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Understanding OFCCP’s Compliance Evaluation

(Through the Federal Contract Compliance Manual)

Biddle Consulting Group, Inc. 193 Blue Ravine, Suite 270 Folsom, CA 95630 916.294.4250 www.biddle.com | www.bcginstitute.org Marife Ramos, PHR, SHRM-CP([email protected]) Criselda Cooper ([email protected])

Contact Information

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Copyright © Biddle Consulting Group, Inc.

mailto:[email protected]

mailto:[email protected]

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Overview of Biddle Consulting Group, Inc.

Affirmative Action Plan (AAP)

Consulting and Fulfillment

• 5,000 AAPs developed through BCG systems annually • OFCCP Audit and compliance assistance • myAAP Software™

Compensation Analysis

• 1M+ job titles reviewed annually • Proactive, wholistic approach to disparity analyses • Litigation/enforcement pay equity studies • COMPare™ compensation analysis software

HR Assessments

• AutoGOJA™ online job analysis system • TVAP™ test validation & analysis program • CritiCall™ pre-employment testing for 911 operators • OPAC™ pre-employment testing for admin professionals • Video Situational Assessments (General and Nursing)

Custom Test Development & Validation

•“High stakes” test development •Validation studies in response/prevention to litigation

EEO Litigation Consulting /Expert Witness Services

• Over 200+ cases in EEO/AA (both plaintiff and defense) • Focus on disparate impact/validation cases

Publications/Books • EEO Insight™: Leading EEO Compliance Journal • Adverse Impact (3rd ed.) / Compensation (1st ed.)

BCG Institute for Workforce Development

• 7,000+ members • Free webinars, EEO resources/tools

Biddle Consulting Group Institute for Workforce Development (BCGi)

• BCGi Memberships (free): ~7,000+ members / 15,000 HRCI credits to-date

– Online community

– Monthly webinars on EEO compliance topics

– EEO Insight Journal (e-copy)

• BCGi Platinum Membership (paid) – Includes validation/compensation analysis books

– EEO Tools including those needed to conduct AI analyses

– EEO Insight Journal (e-copy and hardcopy)

– Access to the BCGi library of webinars, training materials, and much more …

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Agenda


What is a Compliance Evaluation?

The “Selection” Process for an Audit

Desk Audit (Preparation, Review, Etc.)

Recommendations

Compliance Evaluations A compliance review (or audit) under the OFCCP’s Active Case Enforcement is

• an evaluation to determine if the contractor maintains nondiscriminatory hiring and employment practices and is taking affirmative action to ensure full compliance with the requirements of EO 11246, VEVRAA, and Section 503 of the Rehabilitation Act.

• ensures that the contractor does not make employment decisions with regard to race, color, religion, sex, and national origin

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Compliance Evaluations OFCCP’s audit cycle is based on its fiscal year (October 1 thru September 30 of the following year)

• Typically includes 2 scheduling lists • Audits may be scheduled outside the FY • First release in FY 2015:

o 2500 establishments o 993 distinct companies o 27 Corporate Management Compliance Evaluations

(CMCE)

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Compliance Evaluations – The “Selection” Process Federal Contractor Selection System (FCSS) – a neutral selection system that identifies contractors for audit.

• Federal acquisition and procurement databases • EEO-1 reports • Dun & Bradstreet data • Census data • Industry type • Employee counts

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Compliance Evaluations – The “Selection” Process The list is further refined by applying a number of neutral factors, such as

• Expiration date of the contract • Value of the contract • Pre-determined limit on the number of audits per contractor

per cycle Also removes:

• FAAPS • Under current review • Reviewed within last 24 months • Under Conciliation Agreement • Already included in previous list

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Compliance Evaluations – The “Selection” Process The OFCCP determines the total number of establishments to be reviewed based on OFCCP’s region and district office staffing levels of full time employees (FTE). The final list is sorted using any one of a number of neutral factor (e.g., number of employees at the location, contract value, contract expiration date, etc.)

• First and 25th establishment on the list in each district are marked for quality review per the Active Case Enforcement

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Compliance Evaluations – The “Selection” Process Other reasons for compliance reviews (outside the FCSS):

• Functional AAP • Individual or class complaints • Those initiated by the National Office based on

alleged violation • Pre-awards evaluations • Monitoring of conciliation agreements and consent

decrees

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Federal Contract Compliance Manual (FCCM)

• What is the FCCM? – Provides procedural and technical guidance on compliance

issues based on current agency procedures and processes – Provides new and experienced compliance officers (COs) the

procedural framework for executing quality and timely compliance evaluations and complaint investigations

– Provides consistency across the agency – Provides contractors and subcontractors more transparency

and clarity about basic OFCCP procedures and processes Note: Differences between regions can still occur BUT these

differences should be minor and infrequent

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• What the FCCM is NOT/DOES NOT do? – Does not establish agency policy

o If there are any inconsistencies between the FCCM materials and OFCCP’s policies, the OFCCP policies must be followed

o Policy guidance, procedures and agency priorities are communicated through directives

– Does not create new legal rights or requirements – Does not change existing legal rights or requirements

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Three Stages of a Compliance Review • Desk Audit • Onsite Review • Offsite Analysis

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• Principles of Desk Audit – Equal Employment Opportunity – Affirmative Action Program – Inclusion and Acceptability

• Focus of Desk Audit – Workforce Structure, Personnel Policies and Procedures

o CO’s examine a contractor’s personnel policies and procedures to determine if they warrant in-depth investigation such as an onsite review

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• Focus of Desk Audit (cont’d) – Good Faith Efforts

o CO’s reviews good faith efforts provided by the contractor to achieve established goals. They are looking for three specific things:

– Areas where there is a lack of progress toward established goals;

– Whether further information is needed in any area; and – Whether an onsite visit is needed

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• Focus of Desk Audit (cont’d) – Potential Discrimination

o CO’s must be aware of the signs of potential discrimination. Examples of signs of potential discrimination: Significant over-representation or under-representation

in a particular area of the workforce Adverse Impact

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• Focus of Desk Audit (cont’d) – Potential Discrimination (cont’d)

Pay difference that resulted from compensation practices that appeared to be based on race, sex or ethnicity Leave for family care giving indicates that it is applied

differently for women and men

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• Standard Compliance Evaluation Report (SCER) – A tool used by the COs to document the desk audit – A 10-page comprehensive “checklist” to guide the CO

in preparing, conducting, and closing the desk audit – It is also used by COs, in whole or in part, in the

offsite review of records or in focused review

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• There are 3 main parts of an SCER: – Part A: Preparation

o General information on the contractor o Contractor’s past review history and complaints filed with

other agencies (EEOC, OSHA, etc.) – Review nature of complaints or problems

– Individual or class complaint?

– Part of the workforce/department affected (e.g., clerical, entry-level, etc.)

– Is there indication of systemic issues (as revealed by different complaints from different agencies)

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• There are 3 main parts of an SCER: – Part A: Preparation (Cont.)

o EEO trends in the workforce and organization structure – Expanding or contracting? Notably in one particular category?

– White/Blue collar: gains or losses in one category?

– Substantial disparity in the representation of a racial/ethnic group?

o Initial review of the AAP and support data (complete? acceptable/not acceptable?)

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• Main parts of an SCER (cont.): – Part B: Affirmative Action

o Summarizes problems with the AAP and the support data o Evaluates the contractor’s Good Faith Efforts in relation to

the goals o Assessment of contractor’s implementation of other AAP

obligations: – Invitation to self-ID

– Disability-related questions

– EO Clause (P.O., sub contracts, CBA notifications, etc.)

– Job advertisement language

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• Main parts of an SCER (cont.): – Part C: Problems Identified

o Identify the problem(s) – Nature

– Relevant evidence reviewed

– Actions taken to resolve the problem

– Was the problem resolved? How?

o For unresolved problems, the CO needs to develop for an onsite plan

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Federal Contract Compliance Manual (FCCM) The Desk Audit Process

– Pre-Desk Audit o Initial contact with the contractor

– Contractor information - CO must verify the following

Name of highest ranking official at the location

Legal name of the company

Name and e-mail of person responsible for the development and implementation of the AAP

Correct mailing address

*** for larger organizations: name of corporate CEO, corporate EEO/AA, and corporate mailing address

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Federal Contract Compliance Manual (FCCM) – Pre-Desk Audit (cont.)

o Initial contact – Representation – When the contractor indicates that it will be

represented by a counsel or a consultant, CO must ask:

Written confirmation of the representation

Contact information of the representative (name, address, etc.)

Scope of representative’s authority (does it extend to negotiating settlement, if necessary?)

Confirmation if all contacts (e.g., data clarification, making appointments, etc) should be made through representative

Confirmation if all correspondence should only be provided to the representative or if copies should also be provided to the contractor

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o Initial contact – Representation (cont)

*** Any changes to the representation, including the instructions, must be put in writing

*** COs must provide the highest ranking management officials copies of all substantive documents mailed. This will include Notice of Violations, Chow Cause Notice, Conciliation Agreements and other documents required by the FCCM to be mailed by the CO.

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o Initial contact – Circumstances Precluding Evaluation – The CO must

determine whether there are circumstances that preclude him/her to continue with the compliance evaluations:

Lists of parties excluded from federal procurement and nonprocurement programs

The contractor has undergone compliance evaluation within the last 24 months

The contractor has a FAAP agreement

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o Preparation and Maintenance of Case Chronological Log

– COs are required to prepare and maintain a case chronological log (a “tracking” tool on the progress and status of the compliance evaluation)

Event summaries starting with the initial contact with the contractor

Documentation of all phone conversations, e-mails, correspondence, and meetings (includes dates, nature of the contact, person contacted and summary of discussion)

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o Creation and Maintenance of the Case File – Generally consists of folders for:

SCER

Case Chronology Log, Correspondence and Notes

Collective Bargaining Agreement and Other Agreements

SOL Opinions, JRC Memoranda, Post SCER Update

Progress Report and Quality Audit

Historical Review Results

AAP and AAP Support Data

***Maintaining these files is crucial. If enforcement is needed, the case file is submitted to the Solicitor’s Office.

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o Sending the Scheduling Letter – Since Scheduling Letters and Itemized Listing are reauthorized

every 3 years, a CO must familiarized themselves with the information and documents being requested in the most recent reauthorized letter

– Sent to the highest ranking official at the location with a copy sent to the CEO at the corporate office

– Letters are sent via certified mail with return receipt requested

– Letters must be signed by the field office official and must include the name and phone number of the CO who will receive the AAP and other supporting data

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o Follow-up Contact with the Contractor – COs must contact the contractor within 15 days of sending the

Scheduling Letter to ensure that the contractor understand what are being requested

– If contractors challenges OFCCP’s jurisdiction and CO is unable to establish jurisdiction, the issue is sent to Division of Program Operations

– Show Cause Notice is issued when jurisdiction is established and contractor continues to dispute

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o Contacting EEO, VETS, and Other Agencies – CO will at start gathering information about the contractor at the same time as the scheduling letter was sent out

– EEOC and State and Local Fair Employment (FEP) Agencies – Inquiry letter is sent out to request information on discrimination complaints.

– VETS and Other DOL Enforcement Agencies – information regarding contractor’s compliance with mandatory job listing and annual VETS filing. Information may include contractor’s recruitment and hiring practices

– Wage and Hour Division – FMLA violations

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o Information on EEO Complaints – CO will note patterns on the types of complaints and discrimination findings

o Relationship of OFCCP Compliance Activities to EEO Litigation or Court Orders – CO will determine if pending litigation or court order puts limitations on the compliance evaluation

o Review of Community Resource Files – Each field office maintains a resource on communities within the areas. This includes local organizations that represents or provides services to the protected group.

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o Review of Previous Compliance Actions – – CO must determine if the contractor has compliance evaluation(s)

for other locations.

– CO must contact the other OFCCP supervisor and discuss issues (if any). Important for determining company-wide issues (e.g., a test that was not validated and has adverse impact against a group)

– Must also review closed case files to determine if there are any issues relevant to the current review.

Conciliation agreement

Back pay

Hires

Remedial measures

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Federal Contract Compliance Manual (FCCM) – Receipt of the AAP and Support Data For Desk Audit

o Contractors must submit the AAP within 30 days from receipt of the scheduling letter

– Women and Minorities

– 503

– VEVRAA

o If not received on a time, CO must contact contractor to determine the status

o If still not submitted, CO’s supervisor has discretion whether to grant extension and the length of time for the extension

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– Initial Review of the AAP o CO must determine that the submitted AAP is complete

and acceptable – Inclusion – Did the contractor provided all the materials included in

the Scheduling Letter and Itemized Listing?

– Missing Items – CO must create a list if every document that the contractor provided, including the date of the request and date the documents was received. Also include any items that the were requested but nor provided by the contractor.

– Acceptability – Are the current AAP and supporting data current, complete and acceptable? If one of the elements is missing, the AAP is deemed unacceptable

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– Audit of Personnel Activity and Impact Ratio Analysis o 4/5 rule is still used to determine if selection rate of one

group is 80% less than the selection rate of another group o Uses group with the highest selection rate as the reference

group o 80% violation is considered a preliminary indicator only

– Need for data refinement

– Further statistical analysis

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o 80% violation (IRA) – Adverse Impact (AI) Determination – According to the UGESP,

employers with 100 employees or more must:

Maintain specific records by job, sex and race to determine whether its selection process have adverse impact on employment opportunities; and

Annually analyze the data to determine whether the total selection for each job title had adverse impact

– Request for AI Determination – when CO identifies a group with adverse IRA and the contractor has 100 employee or more, the CO can:

Request for AI determinations

Request for the AI analysis

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o 80% violation (IRA) – Need for Information on the Selection Process – when adverse

IRA is present, the CO must request for:

Description of the employment selections process in the at-issue job

If multi component, should include:

the description of each step in the selection

the data

the decision makers

criteria and how the criteria used

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o 80% violation (IRA) – Multi Component Selection Processes

When there is AI in the total selection process – individual components(i.e., steps) must be evaluated for AI

Generally, when there is no AI in the total selection process, contractor is not expected to evaluate the individual components and enforcement actions is not needed, except:

Individual component has AI and its use is not justified as job related or consistent with business necessity (e.g., height and weight requirements)

Complaints alleging that the selection process or a criteria used is discriminatory

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o Compensation – CO will consider “other information” besides the data

Explanation of the contractor’s compensation system

Policies and practices regarding setting wages at hire, additions to regular pay such as overtime, employee performance, administration of bonuses/commissions, market survey data, CBA, job descriptions, self audit results

– CO may continue to request for additional compensation data and/or conduct an onsite before final determination of the compliance evaluation

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o Compensation (cont.) – Upon receipt of all compensation data, the CO will conduct an

initial analysis which could result to:

Closing the Compensation Review – there are no indicators of potential compensation discrimination and there in no need for additional information

Continuing the Compensation Review - when there is an indication of potential discrimination based on initial desk review. The CO may request for the entire workforce data.

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Federal Contract Compliance Manual (FCCM) o Compensation (cont.)

– Continuing the Compensation Review (cont)

Following are some situations where a CO may find potential issues with compensation and therefore, may request for additional data:

Potential compensation discrimination based on summary data

Evidence of discrimination on another employment practice

Complaints/Anecdotal evidence

Data integrity issues

To fully understand and interpret the summary data

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o Compensation (cont.) – Upon receipt of all compensation data, the CO will conduct an

initial analysis which could result to:

Closing the Compensation Review – there are no indicators of potential compensation discrimination and there in no need for additional information

Continuing the Compensation Review - when there is an indication of potential discrimination based on initial desk review. The CO may request for the entire workforce data.

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– Conclusion of the Desk Audit o No outstanding questions and no violations – evaluation is

closed at the desk audit stage o Found non-substantive problems – CO may close after all

issues are resolved o CO must proceed with an on site if contractor:

– Provided insufficient data

– Has indicators of potential discrimination, failure to provide complete AAP, and existing complaints;

– Was identified for a complete compliance review

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Top 10 Audit Request (2015)

10. Proof of job listings with the State Employment Service Delivery System (ESDS)

9. Proof of proper notifications o EO Clause o Notice to vendors/subcontractors

8. Proof of online accessibility o Accommodation policy/process (incl. designated person and

contact information) o Link to “EEO is Law” poster

7. Copies of self ID forms, job announcements, applications o Proper format/categories o BQs, tests, background checks

Recommendations

46 Copyright © Biddle Consulting Group, Inc.

Top 10 Audit Requests in 2015

6. Documentation of review of personnel processes 5. Documentation of review of physical and mental qualifications 4. Documentation of accommodations

o Policies (including leave) o Logs (including requests, results, supporting documentation)

3. Documentation of Outreach and Recruitment Efforts o Primarily (but not necessarily) for veterans and individuals with a

disability o Results of the “Evaluation of Effectiveness” o Description of activities, name, contact information o What worked well. What didn’t. What changes are being made. o “Failure to meet a goal/benchmark is not a violation. Failure to try

is.” • Recommendation: Try to get specific information from applicants . . .

Perhaps have recruiters ask as well.

Recommendations


Top 10 Audit Requests in 2015 2. Personnel Activity Data

o Including data for all minority groups o OFCCP is primarily running comparisons to the group with the

highest rate (ala Uniform Guidelines) o Provide unknowns (OFCCP looking for potential flaws in the process

. . . i.e., a low response rate) o If impact . . . be prepared to provide detailed applicant data (with

dispositions), previous year’s job group headcounts, termination logs, promotion reasons, etc.

1. Compensation Data

Recommendations


A few other tips to consider:

1. Review data before submission. Ensure that all data are correct and appropriate for the at-issue time frame

2. Perform adverse impact analyses on all transactions. Pay closer attention to the hires analysis.

3. Review compensation data. Conduct pro-active analysis and pro-actively investigate any pressure points.

4. Document and emphasize all EEO “Good Things.”

5. Prepare a neat and professional AAP.

o The personnel in charge of implementation can answer simple questions regarding the Plan(s)

o The reports are complete and accurate

6. Consider performing a pre-audit “mock audit.”

7. Are you registering job openings with state agencies?

Recommendations


• The OFCCP is expecting contractors create “active” relationships with outreach/recruitment sources

• Ensure all postings make it to state and local agencies including advocacy groups (enlist 3rd-party if necessary)

• Include specific agencies aimed towards women, minorities, veterans, and individuals with disabilities

• Document postings and ensure they were “actionable” • Best practice: Track referral source to evaluate effectiveness of

outreach/recruitment

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Recommendation Posting Requirements


Requires that contractors list job openings with the appropriate employment service delivery system. Employment openings subject to the mandatory job listing requirement include all positions except:

• Executive and top management positions,

• Positions that will be filled from within the contractor's organization, and

• Positions lasting three days or less. Listing with the appropriate employment service delivery system must be done concurrently with a contractor's use of any other recruitment source or effort.

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Recommendation Posting Requirements


A few tips to consider (cont.):

8. Reread the regulations.

9. Review and familiarize with the content of the AAP.

10. Know your auditor.

11. Know your auditor’s time frame for decisions.

12. Document all conversations with reviewers.

13. GET HELP!!!!

Audit Letter and Checklist



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