OFCCP Proposes Substantial Changes to Scheduling Letters and Compliance Checks

On Friday April 12, 2019, OFCCP posted a Notice and Comment for revised supply and service scheduling letters (including FAAPs and CMCEs), Section 503, and VEVRAA Focused Review letters, and compliance checks in the Federal Register.  Comments are due June 11, 2019, and the proposed revisions outline significant changes in expectations for contractors.   

Below is a summary of some of the major changes we noted with each of the proposed review types.

 

Compliance Evaluation Scheduling Letter

OFCCP added several items to the itemized listing and also removed a few items that were not substantially adding to the value of a compliance review.

What’s new?

  • In the Itemized Listing, items 4 and 6 (in the Executive Order 11246 section) and 16 (supporting data section), OFCCP has added information related to 41 CFR § 60-2.16(d), asking contractors to provide the availability for each job group by race/ethnicity to determine if there are any substantial disparities in the utilization of specific minority groups, and thus, any associated separate subgroup goals.  Most contractors currently provide job group, availability information, and typically determine goals for total minorities.  The regulation being cited by OFCCP states the following: 

“The placement goal-setting process described above contemplates that contractors will, where required, establish a single goal for all minorities. In the event of a substantial disparity in the utilization of a particular minority group or in the utilization of men or women of a particular minority group, a contractor may be required to establish separate goals for those groups.”

Note DCI’s added emphasis on the fact that contractors “may be” required to establish separate goals for particular minority groups or a particular sex from the regulations. 

  • The new Item 7 requests the “Results of the most recent analysis of the compensation system(s) to determine whether there are gender-, race-, or ethnicity-based disparities as explained in 41 CFR § 60-2.17(b)(3).”  The actual regulation being cited by OFCCP states the following:

“(b) Identification of problem areas. The contractor must perform in-depth analyses of its total employment process to determine whether and where impediments to equal employment opportunity exist. At a minimum the contractor must evaluate:

(1) The workforce by organizational unit and job group to determine whether there are problems of minority or female utilization (i.e., employment in the unit or group), or of minority or female distribution (i.e., placement in the different jobs within the unit or group);

(2) Personnel activity (applicant flow, hires, terminations, promotions, and other personnel actions) to determine whether there are selection disparities;

(3) Compensation system(s) to determine whether there are gender-, race-, or ethnicity-based disparities;

We are curious about OFCCP’s expectations with this new addition to the scheduling letter.  Since many contractors conduct compensation analyses under attorney-client privilege, OFCCP’s expectations surrounding this item are unclear.

  • OFCCP is now requesting data beyond 6 months if you are mid-way through your plan year, stating, “…every completed month of the current AAP year” in the new Items 9 (Section 503 44(k) analytics related), Item 12 (VEVRAA 44 (k) analytics related), and Item 17 (Executive 11246 personnel transaction activity related).  Specifically, this is stating that if a contractor is 7 months into their plan year, OFCCP expects 7 months’ work of related employment activity data (hires, applicants, promotions, terminations) and Section 503/VEVRAA related 44(k) analytics.  If a contractor is 9 months into their plan year, OFCCP would expect 9 months’ worth of the same data points, rather than just the 6 month update information most contractors submit.

What’s been removed?

  • The proposed scheduling letter removes the prior Item 8 (under the Section 503 section) and the prior Item 12 (under VEVRAA section).  Both items requested “documentation of all actions taken to comply with the audit and reporting system requirements” related to Section 503 and VEVRAA.
  • The proposed scheduling letter removes the former sub-bullet c under the Item 19 compensation data (now Item 18 in the proposed scheduling letter) which requests documentation and policies related to compensation practices, and combines aspects of the former sub-section with other compensation data factors in sub-bullet b.
  • Not all of the removed items are game-changes for contractors; they are definitely not documents that would have added significant time for contractors typically, and we speculate OFCCP removed these items strategically to ease the overall burden associated with the additional items now being requested.

 

Compliance Checks

What’s new?

  • The first item on the compliance check now asks for a contractor’s written narratives for Executive Order 11246, Section 503, and VEVRAA.  Specifically, the new Item 1 on the Compliance Check letter requests the following:
    • “Written AAPs prepared in accordance with Executive Order 11246, Section 503, and VEVRAA. (41 CFR §§ 60-1.12(b); 300.80; 60-741-80).”

What’s been removed?

  • Providing the contractor’s goal attainment report for Executive Order 11246. The prior compliance check letter requested the following, “AAP results for the preceding year (41 CFR 60-1.12 (b)).”

 

Section 503 Focused Review Letter

OFCCP recently issued a sample of the Section 503 Focused Review letter on their website, so we did not expect any surprise changes to this particular letter and itemized listing, but we in fact found several.

What’s new?

  • OFCCP is requesting the “documentation of the computations or comparisons” data beyond 6 months if you are mid-way through your plan year, stating, “…every completed month of the current AAP year.”
  • “Applicant and employee level information on self-identification maintained for individuals with a disability, as required by 41 CFR § 60-741.42(e).”
  • Although this is housed as a part of the employee identification in an HRIS, contractors may be unable to pull a specific personnel report that would have this identification readily available: “Applicant and employee level employment activity data for all applicants and employees covering the immediately preceding Section 503 AAP year and, if you are six months or more into your current AAP year when you receive this letter, provide the data for every completed month of the current AAP year. For job group information, use the job groups as defined in your Executive Order 11246 AAP. For each applicant or employee provide the following information, where applicable.
    • Indicate whether the applicant or employee was hired, promoted, or terminated. For non-selected applicants, indicate that they were not selected;
    • The job title and job group to which each applicant sought employment;
    • The job title and job group of each employee selected for hire, promotion, or termination;
    • The date the employee was hired or promoted;
    • Indicate whether the employee was externally hired into the current job group or promoted to it;
    • For promotions, provide the pool of candidates from which the employee was promoted. Include a definition of “promotion” as used by your company. If it varies for different segments of your workforce, please define the term as used for each segment;
    • The date the employee was terminated and whether the termination was voluntary or involuntary."
  • Compensation: “Employee level compensation data for all employees (including but not limited to full-time, part-time, contract, per diem or day labor, and temporary employees) as of the start date of the Section 503 AAP. Provide hire date for each employee as well as job title, EEO-1 Report category and Executive O 11246 AAP job group in a single file.
    • For all employees, compensation includes base salary and or wage rate, and hours worked in a typical workweek. Other compensation or adjustments to salary such as bonuses, incentives, commissions, merit increases, locality pay or overtime should be identified separately for each employee.
  • You may provide additional data on factors used to determine employee compensation. For example, such factors may include education, past experience, duty location, performance ratings, department or function, and salary level/band/range/grade. You may also provide documentation and policies used to determine compensation hierarchy and job structure.”

DCI is reviewing this unexpected request. Most contractors are not performing in depth compensation analytics on individuals with disabilities, so this will be a major point of discussion and comment.

What’s been removed?

  • “The formation of job groups (covering all jobs) consistent with criteria given in 41 CFR § 60-2.12;”
  • “Documentation of all actions taken to comply with the audit and reporting system requirements described in 41 CFR § 60-741.44(h);”
  • Request for 3 years of EEO-1 Reports

 

VEVRAA Focused Review Letter

This was the first glance at the VEVRAA focused review letter, as OFCCP has previously issued sample copies of the Section 503 Focused Review letter.

  • A VEVRAA review is structured identically to the previously mentioned revised Section 503 Focused Review, the difference being that the population under review is Protected Veterans. As such, it is relevant to document the adopted hiring benchmark or be able to include the methodology utilized to establish a benchmark “if using the five factors.”

 

DCI is still digesting the proposed revisions to the letters and is planning on providing public comments via The Institute for Workplace Equality.  We will keep our clients regularly updated on expectations for future changes to audit submission materials pending implementations from this notice and comment period.

By: Joanna Colosimo, Director of EEO Compliance, and Rachel Monroe, Associate Consultant, at DCI Consulting Group

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