DCI Consulting Blog

OFCCP Rescinds Equal Opportunity Survey

Written by DCI Consulting Group | Sep 8, 2006 3:58:00 PM

As first reported yesterday, the OFCCP has rescinded the Equal Opportunity Survey requirement. The final rule was published in the Federal Register on September 8, 2006. OFCCP took this action, according to the final rule, so it could “more effectively focus enforcement resources and eliminate a regulatory requirement that fails to provide value to either enforcement or contractor compliance.” The agency concluded that the “objectives of the Executive Order 11246 program can be better accomplished through means other than the EO Survey.” There are no differences between the proposed rule issued in January 2006 and the final rule, according to OFCCP.

Background:
The EO Survey was developed during the Clinton administration and became a legal requirement on November 13, 2000 following formal rulemaking. OFCCP proposed eliminating the EO Survey in a Notice of Proposed Rulemaking on January 20, 2006.

 

OFCCP received a total of 2,736 comments on its proposal to discontinue the EO Survey. Sixty-two percent of the comments supported eliminating the survey, and 38 percent opposed the move. It’s believed that approximately 2,600 of the total responses were form letters. About 1,600 of the form-letter responses are believed to be from members of SHRM in support of the proposal to eliminate the survey, with some 1,000 form letters from civil rights groups in opposition.

 

Summary of OFCCP’s Rationale for Eliminating the EO Survey

OFCCP concludes the EO Survey should be eliminated because the survey does not meet its original objectives. Their conclusion is based on the results of two studies it commissioned to focus on the predictive ability of the EO Survey, as well as OFCCP’s evaluation of new initiatives it has implemented to accomplish the same objectives of the EO Survey, but in different ways.

 

The EO Survey’s original objectives were outlined in a final regulation released November 13, 2000:

 

1. To increase compliance with equal opportunity requirements by improving contractor self-awareness and encourage self-evaluations;

2. To improve the deployment of scarce government resources toward contractors most likely to be out of compliance; and

3. To increase agency efficiency by building on the tiered-review process already accomplished by OFCCP’s regulatory reform efforts, thereby allowing better resource allocations.

 

OFCCP relies upon two studies: the Bendick & Eagan Report and the Abt Report.

 

The first study, the Bendick & Eagan Report, was finalized in September 2000. The report analyzed whether the pilot EO Survey results could be used to predict whether a contractor would have findings of non-compliance. In the final rule eliminating the EO Survey requirement, OFCCP concludes the Bendick & Eagan Report “did not demonstrate that the EO Survey is a good predictor of noncompliance.” OFCCP references data problems and other methodological issues that prevented Bendick & Eagan from conducting a full-scale analysis of the pilot EO Survey’s predictive power.

 

The second study, known as the Abt Report, released its findings in 2005. Abt analyzed whether EO Survey data could be used to develop a model to more effectively target those contractors engaged in “systemic discrimination.” OFCCP concluded from Abt’s study that EO Survey data could not be used to develop such a model, and it points to key findings of the Abt report including:

 

1. Abt found the model’s predictive power to be only slightly better than chance; and

2. Abt found the EO Survey model wrongly classifies a significant portion of true discriminators as non-discriminators, and thus would not target them for compliance evaluations.

 

Summary of Commenters’ Positions and OFCCP’s Response

 

Most of the comments focused on (1) the Abt Report; (2) the alleged intrinsic value of the EO Survey and/or (3) the implications of rescinding the EO Survey.

 

A. Abt Report

 

Comments to eliminate the EO Survey: Many of the commenters who supported the proposal to rescind the EO Survey cited the Abt Report and the conclusions that OFCCP drew from it. Examples include the survey not “find[ing] systemic discrimination;” the false positive and false negative rate generated by the survey data; and that “continuing a system that consciously targets a significant number of compliance contractors violates fundamental principles of due process.”

 

Comments to retain the EO Survey: Commenters that supported retaining the EO Survey suggest the Abt study is flawed for reasons including:

 

1. The Abt study should have been based upon a larger group of federal contractors.

OFCCP Response: OFCCP disagrees with this objection and concludes, “an adequate number of establishments were sent the EO Survey.” OFCCP indicates the approach they used was to send out the minimum number of surveys necessary to conduct a statistically valid study. OFCCP believes this method not only reduced the burden on federal contractors, but it also minimized the burden on OFCCP and its resources.

2. The sample used by Abt was skewed [because it was not a representative sample of federal contractors].

OFCCP Response: OFCCP disagrees with this objection concluding that the sample Abt used to conduct its analysis was “appropriate, statistically valid, and did not skew the results.”

3. The Abt study inappropriately focused on systemic discrimination rather than all violations.

OFCCP Response: OFCCP disagrees with this objection and concludes it was “appropriate for the Abt Report to focus on cases of systemic discrimination rather than generally on all types of non-compliance (including, largely, affirmative action program paperwork requirements).” The agency reiterated that systemic discrimination is the “proper standard for the EO Survey to measure.” It reasoned that to fulfill its mission, “OFCCP’s stated policy is to focus on increasing outreach efforts and targeting systemic discrimination in order to make better use of its resources.” Central to this policy, then, is to schedule and focus its compliance evaluations on those cases most likely to result in findings of systemic discrimination and the recovery of make whole relief for victims of discrimination.

 

In sum, “OFCCP continues to believe that the Abt Report is statistically sound and supports it conclusion that the EO Survey does not, in any meaningful way, improve OFCCP’s ability to target for review those contractors engaging in systemic discrimination.”

 

B. Alleged Intrinsic Value of the EO Survey

 

Comments to eliminate the EO Survey: Some commenters claim the survey is overly burdensome, expensive, ineffective and duplicative of other EEO and affirmative action reporting requirements.

 

Comments to retain the EO Survey: Other commenters believe that even if EO Survey data does not automatically prove discrimination, the survey still has an intrinsic value because it will encourage contractors to conduct self-evaluations. They point to the following examples of intrinsic benefits:

 

1. The EO Survey is the only reliable method to collect compensation data.

OFCCP Response: OFCCP disagrees with these comments citing several points including:

    • Since the EO Survey compensation data is by EEO-1 category, it cannot be used to predict systemic discrimination and is not an effective enforcement tool.

 

    • Any small marginal utility to EO Survey compensation data would be outweighed by the burden on contractors to complete the survey, and on OFCCP to process and use the survey.

 

    • “[T]he obligation to expend resources to complete the EO Survey could discourage contractors from conducting a more thorough and useful evaluation of their personnel data.”

 

    • The necessity for OFCCP to collect and process survey data could “divert scarce OFCCP resources from more vigorously enforcing equal employment laws in a more effective manner.”

 

  • The EO Survey is not the only source of compensation data available to OFCCP – it collects compensation data as part of the desk audit process, and contractors are required to collect it as part of their affirmative action obligations.

 

2. The EO Survey enhances the tiered review process [by enabling OFCCP to more accurately determine which level or type of compliance review is appropriate for a particular contractor].

 

OFCCP Response: OFCCP disagrees with these comments and concludes that aggregate EO Survey data does not enhance the tiered review process. OFCCP believes that it has better procedures to build upon the tiered-review process, such as Active Case Management (ACM) and the standards for identifying systemic compensation discrimination. Under the ACM procedure, OFCCP uses “automated statistical methods,” and ranks and prioritizes establishments for a full review based on the probability that discrimination would be uncovered during a more in-depth review. EO Survey data does not predict systemic discrimination, so it would have limited utility in predicting whether and how the selected contractors are discriminating.

 

3. The EO Survey facilitates effective self-evaluations by federal contractors.

 

OFCCP Response: OFCCP disagrees with these comments and concludes that EO Survey data is too aggregated to permit meaningful self-analysis; hence it is an ineffective method of promoting self-evaluations. OFCCP believes that it has implemented more effective program initiatives in recent years for encouraging thorough and meaningful self-analyses by contractors, such as compliance assistance efforts and the new voluntary systemic discrimination guidelines.

 

C. Rescinding the EO Survey Sends a Negative Message

 

Comments to retain the EO Survey: Many commenters believe that rescinding the EO Survey sends a “negative message” and indicates the Department of Labor is not “serious about enforcement of equal employment opportunity laws.”

 

OFCCP Response: OFCCP disagreed with this assertion. To the contrary, OFCCP outlined several examples to demonstrate their commitment to improving the enforcement of equal employment opportunity laws. For example, OFCCP points to the $5.5 million in salary adjustments and other financial remedies it secured for former female employees in its first systemic compensation discrimination case to be filed in a quarter century, and the record $45.2 million for 14,761 workers who had been subjected to “unlawful employment discrimination” in FY 2005. They also cited their newly released systemic compensation standards and voluntary guidelines as examples of their commitment.

 

Conclusion
The EO Survey has been controversial since its inception. The OFCCP’s final rule rescinding the EO Survey resolves this controversy, and contractors finally have closure on this requirement.