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Much has been written about the U.S. Department of Labor’s Office of Federal Contract Compliance Programs (OFCCP) in the last few years. OFCCP has a number of significant new initiatives, most notably its recent directive regarding the evaluation of compensation data that federal contractors and subcontractors will be asked to provide during compliance reviews. OFCCP has also gone through a number of changes to the manner in which it conducts compliance reviews. For example, the agency was routinely conducting on-site investigations for a while, but OFCCP is now limiting its on-site presence and is instead requesting many additional documents during the course of a compliance review.
While we know a great deal about what OFCCP is doing, a rarely asked question is this: what does OFCCP want? Phrased somewhat differently, what are OFCCP’s expectations of federal contractors and subcontractors? And, what kind of expectations does the federal government in turn have for OFCCP?
A simple answer to the question “What does OFCCP want?” is “OFCCP wants compliance with its regulations.” Like all regulatory agencies, OFCCP expects that the entities covered by its regulations will comply with these regulations. OFCCP doesn’t really care whether federal contractors and subcontractors are pleased with and excited about its regulations, or if companies are frustrated with and unhappy about its regulations. The agency expects that companies will comply. This is true in no small part because when companies agree to take federal money (either directly or indirectly), they also agree to take on the federal government’s affirmative action obligations.
While OFCCP wants compliance, it isn’t enough for companies to simply be making rudimentary attempts to comply. OFCCP expects that companies have read and understand the agency’s regulations. This was clearly pointed out in 2009 when OFCCP made a dramatic change in the way it implements the agency’s regulations regarding veterans and persons with disabilities.
For many years, OFCCP spent very little time during compliance reviews looking into issues concerning veterans and persons with disabilities. Companies routinely submitted the same AAP covering veterans and persons with disabilities during compliance reviews, and OFCCP took little notice of the contents of the AAP or the actions that companies took to implement this AAP. Suddenly, in 2009, OFCCP decided that veterans and persons with disabilities were very important to the agency, and compliance officers began asking many questions about the efforts that companies were making to recruit members of these two groups and to comply with various requirements in the federal regulations. OFCCP gave no warning to federal contractors and subcontractors that it was making this dramatic change. Instead, when companies asked why they were being cited for omissions that had gone unnoticed for years, compliance officers insisted that it was the responsibility of federal contractors and subcontractors to understand and implement all of the relevant federal regulations. OFCCP’s previous approach to compliance reviews didn’t matter. Companies were expected to understand that they needed to comply with all sections of the federal affirmative action regulations.
This is just one example of a situation where OFCCP has expected that companies know and understand the agency’s regulations. Companies that complain about some of the arcane and antiquated sections of the Uniform Guidelines on Employee Selection Procedures are told that they must understand and follow these regulations, regardless of the difficulties involved in implementation. Similarly, companies that are frustrated by the somewhat nebulous nature of OFCCP’s regulations regarding what applicant data should be submitted during a compliance review are told to closely review the agency’s Internet applicant rule and related regulations.
It is not a new thing for OFCCP to expect that companies comply with and understand the agency’s regulations. However, in the past, companies have frequently been able to rely on the idea that it was sufficient to make a good faith effort to meet their affirmative action obligations. This was especially true when it came to evaluating progress towards meeting affirmative action placement goals.
However, today’s OFCCP has a higher level of expectation for federal contractors and subcontractors. This change is best represented by a statement made by OFCCP Director Patricia Shiu at the 2011 National Industry Liaison Group conference. Ms. Shiu said “Affirmative action can no longer be measured by good faith efforts.” Compliance officers have taken this statement to heart. Companies are frequently being asked to prove they made specific outreach efforts to find minorities and females when affirmative action placement goals are not met. Companies are also frequently being asked about both the number of veterans and persons with disabilities in the workforce and the specific, documented efforts that are being made to attract and retain members of these groups. A lack of results often brings intensive requests by OFCCP for information on reasons for the lack of results and on efforts that will be made to remedy this lack of results.
Here is an important note in regard to this idea of good faith efforts: it has NEVER been sufficient for companies to indicate they are making a good faith effort to avoid discrimination. OFCCP has always demanded that federal contractors and subcontractors take action to prevent discrimination against minorities, females, veterans, and persons with disabilities. A relatively recent change is that OFCCP now demands that companies avoid discrimination against any individual or group on the basis of any race, ethnicity, or gender. Regardless, OFCCP has never accepted the excuse that a company was trying not to discriminate when OFCCP finds some kind of disparity in regard to how applicants or employees of a certain class are treated.
It is true that OFCCP wants companies to comply with its regulations. In some ways, though, what OFCCP really wants is to find the companies that are not in compliance with its regulations. OFCCP is especially interested in finding instances where statistics and other information suggest that there has been discrimination against some class of applicants or employees protected under the agency’s regulations.
This desire to find examples of non-compliance has to do with how OFCCP is evaluated. All organizations are measured on the progress made towards meeting goals. Publicly-held companies are measured in part by stock price. Privately-held companies are measured in part by profitability. Government agencies are measured by various means. One of the yardsticks that is often used to measure OFCCP is the number of dollars the agency has collected on behalf of alleged victims of discrimination. When that number increases, OFCCP touts its success on behalf of the American people. OFCCP uses several other measures to demonstrate its value, including the number of reviews closed in a year, but the number of dollars secured for supposedly aggrieved applicants and employees is a key number that OFCCP points to in order to demonstrate its success in conducting compliance reviews.
OFCCP certainly wants to prove that its has been successful in fulfilling its mission. However, part of OFCCP’s mission is to effectuate the political agenda established by the presidential administration in office at any given time. During George W. Bush’s presidency, there was a desire on the part of the administration to understand and work with business. OFCCP was certainly looking for non-compliance with its regulations during this time and was seeking situations where there appeared to be discrimination. However, the agency’s efforts to find discrimination were typically limited to situations involving large classes of potentially affected applicants or employees. There was very little interest on the part of the agency in evaluating the efforts companies were making to reach out to minorities and females, and veterans and persons with disabilities were basically ignored by OFCCP during the Bush years.
Since the start of the Obama administration, OFCCP has taken on a very different political mission. As part of the administration’s efforts to aid members of the military returning from Iraq and Afghanistan, OFCCP has been tasked to help ensure that veterans are able to find positions in the private sector. OFCCP has also been tasked to help ensure that persons with disabilities are able to move from government-sponsored programs to positions in the private sector.
There is a strong belief in the current administration that there is extensive discrimination occurring in the private sector, especially in regard to the manner in which women are being paid. Thus, OFCCP has been very involved in investigating compensation data and practices. This desire to investigate compensation recently culminated in OFCCP’s issuance of a new directive (Directive 307) that prompts OFCCP compliance officers to dig extensively into compensation-related issues during compliance reviews. Among other things, Directive 307 overturned the agency’s practice of focusing compensation investigations on large groups. Now, compliance officers are instructed to investigate possible compensation discrimination involving individuals and small groups as well.
Finally, the current administration strongly believes in the importance of affirmative action. While the agency showed little interest in outreach efforts during the Bush administration and was instead consumed with finding discrimination involving large groups, OFCCP is now very interested in the kind of affirmative action initiatives that had fallen by the wayside. This interest in affirmative action could be considered part of the current administration’s efforts to look out for the interests of American workers, or it could be considered part of the administration’s efforts to aid persons who previously may have been the subject of discrimination.
Understanding what OFCCP wants is important to federal contractors and subcontractors. If the agency’s interests and expectations are changing, companies that are subject to OFCCP’s regulations need to change as well.
Here are several suggestions in regard to understanding what OFCCP wants:
For more information on what to submit (and what not to submit) at the start of an OFCCP compliance review, contact Bill Osterndorf at [email protected].
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. 2013