The 31st Annual National Conference for the Industry Liaison Group (ILG) was held July 30 – August 2, 2013 in Indianapolis, IN. This annual conference brings together members of the federal contracting community to discuss affirmative action and equal employment opportunity (EEO) issues and share information. With the reelection of President Obama, the start of a second term for Director Shiu, and numerous regulatory and policy changes this year, it’s no surprise that the conference was very well attended by federal contractors and related organizations. One topic that seemed to be on everyone’s mind was compensation equity and the agency’s directive 307 (more on that in a separate post).
It is also worth noting that OFCCP submitted the 4212 and Section 503 regulations in final form to the Office of Management and Budget (OMB) during the conference. Although not discussed at the conference during any OFCCP led sessions, the submission of these regulations was definitely on the mind of attendees and presenters. The timing of the submission to OMB further highlights the flurry of change that the contractor community continues to experience.
DCI Consulting Group staff attended a variety of sessions during the conference. Session summaries and highlights can be found below.
OFCCP Panel - Marika Litras, Deputy Director, Division of Program Operations; Michele Hodge, Regional Director – Mid Atlantic; Bradley Anderson, Regional Director – Midwest; and Lauren Hicks, District Director – Indianapolis
A Conversation with OFCCP on Compensation Reviews - Pam Coukos, Senior Program Advisor, OFCCP
(note: stay tuned for a future white paper on various issues related to this blog).
Your Pay Systems Under the Microscope: OFCCP’s New Rules for Investigating Pay - Mickey Silberman, Jackson Lewis, LLP
The Deal on Dispositions - Joe Lakis, EEAC
Experts Talk About Real Audits: The Bad & The Ugly - Jon Geier, Paul Hastings LLP and Valerie Hoffman, Seyfarth Shaw LLP
ATS Strategies for Compliance Needs - Chris Alves, SPHR and Bonnie Ross, SPHR, The Walt Disney Co
Creating Effective Disability Programs - Nita Beecher, Mercer; Jason Capili, PwC US; Dionne Mack, Lockheed Martin; Nora Vele, Merck & Co
OFCCP Compensation and Hiring Enforcement: The Times They Are a-Changin’ – David Cohen, Mike Aamodt, and Eric Dunleavy, DCI Consulting Group
Tests, Tests, and More Tests? – John Arnold, Wayne State University; Dan Biddle, Biddle Consulting; Richard Tonowski, EEOC
New Disability Equality Index - Jill Houghton and Jani Willis, USBLN; Mark Perriello and TaKeisha Walker, AAPD
EEOC Systemic Investigations – Aarika Mack-Brown, EEOC
Recent Significant OFCCP Developments - John C. Fox, Fox, Wang & Morgan PC
Social Media: Legal Risks and Rewards - Nancy Holland, DirectEmployers Association; Edward Loughlin, EEOC; Michelle Shea, Charles Schwab Co
Competitive Advantage Leveraging Employment Practices to Create Organizational Health - Michael Hines, GlaxoSmithKline
Navigating the Sea of EEO/AA Regulatory (Panel): - Nita Beecher, Mercer; David Cohen, DCI Consulting Group; David Fortney, Fortney & Scott, LLC; Alissa Horvitz, Littler Mendelson, P.C.; Joseph Lakis, Equal Employment Advisory Council (EEAC); Mickey Silberman, Jackson Lewis LLPn
Patricia Shiu, OFCCP Director, opened the conference indicating the pivotal transition in the agency’s history. The transition is a reflection of increased collaboration between federal agencies, a unified civil rights agenda encouraged by President Obama, and the appointment of the new Labor Secretary, Tom Perez.
Shiu praised Perez’s political history and indicated that Perez would be looking for “win-win” solutions that would promote job creation, and at the same time, protect worker’s rights. She continued by stating that Secretary Perez will make it a priority to “listen and learn” in his new role, and encouraged a partnership with federal contractors and the Department of Labor.
Highlighting enforcement trends since President Obama took office, Shiu noted that in the past 4-and-a-half years almost 19,000 federal contractor establishments have been audited, resulting in more than $45 million in financial remedies for 84,000 workers who were affected by discrimination. Shiu also noted that over the past three years, the number of violations under VEVRAA has quadrupled and violations of Section 503 have quintupled. Further, Shiu provided tips for best practice Affirmative Action Plans (AAP), including the involvement of senior leadership during the AAP development process.
Shiu also reminded contractors that the audit scheduling process complies with the Fourth Amendment and the U.S. Constitution, and that no company or establishment is targeted for selection. She continued to note that the selection process has been refined for ease of implementation. Shiu continued by indicating that the final rules on both the Vietnam Era Veterans´ Readjustment Assistance Act and Section 503 of the Rehabilitation Act would be “published soon”.
With regards to compensation, Shiu indicated that the OFCCP rescinded the 2006 Standards and Guideline because they were “overly restrictive guidelines promulgated under the Bush administration which created arbitrary and artificial barriers to our investigations of pay discrimination”. Further, she indicated that the OFCCP still plans to propose a new compensation data collection tool. She noted that closing the pay gap was a priority for the OFCCP, and also a priority for the National Equal Pay Task Force. She indicated that Pam Coukos, Senior Program Advisor, is working with OFCCP staff to develop an in-depth compliance assistance program related to compensation. The new program should be available to contractors next year.
Shiu closed by reminding the federal contractor community that doing business with the federal government is a privilege.
Marika Litras, Deputy Director, Division of Program Operations; Michele Hodge, Regional Director – Mid Atlantic; Bradley Anderson, Regional Director – Midwest; and Lauren Hicks, District Director – Indianapolis
Immediately following the opening ceremony for the NILG conference, a panel of OFCCP representatives convened in order to provide additional information to the audience and address questions submitted by the contractor community. Panelists included Marika Litras, Deputy Director, Division of Program Operations; Michele Hodge, Regional Director – Mid Atlantic; Bradley Anderson, Regional Director – Midwest; and Lauren Hicks, District Director – Indianapolis. The session was moderated by Cara Crotty, Partner, Constangy, Brooks & Smith, LLP.
Several panelists also provided points that they felt were best practices for contractors, including:
- Send in data electronically (Excel preferred)
- Cross-train your compliance, HR, and compensation staff so that there are multiple people who can step in during an audit if needed. Additionally, the point of contact in an audit should be familiar with company-wide compliance and policies, as well as the facility under review.
- Self-audit – this will prepare you and also sets the tone internally
- Send in typical data requests at the beginning of an audit, rather than waiting for a request
- Highlight any issues or information that the compliance officer should know when interpreting the plan
- Recordkeeping in hiring – document the who, what, when, and where for all records and decisions
- Continuously evaluate your outreach and good faith efforts – make sure your relationships are meaningful
- Audit your 3rd party vendors – make sure you receive copies of your paperwork and request records periodically
- Work with the OFCCP field office as much as possible during an audit (rather than contacting National office)
In addition to typical concerns and/or best practices, the panelists also provided several other important pieces of information, including:
- Compensation – The panel advised the audience that compensation would be addressed during Pam Coukos’ session later in the day, however they took the time to provide some advice. They advised contractors to “shift their paradigm” on how they view compensation. It was noted that OFCCP is looking at qualitative and quantitative factors and that there is no more a “pass/fail or trigger test”. To be prepared, panelists advised that 3 issues should be investigated: (1) how people get placed, (2) how people are paid, and (3) how people are promoted. They also noted that there has been a rigorous internal compensation training program at OFCCP that is almost complete and that the contractor community can expect training and/or guidance to be released soon.
- Federal Contractor Compliance Manual (FCCM) – The allusive FCCM is now complete and an internal training program was just finished. A webinar will be released soon.
- Confidentiality and data security - On the subject of confidentiality and data security, Litras assured the audience that data is stored securely. She also advised contractors to send employee ID numbers rather than names when sending data and also password protect documents. She also noted that they have a reverse FOIA process, meaning if OFCCP receives a FOIA request for a contractor’s data they will contact the contractor directly to let them know.
- Corporate Scheduling Announcement Letters (CSALs) - There were some questions surrounding the “courtesy” letters, traditionally known as CSALs. Litras noted that OFCCP decided last year that the individual establishments were the best place to send these letters, rather than the corporate office as in the past. Additionally, she mentioned that National office tries to release several lists per year and that a scheduling list does not expire.
In a well-attended session, Valerie Vickers and Val Hoffman held an engaging and informative discussion with Special Assistant to the OFCCP Director, Pamela Coukos. The two Vals posed tough questions focused mostly on the directions and consequences of Directive 307. The bullets below present some of the more controversial issues that were discussed. In each bullet, we present the position of Ms. Coukos followed by a response from DCI.
- Who you calling dummy?
- PC: In specific race analyses using a dummy coding strategy, designation of the referent group does not matter statistically.
- DCI Response: DCI disagrees and will soon present an illustration of the referent group problem in a white paper to be posted on this blog. The dummy coding scheme absolutely matters when considering which groups are being compared. Stay tuned.
- There are policies, and then there are policies.
- PC: There is a distinction between stated compensation policy and actual compensation policy. Presumably, the actual compensation policy will be determined by OFCCP via stakeholder interviews.
- DCI Response: It is unclear what limits may be in place to prevent weak anecdotal evidence from trumping official company policies and documentation.
- Bigger is better.
- PC: Larger sample sizes are always “better” for analysis purposes, and small sample sizes mask discrimination.
- DCI Response: As a counterpoint, aggregating dissimilar employees into one analysis, statistical controls or not, can also be fraught with error, albeit usually a different type of error (i.e., false positives) than that usually associated with small sample sizes (i.e., false negatives).
- Two Gs, an L, and a B.
- PC: The only acceptable Item 11 compensation submission is by Group, Grade, Level, or Band.
- DCI Response: Interestingly, the Scheduling Letter, which trumps Directive 307, provides for submission by title by allowing the data to be submitted “in a manner that is most consistent with your compensation system.” If job title best reflects the market and best reflects differences in how employees are paid at an organization, job title is clearly the most appropriate level of aggregation. As a last point, it is unclear how group or level are designated, and it is further unclear why group or level would be mutually exclusive with job title.
- There is no longer an EG in SSEG.
- PC: Title VII requires that jobs be similarly situated, not that they be similarly situated employee groupings. Pay analysis groups combine jobs that are not similarly situated, but they become similarly situated when factors are properly controlled in the regression.
- DCI Response: Dissimilar jobs are not effectively made similar using simple controls in a regression analysis. In an upcoming white paper, DCI addresses a number of clear analytic problems that occur when dissimilar jobs are grouped for purposes of compensation analyses. Contractors should ignore the OFCCP concept of pay analysis groups and analyze their data in the manner that best reflects their compensation system (e.g., title, market).
Your Pay Systems Under the Microscope: OFCCP's New Rules for Investigating Pay
Mickey Silberman, Jackson Lewis, LLP
Mickey Silberman addressed the issue of compensation and recent changes in OFCCP’s enforcement of pay discrimination, including the rescission of the Standards and replacement with Directive 307. Silberman strongly emphasized that compensation is one of the top priorities for this administration, and discussed current OFCCP audit enforcement trends in light of Directive 307.
Silberman discussed the historical trends of OFCCP compensation enforcement, indicating that there were almost “no systemic pay discrimination findings or settlements” under the 2006 Compensation Standards and Guidelines. Therefore, the OFCCP needed to get rid of the old tools and adopt new tools to help close the pay gap. The OFCCP’s initiative is based on the White House Equal Pay Taskforce, which was tasked with finding ways to close the pay gap. Silberman discussed why the Standards and Guidelines were rescinded, citing the OFCCP’s view that they were “overly restrictive” and “arbitrary and artificial”. As of February 2013, the OFCCP issued what Silberman calls a “game-changer” compensation directive with Directive 307. Some highlights from this presentation regarding the new Directive include:
- A reminder that the directive is not a law or regulations, but it is an internal directive that affects how the OFCCP with conduct compensation analyses.
- There will be greater flexibility in analyzing pay, and the OFCCP will use a case-by-case basis for justifications.
- Silberman noted that the OFCCP will likely start with larger pay groupings being compared. In fact, the concept of comparing similarly situated employees in an analysis may be disregarded.
- According to the directive, anecdotal evidence is not needed.
- Variables that explain pay may or may not be accepted by the OFCCP. OFCCP may consider some variables “tainted” and not applicable to statistical modeling.
- Compensation will be defined more broadly than in the past. Specifically, it may not be just base pay, but could include total compensation, placement issues, etc.
- Silberman indicates that the Directive is inconsistent with Title VII case law principles.
- There was encouragement for contractors to still submit their Item 11 compensation data by job title or any factor that is consistent with the contractor’s compensation system. Specifically, the best practice is to group together only those employees who should be compared for pay purposes.
Silberman concluded by encouraging contractors to continue to do proactive analyses even though the current climate is uncertain. Moreover, he encouraged contractors to rely on Title VII case law and conduct analyses by similarly-situated groupings, using regression and other related statistical analyses. However, a best practice for an audit situation is to attempt to simulate the OFCCP’s preliminary analysis internally to see what the OFCCP may flag. Finally, Silberman emphasized that contractors should conduct all of their analyses (pro-active and audit) under attorney-client privilege.
The Deal on Dispositions
Joe Lakis, EEAC
Joe Lakis gave an overview of the importance of applicant flow disposition codes with practical suggestions for HR and compliance professionals. A major recommendation from Lakis was that the compliance and recruiting groups be brought together when designing a disposition code menu and/or making changes. The dispositions are important to both, but for very different reasons; compliance needs to be able to understand the dispositions used in order to know what happened to whom, when, and why. On the recruiting side, dispositions need to be meaningful to recruiters. It’s also important that recruiters have an understanding of how crucial dispositions are to compliance needs. In addition to reiterating the importance of this relationship, Lakis also offered the following information and/advice:
- No single code achieves all objectives for employers, especially in defining whether a candidate met the 4 prongs of the internet applicant regulation.
- Codes are comprised of 3 elements: status, stage, and summary conclusion.
- If possible, an automated, prescreen stage should be implemented; otherwise the prescreen stage is “low hanging fruit” in an audit situation.
- Prescreen questions can be constructed for factors such as BQs (e.g., degree or years of experience) in ways where the candidate doesn’t know the “right” answer (e.g., multiple choice)
- A disposition menu should provide the ability to disposition someone as not meeting the basic qualifications at a later stage in case the job seeker slips through the prescreen stage.
- Most applicant tracking systems have preloaded, standard disposition codes. Typically these are too simple or too complicated, but they are a good starting point. Contractors should have compliance and recruiters work together to come up with the best possible list. Lakis advised that once a list is developed and you think you’re done, stop and try to think of the “weirdest situation” that a recruiter has seen and whether the disposition list can be used to disposition that hypothetical candidate. If not, you’re not done.
- Lakis commented that he sees post-offer dispositions as selections and reiterated the importance of having agreement between the numerator (i.e., selections) and denominator (i.e., pool) in selection rate analyses.
Experts Talk About Real Audits: The Bad & The Ugly
Jon Geier, Paul Hastings LLP and Valerie Hoffman, Seyfarth Shaw LLP
This session teamed two nationally recognized lawyers with many OFCCP audit stories to share. The setting was conversational in nature, and the informal tone allowed for a fun and interactive session. Jon and Val discussed a number of issues including OFCCP jurisdiction, how OFCCP conducts regression analysis for pay equity enforcement, and how contractors should develop their selection systems to minimize risk. Some highlights included:
- One story described how an OFCCP audit of a single establishment expanded to a geographic review based on EEO 1 data. Apparently there were disparities against females identified in that audit, and OFCCP leveraged EEO-1 data to identify locations where the agency thought there may be similar scenarios based on low female representation. It is unclear whether this expansion is justified. Stay tuned.
- Another story focused on pay equity research. In this situation OFCCP conducted regression analyses to assess whether there may be systemic discrimination. The agency alleged discrimination based on the regression analysis, but when the contractor’s analyst conducted the analysis using a reasonable set of merit based variables there was no meaningful disparity against members of any protected group. After some detective work, the analyst concluded that OFCCP was leaving half of the merit variables out of the analysis, and it just so happened that the disparity was still statistically significant when those variables were excluded.
- Substantial time was spent on establishing and differentiating basic versus preferred qualifications. The presenters agreed that structuring these steps in the hiring process requires time and thought, but took slightly different approaches regarding where to focus. When focusing on basic qualifications, Val noted that it is critical to abide by the internet applicant rule and use factors that are clearly job related. However, Jon noted that preferred qualifications may be more useful for narrowing the applicant pool down in meaningful ways. Regardless, both presenters stressed the need for consistent and standardized application of both types of qualifications.
ATS Strategies for Compliance Needs
Chris Alves, SPHR and Bonnie Ross, SPHR, The Walt Disney Co
Chris Alves, SPHR and Bonnie Ross, SPHR from The Walt Disney Company shared with contractors their experience with developing and implementing a new Applicant Tracking System (ATS). The need for an updated ATS was based on the demand for quicker, more standardized, robust record-keeping. Prior to selecting a vendor, The Walt Disney Company team created selection guidelines in the form of a “must have” list of elements they would require in the ATS. After some difficulty in finding a vendor that could meet their needs, the Company partnered with a vendor that worked with them to revise an existing system to provide the specific needs of the organization. The priorities for the ATS included:
- An emphasis on the Internet Applicant Regulation to create accurate analysis pools through disposition codes.
- Data structure in line with desired data output for accurate reporting.
- Standardized and structured data entry to support reduction in likelihood of bias-driven choices.
- Flexibility in the system to respond to business needs outside of the prescribed process.
The presenters conducted a system demonstration to illustrate how the organization priorities translated into design features. Such features included:
- Built-in steps for disposition coding options based on applicant processes.
- Separate, automated process for documenting Data Management Techniques.
- Report options for high-level diversity monitoring.
In closing, the presenters provided contractors with lessons they learned in developing an ATS. This discussion was centered around the need for designing the system to be supportive of desired behaviors, based on business reason, inclusive of stakeholder input, and based on the expertise of the vendor. Other notes included communication toward change management, documentation of key decisions, testing the product and training the testers, and knowing when to implement the system, saving final edits for post-launch.
Additionally, the presenters shared that the Company asked OFCCP how many attempts must be made to invite job seekers to apply after an expression of interest has been made. The OFCCP response was that at least two invitations must be made.
Creating Effective Disability Programs
Nita Beecher, Mercer; Jason Capili, PwC US; Dionne Mack, Lockheed Martin; Nora Vele, Merck & Co
Given the status of the 503 regulations, the session on creating effective disability programs was timely and provided some thoughts on best practices for federal contractors. The overarching theme across presenters was that disability programs are an opportunity to engage the unique talents of a particular population slice that provides real, bottom-line value to organizations. That said, the presenters warned that disability programs do not drive themselves and that significant resources and planning are required to initiate and support programs with meaningful business and societal impact. Best practice recommendations included:
- Disability programs should be standardized across the organization to achieve a consistent approach across lines of business and departments.
- HR must provide the line businesses with easy to understand and easy to use resources for implementing disability programs, such as providing standardized processes for addressing reasonable accommodation requests.
- Effective implementation of disability programs is a multi-step and cross-functional process involving a period of preparing the organization for implementation, training recruiters, developing external relationships with sourcing organizations, and fostering internal programs that provide resources and information for those running the business and those recruited.
- Disability programs that have been aligned with organizational strategy, support the organization’s mission, and have senior executive sponsorship are more successful than those without.
OFCCP Compensation and Hiring Enforcement: The Times They Are a-Changin’
David Cohen, Mike Aamodt, and Eric Dunleavy, DCI Consulting Group
In a presentation on enforcement statistics and new EEO Directives 306 and 307, David Cohen, Mike Aamodt, and Eric Dunleavy of DCI Consulting Group provided contractors with a discussion of OFCCP audit trends and expectations. Based on the OFCCP enforcement database for FY 2012 and more recent audits, the following trends were noted:
- The number of cases being litigated has increased.
- Denial of access is a hot spot.
- There has been a drop in on-sites in the last several months.
- Continued focus on Good Faith Efforts in audits and a trend toward translating violations into Conciliation Agreements.
Because the enforcement database has confirmed discrepancies between reported statistics and actual enforcement, a study of OFCCP enforcement statistics was conducted by the Center for Corporate Equality (CCE) based on review of Conciliation Agreements and Consent Decrees obtained through a Freedom of Information Act (FOIA) request. A total of 102 settlements were received; 96 conciliation agreements and 6 consent decrees. The following resulting trends were noted:
- Two-thirds of the settlements were based on hiring, while one-third included allegations based on pay equity.
- The majority of settlements were pattern and practice allegations of intentional discrimination.
- Pay equity violations indicated no clear patterns with regard to industry and type of job.
In a discussion of Directive 306 - Complying with Nondiscrimination Provisions: Criminal Record Restrictions and Discrimination Based on Race and National Origin, Dr. Mike Aamodt indicated that the EEOC has been busy recently with related cases. One important element to such cases includes demonstrating job-relatedness of criminal records. It was suggested that contractors conduct studies of criterion and content validity. With little research to inform contractors on the link between criminal history and quality of performance, there is only a general indication of increased instances of firing for those with criminal conviction. Some select recommendations for employers that OFCCP has adopted from EEOC include:
- Refraining from asking about convictions on job applications.
- Conducting an “individualized assessment” narrowly tailored to the essential job requirements and actual circumstances under which the job is performed.
- Treating applicant criminal records as confidential and only to be used for the purpose of selection decisions.
Procedures for Reviewing Contractor Compensation Systems and Practices. This guidance included the following points on the Directive:
How it differs from past guidance –
- No SSEGs.
- Pay Analysis Groups.
- Multiple personnel/staff decisions = compensation.
- No anecdotal evidence.
- Repeated Analyses – multiple cuts and looks.
Important notes –
- Not retroactive, even with Conciliation Agreements.
- Introduction of Pay Analysis Groups, which is undefined and allows for all of an organization to be analyzed in the same analysis as long as controls are in place for similarly situated jobs.
- Should a relationship be evident between a compensation factor and gender or race/ethnicity, the agency may remove that factor as an explanatory variable.
Pitfalls of the company-wide regression analyses –
- Model becomes unwieldy with possibly hundreds of variables.
- Will not account for differential interactions in different groups for variables.
- Evaluation is conducted across jobs, rather than within jobs.
A final best practice shared was to continue following the 2006 Systemic Compensation Discrimination Standards. This recommendation was based on the fact that relevant case law, regulations, and statistical standards did not change on February 28th, 2013 when the new Directive was implemented.
Tests, Tests, and More Tests?
John Arnold, Wayne State University; Dan Biddle, Biddle Consulting; Richard Tonowski, EEOC
John Arnold, Dan Biddle, and EEOC’s testing expert, Rich Tonowski, held an excellent panel in which they discussed characteristics, validation, and shortcomings of employee selection procedures. A number of clear takeaways for DCI’s clients include:
- Any decision(s) made during a selection procedure in which the candidate pool is reduced qualifies as a test.
- All tests are subject to scrutiny under Title VII and the Uniform Guidelines on Employee Selection Procedures.
- The biggest problem with the use of eligibility and minimum qualifications is not that they are job unrelated but rather that they are inconsistently applied.
- Test validation is essentially about being able to convince reasonable people that your test is doing what you claim it is doing.
- Contractors should be wary about claims that a test is appropriate for any job. The legal liability question to ask is: “Was your test used appropriately for your situation and your applicants?”
- Validation is a term of art for the process of showing job relatedness. It is possible to demonstrate job relatedness or business necessity of a test’s use without formal validation; however, the validation procedure is most typically the foundation for establishing job relatedness and business necessity.
New Disability Equality Index
Jill Houghton and Jani Willis, USBLN; Mark Perriello and TaKeisha Walker, AAPD
Presenters from the US Business Leadership Network (USBLN), a national non-profit that helps employers leverage disability inclusion, partnered with representatives from the American Association of People with Disabilities (AAPD) for a presentation regarding the new Disability Equality Index. The Disability Equality Index, which was under development at the time of this presentation, is being designed as a new national disability benchmark tool.
The new tool is being designed to offer Fortune 1000 employers an opportunity to receive an objective score on their disability inclusion policies and practices. The Disability Equality Index was inspired by the Corporate Equality Index, which is a benchmarking tool on corporate policies and practice related to LGBT employees. The goal is to provide employers a scorecard for disability inclusion that is realistic and as objective as possible.
The development of the tool is being reviewed by a robust advisory committee that includes General Counsel from top companies, former White House policy advisors, and corporate representatives from various organizations.
Organizations will be evaluated on various employment practices that may include employment practices, benefits provided, accommodations policies, online accessibility, facilities accessibility, supplier diversity, and other additional factors that have not been finalized. The scoring for the survey will be on a 1-100 scale and will likely be available online for employers once launched.
Since the tool is still in the development stage, the presenters surveyed representatives from participating NILG organizations on best practices seen in their organizations. This valuable input will be used in finalizing components and importance ratings of the new Disability Equality Index. A soft launch of the survey tool is expected at the annual USBLN conference in October 2013.
EEOC Systemic Investigations
Aarika Mack-Brown, EEOC
Aarika Mack-Brown, a trial attorney with the EEOC Indianapolis District Office, provided an overview of the EEOC’s systemic discrimination program and enforcement. Mack-Brown noted that the most common way for a charge to be brought is by an individual filing a complaint with an EEOC office. Although the complainant did not realize there were systemic allegations in the initial compliant, the scope would expand to a systemic charge. The investigation can also expand to include other facilities or other protected classes (requiring a commissioner’s charge). In evaluating a case, an EEOC compliance officer may take several types of information into consideration, including Census and EEO-1 data, media sources, searching for key terms (e.g., searching for “young and energetic” in job postings), and information from other government agencies.
Mack-Brown also summarized what organizations can expect if there is a systemic investigation by EEOC. First, the company would receive a letter from the EEOC notifying them of the charge and requesting a position statement from the organization, and may include a request for information (RFI). In addition to RFIs, the investigation may move onsite (typically 2-3 days) and will include a facility tour and interviews.
The most common charges are for hiring, compensation, harassment, promotion, inflexible attendance/leave, or medical exams. The enforcement priorities for EEOC include: eliminating barriers in recruitment and hiring; protecting immigrant, migrant, and other vulnerable worker populations (e.g. human trafficking); addressing emerging and developing issues (e.g. wellness programs, leave as a reasonable accommodation); preventing harassment, and preserving access to the legal system (e.g., if a case would not be taken on by a plaintiffs firm).
A few tips from Mack-Brown included: (1) update antiquated handbooks, (2) train managers, HR staff, employees, and (3) investigate internally if there are complaints from employees.
John C. Fox, Fox, Wang & Morgan PC
In his OFCCP regulatory update, John Fox provided a number of observations, assessments of OFCCP trends, and suggestions for federal contractors.
- Lack of transparency and trust between OFCCP and the contractor community is a major problem.
- Justice at the ALJ and ARB level is unlikely to happen. Cases will have to get to the federal district court level for appropriate rulings.
- Contractors signing conciliation agreements have a higher probability of being audited later.
- The average OMB processing time is 100 days, but it is impossible to predict with any accuracy the length of time that proposed regulations will sit at OMB.
- Scheduling letters reflect that OFCCP is targeting contractors by industry.
- Compensation broad-banding is a problem under Directive 307 enforcement.
Fox Assessments of Trends
- Despite 20% increase in OFCCP’s workforce, systemic discrimination settlement numbers are down. Violations are found less than 1% of the time for selection, and the percentage is even lower for compensation. Audit volume is down by 20%, but technical violations are up. All these numbers do not mean that OFCCP is ineffectual but rather that contractors are doing a good job of proactively preventing discriminatory practices.
- Although audit volume is down, the audits that are taking place are increasingly more expensive and time consuming. Thus, non-problematic audits are placing heavy burdens on the contractor community.
- Contractor audit costs are estimated at $120,000,000 resulting in $500,000 back pay collections.
- Investigations of Section 503 violations have found little unlawful discrimination.
- Investigations of VEVRAA violations have found few failure-to-hire problems. Substantive enforcement of VEVRAA has focused on outreach and recruitment.
- Based on political trends, the regulatory agenda will remain as is.
Fox Contractor Suggestions
- Consider job groups carefully, as OFCCP may use job groups to flag compensation.
- There are four major areas of concern during audits: 1.) record keeping, 2.) failure to hire for entry level, 3.) 503 outreach, and 4.) Veteran outreach.
Michelle Shea, with Charles Schwab Co, and Nancy Holland, with Direct Employers, summarized the growing use of social media by many federal contractors and associated risks and rewards. They noted that contractors should not be hesitant to use social media; the White House has embraced social media so obviously government agencies like OFCCP and EEOC recognize its importance and would not restrict it. However, misuse could be investigated if relevant. If using social media as a recruitment tool, Shea and Holland advised that any searches that are performed are recorded per existing recordkeeping obligations. Shea mentioned that there are programs that contractors can use to archive searches if the social media platform does not record or archive automatically. Shea noted that many social media platforms wouldn’t have OFCCP compliant features like a recruitment tool such as Monster.com would. They encouraged HR and compliance professionals to involve legal in any policy setting discussions or personnel decisions that involve social media. Staff should also be trained appropriately
For guidance on legal risks with social media, Shea and Holland provided a few recommended resources including the National Labor Relations Board (NLRB) website, as well as Social Media Governance, Smart Brief on Social Media, and Google alerts (on OFCCP/social media related articles).
Michael Hines of GlaxoSmithKline, a science-led global healthcare company developing innovative medicines, vaccines, and consumer healthcare products, set out to provide an employer’s view of competitively meeting compliance standards. He placed emphasis on investigating the qualitative elements in an organization, such as organizational values. Rather than simply relying on quantitative analysis of personnel activity, Mr. Hines suggested that contractors:
- Ask questions about the health of organization.
- Develop a story about the causes underlying statistically-driven goals.
- Communicate why diversity and inclusion is critical and how it affects the bottom line of productivity.
- Train on unconscious bias.
- Create internal development plans of personnel to show commitment to diversity and inclusion, and to shape organizational culture from the top down.
- Look at pay practices in addition to pay analyses.
- Conduct regular reviews of grievance processes, personnel trends, and exit interviews.
Navigating the Sea of EEO/AA Regulatory
Panel: David Cohen, DCI Consulting Group; David Fortney, Fortney & Scott, LLC; Alissa Horvitz, Littler Mendelson, P.C.; Joseph Lakis, Equal Employment Advisory Council (EEAC); Mickey Silberman, Jackson Lewis LLPn
Moderator: Nita Beecher, Mercer
A panel discussion titled “Navigating the Sea of EEO/AA Regulatory” was moderated by Nita Beecher of Mercer. The panel was comprised of Mickey Silberman from Jackson Lewis, David Cohen from DCI Consulting Group, Joe Lakis from EEAC, Alissa Horvitz from Littler, and David Fortney from Fortney and Scott. In an effort to ensure equal participation and provide creative, impactful, and brief presentations, each of the panelists had 5 minutes to present 10 slides and each slide auto-progressed every thirty seconds with or without the panelist. Index cards were distributed to collect audience questions while the panelists presented their slides. After the presentations, Nita Beecher asked some initial follow-up questions and then asked audience questions for the panel to answer. The following section briefly summarizes each panelist’s presentation.
Mickey Silberman, Background Checks
Mickey Silberman discussed recent enforcement from the EEOC and OFCCP regarding criminal background checks. Specific points from the presentation included:
- An increase over the past year on the focus of employer’s using background checks to reject applicants, including high profile EEOC lawsuits;
- Increased states and localities passing “ban the box” laws, which means that there can be no questions related to an arrest record or criminal background check on the application;
- Based on broad societal data, criminal background checks may have an adverse impact on minority groups such as Hispanics and African Americans;
- If there is adverse impact then the burden then shifts to the employer to prove the background check is job-related and consistent with business necessity;
- Both the EEOC and OFCCP have issued guidance on background checks, which strongly encourage employers to take into account the job -relatedness of the background screen, and conduct individualized assessments of each applicant. This may be impractical for most large employers;
- Advice included narrowly tailoring background polices, gathering the information later in the application process, training recruiters and hiring officials, and conducting analytics on the data under privilege to determine if there is adverse impact;
- Finally, a good employer should monitor their 3rd party vendors who conduct background checks to understand the type of information being maintained.
David Cohen, Compensation
David Cohen discussed the progression of compensation enforcement through the past few decades and noted historical trends. Further, Cohen discussed the implications of Directive 307. Specifically:
- In 2006, the OFCCP indicated the Standards and Guidelines were consistent with Title VII enforcement principles, yet in 2013, the OFCCP administration issued a Directive insisting that the Standards are NOT consistent with Title VII principles. This indicates a dramatic shift in each administration’s interpretation of compensation standards;
- The current administration indicates that the standards are too restrictive and too difficult to enforce;
- Directive 307 provides very little guidance on how to actually conduct a proactive compensation analysis and enforcement will be based on a Jacobellis v. Ohio (1964) standard of, “I know it when I see it” as applied to compensation discrimination;
- The regulations are detailed in how to do various AAP reports, but not detailed on how to conduct compensation analyses;
- The new directive is no longer endorsing SSEGs, but instead endorses Pay Analysis Groups (PAGs). It is also likely that multiple regression will still be used, as well as multiple cuts of the data and multiple analyses. Further, the OFCCP will likely remove what they deem to be questionable variables.
- The new term “Pay Analysis Group” may combine employees in different jobs or groups with statistical controls to ensure that workers are similarly situated.
- The new directive does not provide a clear understanding of how the OFCCP will conduct analyses. This puts contractors in a difficult position, because there is no real way to be proactive and fully mitigate OFCCP audit risk.
Joe Lakis, 2010 Census Data
Joe Lakis discussed the 2010 EEO census tabulation that will be required for federal contractors to use in their AAPs starting in January 2014. Specifics related to his presentation include:
- There are two separate tabulations of data collected: the EEO tabulation for minorities and females, as well as the Disability employment tabulation;
- There is a large increase in minority representation for many EEO categories between 2000 and 2010 census data;
- The Census data also contains cross-tabulated information by citizenship and earnings for both women and minorities;
- The 2008-2010 disability employment tab is the first-of-its kind census tabulation and was sponsored (paid for) by the OFCCP and ODEP;
- The disability data is reflective of 6 questions about physical/mental impairments asked as a part of the American Community Survey;
- The disability data may affect the proposed regulations on 503 and setting disability goals based on availability metrics from the disability Census file.
Alissa Horvitz, Proposed Veteran Regulations
Alissa Horvitz discussed implications and timelines for the proposed Veterans and Disability-related regulations, as well as recent audit trends and requests. Specifics related to her presentation include:
- An overview of the proposed 4212 regulations changes including the proposed targeted outreach requirements, pre-offer solicitation of veteran status, data tracking and metrics, and 5 year record retention proposals;
- An overview of the proposed 503 regulatory changes, including a proposed 7% utilization goal for disabled workers for each job group, pre-offer solicitation of disability status; prescribed reasonable accommodation process; mandatory linkage sources, and 5 year record retention proposals;
- An outline of how contractors may have to maintain and analyze data for proposed regulatory requirements for both individuals with disabilities and protected veterans;
- A detailed example of a recent OFCCP audit request that included a broad listing of policies, procedures, example advertisements, contracts, vendor relationships, FMLA requests, applicant flow, roster data, leave information, job descriptions, and other related information – all requested within 5 days.
- Noting the impracticality and unreasonable deadlines seen in recent audits.
David Fortney, Legal Update
David Fortney provided NILG attendees with an update on various cases that affect federal contractors, including:
- The Frito Lay decision: Yes, the OFCCP can request data going forward, beyond the year of the scheduling letter. However, the judicial review of the ARB decision is still pending in federal court in Texas. Stay tuned;
- The United Space Alliance case: Highly favorable for the OFCCP – the OFCCP has authority to request additional information from the contractor even when the data does not indicate any violation. Further, the OFCCP is not required to use only one method of data analysis;
- The most recent decision by ARB has expanded coverage based on TRICARE; hospital ruled to be a federal subcontractor under OFCCP regulations based on its TRICARE agreement;
- The Dukes v. Wal-Mart case indicates that the OFCCP’s pattern and practice cases must meet commonality requirements;
- In Christopher v. SmithKline Beecham, the SCOTUS held that an agency cannot announce its interpretations for the first time in enforcement proceedings that result in unfair surprise.
- The USSA case (as mentioned previously) also indicates that contractors will have to wait to be sued by OFCCP in order to assert legal arguments against an audit selection.
by David Cohen, President; Mike Aamodt, Ph.D., Principal Consultant; Eric Dunleavy, Ph.D., Principal Consultant; Joanna Colosimo, M.A., Senior Consultant, Amanda Shapiro, M.S., Consultant, Jana Garman, M.A., Associate Consultant; and Kayo Sady, Ph.D., Consultant, DCI Consulting Group