Always be Prepared: The OFCCP Audit and Enforcement Survival Guide

Always be Prepared: The OFCCP Audit and Enforcement Survival Guide

Kris D. MeadeJody ShipperPartnerExecutive DirectorCrowell & Moring LLPOffice of Equity and DiversityWashington, DCUniversity of Southern Californiakmeade@crowell.comjshipper@usc.edu202.624.2854213.740.5086

IntroductionAgendaUnderstanding the OFCCP and Its AgendaKey Regulatory DevelopmentsKey Enforcement Priorities Hot Button IssuesPreparing for an Audit Practical TipsSurviving an Audit Phase-by-phase TipsConcluding an Audit Potential Resolutions

Understanding the OFCCP and Its Agenda

OFCCP Overview and AgendaOrganizational Structure and MissionWithin Department of LaborEnforces Executive Order 11246, the Vietnam-Era Veterans Readjustment Assistance Act (VEVRAA), and Section 503 of the Rehabilitation Act (Section 503)Non-discrimination thou shall notAffirmative action thou shallNational Office, Regional Offices, District OfficesDecentralized in practiceOFCCP Overview and AgendaJurisdictionFederal contractors and subcontractors not grant recipientsSubcontractor two prongsEnforcement ToolsCompliance Reviews or AuditsComplaint InvestigationsRemediesNo civil fines or criminal penaltiesStandard Title VII-like remedies back pay, reinstatement, instatement, pay adjustmentsDebarment ultimate sanction rarely usedOFCCP Overview and AgendaPrimary Obligations of Contractors and SubcontractorsPrepare Affirmative Action Plans (AAPs) - AnnuallyEngage in outreachFlow down obligations to subcontractorsRegulatory DevelopmentsOverhaul of VEVRAA and Section 503 RegulationsProposed Rules 2011 Substantial Increase in Contractors ObligationsContractor Community Response assessment of costFinal Rules announced August 27, 2013Effective Date of Final Rule March 22, 2014Phased In compliance for AAPsIf AAP in place before March 22, 2014, no changes to AAP in 2014Significant systems and process changes prior to March 2014

Regulatory DevelopmentsKey Changes - Section 5037% Utilization Goal every job groupPeriodic Solicitation of Disabled StatusAll EmployeesAll ApplicantsDocumentation of Outreach EffortsCollection and Assessment of Disabled Applicant and Hire DataNew Subcontract Flow Down LanguageThree-year Record-Keeping RequirementExpanded Audit Scope

Regulatory DevelopmentsKey Changes VEVRAASolicitation of Veterans StatusAnnual Hiring Benchmarks workforce as a whole8% defaultSet ownDocumentation of Outreach EffortsCollection of Veteran Applicant and Hire DataNew Subcontract Flow Down LanguageThree-year Record-Keeping RequirementExpanded Audit ScopeRegulatory DevelopmentsChallenging Implementation IssuesExtent of Effort to Achieve 7% Goal8% Benchmark v. 5-Factor AnalysisHow to Document Audit and Reporting SystemReasonable Accommodation Guidelines Adopt?OtherRegulatory and Enforcement AgendaCompensation Guidelines Directive 307 issued 2013Reflects importance of compensation issues to OFCCPRescinds Bush-era guidance regressions and anecdotal evidence requiredAd-hoc, case-by-case approachStatistical, non-statistical and anecdotal evidencePay analysis groups broader than job titleInvestigate at systemic, unit, and individual levelRegulatory and Enforcement AgendaUnited Space Alliance right to individualized compensation data2009 scheduling letter issues; company provides aggregate compensation data per item 11OFCCP conducts threshold test no indicators of discriminationOFCCP conducts additional tests pattern test claims disparity, seeks individualized dataCompany refusesALJ orders company to provide dataDistrict Court 2011 affirms based on substantial deference standard

Recent Significant DecisionsFrito-Lay timeframe for investigation expandedScheduling letter dated July 13, 2007Company provides activity data for 2005, 2006 and part of 2007OFCCP claims data show statistically significant disparity requests additional data - 2008 and 2009Cites variance in female hiring rates 3.26 standard deviationsCompany refuses to produce beyond date of scheduling letterRecent Significant DecisionsFrito-Lay ALJ Decision OFCCP precluded from seeking 2008-09 data; based on FCCMARB reverses ALJOFCCP clearly has discretion to request AAP data covering activity occurring after the scheduling letterOFCCPs impetus in seeking additional data reasonable2013 Frito-Lay files challenge in federal court in Texas; OFCCPs Motion to Dismiss pendingHot Button Issues OFCCP Hot Button IssuesPriority Issues those that yield monetary recoveries Compensation lack of Agency experience with higher educationPersonnel selection decisions hires, promotions, and terminationsApplicant tracking and selection processes: Making sure your records talk, so your employees dont have to be interviewed

Hot Button Issue: CompensationOFCCPs limited understanding of factors common in higher education for determining differences in compensation can create traps for institutions - Retention - Reputation - Differences in status of various publications - Differences in funding sources

Other Traps Easily Exploited by OFCCPPersonnel Selection and Applicant Tracking: Who is an applicant in a faculty search?Does your faculty keep records of all searches?Is everyone a Target of Opportunity Hire?

OFCCP Hot Button IssuesOutreach Veterans and Individuals With Disabilities How much is sufficient? Record keeping? Do results matter, or just the effort?Side note: When asking for disability status, do you put yourself on notice of need to discuss reasonable accommodations?

Internet applicants, tracking and testingRecord keepingLinkedIn and other common job search sitesPre-employment testing

Background checks

OFCCP Hot Button IssuesPractical Tips to Prepare for an AuditPreparations for Audit Practical TipsRole of General Counsels OfficeOften not intimately involved prior to auditRecommendationBecome more involved in day-to-day programTreat audit enforcement action and proactively manage responseInitial decisions may include whether to ask for delayReview of past plan

Preparations for Audit Practical TipsTechnical Review of AAP and Related PoliciesCompliance with regulationsPotential exclusionsTemporary employeesStudent workersNo definition of employee

Preparations for Audit Practical TipsAAP StructureMultiple establishments?Employment TestsUse?Locally validated?Monitoring for Adverse ImpactQuarterly applicants, hires, promotions, and terminationsSteps to address areas of adverse impact

Preparations for Audit Practical Tips

Self-identification race and gender (currently)Different obligations for applicants and employeesDecline to state gender vs. raceApproachesVisual identification if no self-identification?Preparations for Audit Practical TipsRecord-keepingTwo years personnel recordsTracking down missing recordsInterview notesHow capture?What level of detail?Dispositions of candidatesThe importance of consistency

Preparations for Audit Practical Tips

Mock AuditsParticularly useful if not audited in last five yearsPrivilege issuesAreas of focus parallel OFCCP areas of interestInterview managers; examine dataPreparations for Audit Practical TipsCompensation AnalysesPay equity studies academic sideRoutine practice on many campuses; transparencyRegressions privilege issues againDifficulty identifying and quantifying factors that impact pay often not in data form

Practical Steps: Each Phase of AuditPractical Steps Each Phase of Audit

Receipt of Pre-Scheduling LetterAssess readiness areas of strength and vulnerabilitiesAAP reviewUnderstand your numbers utilization and adverse impactCompensation analysis potential pay adjustmentsAssemble audit response teamInterdisciplinary HR/Affirmative Action/Compensation/LegalDesignate leadsDevelop preliminary themesEducate your clientPractical Steps Each Phase of Audit

Receipt of Scheduling LetterData requiredMore than six months into AAP year? If so, analyze data for AAP year-to-dateDeadline for response 30 days (extensions)Pull compensation data analyze, assess (and adjust?)Format of response varying approachesExplain areas of apparent discrepancy particularly on compensationConfidential/Proprietary Information password protectEducate your client (again) and OFCCPPractical Steps Each Phase of Audit

Desk Audit PhaseTimeline first contact can be within days or may not be for monthsAdditional data and document requestsUnreasonable deadlines within three daysImpact of sequestration travel limits more done at desk auditAccommodations, lists of employees who have taken leave and whether they returnedCharges filed with agencies and any settlements employee complaintsBate number all documentsPractical Steps Each Phase of Audit

Desk Audit PhaseDevelop Rapport with OFCCP Compliance OfficerLegal v. HR/affirmative action as point of contactIn-house counsel and outside counselProfessional, respectful tone even if not returnedKnow when to push back and when to escalateSilence what then?Low bar for moving from Desk Audit to On-Site Review

Practical Steps Each Phase of Audit

On-Site PhaseOFCCP teamLarge numbersMany inexperiencedOpening conferenceOFCCP will presentBe proactive stress themes; inform about campusDocument reviewsTrack all documents provided if originalsOffer to provide as availablePractical Steps Each Phase of Audit

On Site ReviewPreparation the big and the smallLegalMedia relationsLogistics where and whenParking?Coffee and cookies how comfortable do you want them to be?Ask around colleagues at other institutions may have direct experiences with same team membersPractical Steps Each Phase of Audit

On-Site PhaseLogisticsOffices away from other employees and away from HRSuggest places for lunch not campus cafeteriaInterviews key areas and key decision-makersHR personnel recruiting and compensation functionsManagement personnelPreparing staff and senior administratorsBrief on OFCCP and its missionEnsure knowledge of AAP and compliance posture themesDeposition-like preparation

Practical Steps Each Phase of Audit

On-Site PhasePreparing non-management employeesNo right to be present or have legal counsel presentExplain OFCCP and missionCan inform of right to ask to have someone else presentInterview statements prepared by OFCCPOften vague or incorrectTo correct or not correct?To sign or not to sign?CopiesWho has control over the order of interviews?Practical Steps Each Phase of Audit

Audit ClosureCompliance formal and informal closuresConciliation AgreementNegotiation some partsReporting period almost always 6 months to two yearsPress release if monetary remediesNot negotiableOften misleadingCan prompt private actionsPractical Steps Each Phase of Audit

Audit ClosureEnforcement Proceedings if unable or unwilling to resolveSolicitors office, not within OFCCPAdministrative litigationBefore ALJSome discoveryAppeal to Administrative Review Board of DOLAppeal ARB decision to federal courtsOpportunities to settleQUESTIONS

Always be Prepared: The OFCCP Audit and Enforcement Survival Guide

Kris D. MeadeJody ShipperPartnerExecutive DirectorCrowell & Moring LLPOffice of Equity and DiversityWashington, DCUniversity of Southern Californiakmeade@crowell.comjshipper@usc.edu202.624.2854213.740.5086