By: Cassie Alfheim, Amanda Bowman and Evan Szarenski
On April 18, 2023, the Office of Management and Budget (OMB) released a revised version of the Office of Federal Contract Compliance Program’s (OFCCP’s) proposed scheduling letter and itemized listing. As we previously discussed in an early blog post, the initial proposal for revisions was very substantial. After receiving 48 public comments, OFCCP appears to have retained most of its initial proposal, with only one item receiving substantive changes. In this blog, we explore the recent version of the scheduling letter and itemized listing below, making note of what may have changed between the version released in November of 2022 and the version sent to OMB in April of 2023. Please note, OFCCP did reorder some items between versions, so the item number may have changed in the current version of the itemized listing.
The public will have one additional opportunity to submit comments before OMB completes its final review. Comments are due May 17, 2023.
Scheduling Letter Changes
As described in detail in our earlier blog post, the agency’s proposed change to the scheduling letter regarding “campus-like settings” has been a focus for many in the federal contractor community. The specific proposed language is as follows:
If you are a post-secondary institution or federal contractor with a campus-like setting that maintains multiple AAPs, you must submit the information requested in this scheduling letter for all AAPs developed for campuses, schools, programs, buildings, departments, or other parts of your institution, or company located in [city and state only].
Despite significant concerns from federal contractors and subcontractors regarding the “campus-like settings” proposed change, OFCCP has retained this exact verbiage. The request for all AAPs that are part of one campus setting will result in significantly greater employee counts and more personnel actions with which the agency will run its analyses.
Educational institutions and federal contractors with multiple establishments in close proximity to one another should carefully consider the impact this proposed change would have on federal AAP reporting. Comments on this specific component of the proposed letter should be sent to OMB, as OFCCP has yet to provide regulatory bases for this change or define “campus-like setting.”
Itemized Listing Changes – Changes with Substantial New Burdens
There are a number of items in the proposed scheduling letter that will create substantial burdens for federal contractors and subcontractors undergoing a compliance review. Among these items are those listed below.
Item 18 – Personnel Activity Data
In the November 2022 version of the proposed scheduling letter and itemized listing, OFCCP proposed that significant new data be submitted for promotions and terminations (covered in detail here). While OFCCP dropped some of the more burdensome requirements found in its November 2022 proposal, the agency is still proposing additional data that is not requested by the current scheduling letter. First, it is requiring “documentation that includes established policies and describes practices related to promotions.” Currently, the scheduling letter only requests a definition of “promotion.” Second, it is requesting incumbency by gender and race/ethnicity at the start of the prior AAP year. There is no such request in the current version of the scheduling letter. OFCCP routinely asks for this information during compliance reviews. The current scheduling letter does request job group representation at the start of the last AAP year for purposes of determining placement goals met. However, that part of the scheduling letter only requests the total number of incumbents, total number of females, and total number of minorities in each job group. The change to this item was greatest between the initial and secondary versions of the itemized listing proposed by OFCCP.
Item 19 – Compensation Data
OFCCP’s proposed Itemized Listing will increase what contractors need to submit regarding compensation.
- First, OFCCP is proposing that contractors submit two snapshots of compensation data. One snapshot would cover the workforce analysis in the current Executive Order AAP. The other would cover the workforce analysis in the previous Executive Order AAP.
- Second, the proposed scheduling letter explicitly includes employees “provided by staffing agencies.” OFCCP’s supporting statement for the April 2023 version of the scheduling letter states that the agency is only requesting information persons considered to be employees of the federal contractor or subcontractor. However, OFCCP has never provided a formal definition of “employee,” which may cause confusion regarding who is to be included in compensation data.
- Third, contractors would be required to submit “relevant factors used to determine compensation such as education, experience, time in current position, duty location, geographic differentials, performance ratings, department or function, job families and/or subfamilies, and salary level/band/range/grade” for each employee. Previously, employers were allowed but not required to provide this kind of information.
- Finally, the proposed Itemized Listing would mandate the submission of documentation and policies related to a contractor’s compensation practices. Again, employers were previously allowed but not required to provide this kind of information.
Item 21 – Policies and Practices Regarding Recruiting, Screening, and Hiring
The proposed itemized listing has a new item introduced in the November 2022 version of the scheduling letter that would require contractors to:
Identify and provide information and documentation of policies, practices, or systems used to recruit, screen, and hire, including the use of artificial intelligence, algorithms, automated systems or other technology-based selection procedures.
OFCCP has retained this verbiage in its April 2023 proposal. In its supporting statement for the April 2023 version of the scheduling letter, OFCCP states that this will help ensure that the agency can evaluate whether technology-based selection procedures do not create barriers to equal employment opportunity. OFCCP does not specify, however, how it will evaluate these policies. It is also not clear what “information and documentation” must be submitted.
Item 22 – Self-Analysis of Compensation Systems
The proposed itemized listing has a new item introduced in the November 2022 version of the scheduling letter that requests documentation that the contractor has evaluated its compensation as required by 41 CFR § 60-2.17(b)(3). That section of the Code of Federal Regulations reads as follows:
41 CFR 60-2.17(b). 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… (3) Compensation system(s) to determine whether there are gender-, race-, or ethnicity-based disparities;
OFCCP states that the documentation must include at least the following:
- When the compensation analysis was completed
- The number of employees the compensation analysis included and the number and categories of employees the compensation analysis excluded
- Which forms of compensation were analyzed and, where applicable, how the different forms of compensation were separated or combined for analysis;
- That compensation was analyzed by gender, race, and ethnicity; and
- The method of analysis employed by the contractor.
In Directive 2022-01 (Advancing Pay Equity Through Compensation Analysis), OFCCP stated this information is necessary to demonstrate compliance with 60-2.17(b)(3). However, under Directive 2022-01, an OFCCP Compliance Officer is supposed to only request this data if “the desk audit reveals disparities in pay or other concerns about the contractor’s compensation practices.” The proposed scheduling letter will gather this information for all compliance evaluations, whether or not there are any concerns about the contractor’s compensation practices. OFCCP has retained the verbiage as initially proposed in November 2022.
Item 7 – Action Oriented Programs
OFCCP’s November 2022 proposal included a new item that requested a “list of all action-oriented programs designed to correct any problem areas pursuant to 41 CFR 60-2.17(b).” The April 2023 version includes a noteworthy change to this language:
Pursuant to 41 CFR § 60-2.17(c), provide documentation demonstrating the development and execution of action-oriented programs designed to correct any problem areas identified pursuant to 41 CFR § 60-2.17(b). (Emphasis added)
In a previous blog post, we discussed the burden associated with this new item as it pertains to each individual establishment or functional/business unit. As in various other components of the proposed itemized listing, this documentation request - if enforced - would be significantly burdensome to the federal contractor community.
Item 8 and Item 12 – Outreach and Recruitment Efforts
OFCCP’s proposed changes regarding outreach and positive recruitment efforts under the federal affirmative action regulations for individuals with disabilities (Item 8) and protected veterans (Item 12) remain unchanged between the November 2022 and April 2023 versions. As described in an earlier DCI blog post, these proposed changes add language to provide documentation of outreach and recruitment efforts. This includes documentation describing actions to be taken when outreach efforts were ineffective, and any alternative efforts explored. If enforced, Items 8 and 12 will have significant burden for federal contractors and subcontractors.
Item 11 – Disability Utilization Analysis
As discussed in a previous DCI blog, OFCCP’s proposed revisions to Item 11 are likely to be more burdensome to federal contractors and subcontractors than OFCCP anticipates. These revisions remain unchanged between the November 2022 and April 2023 version of the proposed scheduling letter. OFCCP has added language stating that employers must provide documentation regarding efforts to meet the disability utilization goal. This documentation may include the assessment of personnel processes, a description of outreach and recruitment efforts, and action-oriented programs developed to correct identified problems.
Itemized Listing Changes – Changes with Moderate New Burdens
Along with the items mentioned above that will create substantial burdens, there are other proposed items that will create at least a moderate burden for federal contractors and subcontractors undergoing a compliance review. Among these items are those listed below.
Item 25 – Review of Personnel Processes
OFCCP claims in its supporting statement for the proposed scheduled letter that the current scheduling letter does not include enough information for OFCCP to verify whether contractors are meeting requirements to review personnel processes under the federal regulations regarding protected veterans and individuals with disabilities. The current scheduling letter has the following language:
[Submit your] most recent assessment of your personnel processes, as required by 41 CFR §§ 60-300.44(b) and 60-741.44(b), including a description of the assessment and any actions taken or changes made as a result of the assessment.
The proposed scheduling letter has the following language:
[Submit the] contractor’s most recent assessment of its personnel processes, as required by 41 CFR §§ 60-300.44(b) and 60-741.44(b). This assessment shall include, at a minimum, a description of the assessment, any impediments to equal employment opportunity identified through the assessment, and any actions taken, including modifications made or new processes added, as a result of the assessment. (Emphasis added)
This verbiage is the same in the November 2022 and April 2023 proposals. Employers will need to ensure that they are tracking any impediments identified during its assessments. Additionally, contractors should ensure that the list of impediments identified does not open the door to a finding of discrimination against protected veterans or individuals with disabilities.
Itemized Listing Changes – Changes with Minimal New Burdens
The items mentioned should create only minimal new burdens for federal contractors and subcontractors undergoing a compliance review.
Item 16 – EEO-1 and IPEDS Reports
The current itemized listing requires employers to submit the last three years of their EEO-1 reports. However, post-secondary educational institutions do not file EEO-1 reports. Both versions of the revised scheduled letter have a modification that would require post-secondary educational institutions to submit copies of their Integrated Postsecondary Education Data Systems (IPEDS) report for the last three years. This revision remains unchanged between the November 2022 and April 2023 notices.
Item 23 (previously Item 20) – Reasonable Accommodation Policies
The current itemized listing requires employers to submit their reasonable accommodation policies as well as information on accommodation requests received and their outcomes. Both versions of the revised scheduling letter have a modification to this item to add clarifying language that the accommodation data should involve requests made during the preceding AAP year. This revision remains unchanged between the November 2022 and April 2023 notices.
Item 24 – Written Policies
In the November 2022 version of the proposed scheduling letter, OFCCP has a new requirement for employers to submit copies of existing written employment policies and documents that concern equal employment opportunity. Examples included anti-harassment policies, EEO complaint procedures, and employment agreements. This item has been slightly modified in the April 2023 version to clarify that the agency is seeking EEO-related policies. OFCCP’s supporting statement makes it clear that the request for “employment agreements” does not refer to agreements with individual employees, but rather policies around these types of agreements.
OFCCP’s proposal for modifications to the scheduling letter and itemized listing is not final yet. As noted above, the public has until May 17, 2023 to file any comments with OMB. Comments can be submitted at reginfo.gov. Once the comment period closes, OMB will begin its review of OFCCP’s proposal. There is not a required deadline for OMB to complete its review. However, OMB’s most recent reviews of substantive changes to the scheduling letter lasted nine months for changes proposed in 2019 and three years for changes proposed in 2011. Both reviews ended with OFCCP making additional changes in what had been submitted to OMB.
The current scheduling letter expired on April 30, 2023. OMB has granted an extension to the current scheduling letter through May 31, 2023, and will continue to grant extensions while it reviews OFCCP’s proposed scheduling letter.
DCI will continue to monitor developments with the scheduling letter and will post updates to its blog.