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As 2023 ends, despite the visions of sugar plums dancing in your head, it is a good time to take stock of government initiatives affecting your Affirmative Action practice, the better to get ready for 2024. Many things happened this year, but to Circa, the following are the big ones. The list, of course, has both naughty and nice. Please check the list twice.

 

New Scheduling Letter and Itemized Listing. Approved by the Office of Management and Budget (OMB) in August 2023, new Scheduling Letter and Itemized Listing (“Scheduling Letter”) represents a massive increase in the amount of data federal contractors must submit with their desk audit submission.  In the past, the Agency asked for much of this detail only if a contractor’s initial submission raised issues warranting additional review.

Item 22 requires new detail on the contractors 41 CFR 2.17(b)(3) review of its compensation system. It identifies more detail for submission than the regulation requires. For example, the regulation does not require that contractors perform a statistical analysis – even though 22(e) is written as if it does.

In its justification for the Scheduling Letter change, OFCCP maintains that receiving all possibly relevant information with the initial submission will speed up the audit process. Frankly, it is too soon to say whether OFCCP will choke on all the added information.  More on this in Circa’s follow-up blogs as things develop in 2024.

 

OFCCP Director Turnover: Director Yang left OFCCP in March 2023. By the end of her tenure, OFCCP was performing cursory initial reviews of audit submissions to decide which were most likely to warrant further review. After the appointment of Acting Director Michelle Hodge, the Agency reverted to performing full-scale audits from the get-go. To triage or not to triage, that is the question for 2024.

 

Compensation Review: In public comments throughout 2023 concerning how it reviews contractor’s pay data for possible pay equity issues, OFCCP spoke of “zooming in and out.”  This apparently refers to comparing the pay of employees that employers do not necessarily maintain performing similar work. OFCCP creates one grouping after another, large, small, or medium (i.e., “zooms”), until a grouping produces a statistically significant pay difference between men and women or race/ethnicities.

Title VII requires that pay equity review be limited to a comparison of employees who are “similarly situated.” [1] “Zooming in and out” for the limited purpose of determining whether further analysis is warranted may be fine. “Zooming” around to tell a contractor it is violating Title VII is not.

 

Pay Data Reporting: At the 2023 NILG National Conference, EEOC Chair Burrows promised that EEOC will ask for business community input before deciding how to expand EEO-1 reporting to include detail on employees’ pay (“Component 2” reporting). Burrows said that the Commission will look for stakeholder input because it is “important to get it right.” The consensus in the contractor community is that the Component 2 process used to collect 2017 and 20178 data is time-consuming and of little utility in identifying race- and gender-based inequalities in pay. Will EEOC solicit more input or ram through Component 2 reporting unchanged in 2024? Stay tuned.

 

Artificial Intelligence: AI analyzes data to make recommendations on how best to proceed (who to hire, for example). If the data relied on is biased, AI will make biased recommendations.  This issue is now ‘top of mind’ in government: See the Biden Administration’s Executive Order on AI. AI is one of the most pressing and complex issues of 2023 and beyond.

AI is being used in talent acquisition, onboarding, training and development, performance management and a host of other HR initiatives. The new Scheduling Letter Item 19 requires that contractors supply “documentation of policies and practices” for AI and “technology-based selection procedures” when audited. If you use AI, review how your system works to make sure that it does not create a barrier to employment and have documentation at the ready.

 

Supreme Court’s Harvard and UNC Decisions and Decisions to Come: The Supreme Court held that the Harvard University and University of North Carolina’s Affirmative Action programs for college admissions violate the Constitution and Title VI of the Civil Rights Act. The Court ruled that the programs, designed to encourage Black admissions, could not be “narrowly tailored” to ensure that the rights of other groups (Chinese in this instance) are limited to the least degree possible. Chief Justice Robert’s majority opinion relied in large part on a 2003 case, Grutter v. Bollinger, in which the Court held up Harvard’s admissions process as an example of how to properly implement Affirmative Action in college admissions. Chief Justice Roberts’ opinion also questions whether metrics such as those we use in Affirmative Action planning are reliable. Using this logic, a future Court decision could knock out the underpinnings of Affirmative Action.

Generating less buzz but still of significance is the Supreme Court’s upcoming review of the ‘Chevron Doctrine’.  In 1984, in Chevron, U.S.A., Inc. v. Natural Resources Defense CouncilInc., the Supreme Court held that when Congressional legislation does not specifically address an issue, a federal agency can fill in the blanks on how to proceed. The current conservative majority on the Supreme Court does not favor delegation of authority to federal agencies. Next year the Supreme Court will hear two cases addressing the Chevron Doctrine. While the cases do not directly address Affirmative Action or Diversity, Equity and Inclusion (DE&I), a reversal of the Chevron Doctrine could become ammunition for conservative groups to challenge these programs. This makes the Supreme Court decision to review the Doctrine one of the biggest compliance-related events of 2023.

 

Conclusion

Was the Supreme Court naughty or nice? In our divided country, opinions differ.

Was OFCCP naughty to essentially ignore comments received from the contractor community when justifying the new Scheduling Letter? On the nice list, OFCCP is in the process of renewing its Memorandum of Understanding (“MOU”) with the NILG. Past agreements promised robust and meaningful discussion of issues critical to compliance practice. Hope springs eternal: meaningful discussions would help ensure meaningful audits that identify and address actual barriers to equal access. That would be nice.

[1] “How do you determine whether employees are similarly situated? The jobs the employees hold should be similar enough that one would expect the jobs to pay the same. This need not be an overly rigid process. The key is what people actually do on the job, not job titles or departmental designations. Skill, effort, responsibility, and the general complexity of the work are guideposts in determining job similarity.” (EEOC Q & A: Compliance Manual Section on Compensation Discrimination)


1 “How do you determine whether employees are similarly situated? The jobs the employees hold should be similar enough that one would expect the jobs to pay the same. This need not be an overly rigid process. The key is what people actually do on the job, not job titles or departmental designations. Skill, effort, responsibility, and the general complexity of the work are guideposts in determining job similarity.” (EEOC Q & A: Compliance Manual Section on Compensation Discrimination)

Author

Paul McGovern
Managing Partner
Praxis Compliance

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