In January of 2017, Donald Trump will be president of the United States. This is not what the political pundits expected, and it is not what most service providers working in the affirmative action/equal opportunity area expected. Now that a Trump presidency is a reality, it is time to determine how this affects organizations that must comply with the federal affirmative action laws.
How Are the Federal Affirmative Action Laws Different Than Other Laws?
When an organization accepts money through a federal contract or subcontract, it must meet the requirements associated with the three affirmative action laws. These laws are:
Requirements in these laws apply to organizations depending on the number of federal dollars they receive, the number of employees in the organization, and the type of organization at issue.
The affirmative action laws are different from many other federal laws in that they only apply when organizations voluntarily choose to take federal money through contracts or subcontracts. This is different than the federal laws governing wages and hours, or the federal laws governing worker safety, where organizations that meet certain thresholds must follow these laws.
Once an organization accepts federal money through a contract or subcontract, the federal affirmative action laws and regulations become a binding obligation. If an organization is unwilling to meet the requirements associated with the federal affirmative action laws, that organization can choose to leave the federal contracting realm and relieve itself of these burdens.
Changing the Federal Affirmative Action Laws
As we have seen during the last eight years, the federal affirmative action laws and the regulations implementing these laws can undergo great change when a presidential administration decides to move in a new direction. During the Obama administration, there were dramatic changes to Executive Order 11246 that added new protected classes and new obligations to the executive order. There were also dramatic changes to the regulations implementing VEVRAA and Section 503 that greatly expanded the obligations of federal contractors and subcontractors.
A direct change to the affirmative laws and regulations is not required for there to be a change in the actions that organizations covered by these laws should take. A change in focus by the agency that enforces these laws and regulations, the U.S. Department of Labor’s Office of Federal Contract Compliance Programs (OFCCP), can have far-reaching effects. For example, during the Obama years, OFCCP was very focused on investigating compensation policies, practices, and decisions during affirmative action compliance reviews to determine whether there were any disparities in pay based on race, ethnicity, or gender. There was an increase in the scrutiny of compensation-related information that far exceeded what had been occurring prior to 2009. This change in focus did not require a formal change to Executive Order 11246 or its implementing regulations. Instead, policy decisions were made to reorient the agency and shift the focus of compliance reviews.
Federal Contractors and Subcontractors Must Continue to Meet Their Obligations While Waiting for Changes
Most of us who work in the affirmative action field expect there will be significant changes in the way that the federal affirmative laws and regulations are implemented during a Trump administration. However, it may be some time before organizations see a significant change in the way OFCCP operates. While we await changes at OFCCP, federal contractors and subcontractors will continue to have the same obligations that have been in place for the last few years. Among these obligations are the following:
Federal contractors and subcontractors need to be aware that until there is specific change within the agency, OFCCP is likely to continue to carry out some of the initiatives that were important to the Obama administration. For example, OFCCP is likely to continue to focus its efforts on investigating pay disparities involving race, ethnicity, or gender. In January of 2017, OFCCP issued a press release that announced a significant back pay settlement involving pay disparities identified during compliance reviews of a large federal contractor. This clearly indicates that OFCCP has not abandoned its efforts to identify and correct what it perceives to be pay discrimination.
Another initiative that is likely to continue to receive attention from OFCCP involves the revised regulations regarding protected veterans and individuals with disabilities that came into effect in 2014. These revised regulations have now been in place long enough that OFCCP compliance officers are likely to have heightened expectations about the implementation of various portions of these regulations. Compliance officers are especially likely to examine the assessment of outreach that organizations are required to prepare in order to determine whether there was success in recruiting and hiring protected veterans and individuals with disabilities. Organizations will be expected to have concrete plans of action when they were unsuccessful in this regard. OFCCP is also likely to continue asking questions about the manner in which organizations gather information on the veteran and disability status of applicants and employees.
Finally, OFCCP will almost certainly continue to carefully scrutinize hiring, especially into low-skilled entry-level positions. Organizations with these types of positions should expect that OFCCP will ask questions about any type of statistical disparities involving these positions. OFCCP will demand that organizations provide documentation that can demonstrate that the best qualified applicants were hired when statistical disparities exist.
Change May Not Occur Immediately at OFCCP
While change will almost certainly occur at OFCCP, it is not clear when this change will take place. One reason that it may take some time to change how OFCCP operates is that many of the regulations OFCCP enforces cannot be changed overnight. There is a defined process for making changes to regulations for any federal agency. This process involves the release of a proposed version of the relevant regulatory changes that gives the public an opportunity to comment on these changes. After comments are considered by the regulatory agency proposing the changes, the agency must release a final version of the revised regulations. If the revised regulations potentially have a financial burden on the public, they must also gain the approval of the White House’s Office of Management and Budget.
Another reason that it may take some time to change how OFCCP operates is that it may be some time before a new head of OFCCP is appointed. A new head of OFCCP (referred to as the Director of OFCCP) will not be appointed until a Secretary of Labor is confirmed. If a Secretary of Labor is confirmed by the end of January, a new head of OFCCP could be appointed as early as spring. However, history would suggest it is just as likely that it may be summer or later until we see someone appointed to this position. Until there is a new head of OFCCP, leaders who served under the previous OFCCP Director, Patricia Shiu, will remain in place and will continue to carry out the policies and practices of the last administration. There may be some minor changes in how OFCCP operates, but any major changes are likely to wait until a new head of the agency has been formally approved.
A final reason that it may take some time to change how OFCCP operates is that the new administration will have a multitude of priorities to consider, and changing OFCCP is not likely to be on the top of that list of priorities. Some federal contractors and subcontractors are very frustrated by the regulatory and procedural changes that have occurred at OFCCP during the Obama administration. However, the new Secretary of Labor is likely to prioritize other issues. Changes at OFCCP may wait until a variety of other objectives of the new administration have been addressed.
Change Will Come
While it is unclear when changes will occur at OFCCP, they most certainly will arrive. Some of these changes are entirely predictable. For example, there will be changes to the manner in which compensation is evaluated by OFCCP. The agency’s current approach to reviews of compensation is based on the premise that there is extensive compensation discrimination in the private sector, a premise the new administration does not accept. (In that light, the recent changes to the EEO-1 report that mandate the collection of compensation data by federal contractors and others subject to this report are ripe for rescission by the new administration.)
Some changes to OFCCP may not be as predictable. For example, there is some thought that OFCCP may be placed under the jurisdiction of the Equal Employment Opportunity Commission (EEOC) and that the fundamental mission of OFCCP would no longer involve the investigation of employment discrimination. Instead, OFCCP would simply assist federal contractors and subcontractors with their affirmative action activities. Alternately, it is possible that OFCCP will remain within the Department of Labor and will return to the priorities and approaches it had during the Bush administration. During that era, the agency focused almost all of its attention on finding what it believed were the most problematic “bad actors.” Compliance reviews primarily centered on hiring, and reviews where organizations did not show disparities in analyses of applicants and hires were generally closed quickly.
We will know more about a new direction for OFCCP when a Secretary of Labor is confirmed and when a head of OFCCP is appointed. In the meantime, federal contractors and subcontractors must continue with their efforts to effectively implement the current affirmative action laws and regulations. The time to change direction is when we know what direction to go, not when we are waiting for signals on where we may be headed.
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. 2017