• OFCCP Seeks to Overhaul Audit Submission for Federal Contractors
  • May 27, 2011 | Authors: Colin L. Barnacle; Mickey Silberman
  • Law Firm: Jackson Lewis LLP - Denver Office
  • The Office of Federal Contract Compliance Programs is proposing to overhaul its Scheduling Letter and associated Itemized Listing used to commence agency audits of employers. While the Agency states that it is seeking to “reduce overall burden hours on contractors,” the proposed changes, if approved, will significantly increase the burden on employers subject to OFCCP audit.  The May 12 proposal (available at www.regulations.gov) comes as the current Scheduling Letter is set to expire on September 30, 2011.  The public has until July 11, 2011, to submit comments on the proposal.

    The OFCCP Scheduling Letter is sent to notify a particular contractor establishment that it has been scheduled for a compliance evaluation and to request submission of the contractor's Affirmative Action Program(s) and the supporting data, including personnel activity data and summary pay data. A sample Scheduling Letter currently in use is available from the Department of Labor website at www.dol.gov/ofccp/regs/compliance/OMB&under;appr&under;letter.pdf.

    OFCCP’s proposal would newly require the selected contractor establishment to submit, among other things, (a) Family and Medical Leave Act (FMLA) and other leave or accommodation policies; (b) data on sub-minority by both job group and job title for applicants, hires, promotions, and terminations; (c) data on “actual pool” of employees considered for promotions and terminations; and (d) detailed employee-specific pay data (typically requested only where OFCCP identifies indicators of potential discrimination).

    The changes would raise the hurdles federal contractors must clear in order to meet OFCCP’s initial audit submission requirements.

    Employment Leave Policies
    OFCCP proposes employers be required to submit their employment policies covering FMLA, pregnancy leave, and accommodations for religious observances and practices. It declares that these revisions provide two important benefits:

    1. Assist OFCCP in better determining the existence of sex or religious discrimination indicators within contractor organizations; and
    2. Enhance OFCCP’s broad authority under Executive Order 11246 to prohibit sex and religious discrimination in employment and its shared enforcement responsibilities with the EEOC under Title VII.

    The current Scheduling Letter does not request copies of these policies.

    Personnel Activity Data Changes
    OFCCP proposes that employers will no longer have the flexibility of reporting applicant, hire, promotion, and termination data by job group or job title. Instead, it wants to change Item 10 of the current Itemized Listing (Item 11 under the proposal) to requiring this data be submitted by job group and job title.

    Furthermore, OFCCP seeks to require personnel activity data be submitted by specific sub-minority groupings - African-American/Black, Asian/Pacific Islander, Hispanic, American Indian/Alaskan Native, and White. OFCCP claims this abandoning of the “ambiguous minority and non-minority terminology” will allow the Agency to obtain more accurate reporting data for its analyses related to identifying gender and race discrimination indicators.

    Finally, OFCCP seeks to require employers to identify employee terminations as either involuntary or voluntary.

    “Actual Pools” Considered for Promotions and Terminations
    Under the current Scheduling Letter, employers must supply information on the total number of promotions and terminations. For adverse impact purposes, OFCCP traditionally has compared the promotions and terminations data to incumbent employees of the particular job groups from which the promotions or terminations came.

    OFCCP’s proposed revision will require employers to provide information on the “actual pool” of candidates considered for the particular promotions or terminations. While this approach may allow for a more precise analysis of the potential discriminatory effect of such decisions, it also adds a significant burden by requiring employers to report the information even where no statistical issues have been identified.

    Compensation Data as of February 1st for All
    Under the current Scheduling Letter, OFCCP requests pay data (under Item 11) with two simple sentences:

    1. Please provide annualized compensation data (wages, salaries, commissions, and bonuses) by salary range, rate, grade, or level showing total number of employees by race and gender and total compensation by race and gender.
    2. Present these data in the manner most consistent with your current compensation system.

    The proposed changes (proposed Item 12, formerly Item 11) present employers with significantly greater obligations.  They would compel federal contractors to do the following: (a) disaggregate all components of each employee’s compensation (separate base pay from all other earning types, e.g., bonus and commissions); (b) provide additional detailed variables typically used in a pay regression analysis for every employee (such as date of hire); and (c) provide all data as of February 1 - an arbitrary date that does not take into account the employer’s actual pay administration practices or AAP start date.

    All contractors would be required to submit the following pay data:

    Employee level compensation data for all employees (including but not limited to full-time, part-time, contract, per diem or day labor, temporary) as of February 1st (i.e., the data as it existed on the most recent February 1st date). Provide gender and race/ethnicity information and hire date for each employee by job title, EEO-1 Category and job group in a single file. Provide all requested data electronically in Excel format, if available.

    a. For all employees, compensation includes base salary, wage rate, and hours worked. Other compensation or adjustments to salary such as bonuses, incentives, commissions, merit increases, locality pay or overtime should be identified separately for each employee.

    b. You may provide any additional data on factors used to determine employee compensation, such as education, past experience, duty, location, performance ratings, department or function, and salary level/band/range/grade.

    c. Documentation and policies related to compensation practices of the contractor should also be included in the submission, particularly those that explain the factors and reasoning used to determine compensation.

    These changes represent the most significant departure from OFCCP’s current Scheduling Letter and signal the Agency’s continued heightened focus on investigating issues related to pay discrimination.

    Veterans’ and Accommodations Reporting
    Proposed Item 13, new to the Itemized Listing, would require copies of contractors’ veterans’ employment reports (VETS-100 or VETS-100A) for the last three years, as well as copies of the contractor’s accommodation policies and records of accommodations granted for disabled employees and disabled veterans.