Eight Ways to Survive an OFCCP Audit

Auld Lang Syne was a Scottish poem written in 1788 and later set to music. The title translates to t...

Posted by Michiko Lynch, HR Consultant on February 6 2023
Michiko Lynch, HR Consultant

Auld Lang Syne was a Scottish poem written in 1788 and later set to music. The title translates to times gone by. It is about not forgetting the past. We should take a lesson in not forgetting the past as we ring in 2023. The New Year offers an opportunity for a fresh look at the OFCCP compliance review.  

The key to surviving a compliance review, or audit, is in preparing the AAP—way before the scheduling letter is received. Remember, a compliance review focuses on the activity from the 12 months prior to the development of the current AAP. Audit survival starts with not forgetting the past. Here are eight ways to do just that:

Develop your AAP on time and accurately! 

Scrub your data before your AAP is developed, and check for missing or inaccurate information. Some common errors are missing or inaccurate race/ethnicity and gender codes, and old job titles. Other frequent issues that should be checked are:

  • Applicants and hires—are all of your new hires included in your applicant data with the appropriate pool of applicants? Are there any jobs filled with one applicant and one hire? Is the single applicant and hire correct or are you missing applicants? If there was only one applicant, do you know why there was such a limited applicant pool? What disposition codes are being used and are they accurate? Do you have applicants who applied to one job and are hired to a different job? Did any hiring occur with an outside search firm, and if so, did you receive the pool of candidates the firm considered when passing along the candidate for hire to you?
  • Promotions and transactions—do your promotions reflect the company definition of a promotion? Do you have employees who are promoted to and from the same job? Is that transaction a promotion or a merit increase in the same job? Was the promotion competitive or non-competitive? If competitive, do you know the pool of candidates who were considered for that opportunity?
  • Termination reasons—are those who were terminated for cause, or involuntarily terminated, accurately reported? Is there back-up documentation for every involuntary termination? If an employee resigned, do you have a resignation letter?

Once you have confirmed your data accuracy, make sure you review your placement analyses to see if there are any areas that should be explored further.

Know your policies and have copies ready.

The compliance officer will try to find out as much as possible about how things work at your company. All employment decisions for individuals or groups may be fair game. Common requests include copies of policy statements about: compensation, leaves of absence (military, disability, maternity), promotion, termination, layoff or reduction-in-force, religious observance/practice, request for accommodation for disability, requirements for medical exams, EEO/Non-discrimination/Anti-Harassment policy statements, and contract clauses.

Define your processes and be able to explain them. 

Some common inquiries include the processes for: requesting self-identification of race/ethnicity, gender, disability, and Protected Veteran status; reviewing physical and mental job qualifications, reviewing an applicant’s job qualifications, reviewing and responding to requests for accommodation, and returning from leave.

Be prepared to explain your annual review of your compensation systems.

With the new Compensation Analysis Directive, that was released on August 18, 2022, the OFCCP may ask for information on how your organization complied with its obligation to review its pay systems. Prepare to provide the following information to demonstrate compliance with this regulatory requirement:

  • When the compensation analysis was completed
  • Number of employees included in the compensation analysis and the number and category of the employees that were excluded from the analysis
  • The “forms” of compensation that were analyzed and if applicable, how the different forms were separated or combined for analysis (e.g., base pay alone, base pay combined with bonuses, etc.)
  •  The method of analysis used by the contactor (e.g., multiple regression, decomposition regression analysis, meta-analytic tests of z-scores, compa-ratio regression analysis, rank sums tests, career-stall analysis, average pay ratio, cohort analysis, etc.)

Outreach and recruitment. 

OFCCP will likely request copies of all job openings that were listed with the appropriate State Employment Center closest to the job location. Be sure you have proof of all job listings with the state job bank offices for all externally filled positions. Confirm you have all documentation of outreach and recruitment efforts for the applicable period. Prepare a written evaluation of outreach efforts and activities that focused on Individuals with Disabilities and Protected Veterans.

Communicate with managers and supervisors. 

First, ensure they are informed of placement goals and action-oriented programs as soon as the AAP is developed. When a scheduling letter is received, inform them about the compliance review and how they may be involved including providing explanations or information about their employment selections, compensation differences for their employees, how they handled complaints of harassment or discrimination, or their role in the termination of an employee.

Pay attention to dates. 

Note the date your company received the scheduling letter. These letters are typically sent via email. The compliance officer may reach out a few days before the letter is sent to confirm contact information. You have 30 calendar days from the receipt date to provide your AAP and all other required data items. Extensions are not freely granted so be prepared to submit on time. If your company has an unavoidable issue, contact the compliance officer or the District Director immediately and work out a solution. Once the audit is underway, officers increasingly rely on email to communicate with you and often set deadlines that are three to five days out. Don’t delay. If you cannot meet the deadline for submitting additional information, notify the compliance officer immediately and suggest an alternate date.

Ask for help. 

A compliance review almost always requires a team response. Engage legal counsel and/or your AAP consultant immediately after receiving a phone call or the scheduling letter indicating a compliance review. Identify others to help with items outside of your area of expertise such as Labor Relations for copies of notices sent to unions or Purchasing for copies of purchase orders or contracts.

For more information on developing an AAP in 2023, contact a Berkshire expert at 800.882.8904. Or check out our Audit Support Page here.

If you would like more information on the fundamentals of OFCCP Compliance, check out our page here!

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