On September 19, the OFCCP released two new policy Directives that the federal contract compliance agency said would shine a brighter light on its compliance activities and establish a program designed to listen to concerns that contractors may be reluctant to share.
To understand the implications of these new Directives, Employment Law Daily reached out to Polsinelli Shareholder Connie Bertram. She called them “the most recent in a series of Directives designed to facilitate contractors’ efforts to self-audit and understand their compliance obligations, and increase the transparency and accessibility of the enforcement efforts of OFFCP.”
Transparency in compliance audits. Directive 2018-08 is aimed at furthering the OFCCP’s goal of transparency in the compliance audit process. The agency explains that this Directive is the most recent of a series designed to increase transparency and the quality of compliance reviews, including hosting a series of compliance assistance events across the country, issuing a Directive requiring Pre-Determination Notifications prior to the issuance of Notices of Violation, issuing a Directive that outlines what contractors can expect during compliance evaluations and investigations, and publishing the OFCCP’s supply and service scheduling methodology, Bertram observed.
The agency states in this Directive that it “extends OFCCP’s transparency initiative to every stage of a compliance evaluation to facilitate consistency of operations, improve efficiency, and resolve collaboratively matters during compliance evaluations.”
Changes in the audit process. Bertram pointed to the following changes to the compliance audit process announced in Directive 2018-08:
- Compliance officers will contact the contractor within 15 days of sending a Corporate Scheduling Announcement Letter (CSAL) so that the officer can provide technical assistance and support to the contractor in responding to it.
- The OFCCP will provide a 30-day extension to provide supporting data responsive to the CSAL if (1) the contractor requests the extension prior to the initial 30 day due-date; and (2) the contractor timely submits the basic affirmative action programs (AAPs) within the initial 30-day period. If these conditions are not satisfied, the OFCCP will only allow extensions in “exceptional circumstances.”
- The failure to submit timely AAPs or supporting data will result in the immediate issuance of a procedural Notice to Show Cause. The contractor will have an additional 30 days to submit these materials after the issuance of the Notice. After the compliance officer receives the contractor’s AAPs and supporting data, he or she will contact the contractor to confirm receipt and start the desk audit promptly, ideally within five days.
- The compliance officer initially will review the submission to make certain that it is complete and acceptable. If there are deficiencies in the submission, the compliance officer will notify the contractor promptly and provide 15 days to cure the deficiencies. The OFCCP will issue an immediate procedural Notice to Show cause if the deficiencies are not cured.
- The compliance officer will then review the submission and contact the contractor to request follow-up information or clarifying information. Compliance officers may not request information beyond the categories listed in the CSAL (e.g., data to refine indicators, employment applications, manager interviews) until after the desk audit has been completed and the conclusion of the desk audit has been recorded in the OFCCP’s case management system.
- Compliance officers should work to close reviews quickly if there are no indicators of discrimination or other evidence of violations. The Directive states that ideally, and in the majority of cases, the OFCCP should complete a typical desk audit within 45 days of receiving complete and acceptable AAPs and supporting data.
- Prior to an onsite visit, the compliance officer may request supplemental data to refine indicators and prepare for a potential onsite visit.
- Critically, the Directive states that “[s]upplemental information requests must include the basis for the request, be reasonably tailored to the areas of concern, and allow for a reasonable time to respond.”
- Prior to an onsite visit, the OFCCP should provide a “high-level summary” of any preliminary indicators of discrimination in the onsite confirmation letter.
Contractors should note. Bertram underscored several aspects of Directive 2018-08. Although the Directive does not address the onsite review process, it states that the offsite analysis should begin “immediately” after the onsite visit is completed and that the OFCCP should maintain regular contact with the contractor (at least every 30 days) to keep the contractor informed of the status of the evaluation, she observed. “The Directive also does not address the process for reviewing the data and information collected through the desk and onsite audits, or for determining whether the OFCCP should issue a Notice of Violation,” she said. “However, it addresses new procedures for the conciliation process after the issuance of a Notice of Violation.”
The Polsinelli attorney noted the Directive’s statement that the OFCCP should undertake a collaborative process, including:
|Sharing information and essential source data in electronic format so that contractors can understand and replicate the OFCCP’s methodology and findings;|
|Sharing the factors used to calculate back pay; and|
|Providing an overview or summary of anecdotal evidence or non-statistical findings to provide support or context for the statistical analyses.|
The Directive additionally says that Branch of Expert Services and/or the staff of the Office of Solicitor may become involved to facilitate the conciliation process. It also states that the OFCCP will work with the contractor to identify innovative remedies, such as apprenticeship programs and proactive corporate-wide solutions.
What’s behind the move? The Directive is designed to address contractors’ complaints that many audits are taking too long and are not following the steps required in the compliance manual, according to Bertram. “Many compliance audits have become endless desk audits where compliance officers request endless follow-up data without undertaking an onsite review or notifying contractors of their findings at the end of it,” she said. “These audits—now referred to by the OFCCP as ‘aged audits’—have become an area of concern for the senior leadership of the OFCCP.”
A bit of advice … Although Directive 2018-08 is designed to address these concerns, “it will be important for contractors to hold Compliance Officers to these standards, requesting that they present required findings and that they not request information beyond the CSAL until they [the findings] have been provided,” Bertram suggested. “Although it is the objective of most contractors to be cooperative during audits, they can certainly request that the OFCCP comply with its own Directives without becoming adversarial.”
Bertrim added that contractors and their counsel can draw a lot of guidance from the Transparency Directive. “It is clear that contractors must be prepared to produce immediately their basic AAPs upon the receipt of a CSAL,” she said. “To ensure that employees responsible for the preparation and implementation of AAPs are notified immediately of the receipt of CSALs, contractors should confirm that the OFCCP has accurate contact information for the contractor and each of its establishments or functional units.” Bertram also suggested that with these new deadlines, contractors must stay on top of their AAPs, ensuring that they are prepared on time and implemented effectively.
“Contractors should also confirm that they have the ATS [applicant tracking system] and HRIS [human resources information system] systems and other databases available that will allow them to pull and analyze the hiring, promotion, termination, and compensation information that is accurate and includes the categories of information necessary to provide the data requested through the CSALs,” Bertram added.
Ombud Service. Turning to Directive 2018-09, Bertram explained that through it, the OFCCP adopts an Ombud Service in the National Office to help resolve concerns raised by external stakeholders, including federal contractors and subcontractors, industry groups, law firms, and complainants. The Directive explains that “transparency is the foundation of a relationship of respect, dialogue, and feedback with its stakeholders that will help the agency improve its effectiveness in both compliance assistance and evaluations,” the Polsinelli attorney noted. She said the agency “believes that increased transparency will improve operational efficiency and effectiveness and support contractors’ ability to conduct meaningful self-audits that proactively identify and address areas of concern.”
How it will work. Addressing the genesis of the development, Bertram said that to respond to concerns raised in a September 2016 report by the Government Accountability Office, the OFCCP is “adopting an independent mechanism through which external stakeholders can share their concerns with the OFCCP about a particular open matter or provide general feedback or recommendations.” The OFCCP will hire an OFCCP Ombud who reports directly to the Deputy Director. The Ombud will be responsible for:
|Listening to the concerns of external stakeholders;|
|Promoting and facilitating the resolution of OFCCP matters at the regional and district levels; and|
|Working with OFCCP regional and district offices as a liaison to resolve certain issues after stakeholders have exhausted those channels.|
What does it mean for contractors? If the Ombud program operates consistently with the Directive, it should provide contractors with an additional resource when they are facing challenging situations during the course of an audit, according to Bertram. “For instance, if a district office is demanding extensive records (perhaps for the third or fourth time) from a contractor during a compliance audit, without an explanation (or what the contractor considers to be a reasonable one), contractors could reach out to the Ombud for assistance and support,” she explained. “The Directive emphasizes that the Ombud will not act as an advocate for either side or give advice or opinions. However, he or she may be able to help the contractor and the district or regional office reach a resolution of their dispute.”
Best practices. Bertram said that in these situations, it would be advisable for the contractor to work the issue through the “chain of command,” presenting and documenting its communications and positions in a constructive and professional manner at each step in the chain. “Then, it will be able to reach out to the Ombud with a written record, showing its efforts to reach a resolution, and clearly identifying its position and arguments on the dispute,” she said. “It would also be advisable to work with the Ombud on constructive issues, such as suggestions for improvement, so that he or she knows that the contractor supports the OFCCP and its compliance efforts,” Bertram recommended.
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