President Obama and the OFCCP: 2014 in Review – Part I

Every year we like to provide you, our readers in the federal contracting community, with a year-in-review and look ahead to the coming year to ensure that you are aware of trends that could impact your business. Typically, that means reviewing the OFCCP’s stated goals against its actions and then making an educated projection of what is to come. This year we will take our analysis a step further. As a federal government contractor, you must first understand that everything the OFCCP does is within a specific context. That context, at least through 2016, is President Obama’s agenda. In this mini-series we will explore exactly how that works.

A federal government agency is essentially an arm of the President. Not only is the OFCCP no exception; it might even be the leading indicator. Let’s take a look, issue by issue, first at some of the President’s goals and actions, then at the OFCCP’s actions and goals.

Hiring of Veterans and Individuals with Disabilities

1. President Obama: Among other things, the President has made employment and re-employment of veterans a priority. In August of 2012, he signed a bill aimed specifically at that objective. The law provides double the tax incentives for companies hiring disabled veterans and repeals a 2006 law that, as of 2012, would have required federal, state and local governments to withhold three percent of payments to contractors. The President also issued a number of Executive Orders that provide a job bank, employment counseling and online resources geared toward veterans. Citing rising unemployment among veterans in the face of a decrease among the general population, the President has called on Congress to continue its – and his – efforts to get Americans in general, and veterans in particular, back to work.

   President Obama also set a robust agenda regarding employment of the disabled. In 2010 he issued Executive Order 13548 requiring federal government agencies to create hiring plans that include hiring of the disabled, and holding them accountable for their hiring practices, along with a number of other initiatives designed to encourage businesses to hire individuals with disabilities.

2. The OFCCP: The OFCCP’s final rule amending Section 503 of the Rehabilitation Act and the Vietnam Era Veterans Readjustment Assistance Act (VEVRAA) went into effect in March of 2014. That rule requires federal contractors and sub-contractors to set hiring goals of 7% of their workforce being comprised of individuals with disabilities. Federal contractors and sub-contractors must also establish hiring benchmarks for protected veterans. Benchmarks may either be based on the national percentage of veterans in the civilian labor force, or upon data from the Bureau of Labor Statistics (BLS) and Veterans Employment Training Service (VETS)/Employment and Training Administration (ETA) and other factors unique to the contractor’s hiring practices. For review of the details, click here & here. As a result, contractors saw more requirements regarding recordkeeping and data collection.

   A number of Items on the new Itemized Listing that accompanies the new Scheduling Letter focus on recruitment, hiring and accommodation of protected veterans and Individuals with Disabilities (IWDs). Items 7 and 11 require contractors to provide data on results of outreach and recruitment efforts vis-à-vis protected veterans and IWDs; Items 8 and 12 require contractors who are audited to provide documentation of actions taken to comply with audit and reporting system requirements for protected veterans and IWDs; Items 9 and 13 require documentation of computations or comparisons used for the previous AAP plan year and, if the request comes more than 6 months into the current year, then for an additional 6 months or longer as applicable; Item 10 requires a utilization analysis of IWDs in each job group, or if appropriate, the contractor’s entire workforce; finally, Item 12 requires contractors to document if they are using the OFCCP’s recommended 7.2% hiring benchmark, or, if using the permitted “5 factors”, an explanation of how the contractor computed its hiring benchmark for protected veterans.

   Finally, the OFCCP did give contractors one break in this area. In October it announced a new reporting form with respect to hiring of veterans. The new form replaces the VETS-100 and VETS-100A and allows contractors to report aggregate hiring numbers rather than by each category of protected veterans. The form’s requirements now align closer with the EEO-1.

   The OFCCP’s robust enforcement and rulemaking activity clearly reflects the President’s vigorous agenda regarding hiring of protected veterans and IWDs.

Pay Equity

1. President Obama: The President on more than one occasion clearly stated that he is committed to establishing gender pay equity. To that end, one of his first acts as President was to sign the Lilly Ledbetter Fair Pay Act into law. Under the Fair Pay Act, Title VII of the Civil Rights Act of 1964 was amended to provide that the 180-day statute of limitations in pay discrimination claims resets with every pay check affected by the allegedly discriminatory action or decision. Obama has had less luck with the Paycheck Fairness Act though. That bill was again blocked by the Senate as of April 2014. This law, if passed, would require employers to show that disparities in pay between men and women are not gender-based.

   As with many other priority areas, where the President has met with resistance in the larger sector, he has issued Executive Orders mandating the changes he wants in the federal contractor world. For example, in April, Mr. Obama signed an Executive Order, amending EO 11246 to prohibit discrimination or retaliation against “any employee or applicant because such employee or applicant has inquired about, discussed, or disclosed the compensation of the employee or applicant or another employee or applicant.”

2. The OFCCP: Along with his Executive Order, the President issued a memorandum directing the OFCCP to publish proposed regulations within 120 days that require federal contractors and sub-contractors to submit to the OFCCP pay, race, and gender data on their employees—even without a compliance review. The OFCCP’s Proposed Rule imposes a number of data collection and reporting requirements. (Click here and here for review.) The OFCCP extended the public comment period to January 5, 2015, sometime after which these requirements could go into effect.

   The OFCCP’s revised Itemized Listing, which it sends with its Scheduling Letters prior to a compliance review, now contains the new Item 19, which seeks detailed, precise compensation data for each and every employee. This requirement stands in marked contrast to the previous Itemized Listing, which only asked for aggregate compensation data for the employees listed in the AAP. Item 19’s definitions of “compensation” and “employee” are quite expansive, leading to a significant increase in data that contractors must collect and maintain. (Click here and here for review.) While this requirement may seem to conflict with the Equal Pay Report, in which contractors would essentially be providing summary compensation data, the point is that the OFCCP has made compensation practices an enforcement priority—because President Obama has made it one of his priorities.

From these two issues alone we see that the OFCCP, and its activity, does not exist in a vacuum, but is driven by the President’s agenda.

Watch for Part II of this post, where we will discuss the President’s position and agenda regarding discrimination based on sexual orientation and gender identity as well as his position and agenda on general pro-labor, workers’ rights issues.

For more information, contact Ahmed Younies at [email protected] or 714-426-2918 x. 1.

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