what to expect in the new round of ofccp audits with … ronnenburg, sphr, shrm-scp president...

What To Expect in the New Round ofOFCCP Audits with the New

Leadership at the DOL & OFCCP

Triangle ILG – September 8, 2017

Beth Ronnenburg, SPHR, SHRM-SCPPresidentBerkshire Associates Inc.

• Impact of New Administration• What Has OFCCP Done Since Election• Southeast Region Updates• Section 503 and VEVRAA Enforcement• Hiring Discrimination Enforcement• Pay Equity Enforcement

• Impact of Google Case• Preparing for an Audit

Agenda

• Leadership changes• OFCCP Director, key national office roles, Regional

Directors• EEOC Commissioners and General Counsel

• Government reorganization• Consolidation of local offices• Merger with EEOC

• Impact of new budget priorities• Voluntary retirement & separation packages offered

• Potential change to enforcement protocols• Active Case Enforcement vs. Active Case Management

Impact of New Administration

• Obama OFCCP issued massive amount of regulation;new administration must comply with Trump “2 For1” Executive Order• Increase to coverage thresholds?

• ‘Friendlier’ OFCCP– OFCCP presence at ILG National Conference– Town Hall Meetings (D.C., Chicago, & San Francisco)

• Annual certification process?• Sub-regulatory guidance more likely to be revised

• Directive 307• FCCM• Active Case Enforcement Directive


• Indefinite stay issued for part 2 of EEO-1Report– Office of Information and Regulatory Affairs

(OIRA) sent letter to EEOC on 8/29 issuing stay– Email sent out by EEOC on 9/1

• For the 2017 EEO-1 Survey cycle, the EEO-1Report will be due on March 31, 2018. Theemployment data used for the 2017 EEO-1Report should be selected from a payrollperiod in October, November, or December -the fourth quarter of calendar year 2017.


Filed 3 high-profile “midnight hour” administrative lawsuits• Google, filed 1/4/17: Denial of access case relating to OFCCP request for

additional year of compensation information, and employee names andcontact information

• JPMorgan Chase & Co., filed 1/18/17: Alleges 93 female ApplicationDeveloper Lead II, Application Developer Lead V, Project Manager, andTechnology Director positions within Investment Bank, Technology &Market Strategies unit were paid less than men employed in samepositions

• Oracle, filed 1/18/17: Claims white males paid more than females, AfricanAmericans, and Asians in 80 job titles and that Asians were favored for 69technical roles by, among other things, offering referral bonuses toemployees that encouraged heavily Asian workforce to recruit otherAsians

Post November 2016 OFCCP Activity

• Issued new CSAL list in February 2017; sent to establishment,not HQ

• 800 Establishments; 29 industries; 373 companies• 30 CMCEs• Can confirm establishments on CSAL list by emailing

[email protected]

• Scheduling of reviews from new list began March 2017, butreviews from old lists still being scheduled

• FAAP reviews still being scheduled separately

• Anticipate another scheduling release this calendar year

Post November 2016 OFCCP Activity

• Reached 34 financial settlements between October 1,2016 and September 1, 2017– Totaling just under $14 million

• Large monetary settlements from Pacific Region intech industry

• Some larger-scale compensation discriminationsettlements (B&H Foto, Lexis Nexis, Leidos)

• Focus in all regions on hiring activity in more thanjust entry-level positions

• Continued emphasis on “steering” issues• Cross-region or multiple establishment “enterprise”

settlements

FY 2017 OFCCP Financial Settlements

• B&H Foto: $3.2 million settlement for compensation andpromotion discrimination against Hispanics and hiringdiscrimination against Females, Blacks and Asian applicants.

• Splunk: $2.7 million settlement of claims company failed to hireBlacks & Asians in three technical professional jobs; Requiredhiring of EEO expert to oversee compliance.

• Palantir: $1.65 million hiring discrimination settlement; OFCCPclaimed that employee referral system resulted indiscrimination against Asian applicants for engineeringpositions.

• Bank of America: $1 million settlement for alleged failure tohire Black applicants for entry-level positions in 1993. (SE)

• LexisNexis Risk Solution (FL & GA): $1.2 million settlement ofcompensation discrimination claims for 211 females in exempt,non-commissioned operational leadership roles. (SE)

Notable FY17 OFCCP Settlements

Southeast Region Enforcement Statistics

FiscalYear

# ofCompletedAudits

Notice ofCompliance(#/%)

ConciliationAgreement (#/%)

Financial Agreementor Consent Decree(#/%)

FY17* 403 348/86% 45/11% 10/3%FY16 253 197/78% 47/18% 9/4%FY15 354 288/81% 57/16% 9/3%

*Through August 18, 2017 – DOL Enforcement Database(https://enforcedata.dol.gov/homePage.php)

• Apex Systems - Failure to hire African-American applicants forRecruiter position; settlement of $148,500 and hiring of 6 classmembers

• Bank of America – Failure to hire African-American applicants forentry-level positions; settlement of $1,000,000

• Compass Group- Failure to hire African-American applicants forservice worker position; settlement of $29,921.16 and hiring of 8class members

• Crossmatch Technologies – Compensation discrimination offemale employees in non-exempt technician positions (13) with asettlement fund of $49,305.29

• Derst Baking Company – Failure to hire African-Americanapplicants for production positions; settlement of $122,874 andhiring of 5 class members

• John Q. Hammons Hotel Management, LLC – Failure to hirefemale applicants for service level positions; settlement of $47,000and hiring of 5 class members

Southeast Region FY17 Settlements

• Kappler, Inc. – Placement discrimination upon hire for females inoperative positions; settlement of $5,500 and hiring of 2 classmembers

• Lexis Nexis Risk Solutions (FL) – Compensation discrimination offemale employees in exempt non-commissioned operationalleadership roles (26) with a settlement fund of $272,920

• Lexis Nexis Risk Solutions (GA) – Compensation discriminationof female employees in exempt non-commissioned operationalleadership roles (185) with a settlement fund of $953,494

• Unifirst Corporation – Steering for females and failure to hire formales in production positions; settlement of $191,505.76 andhiring of 7 female and 6 male class members

• Vulcan Packaging - Ebsco Industries, Inc. – Compensationdiscrimination/steering for females in operative positions;settlement of $56,000 and hiring of 5 class members

Southeast Region FY17 Settlements

• Areas of Focus– Compensation

• They are looking at compensation beyond employees in thesame job title - Very aggressive in their groupings ofemployees to get the largest groups possible, even crossingEEO categories

• Appear to be using some type of internal compensation tool• In a FL audit we were asked to provide more detailed comp

(25 items) as of the plan date, date the audit letter wasreceived, and the date 2 years prior to the audit letter beingreceived, so 3 full sets of data.

• Quick requests for compensation interview– Failure to hire

• Following the numbers and requiring follow-up on all areasof significant AI

Southeast Region Trends

• Hard to “quietly settle” OFCCP discrimination cases– Class locator database:

https://www.dol.gov/ofccp/cml/index.htm– FOIA reading room:

https://www.dol.gov/ofccp/foia/foiareadingroom/– But, since election, many settlements without press

release

• Agency aggressively seeking enforcement on access todata—strong track record in these cases

• OFCCP has been more willing to sue than settle forpennies on the dollar; but budget may make it difficult forOFCCP to continue these cases

Enforcement Trends To Watch

• Honeymoon period is over—all contractors should be in fullcompliance with revised Section 503 and VEVRAA regulations

• Do not expect major changes to these regulations• Agency is consistently looking at

• IWD utilization and PV benchmark data, and six-monthupdates

• Accommodation requests and resolutions• Qualification and personnel process reviews• Audit and reporting system compliance• Annual outreach efforts and evaluation

503 and VEVRAA Enforcement

503 and VEVRAA Enforcement

• OFCCP is examining personnel activity usinglots of different analyses:• Minority vs. Total Minority• Favored Group vs. each Other Group• Hispanic vs. Black or White• Hispanic vs. White and Black• White vs. Black• White vs. Other Races with large applicant pools

Hiring Discrimination Enforcement

• Requests to interview HR and hiring managers onapplication and hiring process• Seeking to debunk requisition based hiring argument• Questions about moving or linking candidates, how data

was gathered, steps in process• Follow-up data requests for “complete candidate

file”• Agency more likely to explore whether contractors have

applied Internet Applicant rule correctly• Requests regarding use of agencies• Requests for underlying documents to build own

applicant database or evaluate reasons for non-selection


• If you are submitting update data in addition to AAP,be aware the OFCCP is often combining annual andupdate data in addition to calculating themseparately.• CO requested underlying applicant data even though there

was no significant impact in either time period separately,but there was when it was combined.

• CO requested ‘step analysis’ for the combined time period, and wepushed back since there is no corresponding requirement for this.

• This is a problem for contractors, especially when you haverequisitions that cross time periods. Applicants will becounted twice in their analysis.

• Will often lead to OFCCP asking for additional data goingbackwards and forwards.


• Pay equity was Obama Admins #1 civil rightsenforcement priority; expect focus to continue• Ivanka Trump Tweet - #EqualPayDay is a reminder that

women deserve equal pay for equal work. We must work toclose the gender pay gap!

• Obama White House Equal Pay Pledge signed by100+ companies

• Ivanka Trump supported stay of part 2 of EEO-1Report• “Ultimately, while I believe the intention was good and

agree that pay transparency is important, the proposedpolicy would not yield the intended results. We lookforward to continuing to work with EEOC, OMB, Congress,and all relevant stakeholders on robust policies aimed ateliminating the gender wage gap."

Pay Equity Enforcement

• High profile enforcement actions• EEOC charge by U.S. Women’s Soccer Team• EEOC/OFCCP investigation into film industry

• Significant legislative activity• Congressional interest in expanding Equal Pay

Law• Expansion to California, New York,

Massachusetts, Puerto Rico, Oregon, andMaryland equal pay laws

• 20+ other states with new or proposed legislation


• Celebrity press– Robin Wright: “I was looking at statistics and

Claire Underwood’s character was more popularthan [Frank's] for a period of time. So I capitalizedon that moment. I was like, ‘You better pay me orI’m going to go public’ . . . And they did.”

• Activist investor pressure, particularly in IT andSilicon Valley, for companies to conduct equal payanalyses and publish results

– Facebook– Microsoft


• OFCCP wants to examine pay in broad groupings– Follow-up requests for entire workforce, whole job

groups, exempt versus non-exempt• Agency struggles to understand compensation beyond

base pay, but is asking about these components more often• OFCCP interviews of employees and compensation

manager• Agency follow-up requests for “pay factor” information

– Common requests for 15-60 follow-up items for eachemployee

– Longest request was for 90+ items– Requests for last self-audit

OFCCP’s Compensation Toolbox

• Compliance Review initiated September 2015

• Review based on GSA contract valued at $600K

• Establishment selected for review was Google’s HQs– AAP submitted included 21,114 employees on campus

setting

• Largest review in Pacific Region ever; 10th largestOFCCP review in history

Google Compliance Review

• Extensive document exchange during review

• 1.3 million data points about applicants

• 844,560 data points on compensation

• 329,000 documents

• Required 2300 hours at estimated cost of $500K

• Two-day onsite visit

• Interviews of 20+ HR, compensation director,recruiter, and hiring managers


Additional Items for Item 19 Snapshot– Name and EE ID– DOB– Bonus earned– Bonus period covered– Campus or industry hire– Competing offer– Current CompaRatio– Current job code– Current job family– Current level– Current manager– Current organization– Department hired into– Education– Equity adjustment– Hiring manager– Job History– Locality– Long-term incentive eligibility and

grants

– Prior experience– Prior salary– Referral bonus– Salary history– Short-term incentive eligibility and

grants– Starting CompaRatio– Starting job code– Stock monetary value at award date– Target bonus– Total cash compensation– Country of citizenship– Secondary country of citizenship– Visa status– Visa type– Place of birth


• Reached impasse over following requests made in inJune and September 2016:– Second compensation snapshot dated September 1, 2014, with

same data points

– Salary and job history for all individuals on both snapshots,going back to founding of Google in 1998

– Name, address, telephone number, and personal email of allemployees on either snapshot

Case History• OFCCP filed denial of access claim on January 4, 2017• OFCCP’s Motion for Summary Judgement denied on March 15,

2017• Hearing on April 7, 2017

– Hearing adjourned so that Google could move to dismiss based onpress comments made by OFCCP Regional Solicitor

• Motion to dismiss denied and hearing resumed May 26, 2017• Recommended decision issued by ALJ on July 14, 2017• OFCCP appeals ALJ decision on August 23, 2017

– Argued that the judge improperly applied a probable cause standard

OFCCP Arguments

• Requests are relevant to investigation becausemultiple regression of initial data showed“systemic compensation disparities againstwoman pretty much across the entire workforce”

• Why salary history is needed– Investigation suggests that Google’s practices at time of

hire may be reason for pay disparity– Consideration of prior salary leads to “anchoring,” or

an ongoing weight keeping women’s pay less– Research shows women don’t negotiate as well as men

so, if starting salaries are negotiated, female employeesremain behind in pay entire career

– Must look at every pay decision to determine cause ofcurrent pay disparity

OFCCP Arguments• Why employee contact information is needed:

– Agency asks for contact information for all employees to get theirperspective on employment practices without contractor knowingwho OFCCP interviewed

– Protects against retaliation• Why second snapshot is needed:

– Earlier snapshot used to determine if pay disparity exists atmultiple points in time; suggests continuing violation

• Contractors give up 4th amendment rights when they sign afederal contract or subcontract.

• Cost of $1 million to comply with OFCCP requests “has nomeaningful impact on Google’s business;” No testimony byOFCCP on how burdensome request might be

The Decision• Found Google’s testimony on its pay practices “detailed,

consistent, and not contradicted on cross-examination”

• Found OFCCP ADD Suhr’s testimony “lacked [] foundation andunderstanding”

• Found that OFCCP ADD Wipper had “limited personalknowledge,” her overview of Google’s practices that was“lacking in detail” and that she was “evasive” and “advocating”

• “OFCCP’s understanding of Google’s organizational structureand pay practices was lacking.” It is evident that the questionsposed to Google onsite “failed to elicit” detailed information,and that the “interviewers did not entirely understand theinformation that they did elicit.”

The Decision• OFCCP should have offered “information about the

issues it was finding” to allow contractor to evaluatewhether additional requests for information were“relevant” as part of good faith conciliationobligation

• OFCCP requests are like administrative subpoenas,subject to 4th amendment standards:– Does agency have authority to investigate– Have procedural requirements been followed– Is material relevant and material to investigation

• OFCCP has no more authority than EEOC

The Decision• Standard requires that data OFCCP seeks is

“sufficiently limited in scope, relevant to its purpose,and specific in directive so that compliance will notbe unreasonably burdensome”

• Relevant given generous construction, but mustaccount for fact that OFCCP review is not complaintdriven and that OFCCP is pursuing adverse impactcase– “OFCCP should be able to identify specific areas that are

relevant . . . rather than willy-nilly search anywhere andeverywhere”

– Must also consider privacy concerns of Google employees

The Decision

• Judge denied OFCCP’s request for:– Complete salary histories for all employees on

both snapshots– Contact information for all 21K employees– Data on place of birth, citizenship, visa status, date

of birth, or locality data for second snapshot– No job or salary history information on snapshot

(Department hired into, job history, salary history,starting CompaRatio, starting job code, startingjob family, starting level, starting organization,starting salary)

The Decision• BUT Judge ordered Google to provide:

– 2014 compensation snapshot (as limited)based on Wipper’s “conclusory statement thatOFCCP conducted an analysis that showedwidespread pay disparities”

– Contact information for OFCCP-selectedsampling of 5000 employees, with opportunityto request contact information for up to 3000more employees as follow-up

• ALJ had significant concerns about data breaches• “OFCCP sees its role as protecting workers’ rights,

yet it has done nothing to ask if any of Google’semployees objects to disclosure.”

Status of Decision

• Decision is a Recommended Order by aDepartment of Labor ALJ– Both parties can file “exceptions” with

DOL ARB Board• OFCCP has done this on 8/23/17• Google said publicly it would comply with

ALJ’s order– Once ARB decision is rendered, both sides

have right to appeal to federal district court

Impact on Other Contractors• Second compensation snapshot requests will become

more typical– According to anecdotal evidence at ILG National

Conference, many contractors are already providing this ona routine basis

• Requests for contact information may increase– Contractor should discuss manager contact information with

agency• Decision is clear signal that agency is interested in

impact of starting pay and use of prior salary oncurrent pay gap

Impact on Other Contractors

• Providing the second snapshot– Evaluate timing of the request

• Are they still asking clarifying information about the firstdata set?

– Ask for more information about what they areseeing

• Whenever contractor denies OFCCP request,contractor should:– Make clear continued intent to cooperate– Offer to provide some of requested data if possible

• Continue to prepare annual and update AAPs• Ensure locations on the CSAL are audit ready• Follow all technical compliance requirements,

especially those that cannot be corrected afterthe fact

• Re-evaluate and audit hiring processes• Consistent use of strategic disposition codes• Strategic workflow models that limit compliance

risks and narrow applicant pools to bestcandidates

How to Prepare for an Audit

• In-depth review of personnel activity dataanalytics for EEO concerns– Discuss hiring process with stakeholders– Evaluate how you are determining your applicant

pools• Best practice is to reverse engineer from new hires file

– Refine data in job groups where there is significantimpact

– Be on the lookout for use of tests, preference givento employee referrals, matching/moving applicants


• Make strategic decisions about what pay to provideand when to explain reasons for pay discrepancies ina compliance review

• Prepare for compensation manager interview

• Evaluate what factors influence pay at yourorganization and how accessible that data is to you

• Proactively examine pay under privilege– Agencies: Employers should conduct own analyses, identify

red flags, and make corrections before we look at pay

– In many cases, companies are doing salary surveys but notpay equity analyses


• Structure process so that it is privileged• Develop a plan for analysis

– Purpose and timing of analysis– Breadth of review (company-wide, location, or region

specific)– Pay groupings– Total comp or base pay

• Gather and analyze initial data– Date of hire, time in job, department/unit, time in grade

• Investigate reasons for disparities– Gather and analyze additional data points, such as

experience, education, prior salary, performance reviews,starting salary

• Make necessary pay adjustments

How to Conduct Proactive Pay Analyses

Beth Ronnenburg, SPHR, SHRM-SCPPresidentBerkshire Associates Inc.

[email protected] ext. 1202

www.berkshireassociates.com/besource

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