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Apr 07, 2022

OFCCP resets expectations for contractors during audits

Affirmative Action 

On March 31, 2022, the Office of Federal Contract Compliance Programs (OFCCP) issued Directive 2022-02 (Effective Compliance Evaluations and Enforcement), which eliminates some employer-friendly affirmative action audit procedures and establishes high expectations going forward. This is the second directive issued by OFCCP Director Jenny Yang, who was appointed by President Biden in January 2021. It rescinds four Trump-era directives, most importantly Directive 2018-08 (Transparency in OFCCP Compliance Activities), which allowed federal contractors selected for audits to submit just their written affirmative action plans (AAPs) by the normal 30-day deadline, with an automatic 30-day extension to provide the remaining support information such as compensation data. This prior directive also said the OFCCP would hold off on sending any audit scheduling letters until 45 days after issuing its Corporate Scheduling Announcement List (CSAL).

Here are the key points from the new directive:

  • In-depth audits: The agency intends to conduct “comprehensive compliance evaluations,” with no mention of focused reviews on narrower topics such as the disability portion of an AAP under Section 503 of the Rehabilitation Act. This seems to signal the agency’s intention to do a deep dive on each affirmative action plan it reviews. However, Directive 2018-04 (Focused Reviews), a Trump-era directive that said future CSALs should include focused reviews, hasn’t been rescinded, so it remains to be seen whether focused reviews may still be used by the agency.
     
  • Coordinated approach to auditing multi-establishment companies: For companies with multiple establishments selected for audits, the OFCCP will implement a “coordinated, cross-regional approach” to review “common policies and patterns across establishments.”
     
  • Wider range of contractors to be audited: OFCCP intends to change its scheduling methodology “to reach a broader universe of contractors and subcontractors and to identify those with greater risk factors for noncompliance with nondiscrimination and affirmative action requirements.” The agency has been criticized in the past for repeatedly auditing the same companies, with little to show for it. The new directive indicates the agency may be responding to that criticism. The agency didn’t specify what it sees as risk factors for noncompliance, but it would be reasonable to expect it to review EEO-1 Report data for outliers in race/ethnicity and gender composition by job category, industry, and geographic area. Eventually, another data source for the agency will be federal supply and service contractors and subcontractors who fail to certify that they have a current AAP under the new OFCCP Contractor Portal, which we reported on here.
     
  • CSAL and explanation of methodology to continue: There is some good news for federal contractors in the new directive. The agency intends to continue the Trump-era practice of publishing an explanation of its scheduling methodology. The agency also intends to continue publishing the CSAL, which is typically released once or twice a year, displaying the names and locations of the establishments it intends to audit in the coming months.
     
  • Tight time frame to submit data: Employers will have only the usual 30 calendar days after receiving a scheduling letter to submit their complete AAP and all support data. Extensions will be granted only in extraordinary circumstances, such as lengthy medical leaves of key personnel or unexpected departure of a key affirmative action officer.
     
  • Requested data may go back two years: The OFCCP says it has the right to request supplemental information if the initial submission is incomplete or the OFCCP “identifies issues that warrant further analysis.” The OFCCP says it may ask for information from the past two years before the company received the scheduling letter. In addition, it may ask for information on company practices on or after the letter was received, to determine whether those practices have ended or are continuing.
     
  • Contractors must turn over employee contact information: The OFCCP firmly asserts that it may require federal contractors to turn over unredacted contact information for employees, including telephone numbers, mailing addresses, email addresses, and social security numbers, and that it will safeguard the information. It’s well established that the OFCCP has the right to obtain employee contact information but it’s unclear why social security numbers would be necessary in that process.
     
  • Limits on who can be present during interviews: OFCCP recognizes that the contractor has the right to have a representative present during interviews with managers and directors who speak for or make decisions on behalf of the company (unless the managers and directors are whistleblowers or potential victims of discrimination). The OFCCP flatly states that contractors don’t have the right to have a representative present during interviews with nonmanagement personnel. This can be a bone of contention in an audit, to the extent that the OFCCP wants to interview nonmanagement personnel about their role in the company’s hiring processes or other areas in which the company may be held accountable for their actions.

Tips: Director Yang’s first directive, which we reported here, was issued on March 15, 2022, on the subject of pay equity. During each transition between administrations, the OFCCP tends to operate on autopilot while the new director gets to know the agency and identifies new opportunities. The release of these two directives in rapid succession signals the OFCCP’s ship is finally turning and we can expect to see more intensive scrutiny of federal contractors during affirmative action audits. Vigilant represents our AAP clients during the investigation phase of OFCCP audits. If you have questions or would like a quote, please contact Karen Davis (503-603-4426 or KarenD@vigilantlaw.com).

This website presents general information in nontechnical language. This information is not legal advice. Before applying this information to a specific management decision, consult legal counsel.

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