• OFCCP Issues New Procedures for Conducting Compliance Evaluations
  • March 10, 2011 | Author: Eric John Felsberg
  • Law Firm: Jackson Lewis LLP - Melville Office
  • Claiming that its previous Active Case Management (ACM) method for conducting compliance evaluations was only “of limited utility,” the Office of Federal Contract Compliance Programs has rescinded its ACM and instituted a new system.  The new Active Case Enforcement (ACE), OFCCP claims, is intended to allow the agency to “more effectively utilize its resources and strengthen its enforcement efforts” by:

    • lowering the thresholds for an “indicator” of discrimination prompting in-depth review,
    • expanding the definition of what constitutes an indicator of discrimination,
    • planning to assess contractor compliance for the three years preceding an evaluation,
    • expanding enforcement tools available to the agency when conducting evaluations,
    • requiring compliance officers to conduct full desk audits in every review, and
    • requiring an onsite audit requirement in at least every 25th evaluation scheduled.

    ACE went into effect on January 1, 2011, but was not announced until late February.

    “Indicators” of Discrimination

    Under the old ACM, OFCCP focused on identifying cases of class-based discrimination that may have affected at least 10 individuals. Under ACE, however, OFCCP removes the affected-class-member threshold, saying indicators of discrimination may be of an individual or class nature.  OFCCP defines “class” as “two or more victims.”  The agency has much to choose from in finding an indicator of discrimination or violation.  It may include statistical evidence, anecdotal evidence, patterns of individual discrimination, patterns of systemic discrimination, patterns of major technical violations, and indicators of non-compliance with non-EEO (equal employment opportunity) labor and employment laws enforced by other federal agencies (e.g., Department of Labor’s Wage and Hour Division, Occupational Safety and Health Administration, and Equal Employment Opportunity Commission).

    The new approach will likely bring more in-depth audits of contractor employment processes during evaluations even though large-scale indicators of discrimination may be lacking.

    Assessment of Contractor Compliance and Cooperation among Agencies

    Under ACE, OFCCP will review contractors’ history for the prior three years to look for patterns of non-compliance. OFCCP compliance officers are directed to check OFCCP’s internal database system, review any information received from EEOC, state or local fair employment practice agencies, and other enforcement agencies, such as the Department of Labor’s Veterans’ Employment and Training Service and Wage and Hour Division. Significantly, OFCCP will seek cooperation and coordination across Department of Labor agencies when conducting evaluations.

    Now, more than ever, employers should assess their entire employment compliance posture when preparing for an OFCCP evaluation.

    Expansion of Enforcement Tools

    In conducting compliance evaluations pursuant to the new ACE, OFCCP will use all of its enforcement methodologies, including the compliance review, compliance check, focused review, and offsite review of records.
    All compliance evaluations will begin with a full desk audit, regardless of the enforcement method used thereafter.  A full desk audit is a comprehensive analysis of a contractor’s affirmative action plan (AAP) prepared pursuant to Executive Order 11246, Rehabilitation Act and the Vietnam-Era Veterans Readjustment Assistance Act and supporting documentation.
    As with the old ACM, the ACE audit will include a full evaluation of a contractor’s selection decisions (i.e., hires, promotions and terminations), compensation, and other more programmatic aspects of a contractor’s AAP (e.g., goal setting and outreach efforts).

    Following the full desk audit, OFCCP will consider initiating one of the following review methodologies:

    • Compliance Review - A comprehensive review of all components of a contractor’s AAP. In addition to the desk audit, the review may include an onsite review and offsite analysis.
    • Compliance Check - An abbreviated review of a contractor’s recordkeeping practices to ensure compliance with the affirmative action regulations. A compliance check may be followed by a more expansive evaluation, as appropriate.
    • Focused Review - An onsite review that focuses on one or more components of contractor’s employment organization or practices.
    • Offsite Review of Records - As the name suggests, the review will involve OFCCP’s receipt and review of documentation related to a contractor’s employment processes to ensure compliance with the affirmative action regulations.

    On a positive note for contractors, OFCCP re-emphasizes that, if during the desk audit of a contractor’s AAP, the compliance officer identifies no violations or only minor technical violations, the compliance officer should seek to close the review at the desk-audit stage.

    Full Compliance Review for Every 25th Audit

    Under ACE, for quality control OFCCP will select every 25th compliance evaluation for an automatic full compliance review, regardless of whether any problematic employment processes are identified. A full compliance review will consist of all three stages of a compliance review — desk audit, onsite review, and offsite analysis, when necessary.

    What Should Employers Do Now?

    Employers should evaluate their employment practices to ensure full compliance with OFCCP requirements. Among other things, employers should ensure that all employment processes, including, but not limited to, hires, promotions, terminations, and compensation are supported by legitimate, business-related reasons and appropriate documentation, without regard to the number of individuals potentially affected or disadvantaged.

    In the event a facility is selected for evaluation by OFCCP, employers should inquire of the agency at the outset whether it is a 25th compliance evaluation, which carries an automatic onsite review obligation.