OFCCP Releases Updated Construction Scheduling Letter

The OFCCP has received approval to begin using a revised Scheduling Letter and Itemized Listing to initiate “construction” audits. The agency can begin using the new letter immediately.

The revised Scheduling Letter aligns with the agency’s enforcement practices over the last several years by expanding the scope of a construction audit beyond strictly trade workers (though clear authority for this is still lacking). 

The new letter also expands the scope of the employee “snapshot” data provided in audits, and goes a long way toward clarifying what the agency means for each data point. It finally recognizes, and deals with the fact somewhat, that the Itemized Listing contains several duplicate requests. And the revisions will more explicitly push contractors to submit audit documents and data electronically. 

The OFCCP has also added two entirely new items to the Itemized Listing demanding information on “all” tests and selection procedures (emphasis theirs), and “evidence” that the contractor is “monitoring” “personnel and employment-related activities” including seniority practices, job classifications, and work assignments. 

Below we identify and discuss the major changes and what they might mean for contractors. The new Scheduling Letter and Itemized Listing are available here (external link). 

The Future is Now: Scheduling Letter Demands “Electronic” Formats 

The days of old fashioned paper audit submissions are pretty much behind us now. Over the last decade or so the OFCCP has steadily increased the pressure on contractors to submit all audit materials electronically. 

The agency has subtly replaced the word “encourage” with “request,” which is still not quite a demand, but signals the agency’s very strong preference for electronic over paper documents. The new letter also provides more detailed information about various electronic submission options, including using the agency’s secure file sharing system, Kiteworks. 

The OFCCP is well aware that filing a paper submission is often an audit strategy designed to slow things down, among other goals, and that runs counter to the agency’s goal of efficiency. They are also aware that it is 2024, and most employment records are kept electronically these days. 

Paper submissions are still technically allowed, but the OFCCP would really prefer that you discuss the matter with the Investigator (Compliance Officer) first, and now the Scheduling Letter says so explicitly. 

Confidentiality Concerns 

The OFCCP’s notices regarding confidentiality and disclosure of submitted materials under the Freedom of Information Act, etc. remain largely the same. But the agency curiously removed a sizable portion of the Scheduling Letter addressing 41 C.F.R. § 60-1.20(f). 

That section of the OFCCP’s regulations addresses agency compliance evaluations (audits) and explicitly allows contractors to substitute codes for employee names and a coding system for compensation. Given that, since the pandemic the agency has embraced “remote” interviews by phone or video, and that the OFCCP has generally ramped up efforts to gather more and more detailed compensation information, this is not surprising, but it is disappointing. 

The agency effectively moved this notice to a footnote to Itemized Listing Paragraph 3(b) requesting information on “hires.” But that is not the only place where such a footnote would be appropriate. 

The OFCCP changed the Scheduling Letter and Itemized Listing, but they did not update the underlying regulations, so only providing that notice with regard to hires has no legal effect. § 60-1.20(f) still applies when the OFCCP asks for the names of those who were promoted or terminated during the relevant time period, not just hires. 

And despite the OFCCP’s insistence that contractors turn over detailed compensation data in every audit now, the regulations still allow contractors to submit “an index of pay and pay ranges” instead of the actual numbers. They just really don’t want to highlight that fact. 

The regulations go on to state that the OFCCP still has full access to names and numbers, but only if the agency conducts an “onsite” review. 

This puts contractors into a small dilemma. They can submit codes instead of names, and ranges instead of actual pay, but doing so will likely trigger an onsite where one might not have been triggered before. The OFCCP is likely banking on the idea that contractors would rather avoid an onsite, if possible, and are therefore encouraged to submit names and numbers up front. 

Itemized Listing Paragraph 1 – List of Construction Projects 

Here the changes are very minor. The OFCCP requests a list of all construction projects in the relevant area, and the revised letter puts the elements of that list into bullets for you, and adds project start and end dates (or anticipated dates). 

Itemized Listing Paragraph 2 – Compensation Data and Non-Trade Employees 

Consistent with the agency’s trend in recent years to demand more and more detailed employee compensation data, the revised letter blows out Paragraph 2. The agency is also taking a big swing trying to redefine the scope of a “construction” AAP and audit by demanding information on trade employees and those employees who are “involved in the supervision, inspection, and other onsite functions incidental to the actual construction.” 

The OFCCP has a few issues when trying to initiate a “construction” audit, but the biggest one is knowing whether or not a contractor connected to a “construction contract” is actually providing construction services. You may be surprised to learn how often that is the case. For example, for an infrastructure contract, that involves LOTS of actual construction, there is also likely to be work for engineering firms to design the infrastructure being constructed. These engineering firms often do not employ trade workers, nor do they provide trade work. So when they receive a “construction” audit letter, they have little to submit. 

It used to be that the non-construction contractor would simply inform the OFCCP that they do not hold “construction contracts,” and the agency would administratively close the construction audit. At that point, the agency was free to drop that contractor’s bingo ball into the hopper for selection for a supply-and-service audit. But the agency’s restrictions on audit selection generally do not allow the agency to simply switch the audit “type,” issue the proper Scheduling Letter, and continue the review. 

But the OFCCP has spent a tremendous amount of time and money to implement new electronic systems to manage workload, and has worked very hard over the last several years to be more efficient and to eliminate or at least minimize administrative closures. So they are doing a clever thing. 

The agency’s guidance says that if you receive a “construction” audit letter but are not a “construction” firm, you can still participate in a “construction” audit because the OFCCP’s definition of “construction work” includes work performed by employees who are “involved in the supervision, inspection, and other onsite functions incidental to the actual construction.” 

In practice, this should create a sort of mini-supply-and-service audit where the only employees included are those who work on construction projects in those enumerated ways. 

Trouble is, there is no explicit authority for this in the OFCCP’s regulations, and in fact seems to run counter to a clear regulatory divide between “supply-and-service” and “construction” obligations. The OFCCP should really do the hard work of updating their increasingly more antiquated regulations, rather than relying on unenforceable sub-regulatory guidance, providing clarity and consistency rather than the makeshift hodge podge contractors are forced to deal with today. 

Regardless of the agency expanding the scope of employees covered by a “construction” audit, the agency is once again expanding and clarifying the request for employee-level compensation data. 

Again, having hidden the notice that contractors have a regulatory option to submit pay ranges and/or indexes rather than actual numbers, the OFCCP is really re-making the compensation request to more closely mirror such requests in the supply-and-service audits. 

For instance, instead of “total hours worked in each trade,” the revised letter demands contractors split out hours and pay into “regular,” “overtime,” and “bonus or other pay.” 

The revised letter also demands job titles, an indication of whether the employee is classified as “trade,” “supervision,” or “onsite function,” and the time period covered for the pay and work hours being reported. That last demand is a bit superfluous since Paragraph 2 states clearly that the information should be from the preceding 12 months. 

The OFCCP also tried to clarify the scope of the pay data being requested, though this author is not sure they succeeded. The previous letter simply demanded “[e]mployee level payroll data for all construction trade employees” working in the relevant area. The revised letter appears to demand an employee compensation file for each project listed in response to Paragraph 1 (see above). 

So, for example, if the contractor has three projects covered by the audit, they would need to submit three compensation “snapshots” showing the employees and pay earned on that project. And when the OFCCP asks for “total regular pay,” or “total overtime pay,” that appears to be in reference to pay earned on a particular project, not the total pay the employee earned over the time period covered by the audit. 

However, when listing the data points the OFCCP wants to see in these compensation snapshots, they do not include the project name. If you submit a separate spreadsheet (or separate tabs in one spreadsheet file) for each project, that probably isn’t an issue. If you try to combine your compensation snapshots from multiple projects, though, you would be wise to add a column for “project name.” 

And while the OFCCP might think this will lead to necessary clarity, this author questions how the OFCCP intends to deal with the fact that they may now be explicitly asking for partial pay data for some employees, without appearing to recognize that fact. And it should be interesting to see how, if at all, the agency takes that into account when building their compensation analysis models. 

Itemized Listing Paragraph 3 – Employment Activity 

The previous Itemized Listing demanded data on employment activity, specifically, “applicants, hires, promotions, layoffs, recalls, and terminations.” But for some reason the subparagraphs only addressed the detail being requested for applicants, hires, promotions, recalls, and terminations. The revised Itemized Listing now includes a subparagraph specifically for layoffs. It also demands transaction dates for the first time. 

The subparagraph for “hires” includes a footnote letting contractors know that they can submit an employee ID rather than name, as provided in 41 C.F.R. § 60-1.20(f). They fail to include that footnote with regard to applicants, promotions, layoffs, recalls, or terminations, though that footnote is applicable to each. 

The revised paragraph also demands transaction data on trade employees and those “involved in the supervision, inspection, and other onsite functions incidental to the actual construction.” The previous letter demanded data on “construction trade employment activity,” while the revised letter omits the term, “trade.” But as noted above, the agency’s authority for this is thin and unclear. 

Itemized Listing Paragraph 4 – EEO Policies 

The previous Itemized Listing simply demanded a copy of the contractor’s current EEO Policy Statement as required by 41 C.F.R. § 60-4.3(a)7.f. But the revised letter significantly expands this request to cover “antiharassment policies, policies on EEO complaint procedures, policies on employment agreements that impact employees’ equal opportunity rights and complaint processes (e.g., policies on arbitration agreements), and any other EEO policies.” 

The revised paragraph fails to include language such as, “if applicable,” though, and fails to note that none of the enumerated policies the agency is asking for—beyond the required “EEO Policy”—are actually required. They are not. So not having a requested policy is not necessarily a violation. 

Itemized Listing Paragraph 5 – “Flow-Down” Requirement 

The OFCCP’s regulations require construction contractors to include the EO Clause from the OFCCP’s construction regulations in qualifying construction subcontracts. This is typically done by inserting into contracts a reference to the OFCCP’s regulations, rather than copying-and-pasting several pages of regulatory text. 

The requirement has not changed, but the revised Itemized Listing might lead one to believe that it has. Rather than simply requesting evidence that the EO Clause is being properly “flowed-down,” the revised paragraph specified records showing that the contractor “included” the “Standard Federal Equal Employment Opportunity Construction Contract Specifications” and the “Notice of Requirement for Affirmative Action to Ensure Equal Employment Opportunity” in qualifying subcontracts. 

That can still be accomplished “by reference,” and your current reference is likely to be sufficient. Supply-and-service contractors only have to reference one section of the agency’s Executive Order regulations, but construction contractors need to reference two: 41 C.F.R. §§ 60-4.3 and 60-4.2. 

• 60-4.3 is the “EO Clause,” which contains the “Standard Federal Equal Employment Opportunity Construction Contract Specifications.” § 60-4.2 contains the “Notice of Requirement for Affirmative Action to Ensure Equal Employment Opportunity.”

Impact Ratio Analysis Requirements? New Paragraphs 16 and 17 

Hiring discrimination in construction can be difficult to spot and prove based on employment transaction data for a variety of reasons. And to the extent that discrimination is suspected to be present in construction employment transactions, more often than not a trade union is involved and if the OFCCP wants to pursue the matter, that makes their job a whole lot more complicated. So historically construction contractors have not paid much attention to the obligation to perform impact ratio analyses on things like hiring, promotion, and termination, in accordance with the Uniform Guidelines. The OFCCP is likely going to change that. 

The revised Itemized Listing includes a new Paragraph 16 demanding that contractors identify “all tests and selection procedures used in the hiring process” (emphasis theirs), including “technology-based tests and selection procedures (e.g., artificial intelligence, algorithms, automated systems)” and “any other” tests and procedures such as written tests, work simulations, and structured interview questions. Finally, the agency demands “evidence” that the tests and selection procedures were validated “where necessary.” 

The agency is gathering as much information as it can regarding new “artificial intelligence” and related tools as it figures out how to deal with these new tools and how they relate to the Uniform Guidelines. They are not specifically demanding that contractors perform impact ratio analyses (IRAs) on these tools, but if there appears to be adverse impact in a selection process involving such a tool, and the agency identifies the tool as the “culprit,” the contractor will have to provide validation evidence. If you are not monitoring the use of these tools yourself, you won’t necessarily know that validation is necessary until the OFCCP starts waiving a potential violation at you. 

But AI selection tools are not yet quite so helpful in the trades context, so most construction contractors will continue to focus on making sure employment tests are either validated up front (recommended) or monitored and validated if necessary. 

New Paragraph 17, however, demands “evidence that your company monitored personnel and employment-related activities during the preceding year to ensure that seniority practices, job classifications, work assignments, and other personnel practices did not have a discriminatory effect.” 

That falls short of demanding evidence that the contractor performed IRAs, but that might be the easiest way to satisfy this audit requirement. The OFCCP does not cite to the Uniform Guidelines here (though they do not necessarily have to), recognizing that some other, non-statistical method of “monitoring” is sufficient. The point is, contractors do have an obligation to monitor the effect and impact of their various employment practices and processes, and construction contractors are no different. More to the point, the OFCCP is going to be inquiring into this area now in every construction audit. 

Odds and Ends 

Because the OFCCP might initiate a “construction” audit for a non-construction contractor, and doesn’t want to administratively close the erroneous construction audit and properly implement a supply-and-service audit, the revised Scheduling Letter has several new notices included letting contractors know, “If the company does not have a union or training program, it should note that in its submission.” In other words, if you are not a construction contractor, you will still need to respond to the letter, but are allowed to simply note that a particular request is “not applicable.” 

The revised Itemized Listing also recognizes that it asks contractors for information regarding accommodations and accommodation policies three separate times, and that it is not necessary to duplicate your response three times. They didn’t eliminate the duplicate asks likely due to perceived legal reasons that aren’t worth getting into here. What they are really saying is that your response to Itemized Listing – Section 503 Paragraph 9, and VEVRAA Paragraph 9 can simply say, “Please see our response to Itemized Listing – Executive Order 11246 Paragraph 15.” 

But the agency did clarify that a written accommodation policy and accommodation records aren’t actually requirements. If you do have a written policy and/or you do have accommodation documentation to show, the OFCCP still wants to see it. But for the first time they note, “If your company does not have written reasonable accommodation policies or did not receive reasonable accommodation requests during the preceding 12 months, indicate so in your response.” 

And they get that mostly right. You can have accommodation requests that fall into the relevant time period but not have any documentation regarding those requests, and that is not necessarily a violation. Many things that were considered “accommodations” in the past have become so commonplace the organization might not bother with much recordkeeping.  

For example, in 2024 it is less likely that an office worker who needs an ergonomic keyboard or a mouse pad with wrist support will have to fill out a stack of ADA paperwork—the accommodation is simply provided, but not necessarily recorded. Neither the OFCCP’s regulations, nor the ADA, require employers to create any specific documentation around accommodations. The presumption is that if it is a “major” request involving things like widening a doorway, installing ramps, reconfiguring workspaces, etc., it will likely also involve extensive documentation, so no documentation requirement is necessary. 

So turn over what you have and don’t worry if you don’t have documentation for every accommodation made. Be concerned if you do not have documentation surrounding an accommodation request that was denied. It still may not be a violation to not have created documents, but the lack of documentation will make the decision harder to defend and gives the OFCCP a potential opening for a disability discrimination violation. 

Looking Ahead 

The revised construction Scheduling Letter and Itemized Listing aligns this key document with the OFCCP’s recently evolved enforcement practices, so that is a good thing. This should bring more stability and much needed consistency to construction audits going forward. 

What exactly those construction audits will look like remains to be seen, but the new letter seems to signal that the OFCCP is looking at more data, likely performing more analyses on that data, and expecting contractors to follow suit. 

If you have questions about construction AAP obligations, the new construction audit letter, or any other OFCCP-related matter, please don’t hesitate to contact us at bai@berkshireassociates.com.