These aggressive practices have taken the contractor community aback. While OFCCP’s regulatory authority is centered on a neutral selection process, it has recently employed confrontational tactics traditionally reserved for complaint-driven processes – such as EEOC investigations and litigation.
One common theme underlies most or all of the shifts at OFCCP: the persistent drumbeat of 'transparency.' 
To be clear, OFCCP may be showing signs of an evolution toward a more collaborative relationship with employers; but, contractors should not confuse these signals with lackadaisical oversight. After all, OFCCP is still an enforcement agency. That said, contractors can scrutinize how the Agency’s recent adjustments may impact pending – and future – compliance reviews.
Our colleagues recently wrote on how to leverage the additional time to prepare for an OFCCP audit that the Agency’s Corporate Scheduling Announcement Letters (CSALs) present. Following in series, here we explore how OFCCP’s recent shifts may impact strategy when responding to post submission requests.
- OFCCP’s Overarching Theme: Assurances of Transparency
Speaking in front of audiences of varying sizes and composition, including the contractor community and civil rights stakeholders, Director Harris and Senior Advisor Craig Leen (also appointed in late 2017) have repeated the constant refrain of “transparency.” This is a significant change that runs through many of the OFCCP’s current developments.
They have assured contractors that OFCCP is both “talking the talk” and “walking the walk”: including instructing all levels of OFCCP personnel to be transparent regarding compliance reviews. And they’re making good on their word, including:
- Town Hall Action Plan – In late April, OFCCP released a Town Hall Action Plan, which outlines OFCCP’s path forward in light of the feedback it received during its ongoing stakeholder meetings. Initiative Number 3 is to “Increase transparency and communication with agency stakeholders.”
- Regular Statements of Transparency – OFCCP leadership has emphasized in public statements that OFCCP should partner with contractors toward common goals of achieving EEO workplaces, that OFCCP is messaging the requirement for transparency to all levels of the field, and that OFCCP welcomes feedback at the National Office where transparency at the local level is not practiced.
- Responses to Notifications of Non-Transparency from the Field – OFCCP’s National Office has been responsive to feedback where Regional or District level personnel have failed to be transparent – even ensuring that it will reach down to the local level to ensure they are following the National Office’s instructions.
- Disclosure of Methodology for Contractor Selection – In April, OFCCP released a detailed explanation of its audit scheduling methodology for the latest round of CSALs. Among the nuggets in the letter is a description of how the agency grouped contractors by organizational relationship, and how it considered employee count and details of the federal contract.
Contractors are wise to listen to this consistent drumbeat from the National Office. When presented with a significant, unanticipated request, consider attempting to engage the compliance officer on the basis for the request, and even escalate through management to understand the scope and direction of the review. This kind of exploration can help ensure OFCCP’s requests are “sufficiently limited in scope, relevant in purpose, and specific in directive so that compliance [with them] will not be unreasonably burdensome.” See United Space Alliance, LLC v. Solis, 824 F.Supp.2d 68, 91 (D.D.C. 2011). - Implementation of Predetermination Notices (PDNs)
A Predetermination Notice (“PDN”) is a letter to contractors that informs the contractor that OFCCP’s investigation suggests discrimination may have occurred. As the name suggests, a PDN is issued before OFCCP reaches a “final determination” in the review. A contractor then has at least 15 days to respond in writing before OFCCP reaches its final decision as to whether to issue a violation.
In recent years, OFCCP has permitted, but not required, local offices to use the PDN in cases of systemic discrimination before issuing a Notice of Violation (“NOV”).
All of that changed on February 27, 2018, when OFCCP issued Directive 2018-01, which requires all OFCCP Offices to use a PDN whenever it has identified preliminary findings of discrimination in a compliance review. According to the Directive, this shift “encourages communication with contractors and provides them an opportunity to respond to preliminary findings prior to OFCCP deciding to issue an NOV.”
The key here for us is that there is no room for local offices to skip this step: “Regional discretion is no longer permitted.”
One can interpret this change as the National Office installing layers of oversight on any proposed finding of discrimination to ensure the field office’s approach is sound. It also ensures transparency before OFCCP officially concludes a discrimination violation is appropriate.
Contractors can rest a bit easier knowing that there will be an opportunity to vet and respond to any potential discrimination violation before the Agency issues it. - Changes in Leadership Personnel
Even as the new Agency’s National Office leadership discusses transparency, several key downstream leaders at OFCCP have departed in recent months. Most notably, Janette Wipper, former Pacific Regional Director and, before that, a prominent plaintiff’s attorney, left the agency to lead the California Department of Fair Employment and Housing. Regional Director Wipper was largely seen as a driving force behind the Pacific Region’s focus on “black box,” litigation-style tactics to investigate the wage gap in contractor workforces. Her departure may clear the way for more National Office oversight of field office tactics and priorities.
Former Deputy Director Tom Dowd and Midwest Regional Director Bradley Anderson, both long-tenured OFCCP leaders, recently left the Agency as well. Again, flattening the levels of decision making between top brass and the rank-and-file.
We anticipate that this loss of established leadership will usher in more consistent enforcement across Regions, and that enforcement strategies will likely be set by the National Office – including the direction for increased cooperation (i.e. transparency).
Again, contractors should not view these changes as a “free pass” in compliance reviews. All of these former Agency leaders installed capable and competent deputies and direct reports who will continue to evaluate compliance and ensure fair treatment. - A Reported Change in Compensation Enforcement?
It would be impossible to discuss OFCCP’s aggressive enforcement methods in recent years without talking compensation. OFCCP often requests large volumes of data and information and spends long periods of time analyzing it, but has failed to engage in meaningful dialogue with the contractor regarding actual pay practices. In many cases, OFCCP has analyzed compensation, identified statistical indicators, and even issued violations without sharing the methodology used – or employee grouping analyzed – to arrive at their conclusions.
The tide may be changing. Recently, an Administrative Law Judge decision limited areas of inquiry by OFCCP to those that flag in initial analyses. Without such preliminary indicators driving the requests, relevance becomes speculative. So, OFCCP’s transparency should extend to preliminary compensation analyses as well.
In fact, reports are that OFCCP leadership is expected to rescind or modify its large scale statistical analysis approach to compensation analyses known as “Directive 307.” (Directive 307 abandoned the concept of “similarly situated employee groups” in favor of broad “pay analysis groups” that OFCCP, in its sole discretion, creates based on its own conclusions of who should be “similar” for pay purposes.)
As of the date of this submission, there has been no official news on this front – but the impact of this potential change could be big. While sheer speculation, OFCCP may:
- Abandon the foundation of large-scale statistical analyses of Directive 307 that permit the Agency on its own to determine groupings of “similar” employees under the contractor’s pay systems;
- Continue to apply Directive 307’s framework, but engage in collaboration with the contractor under review to determine – and perhaps agree on – the appropriate pay analysis groups for review; or, perhaps,
- Shift its focus back to evaluating “similarly situated employee groups” as developed under longstanding Title VII case law.
What we do know is that the climate of compensation reviews is shifting. For now, contractors that receive requests for robust compensation data or documents should evaluate the requests carefully to ensure they are only submitting “relevant” information. Ask questions. Engage with OFCCP. Attempt to understand the methodology and results of the initial analyses that prompted the additional request from OFCCP. The Agency has invited transparency, and prudent contractors should accept the invitation.
If the Agency rhythm from recent months bears out, contractors should remain informed throughout a compliance review. Contractors should understand the analyses OFCCP is conducting and concerns it may have. If not, engage the compliance officer and appropriate OFCCP management. Neither a PDN nor an NOV should be a surprise.
Contractors should remain hopeful that compliance reviews will eventually have a more collaborative tone. Until then, ask questions, push back where necessary, and engage the Agency as it implements its self-described initiative of transparency.
For assistance in or questions regarding OFCCP audit defense, affirmative action planning, pay equity, or related subject matters, please contact authors Christopher Patrick at 303-876-2202 or christopher.patrick@jacksonlewis.com or Elizabeth Hernandez at 303-225-2410 or elizabeth.hernandez@jacksonlewis.com.
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