Recent OFCCP Trends and Updates

OFCCP TRENDS AND UPDATES

The Office of Management and Budget (OMB) Approves OFCCP’s Proposed Rule to Revise VEVRAA Regulations

The Department of Labor’s (DOL) Office of Federal Contract Compliance Programs (OFCCP) submitted a proposed rule titled “Affirmative Action and Nondiscrimination Obligations of Contractors and Subcontractors; Evaluation of Recruitment and Placement Results Under the VEVRAA of 1974, As Amended” to OMB’s Office of Information and Regulatory Affairs (OIRA) on July 2, 2010. OIRA completed its review of the proposed rule on March 30, 2011.
The proposed rule will be published soon in the Federal Register. In brief, the Notice of Proposed Rulemaking (NPRM) will revise the regulations in 41 CFR parts 60-250 and 60-300, thereby strengthening the affirmative action provisions of VEVRAA. While no details are readily available, under the new rule, federal contractors and subcontractors will be required to conduct more substantive analyses of recruitment and placement actions taken under VEVRAA. They will also be required to use numerical targets to measure the effectiveness of affirmative action efforts. Revisions to recordkeeping requirements are also included in the proposed rule.
The OFCCP and Compensation Analysis
Rescission of Guidelines and Standards, Current Practice, and Advance Notice of Proposed Rulemaking (ANPRM)
 
In December of 2010, the OFCCP rescinded two Bush era notices (2006) relating to compensation—the Voluntary Guidelines for Self-Evaluation of Compensation Practices, and Interpreting Nondiscrimination Requirements of E. O. 11246 with Respect to Systemic Compensation Discrimination. These notices contained standards pertaining to systemic compensation discrimination that the OFCCP used between 2006 and 2010 in enforcing E.O. 11246.
In the event of an audit, item eleven of the current scheduling letter requires the submission of annualized compensation data from the contractor by salary range, rate, grade, or level showing the total number of employees and compensation by race and gender. Once the contractor submits this information to the OFCCP, it then uses an analysis to see if indicators of potential discrimination exist. If they exist, the OFCCP will conduct a further investigation.
Multiple industry sources are indicating the OFCCP began using a different analysis sometime around June of 2010. The old “Tipping Point Test” is no longer being used and has been replaced by the $2000 or 2% analysis. This change in audit procedures compares "similarly situated" employees with either a 2% or a $2,000 difference in pay.
This new procedure allows the OFCCP to ask for more detailed compensation data from the contractor, and enables them to conduct comprehensive investigations of almost all contractors who receive the scheduling letter. The comprehensive investigation usually involves a regression analysis, and is initiated by a request from the OFCCP for additional information—(13, 15 or 16 factors) that influence pay. Once the contractor submits the requested data to the compliance officer, it is forwarded to the Division of Statistics & Technology at the national office. After the regression analysis is concluded there could be two outcomes: satisfactory results will close the compensation portion of the desk audit or unsatisfactory results may trigger an onsite audit by one or more compliance officers under the new Active Case Enforcement (ACE) procedures.  
FY 2012 Budget Justification
Amidst the turmoil about federal government funding for 2012, the OFCCP has made a request for a total operating budget of $109,010,000 for the fiscal year beginning October 1. The OFCCP’s goals for the coming fiscal year include:
  • Conducting more comprehensive audits
  • Improving the identification of adverse impact indicators
  • Identifying compensation disparities
  • Bringing more federal contractors into compliance
Director Shiu has requested funding for an additional eleven full-time employees to bring agency employment to 786. The additional employees would be dedicated to implementing the Obama administration’s misclassification initiative, where the OFCCP will scrutinize both employees and independent contractors to ensure they are coded correctly. Below are some additional stated focuses of the agency.
  • The OFCCP will continue erosion of the pay gap through training compliance officers to recognize compensation discrimination and the development of a Compensation Data Collection Tool which will present aggregate data in a web-based, searchable database system. This replacement for the EO Survey may take the form of either collection of race, gender, individual salary information, or average compensation presented by AAP job group. It is unclear if personnel activity will be collected, and if so, what types, and if the data collection tool will solicit information regarding individuals with disabilities or Veterans. The information will be collected from approximately 70,000–110,000 contractors each year.
  • By building the Federal Contractor Selection System (FCSS) into a secure web portal, the OFCCP is hoping to modernize the audit process. The FCSS will allow contractors to submit data for audits, conduct surveys of OFCCP activities, and provide information in multiple languages.
  • The OFCCP will focus on revising the Federal Contractor Compliance Manual and basic, intermediate, and advanced training to coach compliance officers to implement the updates.
  • The agency will issue new rules governing contractor employment of Veterans and individuals with a disability.
OFCCP FY 2010 Enforcement Results
As part of the FY 2012 budget justification document, the agency released their results for October 2009-September 2010. During that time, they closed 4,960 compliance evaluations, and 1,071 (21.6%) facilities were identified with violations. Of the 1,071 facilities with violations, 919 (18.5% of the total reviews) were resolved through conciliation agreement. In addition, the OFCCP recovered $9,750,272 in back pay for 12,397 persons and investigated 107 complaints of discrimination. The agency completed 592 American Reinvestment and Recovery Act (ARRA Stimulus Act) compliance evaluations and found four (0.7%) facilities with violations. All were referred for enforcement.
For more information on any of these OFCCP updates, please contact Berkshire Associates at 800.882.8904 or email bai@berkshireassociates.com.