A Look Back—2014 Compliance Year in Review-By: Lynn Clements

As we look forward to what is to come in 2015, it’s important to reflect on where we have travelled. The ride was bumpy for federal contractors in 2014, and perhaps best described as “under construction” for Office of Federal Contract Compliance Programs (OFCCP). The agency implemented or proposed a series of new regulatory requirements, placed new directors in several regional field offices, and refined its investigative procedures to more aggressively root out unlawful discrimination.

Only the President may have been busier, issuing a whopping number of new executive orders or memorandums applicable to federal contractors in 2014, including:

o   Executive Order 13658, which established a minimum wage for a limited number of federal contracts (The Department of Labor’s (DOL) Wage and Hour Division, not OFCCP issued regulations);

o   Executive Order 13665, which prohibits federal contractors from discharging or otherwise discriminating against their employees and job applicants for discussing, disclosing, or inquiring about compensation;

o   Executive Order 13672, which amended Executive Order 11246 to prohibit discrimination on the basis of gender identity and sexual orientation;

o   Executive Order 13673, which requires federal contractors to disclose recent labor law violations, including wage and hour, safety and health, discrimination, family and medical leave, and collective bargaining violations, as part of the federal contracting process, among other requirements; and

o   Presidential Memorandum “Advancing Pay Equality Through Compensation Data Collection,” requiring the DOL to evaluate and propose a rule requiring federal contractors and subcontractors to submit compensation data to the federal government.

OFCCP already issued final regulations to implement Executive Order 13672. These regulations, which require policy changes but no data analyses, will become final in April 2015. Final action regarding Executive Order 13665 and a pay data collection tool is expected this year, with proposals regarding both being issued in 2014.

This was also the first year federal contractors had to comply with the agency’s revised regulations under Section 503 of the Rehabilitation Act (Section 503) and the Vietnam Era Veterans Readjustment Assistance Act (VEVRAA), both of which became effective on March 24, 2014. As promised, the agency’s first year of enforcement was more about educating federal contractors about the revised affirmative action requirements for Individuals with Disabilities and Protected Veterans and less about finding violations. However, the agency’s enforcement activity has been slowly ramping up in this area, and compliance officers are regularly asking federal contractors about the status of their efforts to come into compliance with these new requirements. To name just a few, we have seen regular inquiries regarding updated affirmative action policies, vendor notification and recruitment letters, purchase order language, EEO taglines, website accessibility, reasonable accommodation policies and processes, and pre- and post-offer self-identification forms. The agency continues to probe federal contractors’ outreach efforts, and we expect this focus to continue in 2015. The agency also is examining whether all required jobs have been listed with the state employment service delivery system by comparing the hires made during the plan year against available job listings.

OFCCP Director Shiu promised improving “efforts to eliminate pay discrimination” as one of her “primary goals,” and the agency continued to make good on that promise this year. In August, OFCCP issued a controversial proposal to require federal contractors to submit an annual, electronic “Equal Pay Report” providing W-2 wages and typical hours worked for all employees by EEO-1 job category and race/ethnicity and sex to the agency. The agency continued to fine tune its approach to compensation discrimination by issuing a revised Scheduling Letter and Itemized Listing in September. Pending for more than three years, the new scheduling documents require federal contractors submit individual, employee-level compensation data (base pay or wage rate and other compensation) to OFCCP in every audit, among other changes. Already in use for a first wave of audits, the new scheduling documents are increasing the complexity and length of time audits remain open. Going forward, federal contractors can expect more follow-up questions about their compensation practices and the factors that influence pay at their organizations—and a greater focus on statistical testing of available data.

The new scheduling documents also require federal contractors to provide personnel transaction data (hires, promotions, and terminations) to the agency by each of the specific minority classifications, rather than total minority. While this change was expected, it firmly cemented a practice which began in the Bush Administration of “following the numbers” when enforcing the nondiscrimination principles of Executive Order 11246. The agency is routinely examining whether females or males have been disadvantaged, and reached several settlements this year where males were the disadvantaged group. When evaluating racial discrimination, the agency no longer limits its review to whether all minorities have been disadvantaged and regularly considers whether a particular race is being favored or disfavored over others.

The agency’s financial settlements in 2014 only serve to reinforce these policy priorities. The one exception is in the area of compensation discrimination, where significant settlements have proven elusive for the agency. One of the noteworthy settlements this past year involved allegations that 2,500 men were discriminatorily “steered” into more physical roles at a sandwich making plant—a signal the agency will continue to focus on this placement issue as a way to bolster its compensation discrimination initiative. The agency also resolved a hiring discrimination case involving professional-level employees in 2014—a relative rarity as the agency’s bread-and-butter hiring discrimination enforcement usually always involves lower-level positions.  

By all accounts, 2015 promises to be more of the same. OFCCP recently announced an ambitious regulatory agenda for the remaining years of the Obama administration, with final regulations regarding pay transparency, a compensation data collection tool, revised sex discrimination guidelines, and updated construction regulations potentially on the way.

To learn more about what’s in store for 2015, check out this free white paper, “The OFCCP Horizon—a Guide to AA Policy Trends and Updates.”

Republished with permission from Berkshire Associates, Inc.

 

 

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