compliance reviews in 2016: conciliation stakes have changed€¦ · stages of an ofccp compliance...

Compliance Reviews in 2016: Conciliation Stakes Have Changed Joshua S. Roffman and Alissa A. Horvitz Roffman Horvitz, PLC

-How does a contractor reach the point of conciliation? -How did OFCCP approach conciliation in the past? -What has changed? -How is OFCCP approaching conciliation, now?

How does a contractor reach the point of conciliation?

Stages of an OFCCP compliance review

•  Scheduling letter and contractor’s response •  Review of the contractor’s audit submission •  Recommend notice of compliance or conduct an onsite •  Off site review of additional information learned during

the onsite •  Recommend notice of compliance or issue a notice of

violations

Notice of Violations

•  Notice of Violations with Minor issues – for example, record keeping, failure to list jobs with the employment service delivery system, failure to engage in outreach

•  Notice of Violations with Major issues – discrimination findings –  OFCCP has no power to impose a fine or a penalty –  It has the power to obtain monetary remedies on behalf of the

victims of the alleged discrimination •  Contractor has two options: conciliation or

enforcement

The Subtext of Conciliation Agreements with Major Discrimination Violations

•  Affected class members •  Shortfall •  Monetary relief •  Iterative mailings •  Uncashed checks •  Progress reports

How did OFCCP approach conciliation in the past?

How OFCCP Used to Approach Settlement

•  NOV rarely issued in compensation cases; vast majority of settlements involved allegations of discrimination in hiring

•  Notice of Violations for Discrimination and Class Remedy is $100,000 or more –  Press release at the discretion of the Regional Director –  Often Issued

•  Notice of Violations for Discrimination and Class Remedy is less than $100,000 –  Press release rarely issued

•  Willingness to alter the violation wording, not just the reporting section

Without Publicity, Settlement Palatable

•  Less incentive to wordsmith OFCCP’s findings: companies were willing to conciliate even if there was disagreement over the substance

•  Less back and forth between OFCCP and the contractor

•  Faster conclusion •  Less worry about the recidivist factor in audit

scheduling

What has changed?

Three things have changed

•  OFCCP and the Solicitor’s willingness to go to enforcement on the merits

•  Class Member Locator Database •  Fair Pay & Safe Workplaces Executive Order and

Proposed Regulations

(1) Enforcement

•  In the past it would be rare that the Solicitor’s Office would go to enforcement on the merits –  Jurisdictional issues –  Single entity –  Denial of access

•  Now, the OFCCP is involving the Solicitor’s Office earlier and pursuing enforcement on the merits of the audit: –  Enterprise Rent-A-Car –  Pilgrim’s Pride –  B&H Photo –  AmeriQual

(2) Class Member Locator Database

•  https://www.dol.gov/ofccp/cml/index.htm •  Launched September 2015 •  Any time OFCCP finds discrimination and seeks monetary

remedies on behalf of an affected class, the conciliation agreement is published here

•  Once it is on the Internet, it exists in perpetuity somewhere •  Most settlements include a press release, even for amounts

below $100,000 •  Why is this now a problem for the contractor?

(3) Fair Pay & Safe Workplaces: Timeline

•  July 31, 2014: President Obama signs Executive Order 13673

•  Proposed regulations and Department of Labor Guidance issued May 2015

•  May 4, 2016, the Office of Management and Budget received final regulations

Fair Pay & Safe Workplaces: Purpose

•  To ensure that taxpayer dollars are not being used to buy goods and services from companies that violate America’s labor and employment laws

•  Contractor concern: what must be disclosed are not proven violations; they include unproven allegations and steps in the legal process that are far from final

•  Will it be challenged in the courts?

Fair Pay & Safe Workplaces: How will it work in practice, day-to-day?

•  Procurement Officer: System for Award Management –  “The Offerer [ ] does [ ] does not anticipate submitting an offer for a

solicitation with an estimated contract value of greater than $500,000.”

–  If the Offeror checked “does” in the preceding paragraph of this provision, the Offeror represents to the best of the Offeror’s knowledge and belief: q There has been no administrative merits determination, arbitral award or

decision, or civil judgment, rendered against the offeror within the three-year period preceding the date of the offer for violations of labor laws; or

q There has been an administrative merits determination, arbitral award or decision or civil judgment, rendered against the Offeror within the three-year period preceding the date of the offer for violations of labor laws

The SAM Module

•  If there has been such an arbitral award, civil judgment or administrative merits violation, the contractor must input into the SAM module: –  The labor law violated –  The case number, inspection number, charge number, docket

number, or other unique identification number –  The date rendered –  The name of the court, arbitrator(s), agency ,board, or

commission that rendered the determination or decision

Administrative Merits: OFCCP

•  Show Cause Notice –  Untimely submission –  Refusal to sign the conciliation agreement, as drafted,

with OFCCP’s version of factual findings and legal conclusions

Administrative Merits: other laws and regulations (slide 1 of 2)

•  Fair Labor Standards Act •  OSHA •  Migrant and Seasonal Agricultural Worker Protection

Act •  National Labor Relations Act •  Davis-Bacon Act •  Service Contract Act •  Executive Order 11246

Administrative Merits: other laws and regulations (slide 2 of 2)

•  Section 503 of the Rehabilitation Act of 1973 •  VEVRAA 1972 and 1974 •  Family Medical Leave Act •  Title VII of the Civil Rights Act of 1964 •  Americans with Disabilities Act •  ADEA •  Executive Order 13658 (Min Wage for Contractors) •  Equivalent State laws as defined in guidance by the

Department of Labor

Contractor AND Subcontractor

•  The prime or direct contractor must evaluate subcontractor labor violation information when determining subcontractor responsibility

•  Applies even to COTS (commercial off the shelf) with an estimated value that exceeds $500,000

•  Contractor and its subcontractors are re-affirming every six months

Contractor Evaluation of Subcontractor Disclosures

•  The nature of the violations (whether serious, repeated, willful or pervasive)

•  The number of violations (depending on the nature of the violation, in most cases, a single violation may not necessarily give rise to a determination of lack of responsibility)

•  Any mitigating circumstances •  Remedial measures taken to address labor violations, including

existence of and compliance with, any labor compliance agreements, or whether the prospective subcontractor is still in good faith negotiating such an agreement

•  Any advice or assistance provided by DOL

What happens once the contractor discloses to the federal agency?

•  Labor contract advisor –  Who is this person? –  Legal background? –  Contracts background?

•  Bid protests

How do these three changes affect conciliation now?

What happens when there is an NOV?

•  OFCCP reaches factual and legal findings and conclusions

•  No contractor input •  Take it or leave it: “Pay the ticket or go to court and

fight it.” •  If you don’t take it, OFCCP will issue the Show

Cause Notice, and now it’s reportable

Returning to our OFCCP niche of the world

•  How do we try to ensure that we are not in a position for OFCCP to reach the legal conclusion that we have engaged in discrimination?

•  Hiring cases? •  Compensation cases?

Hiring cases

•  Extensive proofing and vetting of the hires and applicant data

•  Pursue inferences of adverse impact statistically and anecdotally

•  Applicant dispositions and record keeping •  Thorough preparation of interviewed witnesses

Compensation Audits

•  The scheduling letter’s variables •  The contractor’s variables (privileged analysis of

compensation) •  Similarly situated •  Explanations for pay differences •  Documentation of pay explanations •  Thorough and extensive preparation of interviewed

witnesses

The Onsite Visit: Raised Stakes

•  Inference of discrimination •  Reasonable likelihood that the Executive Order, Rehab

Act or VEVRAA are being violated •  The best (but last) chance to influence the outcome •  Pre-Determination Letter •  Notice of Violations: no negotiating; it is take it or Show

Cause

Questions?

Thank you.

Josh Roffman jroffman@roffmanhorvitz.com

Alissa Horvitz ahorvitz@roffmanhorvitz.com