OFCCP is moving at light speed to make changes as to how it operates. There have been a number of new directives in 2018 already, “righting the ship” from the previous administration. Now comes three new directives for Fiscal Year 2019 (DIR 2019-01, DIR 2019-04, and DIR 2019-03). These directives are officially changing the way OFCCP is doing business and how audits will be handled in the future.
DIR 2019-01 –OFCCP rescinded Active Case Enforcement for compliance reviews (DIR 2011‐01, Active Case Enforcement (ACE) Procedures). ACE required full OFCCP desk audits regardless of the indicators. Under this approach the number of OFCCP compliance reviews greatly declined over time and overall audit time increased greatly under ACE.
Contractors complained much about the length of times of audits and especially the lack of customer service and information provided. For example, an audit could be continuing for a year or more without any requests or contact from OFCCP and then “all of a sudden” OFCCP will be requiring significant and lengthy data requests without explanation. In part, DIR 2018‐09 committed to transparency throughout the entire process. First, as to the selection of contractor establishments for a compliance evaluation, including the frequency of mandatory onsite reviews for quality control purposes. Second, it encouraged a collaborative approach during conciliation to resolve issues more quickly. The Compliance Officers (COs) were required to provide information as to why the data requests were made. Furthermore, it also established procedures to shorten the time to complete a full desk audit.
Next, DIR 2019-02, Early Resolution Procedures (ERP), establishes processes to close audits and offers five years of relief from audits to contractors who are settling various claims with the OFCCP, in exchange for contractors reporting hiring, pay, and other employment data to the agency. This directive establishes OFCCP’s ERP and outlines general guidelines for its implementation.
First, unless there is an indicator that requires further review found during a desk audit, the CO is recommended to seek to resolve the evaluation at that time, provide any compliance assistance to the contractor, and issue a closure letter referencing the non‐material violations and their remedies.
Second, with respect to material technical or non-discriminatory violations during a desk audit, if the contractor has multiple establishments, OFCCP will seek to resolve these violations through an Early Resolution Conciliation Agreement with Corporate‐Wide Corrective Action (ERCA). Examples of violations that fall into this category include, but are not limited to, record keeping, applicant tracking, failure to implement audit and reporting systems, and failure to conduct self‐analysis.
The ERCA will require the contractor to review all, or a negotiated subset, of its remaining establishments for the similar violation(s) during the progress report‐monitoring period, and if necessary, implement corrective actions at those establishments to eliminate the violations(s) and prevent recurrence. The contractor will report the results of its analysis, findings, any corrective actions, and will provide OFCCP with all supporting documents and information reasonably related to such a review.
If the contractor and OFCCP agree to these terms, OFCCP will not schedule a new compliance evaluation at that specific establishment for a five‐year period from the effective date of the ERCA. The establishment will be under progress report monitoring for part of the five‐year period, as outlined in the ERCA. If during the five‐year period, OFCCP schedules a different establishment of the contractor for a compliance evaluation previously covered by the ERCA, OFCCP will conduct the compliance evaluation consistent with its normal policies and procedures.
Finally, if a compliance review finds discrimination and if the contractor has multiple establishments, OFCCP will seek to resolve material discrimination violations through an ERCA. If the contractor agrees to engage OFCCP in the ERP, the parties must meet within 14-calendar days of the agreement to discuss OFCCP’s findings, proposed remedy, and corrective actions.
This process will provide an opportunity for the contractor and OFCCP to conciliate likely violations before proceeding further with the compliance evaluation and an onsite visit. During the ERP, the contractor may provide additional information for OFCCP to consider. If OFCCP determines that the information eliminates the discrimination indicators, the CO should seek to resolve, if applicable, any outstanding non‐material and/or material non‐discrimination violations in accordance with the procedures outlined above. Otherwise, the CO will close the compliance evaluation with a closure letter.
If there are indicators of discrimination that cannot be resolved, OFCCP will seek, as applicable, make‐whole relief for affected class members, which may include back pay, job offers to affected class members that OFCCP has found to meet minimum/preferred qualifications, salary adjustments and/or other appropriate remedies and corrective actions. If a contractor agrees to an ERCA, the contractor will be required to review all, or a negotiated subset, of its remaining establishments for the similar violation(s) during the progress report‐monitoring period, and if necessary, implement corrective actions at those establishments to eliminate the violations(s) and prevent recurrence. The contractor will be required to report to OFCCP for a five-year period.
If the contractor and OFCCP agree to these terms, OFCCP will not schedule any of the contractor’s establishments covered by the ERCA for a new compliance evaluation for the five‐year period, concurrent with monitoring, from the effective date of the ERCA.
Finally, OFCCP issued DIR 2019-03, in which it announced that it will begin issuing opinion letters, similar to the Labor Department’s Wage & Hour Division, offering guidance on how contractors can comply with their affirmative action and nondiscrimination obligations based on specific factual scenarios. It also outlines steps that the OFCCP will take to enhance its existing Help Desk.
As noted by the law firm Fortney Scott, while the new directives provide new ways to resolve issues with the OFCCP, the question will be whether the “new” OFCCP will be any more reasonable in resolving those issues than the “old” OFCCP. Further, it is still a question of whether contractor lawyers would voluntarily admit to any discrimination violations without a thorough investigation and allow for an expansion of any audit to other establishments. It is likely very few will partake in these “opportunities.” However, only time will tell.
Sources: OFCCP 12/30/18, Fortney Scott 12/30/18