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You are going through your mail and see an envelope postmarked from the Department of Labor. Your heart starts racing and you silently pray that it is a mistake since you did not receive a courtesy letter in advance from the OFCCP. Unfortunately your company is on the OFCCP audit list and you just received your scheduling letter. Whether or not this is your first compliance review experience, the next thirty days will not be fun!
On September 30, 2014 the Office of Management and Budget (OMB) approved OFCCP’s revised scheduling letter and itemized listing which were used to initiate compliance reviews after October 15, 2014. One of our clients unhappily received one of these letters and is currently in the midst of an audit. Shortly after submitting their desk audit package electronically, my client, XYZ Company, received an extremely onerous request for additional data from the Compliance Officer (CO) in the Mid-Atlantic region.
Before I speak to the OFCCP post desk audit request, I think that it would be helpful to understand the new items required by the itemized listing. Here is a condensed summary of the new items required by OFCCP.
Section 503 and 4212
Keep in mind that these new items need to be submitted in addition to your E.O. 11246, Section 503 and 4212 AAPs, EEO-1 reports for three years, collective bargaining agreement (if applicable), prior year goal progress and current year progress if more than six months into your plan year.
It is also important to note that if your AAP plan dates are prior to March 24, 2014 at receipt of your scheduling letter, then many of the new items above in the Section 503 and 4212 request do not apply to your company until your 2015 update. These include numbers 1, 3 – 5 and part of 7 above. For #7, prior to the new letter, you were not required to identify the date of the assessment, actions taken, or the date of the next planned assessment.
Additionally, OFCCP wants to receive all of this information electronically, including the compensation data in MS Excel format. To assist contractors with these new items, OFCCP has posted several FAQs to answer questions relating to partial year data and analysis and compensation data.
Once you have provided all of this information and data to the OFCCP, you take a deep breath and wait. In most cases, you do not have to wait too long, as these days most follow-up requests are sent within a few weeks of receiving your desk audit submission.
Company XYZ submitted their desk audit package on December 1st and received their follow-up request on December 10th. However, on December 3rd the CO contacted them requesting the password for the compensation data, even though they had provided that information in the package. This request so soon after the submission makes it clear that the CO’s priority was compensation; however, the follow-up request did not address compensation.
OFCCP follow-up request due by Close of Business (COB) December 16th:
Item #6 above is the one that caused us the most concern. XYZ’s plan has 12 job groups and during the prior goal year, only had statistically significant adverse impact in one job group for promotions. Surely, this indicator should not warrant such a wide-reaching request for all personnel activity and all job titles. OFCCP wanted the data within six days of the request which didn’t give XYZ much time to prepare the information.
The following details the dialogue between XYZ and the OFCCP following this request.
XYZ’s first follow-up on December 10th: “Can you elaborate further on what you mean by ‘there are some indicators in the personnel activity for 2013, referencing race’? Our internal impact ratio analysis indicates that there are no indicators of statistical significance for race in hiring activity or termination activity.”
OFCCP’s response on December 15th: The CO responded by saying that “in response to your question about Item #6, our office uses different statistical analysis tools. In an effort to pinpoint if and where the issue exists specifically we need the information at a minimum by race. There are indicators as a whole for males, females and minorities in several of the job groups. This information is necessary to narrow the results. Our analysis looks at the entire work force and when there are issues we try to break down the information into smaller groups. I can start with race, but as for the male and female issues there are no smaller groups so job titles would be necessary. I have to collect all the information in this way in order for the Statistical Analysis Unit to analyze the information.”
XYZ’s second follow-up on December 16th: “… you reference “different statistical tools used by your office, and yet regardless of the tool used, the calculation should yield the same results as our internal IRAs…. It may be helpful to schedule a conference call between our team, our AAP consultant, your office and your statistical analysis unit to jointly review the personnel activity summary data and ensure we are basing analysis work on the same numbers. Further, if you can identify the specific personnel activity and the specific job groups in which you find indicators, then we would be happy to comply with your request for those specific job groups and activity.”
We have also discovered that another contractor with an audit with the same CO received the same request #6 and also asked for clarification. As of the writing of this article, neither contractor has received a response from the OFCCP.
In the last response from the CO, there are several things to note in reference to:
Last week, I shared the information of this request with the Michigan ILG on a teleconference with other contractors and a CO from the Midwest region. It was interesting how the CO reacted to the request. He stated that his office would never send out a broad request like that if not backed up by the results of the impact ratio analysis. He suggested that we immediately contact the District Director about the request and not reply to it.
We have decided to wait for the CO’s response before moving up the chain of command. We anticipate that the Mid-Atlantic region is now evaluating the reasonableness of this request; however, it is taking a long time to get back to us.
Since most contractors have just begun having audit activity using the new scheduling letter, we all will have to wait and see how far OFCCP with go to solicit more data to broaden their areas of investigation. Hopefully, requests like this one are random requests initiated by one CO.
Good luck with your future compliance evaluations!