2019 CORPORATE LABOR AND EMPLOYMENT COUNSEL EXCLUSIVE

OGLETREE, DEAKINS, NASH, SMOAK & STEWART, P.C. 24-1

OFCCP ENFORCEMENT

CHECK YOUR ASSUMPTIONS AT THE DOOR

T. Scott Kelly – Ogletree Deakins (Birmingham)

Keith McMurdy – Bloomberg L.P.

Leigh M. Nason – Ogletree Deakins (Columbia)

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OFCCP Enforcement—Check Your Assumptions at the Door

Presented by

T. Scott Kelly (Birmingham)Keith McMurdy, Legal Counsel, Bloomberg L.P.Leigh M. Nason (Columbia)

EEO-1 Pay Data – Post Mortem

OFCCP Recoveries and Areas of Focus

OFCCP on a Roll . . . – GAO Progress Report, CSALs, NPRM Religious Exemption,

FAAPs

– Section 503 (and VEVRAA?) Focused Reviews

OFCCP and Compensation

OFCCP and Hiring

Other Developments and Best Practices

Agenda

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Pay Component – FOIA issues

– Non-binary reporting considerations

– No certified reports

– DO NOT HAVE TO DO IT AGAIN (for now)

Why Are EEO-1s Important?– OFCCP uses information as part of audit selection

methodology

– EEOC uses information to aggregate private industry demographics/job patterns

EEO-1s and Pay Data

$44 million FY 2017/2018 and ?? FY 2019

Hiring Discrimination

Compensation Discrimination

Focused Reviews

– Disability, Veteran, Promotion

Non-compliant Contractors/AAP Verification

OFCCP Recoveries and Areas of Focus

3

GAO Progress Report – September 19, 2019

– Focus on greatest risk for audits

– Electronically monitor AAPs

– Facilitate timely compliance training

– Improve oversight of technology sector

OFCCP Updates

CSAL – FOIA Library – March 2019

– FY 2019 – 3,500 Establishments

• Compliance Checks, Compliance Evaluations, and Corporate Management Compliance Evaluations

• Section 503 Focused Reviews – Corporate Headquarters

OFCCP Updates (cont’d)

4

Notice of Proposed Rulemaking – Religious Exemption

Functional Affirmative Action Programs (FAAP)

– 5-year agreement

– No mandatory audit

– Audit moratorium extended from 2 to 3 years

– Myths and other considerations!

OFCCP Updates (cont’d)

New scheduling letter, OFCCP training & fall roll-out

OFCCP Landing Page – Leen’s Disability Inclusion Video

– Disability Rights Factsheet

– ODEP – Inclusion@Work: Framework for Disability Inclusion

– Reasonable Accommodation Toolkit & Pocket Card

– Learn How to File a Complaint

What if not on 503 Review CSAL?

Section 503 Focused Reviews

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VEVRAA

– Veterans Day Roll-out?

– Training, Outreach, and What to Expect

Promotions

– Another form of compensation discrimination

– Consider competitive v. noncompetitive

– Ensure tracking and maintaining records for analysis

Veteran and Other Focused Reviews

2018-03: Faith-Based Organizations 2018-04: Focused Reviews 2018-05: Analysis of Contractor Compensation Practices 2018-06: Contractor Recognition Program 2018-07: AAP Verification Initiative 2018-08: Transparency in Compliance Activities 2018-09: OFCCP Ombud Service 2019-01: Compliance Review Procedures 2019-02: Early Resolution Procedures 2019-03: Opinion Letters and Help Desk 2019-04: Voluntary Enterprise-Wide Review Program (VERP) 2019-05: Students – Education Institutions

OFCCP (Leen’s) Directives

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In a nutshell– OFCCP is trying to find and remedy pay issues and will

spend lots of time on this issue

– Contractors were looking for clear, unequivocal guidance to replace prior directive. This isn’t it.

– OFCCP has enormous discretion in choosing how to analyze pay and results may be counter-intuitive or even contrary to other pay studies

– Internal OFCCP tool allows compliance officers the leeway to run multiple models to find one that allegedly shows discrimination

2018-05: Compensation Guidance and FAQs

What types of pay cases?

– Systemic, generally “pattern or practice” discrimination

– Could also be individual individual disparate treatment or “cohort” comparisons

Focus: Inequities in monetary compensation

Focus: Inequitable training or advancement opportunities

Focus: Assignment/placement differences

2018-05: Compensation Guidance and FAQs

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What if OFCCP finds problems with compensation?

– Will issue a PDN

– Will provide contractors with data necessary to replicate OFCCP’s regression results

– If contractor cannot rebut, will issue NOV and conciliation agreement

– Will seek back pay + benefits + interest for affected class

– Debarment is highly unlikely without litigation/enforcement

2018-05: Compensation Guidance and FAQs

Regulations require contractors to perform in-depth analyses of total employment process, including compensation, to ensure nondiscrimination

– FAQs suggest “self-audits” with reports to management

– Not required under regulations

OFCCP is not the only fox in your henhouse: EEOC, state and local laws, Title VII/Equal Pay Act litigation may also occur

2018-05: Compensation Guidance and FAQs

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Noteworthy Compensation Decisions

OFCCP v. Analogic (March 22, 2019)

– No evidence of “gross statistical disparity”

– Unpersuasive anecdotal evidence

Spencer v. Virginia State University(Mar. 18, 2019)

– Similarly situated

Review and possibly revise AAP job groups to reflect compensation architecture

No particular form of analysis required but should perform any proactive and voluntary analysis under privilege (and with SME)

Keep as much compensation data electronically as possible (if you can verify accuracy)

Compensation Best Practices

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OFCCP and Hiring Discrimination

OFCCP Case (July 17, 2019)

– Arbitrary manner in which information about applicants was assessed calling into question the Company’s legitimate non-discriminatory reasons for rejection

Hiring Best Practices

– Audit disposition code usage and ensure consistent application

– Consider training on selection process

– Consider more frequent analysis of applicant/hire data

More audits, quicker closures, faster response time required – OFCCP may not do “deep dive” into ALL statistical

indicators

OFCCP’s “bread and butter” is discrimination! – Hiring: low skilled, high turnover jobs

– Compensation: discretionary and variable pay practices are prime targets, as are highly-paid managers and professionals

So What Does All This Mean for You?

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Prepare Before Audit Letter Arrives

Hiring – What is your process? Design it! Know it! Defend it!

Compensation– Know what your data shows

– Review your AAP job groups to reflect compensation architecture

– “Fixing” pay equity problems for one protected group could lead to problems for other groups

– Conduct all analyses under privilege using SME

So What Does All This Mean for You?

Friendlier, more “transparent” OFCCP interactions

More consistency between regions and offices (at least in theory)

More emphasis on disabled and veteran issues

– Audit and documentation requirement; list of efforts is not enough – OFCCP wants narrative explanation of efforts

– Focused reviews will enhance efforts and compliance (but likely lead to conciliation agreements)

So What Does All This Mean for You?

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Resolving problem audits: transparency in process but vigorous prosecution of noncompliance/discrimination

Stay tuned . . . It might be a wild(er) ride!

So What Does All This Mean for You?

22

Questions?

12

OFCCP Enforcement—Check Your Assumptions at the Door

Presented by

T. Scott Kelly (Birmingham)Keith McMurdy, Legal Counsel, Bloomberg L.P.Leigh M. Nason (Columbia)

T. Sco� KellyShareholder  ||  Birmingham

Sco� Kelly is a shareholder in the Birmingham, Alabama, o�ce of

Ogletree Deakins and co-chair of the firm’s A�rmative Action/OFCCP

Compliance Practice Group. As a leader of the A�rmative

Action/OFCCP Practice Group, Sco� counsels and defends federal

contractors and subcontractors throughout the United States on

jurisdictional, compliance, and enforcement issues involving the U.S.

Department of Labor’s O�ce of Federal Contract Compliance Programs

(OFCCP). Sco�’s national practice includes representing employers in

OFCCP compliance evaluations and administrative enforcement actions

in each of its six regions. His clients have operations spanning

numerous industries, including higher education, financial services,

technology, and manufacturing, among others. Sco� frequently works

to design legally defensible hiring processes and practices to fit his

clients’ business models and needs.

Sco� o�ers his clients a solution-oriented approach to both his

a�rmative action programs (AAPs) practice, including preparing,

managing, and defending AAPs, and his e�orts to minimize back pay

liabili� and other sanctions that OFCCP imposes when investigating

and resolving systemic discrimination issues stemming from statistical

disparities in hiring and compensation cases. He is skilled in assisting

employers with conducting privileged proactive compensation analyses

and fair pay audits, providing best practices and strategies for diversi�

and inclusion practices and metrics, and complying with the Equal

Employment Opportuni� Commission’s (EEOC) and Veterans’

Employment & Training Service’s annual reporting requirements.

In his work, Sco� routinely applies principles of e�ciency he learned

while pursuing his Green Belt certification in Legal Lean Sigma. A

litigator by training, Sco� has appeared in numerous employment-

related claims before courts and administrative agencies, and has even

spent time as a prosecutor.

Sco� has served in various leadership roles of the American Bar

Association’s Labor and Employment Law Section (LEL) and the LEL’s

Commi�ee on Equal Employment Opportuni� Law. Sco� served as

chair emeritus of the LEL’s ��th Annual Section Conference, the chair of

the ��th Annual Section Conference, and vice-chair of the ��th Annual

Section Conference. He has also served as an LEL section council

liaison to the Young Lawyers Division—facilitating the involvement of

young lawyers in section activities—and as co-chair of the LEL’s

Membership and Marketing, Commi�ees, in which he worked to raise

awareness of section benefits and programming for its members. Sco�

is also a graduate of the inaugural LEL Leadership Development

Program, which trains and develops a select group of section members

to o�er tools for advancement in leadership, and was tapped to be the

first management co-chair of the program.

Sco� is a member of the Alabama Valley Industry Liaison Group, the

Tennessee Valley Industry Liaison Group, and the American

Employment Law Council. He frequently speaks before federal

contractors and subcontractors, human resources professionals, ILG

members, and others on topics including a�rmative action and OFCCP

compliance, pay equi�, legally defensible selection practices, pre-

employment testing, and equal employment opportuni�.

Sco� has been recognized for his professional accomplishments,

including being selected for inclusion in �e Best Lawyers in America

(����–present), Super Lawyers – Employment & Labor (����–present),

and Super Lawyers – Rising Stars (����–����). He has also been awarded

an AV Preeminent rating (the highest level) by Martindale-Hubbell.®

Leigh M. NasonShareholder  ||  Columbia

Leigh Nason is a shareholder in the Columbia, South Carolina o�ce of

Ogletree Deakins and co-chairs the firm’s A�rmative Action/OFCCP

Compliance Practice Group, whose experienced a�orneys counsel and

defend federal contractors and subcontractors throughout the United

States on jurisdictional, compliance, and enforcement issues involving

the United States Department of Labor’s O�ce of Federal Contract

Compliance Programs (OFCCP).

Leigh provides advice to in-house counsel and human resources

professionals in all industries on the preparation, management, and

defense of their a�rmative action programs and related ma�ers,

including jurisdictional analyses, preventative strategies, complaint

investigations, and compliance evaluations. She is o�en retained to

assist with OFCCP systemic discrimination cases stemming from

statistical disparities in hiring, pay, and testing and has successfully

defended allegations of significant monetary liabili� and other

sanctions in every OFCCP region. She advises small and large

employers throughout the United States, Puerto Rico, and the Virgin

Islands on proactive pay equi� analyses, defensible diversi� and

inclusion strategies and data analytics, and strategic EEO-�/VETS

reporting. An experienced litigator, Leigh has defended discrimination

claims before federal and state courts as well as administrative tribunals.

Leigh has been included in �e Best Lawyers in America for many years.

She received the ���� Distinguished Lawyer Award from the South

Carolina Bar’s Employment and Labor Law Section and was selected as

the ���� Employment Law-Management Lawyer of the Year for

Columbia, SC. She is listed in Chambers USA as one of the country’s

leading a�orneys in the a�rmative action compliance arena, has been

designated as a South Carolina “Super Lawyer,” is AV Rated by

Martindale-Hubbell, and has been recommended in the United States

edition of �e Legal ��� in the category of Workplace and Employment

Counseling. Leigh has authored and edited numerous publications on

a�rmative action compliance issues and is an editor of and contributing

author to all five editions of Labor and Employment Law for South Carolina

Lawyers, published by the South Carolina Bar. Leigh is o�en asked by

national media for her insights on new developments a�ecting federal

contractors and is a frequent speaker at national, regional, and local

conferences on a�rmative action compliance and employment

discrimination.

Leigh is a graduate of Wake Forest Universi� and the Universi� of

South Carolina School of Law, and is certified by the South Carolina

Supreme Court as a specialist in the area of employment and labor law.

She served as Chair of the South Carolina Bar’s Labor and Employment

Law Commi�ee and its Employment and Labor Law Specialization

Advisory Board. She is on the facul� of �e Institute for Workplace

Equali� and serves on the Board of Directors of the South Carolina

Industry Liaison Group.