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Director Yang and the Office of Federal Contractor Compliance Programs (OFCCP) appear to be at a crossroads. OFCCP Director Yang’s recent presentation at the National Industry Liaison Group (NILG) 2022 National Conference set a new tone for the current administration. Director Yang spoke of a new willingness to engage in dialogue with the federal contractor community. Such dialogue could benefit both the Agency and federal contactors intent on ensuring equal workplace access.

Many actions the current administration has taken to date have not been particularly federal contractor friendly. Also, they do not appear to have done OFCCP much good. See Circa’s blog, “What Does Directive 2022-02 Tell Us About OFCCP’s Intentions?”, which argued that the Directive’s stated goal of conducting “comprehensive” audits using “flexible” (i.e., different from audit to audit) standards would slow the Agency’s review process. Well, as we approach the August 30 close of the fiscal year, the Agency is on track for the lowest number of completed compliance evaluations in nearly 20 years.

One promising indicator that a shift in Agency tone may be afoot is the “listening sessions” that OFCCP held this June to seek input from the contractor community (see Circa’s blog, “Recent OFCCP Listening Sessions: What did the Agency Hear?”). It was nice to be asked. The advice given to the Agency, to adopt well-understood standards of review adapted to the realities of individual contractor’s business situations, was good advice. The recommendations could help the Agency get through more audits quickly and efficiently, to the ultimate benefit of workers.
Another indicator that the current administration is adopting a more open mind is comments the Agency has made since issuing Directive 2022-01, the so-called “pay equity audit Directive”, in March of this year. The Directive concerns contractors’ obligation to review their compensation systems (see 41 CFR 60-2.17(b)(3)). Circa’s blog “The OFCCP’s New Compensation Directive: A Lot Below the Surface” raised concerns that the Directive overstated contractors’ obligations. The OFCCP has since made clear that contractors need not perform complex regression or other forms of sophisticated statistical analysis, and that in most cases pay equity reviews performed under legal privilege can stay private. (The Agency is, however, determining means by which it can be satisfied that the privileged review was actually done – without requiring seeing the review itself.) OFCCP’s clarifications are welcome proof that it is listening to concerns voiced by contractors.

What are the biggest issues facing the Agency?

The first is how to complete audits effectively (which I would define as performing efficient audits that concentrate Agency attention on contractors whose plans are most likely to provide indicators of possible discrimination). The second is how to fairly and effectively implement Director Yang’s stated goal of reviewing contractor compliance at the organizational level (“multi-establishment” review), instead of at the individual work location (“establishment”) level.

If the Agency takes the route laid out in Directive 2022-02, all concerned will grow frustrated. Conscientious companies will not be happy to be treated, in effect, as guilty until proven innocent (why else the insistence on “comprehensive” audits?). Compliance Officers will be unhappy about spending so much time on audits unlikely to uncover discrimination (experience has proven that the vast majority of audits do not reveal discrimination, so why do a deep-dive review on every audit?). Multi-establishment review, if not implemented very carefully, could impose a one-size-fits-all audit methodology making diligent and compliant contractors appear discriminatory.1

The silver lining is OFCCP’s stated willingness to talk. As Director Yang said in her remarks at the NILG 2022 National Conference:

“I ask you all for that grace of understanding, for that ability for us to empathize with each other, to be candid about the challenges we are facing so that we can reach solutions that will work for us all and will achieve equal employment opportunity for all Americans.”

Amen. The most efficient way to advance Affirmative Action’s mission of equal access and non-discrimination is for Agency representatives and the contractor community to learn together. If the Agency continues on this path., contractors will follow.

 


1 If, for example, supply and service “multi-establishment” reviews will require the analysis of large groups of employees together, small differences in large sample sizes (for example between male and female hires) may appear statistically significant and create an unwarranted inference of discrimination. Also, in the past, OFCCP desire for the “flexibility” in audit review has caused the Agency to group dissimilar employees together to create the large groupings that produce questionable statistical indicators. The combination of review standards not reflective of how a company does business, as well as reviewing large data sets of dissimilar employees, could really be problematic.

Author

Paul McGovern
Managing Partner
Praxis Compliance

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