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The Blueprint:Case Studies in Effective

Compliance

Office of Federal Contract Compliance ProgramsOffice of Federal Contract Compliance Programs

Greta Young

Phoenix District OfficeNovember 15th, 2011

Presentation Overview Discrimination Defined

Case Study #1: Mediocre Management Solutions

Identifying Disparate Impact (IRA)

Overview of the Uniform Guidelines on EmployeeSelection Procedures (UGESP)

Case Study #2: Inferior Industries

Relevance to AAPs and Discrimination Findings

OFCCP Application and Use in ComplianceEvaluations

Case Study #3: Exemplary Electronics

Question & Answer

Disparate TreatmentDiscrimination resulting from one or more individualsdenying an employment opportunity, benefit, orotherwise treating qualified individuals differentlydue to his or her race, gender, national origin, color,religion, disability, and/or status as a protectedveteran

Disparate ImpactDiscrimination resulting from a facially neutral policyor practice disproportionately eliminating qualified,protected applicants and/or employees

Theories of Discrimination

Theories of Discrimination

Disparate Treatment• Adverse Action• Intent

Disparate Impact• Adverse Action• Result of a Process

Continued

IdentifyingDisparate Impact

41 CFR 60-3.4 (D)

“A selection rate for any race, sex, orethnic group which is less than 4/5ths ofthe rate for the group with the highestrate will generally be regarded…asevidence of adverse impact.”

Referred to as the 80% rule or 4/5ths rule

IdentifyingDisparate Impact

41 CFR 60-3.4 (C)

“If the…total selection processfor a job has an adverse impact,the individual components of theselection process should beevaluated for adverse impact.”

Continued

Discrimination:Defined

41 CFR 60-3.3 (A)

“The use of any selection procedure which has anadverse impact on the…members of any race, sex,or ethnic group will be considered to bediscriminatory and inconsistent with theseguidelines, unless the procedure has been validatedin accordance with these guidelines, or theprovisions of section 6 of this part are satisfied”

Mediocre Management Solutions is a growing companyproviding human resource consulting and financialservices. They recently opened a new office and hiredseveral business analysts.

• Mediocre Management Solutions received 72 totalapplications (41 minorities and 31 non-minorities).

• The company made 9 hires (1 minority and 8 non-minorities).

• Hiring process consists of application, phone screen, in-person interview, and background check.

Case Study #1:MEDIOCRE MANAGEMENT SOLUTIONS

Case Study #1:MEDIOCRE MANAGEMENT SOLUTIONS

Total Non-Min Hires

Total Non-Min Applicants

8 Non-Min Hires

31 Non-Min Applicants.02

Total Minority Hires

Total Minority Applicants

1 Minority Hires

41 Minority Applicants.02 / .08= .26

The app/hire data is applied in the formula below todetermine the favored group and identify potentialadverse impact.

GroupTotal

ApplicantsTotal Hires

Non-Min 31 8

Min 41 1

/ = ImpactRatio

The Formula:

= .26=

Case Study #1:MEDIOCRE MANAGEMENT SOLUTIONS

Case Study #1:MEDIOCRE MANAGEMENT SOLUTIONS

DisfavoredGroup

80% Rule?AdverseImpact?

Minorities 8% YES

Compare the final impact ratio percentage to the 80%rule-of-thumb used by agencies to measure selectionrates.

Conclusion: A .08 impact ratio for minoritieswarrants further investigation8% < 80%

Case Study #1:MEDIOCRE MANAGEMENT SOLUTIONS

Case Study #1:MEDIOCRE MANAGEMENT SOLUTIONS

ApplicantID #

Explanation for Hire

00011 Applicant has degree incomputer science

00017 More years of prior experience;worked for a direct competitor

00022 Greater fluency in HTML, XHTML,CSS, and SQL

00041 Relevant training in projectmanagement

Case Study #1:MEDIOCRE MANAGEMENT SOLUTIONS

Case Study #1:MEDIOCRE MANAGEMENT SOLUTIONS

The Selection Process:

Total Selection Process:• Total pool of eligible candidates• Actual candidates selected

Components of a Selection Process:• Every step in the process where one

or more candidates are eliminatedfrom further consideration

The Selection Process:

Components of a Selection Process:Examples of Individual Components

•Application Screen

•Job Skills & Knowledge Tests

•Interviews

•Pre-employment tests

•Final Hiring Decision

Continued

The Selection Process:

Any event in the selection

process where some candidates

pass and others fail can be

measured for adverse impact;

Continued

Therefore, ALL of these events are…

41 CFR 60-3.2 (B)

Employment Decisions

“These guidelines apply to tests and otherselection procedures which are used as a basis forany employment decision.”

“Employment decisions include but are not limitedto hiring, promotion, demotion, membership,referral, retention, and licensing and certification.”

The total selection process is made up ofindividual components where candidateseither pass or fail – tests.

Adverse Impact: The overall selection ratefor any group (race, sex, ethnicity) is lessthan 4/5ths of any other group.

The use of any selection procedure causingadverse impact is discriminatory unlessjustified in accordance with…

Uniform Guidelines onEmployee Selection Procedures

title 41, part 60-3, sections 1 - 18

“These guidelines incorporate a single set of principles which aredesigned to assist employers…to comply with requirements of federal

law…they are designed to provide a framework for determining theproper use of…selection procedures. 41 CFR 60-3.1: Statement of purpose

Overview of Key Principles

60-3.3: Discrimination DefinedA. Procedure having adverse impact constitutes

discrimination unless justified

B. Consideration of alternative procedures

60-3.4: Information on ImpactA. Records concerning impact

B. Applicable race and gender groups

C. Evaluation of selection rates

D. Adverse Impact (the 4/5th rule)

E. EEO Posture

continued

Overview of Key Principles

60-3.5: Standards for validity studiesA. Acceptable types of validity studies

B. Criterion-related, content, construct validity

D. Need for documentation

G. Method of use

K. Currency

60-3.6: Use of procedures not validatedA. Alternative procedures to eliminate impact

60-3.3 (B): Where validation is not feasiblealternative selection procedures withoutadverse impact must be instituted

60-3.6 (A): Alternative procedures should:1. Eliminate adverse impact in the total selection process;

2. Be lawful, and;

3. Be as job related as possible.

continued

Overview of Key Principles

continued

Overview of Key Principles

60-3.10: Employment Agencies & ServicesA. Selection procedures devised by an agency

Use of an agency does NOT relieve anemployer of EEO obligations under Federal law

60-3.11: Disparate TreatmentA. No selection procedure, regardless of

validation, can be imposed upon membersof a race, gender, etc where otheremployees, applicants, etc have not beensubject

OFCCP Application

Provide a framework for investigatingdiscrimination indicators

Standardize procedures to facilitateconsistency in EEO/AA law enforcement

Codify various court decisions concerningstatistical interpretation, discriminatoryactivity, and employer responsibilities

OFCCP Application

Outline methods and procedures forreviewing the validity of selectionprocedures consistent with court decisions

Specify records and documents to reviewduring compliance evaluations andcomplaint investigations

Give Federal contractors due notice ofexpectations and requirements ofselection procedure evaluation

continued

Relevance to AAPs Although different, the guidelines are

related to, and influence, the compositionof AAPs

Do not relieve any AA obligations

Encourage development and effectiveimplementation of AAPs

OFCCP considers overall EEO posture priorto instituting action against contractors

The guidelines do not preclude the use ofprocedures to achieve AA objectives

Relevance to AAPs Self-evaluation and development of

action-oriented programs requiredelements of AAPs

Guidelines clarify how adverse impact isdetermined, actions to take when adverseimpact is identified, required records anddocuments, and reporting

Should be addressed in ID of problemareas, development of action-orientedprograms, and internal auditing

continued

Relevance to AAPs Identify adverse impact in total selection

processes

Analyze specific components of a selectionprocedure for adverse impact Any action taken where applicants &

candidates pass or fail

Identify specific actions resulting inadverse impact and validate Consider alternative procedures

Maintain ALL relevant documentation

continued

Inferior Industries had recently landed several largeclients and was hiring for account representativepositions.

• Minimum Requirements: A high school diploma orequivalent, two years billing/accounts receivableexperience, and knowledge of computer systems.

• Inferior Industries received 225 total applicants meetingthe minimum requirements (161 males and 64 females).

• The company made 57 total hires (35 males and 22females).

Case Study #2:INFERIOR INDUSTRIES, INC.

Case Study #2:INFERIOR INDUSTRIES, INC.

.64Total Female Hires

Total Female Applicants.34.22

22 Female Hires

64 Female Applicants

The personnel activity data is applied in the formula below todetermine the favored group and identify potential adverseimpact.

GroupTotal

ApplicantsTotal Hires

Males 161 35

Females 64 22

/ = ImpactRatio

The Formula:

Total Male Hires

Total Male Applicants

35 Male Hires

161 Male Applicants /= = .34.22 =“The materials and content presented by DOL are intended to provide general information, and not specific, legal or other advice. DOL strongly encourages you to seek appropriate guidance to assess your specific needs and circumstances."

Case Study #2:INFERIOR INDUSTRIES, INC.

Case Study #2:INFERIOR INDUSTRIES, INC.

Using the 80% rule-of-thumb, the hiring process at InferiorIndustries resulted in adverse impact affecting males.

DisfavoredGroup

80% Rule?AdverseImpact?

Males 64% YES

Conclusion: A 64% impact ratio for males warrantsfurther investigation of selection process64%< 80%

“The materials and content presented by DOL are intended to provide general information, and not specific, legal or other advice. DOL strongly encourages you to seek appropriate guidance to assess your specific needs and circumstances."

Case Study #2:INFERIOR INDUSTRIES, INC.

Case Study #2:INFERIOR INDUSTRIES, INC.

Identification of Problem Areas

(41 CFR 60-2.17 (b))

Each year, The Company performs in-depth analysesof its total employment process to determinewhether obstacles to equal opportunity exist.

Case Study #2:INFERIOR INDUSTRIES, INC.

Case Study #2:INFERIOR INDUSTRIES, INC.

Compliance Evaluations

OFCCP review process mirrors contractors’self-evaluation process

Major difference: Interpretation Evaluate contractors’ proactive response to

identified adverse impact

Determine quality/availability of records

Refine data analyses; determine causality

Assess compliance w/validation requirements

Determine if discrimination occurred

Exemplary Electronics is a proactive federalcontractor who sells computer parts andaccessories to several government agencies.

• Exemplary Electronics received 138 totalapplications (102 females and 36 males)

• 92 applicants were selected for hire (60 femalesand 32 males)

• Selection process consisted of initial application,phone screen, in-person interview, and referencecheck

Case Study #3:EXEMPLARY ELECTRONICS

Case Study #3:EXEMPLARY ELECTRONICS

Total Male Hires

Total Male Applicants.89.59

32 Male Hires

36 Male Applicants

Exemplary Electronics conducted an Impact RatioAnalysis on their total selection process, whichproduced the following results:

GroupTotal

ApplicantsTotal Hires

Males 36 32

Females 102 60

/ = ImpactRatio

The Formula:

Total Female Hires

Total Female Applicants

60 Female Hires

102 Female Applicants /= = .89.59 = .66

Case Study #3:EXEMPLARY ELECTRONICS

Case Study #3:EXEMPLARY ELECTRONICS

Since the selection rate for females was 66% that of theselection rate for males, using the 80% rule-of-thumb,Exemplary Electronics identified adverse impact affectingfemales.

DisfavoredGroup

80% Rule?AdverseImpact?

Females 66% YES

Conclusion: A 66% impact ratio for femaleswarrants further investigation66%< 80%

Case Study #3:EXEMPLARY ELECTRONICS

Case Study #3:EXEMPLARY ELECTRONICS

Process Evaluation

Applicant Pool

138 total applications received102 female / 36 male

138 pass phone screen102 female / 36 male

96 pass 1st interview60 female / 36 male

92 pass reference check60 female / 32 male

Applicant Pool:74% female / 26% male

Process Evaluation

Do the Math!

Applicant Pool:74% female / 26% male

Selection Rate: Screen100% female / 100% male

Selection Rate: Interview59% female / 100% male

Selection Rate: Reference Check100% female / 89% male

Screen: 1.0 IRA

Interview: .59 IRA

Check: .89 IRA

Exemplary Electronics implemented a variety ofmeasures to eliminate the adverse impact in the hiringprocess:

• Standardized their interview process

• Instituted a scoring system

• Provided training to management & other decision-makers

Case Study #3:EXEMPLARY ELECTRONICS

Case Study #3:EXEMPLARY ELECTRONICS

As a result of their multiple action steps, ExemplaryElectronics was able to eliminate adverse impactcome their next 6-month reporting period.

Phoenix: (602) 514-7074

Las Vegas: (702) 388-6897

National: (866) 487-2365

Email: OFCCP-Public@dol.gov

Web: www.dol.gov/ofccp/

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