Transcript The OFCCP Audit and Enforcement Survival Guide

Always be Prepared:
The OFCCP Audit and Enforcement
Survival Guide
Kris D. Meade
Partner
Crowell & Moring LLP
Washington, DC
[email protected]
202.624.2854
Jody Shipper
Executive Director
Office of Equity and Diversity
University of Southern California
[email protected]
213.740.5086
Introduction
Agenda
 Understanding the OFCCP and Its Agenda
 Key Regulatory Developments
 Key Enforcement Priorities – Hot Button Issues
 Preparing for an Audit – Practical Tips
 Surviving an Audit – Phase-by-phase Tips
 Concluding an Audit – Potential Resolutions
Understanding the
OFCCP and Its Agenda
OFCCP – Overview and Agenda
Organizational Structure and Mission
 Within Department of Labor
 Enforces Executive Order 11246, the Vietnam-Era
Veterans Readjustment Assistance Act (VEVRAA),
and Section 503 of the Rehabilitation Act (Section
503)
 Non-discrimination – “thou shall not”
 Affirmative action – “thou shall”
 National Office, Regional Offices, District Offices
 Decentralized in practice
OFCCP – Overview and Agenda
Jurisdiction
 Federal contractors and subcontractors – not grant
recipients
 “Subcontractor” – two prongs
Enforcement Tools
 Compliance Reviews or “Audits”
 Complaint Investigations
Remedies
 No civil fines or criminal penalties
 Standard Title VII-like remedies – back pay, reinstatement,
instatement, pay adjustments
 Debarment – ultimate sanction – rarely used
OFCCP – Overview and Agenda
Primary Obligations of Contractors and
Subcontractors
 Prepare Affirmative Action Plans (AAPs) - Annually
 Engage in outreach
 Flow down obligations to subcontractors
Regulatory Developments
Overhaul of VEVRAA and Section 503
Regulations
 Proposed Rules – 2011 – Substantial Increase in
Contractors’ Obligations
 Contractor Community Response – assessment of
cost
 Final Rules – announced August 27, 2013
 Effective Date of Final Rule – March 22, 2014
 “Phased In” compliance for AAPs
 If AAP in place before March 22, 2014, no changes to AAP
in 2014
 Significant systems and process changes prior to March
2014
Regulatory Developments
Key Changes - Section 503
 7% Utilization Goal – every job group
 Periodic Solicitation of Disabled Status
 All Employees
 All “Applicants”
 Documentation of Outreach Efforts
 Collection and Assessment of Disabled Applicant
and Hire Data
 New Subcontract “Flow Down” Language
 Three-year Record-Keeping Requirement
 Expanded Audit Scope
Regulatory Developments
Key Changes – VEVRAA
 Solicitation of Veterans Status
 Annual Hiring “Benchmarks” – workforce as a
whole
 8% default
 Set own
 Documentation of Outreach Efforts
 Collection of Veteran Applicant and Hire Data
 New Subcontract “Flow Down” Language
 Three-year Record-Keeping Requirement
 Expanded Audit Scope
Regulatory Developments
Challenging Implementation Issues
 Extent of Effort to Achieve 7% Goal
 8% Benchmark v. 5-Factor Analysis
 How to Document Audit and Reporting System
 Reasonable Accommodation Guidelines – Adopt?
 Other
Regulatory and Enforcement Agenda
Compensation Guidelines – Directive 307
issued 2013
 Reflects importance of compensation issues to
OFCCP
 Rescinds Bush-era guidance – regressions and
anecdotal evidence required
 Ad-hoc, case-by-case approach
 Statistical, non-statistical and anecdotal evidence
 Pay analysis groups – broader than job title
 Investigate at systemic, unit, and individual level
Regulatory and Enforcement Agenda
United Space Alliance – right to individualized
compensation data
 2009 – scheduling letter issues; company provides
aggregate compensation data – per item 11
 OFCCP conducts “threshold test” – no indicators of
discrimination
 OFCCP conducts additional tests – “pattern test” –
claims disparity, seeks individualized data
 Company refuses
 ALJ – orders company to provide data
 District Court – 2011 – affirms based on substantial
deference standard
Recent Significant Decisions
Frito-Lay – timeframe for investigation expanded
 Scheduling letter dated July 13, 2007
 Company provides activity data for 2005, 2006 and part of 2007
 OFCCP claims data show “statistically significant
disparity” – requests additional data - 2008 and 2009
 Cites variance in female hiring rates – 3.26 standard deviations
 Company refuses to produce – beyond date of
scheduling letter
Recent Significant Decisions
Frito-Lay
 ALJ Decision – OFCCP precluded from seeking 2008-09
data; based on FCCM
 ARB reverses ALJ
 “OFCCP clearly has discretion to request AAP data covering
activity occurring after the scheduling letter”
 OFCCP’s “impetus” in seeking additional data “reasonable”
 2013 – Frito-Lay files challenge in federal court in Texas;
OFCCP’s Motion to Dismiss pending
Hot Button Issues
OFCCP – Hot Button Issues
Priority Issues – those that yield monetary
recoveries
 Compensation – lack of Agency experience with
higher education
 Personnel selection decisions – hires, promotions,
and terminations
 Applicant tracking and selection processes: Making
sure your records talk, so your employees don’t
have to be interviewed
Hot Button Issue: Compensation
OFCCP’s limited understanding of factors
common in higher education for determining
differences in compensation can create traps
for institutions
- Retention
- Reputation
- Differences in status of various publications
- Differences in funding sources
Other Traps Easily Exploited by
OFCCP
Personnel Selection and Applicant Tracking:
- Who is an “applicant” in a faculty search?
- Does your faculty keep records of all searches?
- Is everyone a Target of Opportunity Hire?
OFCCP – Hot Button Issues
Outreach – Veterans and Individuals With
Disabilities
 How much is sufficient?
 Record keeping?
 Do results matter, or just the effort?
 Side note: When asking for disability status, do
you put yourself on notice of need to discuss
reasonable accommodations?
OFCCP – Hot Button Issues
Internet applicants, tracking and testing
 Record keeping
 LinkedIn and other common job search sites
 Pre-employment testing
Background checks
Practical Tips to
Prepare for an Audit
Preparations for Audit – Practical Tips
Role of General Counsel’s Office
 Often not intimately involved prior to audit
 Recommendation
 Become more involved in day-to-day program
 Treat audit enforcement action and proactively manage
response
 Initial decisions may include whether to ask for delay
 Review of past plan
Preparations for Audit – Practical Tips
Technical Review of AAP and Related Policies
 Compliance with regulations
 Potential exclusions
 Temporary employees
 Student workers
 No definition of “employee”
Preparations for Audit – Practical Tips
AAP Structure
 Multiple establishments?
Employment Tests
 Use?
 Locally validated?
Monitoring for Adverse Impact
 Quarterly – applicants, hires, promotions, and
terminations
 Steps to address areas of adverse impact
Preparations for Audit – Practical Tips
Self-identification – race and gender (currently)
 Different obligations for applicants and employees
 “Decline to state” – gender vs. race
 Approaches
 Visual identification if no self-identification?
Preparations for Audit – Practical Tips
Record-keeping
 Two years – “personnel records”
 Tracking down “missing” records
 Interview notes
 How capture?
 What level of detail?
 Dispositions of candidates
 The importance of consistency
Preparations for Audit – Practical Tips
Mock Audits
 Particularly useful if not audited in last five years
 Privilege issues
 Areas of focus – parallel OFCCP areas of interest
 Interview managers; examine data
Preparations for Audit – Practical Tips
Compensation Analyses
 Pay equity studies – academic side
 Routine practice on many campuses; transparency
 Regressions – privilege issues again
 Difficulty identifying and quantifying factors that impact
pay – often not in data form
Practical Steps:
Each Phase of Audit
Practical Steps – Each Phase of Audit
Receipt of “Pre-Scheduling” Letter
 Assess readiness – areas of strength and
vulnerabilities
 AAP review
 Understand your numbers – utilization and adverse impact
 Compensation analysis – potential pay adjustments
 Assemble audit response team
 Interdisciplinary – HR/Affirmative
Action/Compensation/Legal
 Designate leads
 Develop preliminary themes
 Educate your client
Practical Steps – Each Phase of Audit
Receipt of Scheduling Letter
 Data required
 More than six months into AAP year? If so, analyze data
for AAP year-to-date
 Deadline for response – 30 days (extensions)
 Pull compensation data – analyze, assess (and adjust?)
 Format of response – varying approaches
 Explain areas of apparent discrepancy – particularly on
compensation
 Confidential/Proprietary Information – password protect
 Educate your client (again) and OFCCP
Practical Steps – Each Phase of Audit
Desk Audit Phase
 Timeline – first contact can be within days or may
not be for months
 Additional data and document requests
 Unreasonable deadlines – “within three days”
 Impact of sequestration – travel limits – more done at
desk audit
 Accommodations, lists of employees who have taken
leave and whether they returned
 Charges filed with agencies and any settlements –
“employee complaints”
 Bate number all documents
Practical Steps – Each Phase of Audit
Desk Audit Phase
 Develop Rapport with OFCCP Compliance Officer
 Legal v. HR/affirmative action as point of contact
 In-house counsel and outside counsel
 Professional, respectful tone – even if not returned
 Know when to push back and when to escalate
 Silence – what then?
Low bar for moving from Desk Audit to On-Site
Review
Practical Steps – Each Phase of Audit
On-Site Phase
 OFCCP team
 Large numbers
 Many inexperienced
 Opening conference
 OFCCP will present
 Be proactive – stress themes; inform about campus
 Document reviews
 Track all documents provided – if originals
 Offer to provide as available
Practical Steps – Each Phase of Audit
On Site Review
 Preparation – the big and the small
 Legal
 Media relations
 Logistics – where and when
 Parking?
 Coffee and cookies – how comfortable do you want them
to be?
 Ask around – colleagues at other institutions may have
direct experiences with same team members
Practical Steps – Each Phase of Audit
On-Site Phase
 Logistics
 Offices away from other employees and away from HR
 Suggest places for lunch – not campus cafeteria
 Interviews – key areas and key decision-makers
 HR personnel – recruiting and compensation functions
 Management personnel
 Preparing staff and senior administrators
 Brief on OFCCP and its mission
 Ensure knowledge of AAP and compliance posture –
themes
 Deposition-like preparation
Practical Steps – Each Phase of Audit
On-Site Phase
 Preparing non-management employees
 No right to be present or have legal counsel present
 Explain OFCCP and mission
 Can inform of right to ask to have someone else present
 Interview statements prepared by OFCCP
 Often vague or incorrect
 To correct or not correct?
 To sign or not to sign?
 Copies
 Who has control over the order of interviews?
Practical Steps – Each Phase of Audit
Audit Closure
 Compliance – formal and informal closures
 Conciliation Agreement
 Negotiation – some parts
 Reporting period – almost always – 6 months to two years
 Press release if monetary remedies
 Not negotiable
 Often misleading
 Can prompt private actions
Practical Steps – Each Phase of Audit
 Audit Closure
 Enforcement Proceedings – if unable or unwilling to
resolve
 Solicitor’s office, not within OFCCP
 Administrative litigation
Before ALJ
 Some discovery
 Appeal to Administrative Review Board of DOL
 Appeal ARB decision to federal courts

 Opportunities to settle
QUESTIONS
Always be Prepared:
The OFCCP Audit and Enforcement
Survival Guide
Kris D. Meade
Partner
Crowell & Moring LLP
Washington, DC
[email protected]
202.624.2854
Jody Shipper
Executive Director
Office of Equity and Diversity
University of Southern California
[email protected]
213.740.5086