from this three-part series, and the GAO findings? Here’s what you should not do. You should not assume that because the OFCCP has been found by the GAO to have weaknesses in its effectiveness that you no longer need to focus on your affirmative action obligations as a federal contractor. As you well know from our other posts, once you are selected for a Compliance Evaluation, you will be subject to scrutiny, if not sanctions, if the OFCCP finds violations. In our opinion, it is not worth the risk. So either keep doing what you’re doing, or reach out to us with any questions.

For more information, contact Ahmed Younies at 714-884-4610 or ayounies@hrunlimitedinc.com.

 

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How Effective is the OFCCP? The GAO Answers – Part III

We started this series with an overview of the GAO’s findings as to the OFCCP’s effectiveness. Just to recap, here are the five areas of weakness found by the GAO:

1. Weakness in OFCCP’s process for selecting contractors for Compliance Evaluations makes it challenging to know the extent to which Equal Opportunity Requirements are followed;

2. OFCCP Relies on Voluntary Compliance with Requirements;

3. OFCCP’s Compliance Evaluation Assignment Process May Result in Geographic Imbalances;

4. Reported Inconsistencies in Compliance Evaluations May Be Exacerbated by Lack of Training;

5. Most Violations Are Resolved Through Conciliation

In our previous post, we discussed the first weakness listed above. Let’s move onto the second.

The OFCCP Relies on Voluntary Compliance with Requirements:

This particular weakness would seem to be so self-explanatory, that we might even ask, “Why would the OFCCP use this as a primary strategy if it hopes to be effective?” The answer, simply put, is that the OFCCP, even the more beefed up version we have seen in recent years, cannot possibly conduct Compliance Evaluations for all contractors. (According to the Government Accountability Office report there are “tens of thousands” of contractors under the OFCCP’s jurisdiction.) That said, reliance on voluntary compliance simply cannot ensure that contractors are complying with even basic requirements, such as writing and implementing an AAP, let alone analysis, record keeping and many other more complex regulatory requirements. Note: Failure to have a written AAP was one of the top violations since 2008.

The implication here is fairly obvious: If the OFCCP is relying on voluntary compliance it has little or no actual enforcement mechanisms in place to ensure compliance. For example, when the OFCCP selects a contractor for a Compliance Evaluation, it sends a Corporate Scheduling Announcement Letter, or CSAL (essentially a heads up) that it will be scheduling a Compliance Evaluation. In the Scheduling Letter, the OFCCP requests the contractor to submit data, including a copy of the AAP, within 30 days. By the OFCCP’s own admission, however, approximately 85 percent of contractors who received scheduling letters in 2015 did not submit an AAP within the aforementioned 30 days. Many requested extensions. While contractors are required in their contracts to develop an AAP within 120 days of the contract commencement, and update the AAP annually, they often do not. What is more, the OFCCP has no process for ensuring compliance with even this requirement, and therefore lacks a reliable indicator of whether its own objectives are being met, and, consequently, whether its own efforts in doing so are effective.

This weakness appears so glaring, so obvious that one wonders why it should have taken a lengthy investigation or audit by the Government Accountability Office (GAO) to uncover it.

The GAO’s recommendation to the Secretary of Labor: “Develop a mechanism to monitor AAPs from covered federal contractors on a regular basis. Such a mechanism could include electronically collecting AAPs and contractor certification of annual updates” therefore should come as no surprise.

 

Let’s move onto the third weakness identified by the GAO:

OFCCP’s Compliance Evaluation Assignment Process May Result in Geographic Imbalances

When the OFCCP distributes its scheduling lists, or assigns Compliance Evaluations to District or Area offices, it does so primarily based on the physical address of the contractor establishments. In other words, the contractor’s physical address determines which district or area office will be assigned the Compliance Evaluation. The reason: to minimize travel costs if an on-site visit becomes necessary. According to the GAO this distribution method is outdated, given the steady decline in the number of evaluations actually requiring on-site visits. Specifically the OFCCP admitted that in 2015, only 25% of Compliance Evaluations required onsite visits. The OFCCP has also acknowledged that its current distribution of compliance officers among the 48 district and area offices did not correspond to the national distribution of federal contractors. According to the OFCCP this uneven distribution is due in part to attrition levels across offices. These disparities impact how many officers are actually available in the different district and area offices to conduct compliance evaluations, increasing the likelihood of unevenness and inconsistencies and lack of continuity. Clearly, such disjointed efforts will impact the agency’s effectiveness.

The GAO therefore recommended that to address this particular weakness, the Secretary of Labor “Make changes to the current scheduling list distribution process so that it addresses changes in human capital and does not rely exclusively on geographic location”.

In light of these identified weaknesses, and the GAO’s recommendations to the Secretary of Labor, what can – and should—federal contractors do? The short answer: Expect some changes aimed at tightening up the OFCCP’s enforcement processes and mechanisms. Yes, we know that with a new President taking office soon – one with a very different political agenda than Mr. Obama, that the OFCCP may develop a new and different look. The changes recommended by the GAO however, do not necessarily require more revenue, however. Even if the OFCCP’s presence does not appear to loom as large in the near future, the agency itself, will not be going away, and it will still be charged with enforcing Affirmative Action laws and regulations. Reviewing and ensuring your own compliance can only help you.

In our next installment we will cover the last two weaknesses identified by the GAO, and, of course, we will provide more recommendations to you, our readers.

For more information, contact Ahmed Younies at 800-708-3655, x703 or ayounies@hrunlimitedinc.com.

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