Several years ago, I wrote an article for The OFCCP Digest entitled “What Does OFCCP Want?” The central premise of that article was that the U.S. Department of Labor’s Office of Federal Contract Compliance Programs (OFCCP) has certain defined expectations for federal contractors and subcontractors. With all the additional changes that have occurred involving OFCCP over the last few years, this appears to be a good time to revisit the question “What does OFCCP want?”
OFCCP Wants to Achieve Its Political Agenda
There are a variety of answers to the question “What does OFCCP want?” OFCCP wants federal contractors and subcontractors to comply with the federal affirmative action regulations. The agency wants companies to show results from their affirmative action efforts. The agency wants to find non-compliance so that it can demonstrate its value to the American people. However, OFCCP’s actions during the years since the start of the Obama presidency demonstrate that the agency is an instrument of the White House and that a key purpose of the agency is to help achieve the president’s political agenda.
Before continuing, it’s important to note that it doesn’t matter whether one agrees or disagrees with the president’s political agenda and OFCCP’s role in helping to implement this agenda. We can applaud this administration for its initiatives that are meant to help women, veterans, and individuals with disabilities, or we can disparage the administration for its failure to understand the impact of multiple new regulatory burdens on federal contractors and the rest of the economy. It is even possible to both sympathize with the administration’s goals and express frustration with the way these goals are being implemented. In the long run, it doesn’t matter whether one agrees or disagrees with the political agenda that motivates OFCCP, as long as one understands that political agenda.
So, what is the political agenda that motivates OFCCP?
- OFCCP is seeking to address what it suggests is significant and systemic discrimination against women in the workforce. OFCCP has routinely used the statistic that women earn 77 cents for every dollar that men earn. This has been part of the impetus behind the agency’s compensation directive in 2013, the proposed equal pay report published in 2014, and the proposed changes to the sex discrimination guidelines published this year. The proposed sex discrimination guidelines provide significant insight into OFCCP’s belief that there is pervasive discrimination faced by women in the workplace.
- OFCCP is seeking to advance the employment of veterans who have returned from the recent military campaigns in the Middle East. The revised affirmative action regulations regarding veterans were the final major step in OFCCP’s efforts to remake its own approach to veterans and to redirect the efforts of federal contractors and subcontractors into employing veterans. OFCCP has constantly emphasized the higher rate of unemployment faced by veterans who have served in the Middle East as its justification for imposing an extensive number of new burdens on companies.
- OFCCP is seeking to advance the employment of individuals with disabilities. Again, OFCCP has justified extensive revisions to its regulations and significant new burdens on federal contractors and subcontractors by citing higher unemployment rates faced by individuals with disabilities.
- OFCCP is seeking to address discrimination based on sexual orientation and gender identity. When Congress failed to address issues concerning sexual orientation and gender identity, the White House stepped in to provide guidance to both the federal government and to federal contractors and subcontractors. Executive Order 13672 concerning sexual orientation and gender identity was issued in part because of the concern that workplace inequality impacts millions of lesbian, gay, bisexual, and transgender (LGBT) workers. OFCCP has new regulations based on Executive Order 13672 that will come into effect in April of 2015.
There are some common threads in this political agenda.
- OFCCP is using statistics to support new requirements for federal contractors and subcontractors, even though the accuracy and viability of some of these statistics has been called into question. For example, the statistic that women earn 77 cents for every dollar that men earn has been roundly discredited for failing to compare men and women who are in the same jobs. As another example, the statistics regarding veteran unemployment that were part of the impetus for the revised veterans regulations did not appear to have taken into account the fact that some veterans returning from overseas were seeking further education and some veterans were not qualified for certain jobs.
- OFCCP’s new initiatives benefit certain classes that have been politically active or that have been supporters of the current administration. President Obama has sought and often received the support of women, and he has championed certain issues of importance to women. For example, the first bill signed by the president was the Lilly Ledbetter Act. The president has recognized the growing importance of issues affecting the LGBT community, and he has tried to show sensitivity to issues concerning veterans, who are a potent constituency in many parts of the country.
The fact that the current administration is making efforts to reach out to women, veterans, individuals with disabilities, and members of the LGBT community is no surprise. What is something of a surprise is the fact that OFCCP has become a very critical player in forwarding the administration’s interests regarding these groups. OFCCP’s current mission, initiatives, and actions are very much molded by political objectives.
OFCCP Wants to Find Ways to Implement Its New Initiatives
In order to implement the president’s political agenda, OFCCP has instituted an incredible number of new initiatives in the last three years. Here is a just a partial list of new or revised regulations and directives:
- Directive 2013-03 (formerly numbered Directive 307) regarding compensation in February of 2013
- Revised regulations regarding veterans issued in final form in September of 2013
- Revised regulations regarding individuals with disabilities issued in final form in September of 2013
- Directive 2014-02 regarding gender identity issued in August of 2014
- Revised regulations regarding sexual orientation and gender identity issued in final form in December of 2014
These new or revised regulations and directives have all come with new policies, procedures, and approaches taken by OFCCP. This includes a new version of the letter that opens an affirmative action compliance review and a new version of the itemized listing of materials that must be submitted at the start of a compliance review. The revisions to the itemized listing were especially important, as the number of items grew from 11 to 22 and the kind of data to be submitted on compensation changed dramatically.
OFCCP also has a number of proposed initiatives that have not been issued in final form, but that clearly show the agency’s thinking on certain issues. These include the following:
- Regulations regarding the proposed equal pay report
- Regulations regarding pay transparency
- Revised regulations regarding sex discrimination
If these proposed regulations are issued in final form, with or without revision from their current state, they will require additional changes to policies, procedures, and approaches by OFCCP. In fact, so much is changing in regard to affirmative action compliance reviews that significant portions of the Federal Contract Compliance Manual issued in July of 2013 are already obsolete.
The constant change at OFCCP has resulted in headaches for both federal contractors and for OFCCP itself. In the last three years, federal contractors and subcontractors have been required to make major changes to affirmative action plans, policy statements, recruitment procedures, record-keeping systems, and various other human resource-related activities. At the same time, OFCCP compliance officers have been required to change focus points, internalize new regulatory materials, learn new procedures, and significantly revise much of what was previously done during compliance reviews.
With all the new initiatives that have occurred at OFCCP, the agency has needed to find a way to implement these various changes. This has been challenging for OFCCP. While the agency has tried to train compliance officers on the implementation of its new initiatives, the regulatory environment is changing so fast that it is almost impossible for anyone, including the OFCCP staff, to keep up. It seems at times like OFCCP is a carnival where the agency staff is trying to keep multiple plates spinning on sticks before any of these plates crash to the ground. This parallels the way that many federal contractors and subcontractors feel as they similarly watch the many plates they’re required to spin either wobble or crash as new plates are constantly added.
Lessons from OFCCP’s Political Agenda
The realization that OFCCP has a political agenda can be helpful to federal contractors and subcontractors. It can provide a sense of what’s important to OFCCP and where new OFCCP initiatives may arise. However, the recognition of this political agenda can also be overwhelming because there are so many new burdens that companies now face and additional burdens that companies will face in the future.
Lurking within OFCCP’s political agenda are two themes that may provide companies some insight into where to direct their activities and attention.
- OFCCP is looking for discrimination. The agency’s various initiatives regarding compensation and the recent regulations regarding sexual orientation and gender identity are rooted in finding and preventing discrimination. Federal contractors and subcontractors are well-served by understanding that OFCCP may be an affirmative action agency, but that many of its efforts are focused on discrimination. Companies should make efforts to evaluate all selection procedures to determine whether and where OFCCP might suggest that discrimination has occurred.
- OFCCP expects results. Companies need to realize that OFCCP expects more than good faith efforts in the way companies implement the federal affirmative action regulations. For example, OFCCP expects that companies will take concrete, documented actions to recruit and employ veterans and individuals with disabilities. If their actions aren’t successful, OFCCP expects that companies will make changes to ensure success.
There are also some surprising lessons that are not readily apparent from a review of OFCCP’s political agenda.
- Companies must give attention to disparities in hiring involving race and gender. We know that OFCCP is interested in issues concerning women, and we know that OFCCP is interested in preventing discrimination. What is not obvious until we review press releases and other information issued by OFCCP is that the agency continues to focus on finding and resolving disparities in hiring involving race and gender during compliance reviews. OFCCP gathers millions of dollars every year in settlements following compliance reviews after finding what it believes is discrimination in the hiring process. Despite all of the other issues that require their attention, federal contractors and subcontractors MUST carefully review their selection procedures and take action when statistics suggest there is a disparity in hiring against any particular race or gender.
- Companies should avoid being overly focused on analyzing compensation. In light of OFCCP’s many initiatives regarding compensation, it would seem obvious that companies need to give significant attention to analyzing compensation data. However, while OFCCP has been trying for many years to show there is extensive compensation discrimination among federal contractors and subcontractors, it has little to show for these efforts. Despite significant expenditure of time and resources on finding systemic compensation discrimination, back pay settlements following OFCCP compliance reviews overwhelmingly involve hiring disparities. OFCCP has recently been touting the fact that a number of steering cases have resulted in findings of compensation discrimination. In reality, steering cases involve improper selection decisions where disparities in compensation are basically a by-product of these selection decisions. Companies need to understand that there is a requirement to analyze compensation practices and decisions, but companies also need to realize that there are other requirements in the federal affirmative action regulations that should not be overlooked in favor of additional compensation analyses.
With the myriad of new initiatives coming from OFCCP, this is a difficult time to be involved in affirmative action compliance reviews, both for companies and for OFCCP itself. As OFCCP tries to settle on specific priorities and tries to implement new practices, federal contractors and subcontractors need to stay focused on monitoring their hiring activities, preparing for questions regarding potential discrimination, and demonstrating the results of their efforts to implement the affirmative action regulations.
Please note: Nothing in this article is intended as legal advice or as a substitute for any professional advice about your organization’s particular circumstances. All original materials copyright © HR Analytical Services Inc. 2015