OFCCP Updates: Enforcement Trends, CASLs, Healthcare, and Compensation

Audit Enforcement: Berkshire’s consultants continue to see trends in audit support, including stepped up questions about outreach, and a focus on results rather than efforts. The Office of Federal Contract Compliance Programs (OFCCP)  is shifting focus to areas where they can have direct impact, and away from areas where they would refer potential violations to other agencies. As an example, the OFCCP has indicated it will no longer review I-9s as part of routine compliance reviews for investigating only those areas where they have enforcement jurisdiction. Any I-9 issues found during reviews were referred to Immigrations and Customs Enforcement. 

Also, in a shift away from investigating patterns or practices of discrimination, the agency is pursuing individual complaints at a higher rate, instead of referring the complaints to the U.S. Equal Employment Opportunity Commission (EEOC). According to Director Patricia Shiu of the OFCCP, a recent analysis indicated individual complaints are twice as likely to reveal discrimination as the neutral audit selection process, so it is a good use of agency resources. In the coming year, the agency is expected to strengthen the regulations for Veterans, possibly adding in a utilization style analysis as is currently completed for minorities and women. Contractor’s outreach efforts for disabled individuals are also expected to be scrutinized more closely. Proactive HR professionals are well advised to review their affirmative action plans (AAPs.), applicant tracking procedures, and outreach programs in advance of an OFCCP audit. 

 

Corporate Scheduling Announcement Letters (CSALs): The OFCCP has confirmed to the Industry Liaison Group that the CSALs will be sent to CEOs in late 2010. This letter is sent to any company with two or more establishments on the OFCCP’s list to be audited in the upcoming year, and identifies the location(s) likely to be audited. More information is available at the OFCCP website here.

 

Healthcare: In an example of its continued focus on the healthcare industry, the OFCCP filed a lawsuit against a Florida hospital claiming justification in cases where a facility performs services under a contact with TRICARE, the health care program serving Uniformed Service members and retirees. In this case, Humana Military Healthcare Services, Inc. (HMHS) was contracted to provide networks of health care providers for TRICARE beneficiaries. Florida Hospital then signed a “Hospital Agreement” with HMHS, to become a participating network hospital and provide health care services for beneficiaries eligible for benefits under the contract between HMHS and TRICARE. The Administrative Law Judge (ALJ) found as a result of this arrangement, Florida Hospital is a covered subcontractor and must grant OFCCP access to its facilities, and otherwise permit the agency to conduct and complete a compliance review.

 

The OFCCP has not indicated whether it will consider Florida Hospital to be a binding precedent and certainly the case will be appealed, however TRICARE network and any other government sponsored healthcare program providers should review their contracts with any healthcare maintenance entities or insurers, and evaluate whether to comply with federal contractor and subcontractor obligations. A comprehensive review of the impact of this decision is available through one of Berkshire’s legal partners here.

 

Compensation: The OFCCP has filed a request to rescind the two 2006 guidelines on compensation analysis, “Interpreting Nondiscrimination Requirements of Executive Order 11246 with Respect to Systemic Compensation Discrimination” and “Voluntary Guidelines for Self-Evaluation of Compensation Practices for Compliance with Executive Order With Respect to Systemic Compensation Discrimination.” The details of the document have not been released, but based on Director Shiu’s comments at the NILG Conference and other industry presentations, it is apparent the OFCCP is looking to establish a new method to collect compensation data from contractors. Director Shiu has also emphasized the OFCCP’s role in working to close the wage gap and improve inter-agency cooperation to address compensation disparities. (Read the text of her remarks from NILG here.)

 

While the 2006 Guidelines did not create new regulations, they established a structured way for contractors to conduct compensation analyses using similarly situated employee groups and multiple regression analyses. This request to rescind the guidelines opens the door for OFCCP to begin to analyze compensation without the endorsement of a proscribed grouping or statistical approach. The agency has just begun the process of rescinding the guidelines and the immediate effect of the contractor community is not known.

 

For more information on any of these updates, or to speak with one of our expert consultants, please contact Berkshire Associates at 800.882.8904 or email bai@berkshireassociates.com.