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Always be Prepared: The OFCCP Audit and Enforcement Survival Guide Kris D. MeadeJody Shipper PartnerExecutive Director Crowell & Moring LLPOffice of Equity.

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Presentation on theme: "Always be Prepared: The OFCCP Audit and Enforcement Survival Guide Kris D. MeadeJody Shipper PartnerExecutive Director Crowell & Moring LLPOffice of Equity."— Presentation transcript:

1 Always be Prepared: The OFCCP Audit and Enforcement Survival Guide Kris D. MeadeJody Shipper PartnerExecutive Director Crowell & Moring LLPOffice of Equity and Diversity Washington, DCUniversity of Southern California kmeade@crowell.comjshipper@usc.edu 202.624.2854213.740.5086

2 Introduction Agenda Understanding the OFCCP and Its Agenda Key Regulatory Developments Key Enforcement Priorities – Hot Button Issues Preparing for an Audit – Practical Tips Surviving an Audit – Phase-by-phase Tips Concluding an Audit – Potential Resolutions

3 Understanding the OFCCP and Its Agenda

4 OFCCP – Overview and Agenda Organizational Structure and Mission Within Department of Labor Enforces Executive Order 11246, the Vietnam-Era Veterans Readjustment Assistance Act (VEVRAA), and Section 503 of the Rehabilitation Act (Section 503) Non-discrimination – “thou shall not” Affirmative action – “thou shall” National Office, Regional Offices, District Offices Decentralized in practice

5 OFCCP – Overview and Agenda Jurisdiction Federal contractors and subcontractors – not grant recipients “Subcontractor” – two prongs Enforcement Tools Compliance Reviews or “Audits” Complaint Investigations Remedies No civil fines or criminal penalties Standard Title VII-like remedies – back pay, reinstatement, instatement, pay adjustments Debarment – ultimate sanction – rarely used

6 OFCCP – Overview and Agenda Primary Obligations of Contractors and Subcontractors Prepare Affirmative Action Plans (AAPs) - Annually Engage in outreach Flow down obligations to subcontractors

7 Regulatory Developments Overhaul of VEVRAA and Section 503 Regulations Proposed Rules – 2011 – Substantial Increase in Contractors’ Obligations Contractor Community Response – assessment of cost Final Rules – announced August 27, 2013 Effective Date of Final Rule – March 22, 2014 “Phased In” compliance for AAPs If AAP in place before March 22, 2014, no changes to AAP in 2014 Significant systems and process changes prior to March 2014

8 Regulatory Developments Key Changes - Section 503 7% Utilization Goal – every job group Periodic Solicitation of Disabled Status All Employees All “Applicants” Documentation of Outreach Efforts Collection and Assessment of Disabled Applicant and Hire Data New Subcontract “Flow Down” Language Three-year Record-Keeping Requirement Expanded Audit Scope

9 Regulatory Developments Key Changes – VEVRAA Solicitation of Veterans Status Annual Hiring “Benchmarks” – workforce as a whole 8% default Set own Documentation of Outreach Efforts Collection of Veteran Applicant and Hire Data New Subcontract “Flow Down” Language Three-year Record-Keeping Requirement Expanded Audit Scope

10 Regulatory Developments Challenging Implementation Issues Extent of Effort to Achieve 7% Goal 8% Benchmark v. 5-Factor Analysis How to Document Audit and Reporting System Reasonable Accommodation Guidelines – Adopt? Other

11 Regulatory and Enforcement Agenda Compensation Guidelines – Directive 307 issued 2013 Reflects importance of compensation issues to OFCCP Rescinds Bush-era guidance – regressions and anecdotal evidence required Ad-hoc, case-by-case approach Statistical, non-statistical and anecdotal evidence Pay analysis groups – broader than job title Investigate at systemic, unit, and individual level

12 Regulatory and Enforcement Agenda United Space Alliance – right to individualized compensation data 2009 – scheduling letter issues; company provides aggregate compensation data – per item 11 OFCCP conducts “threshold test” – no indicators of discrimination OFCCP conducts additional tests – “pattern test” – claims disparity, seeks individualized data Company refuses ALJ – orders company to provide data District Court – 2011 – affirms based on substantial deference standard

13 Recent Significant Decisions Frito-Lay – timeframe for investigation expanded Scheduling letter dated July 13, 2007 Company provides activity data for 2005, 2006 and part of 2007 OFCCP claims data show “statistically significant disparity” – requests additional data - 2008 and 2009 Cites variance in female hiring rates – 3.26 standard deviations Company refuses to produce – beyond date of scheduling letter

14 Recent Significant Decisions Frito-Lay ALJ Decision – OFCCP precluded from seeking 2008-09 data; based on FCCM ARB reverses ALJ “OFCCP clearly has discretion to request AAP data covering activity occurring after the scheduling letter” OFCCP’s “impetus” in seeking additional data “reasonable” 2013 – Frito-Lay files challenge in federal court in Texas; OFCCP’s Motion to Dismiss pending

15 Hot Button Issues

16 OFCCP – Hot Button Issues Priority Issues – those that yield monetary recoveries Compensation – lack of Agency experience with higher education Personnel selection decisions – hires, promotions, and terminations Applicant tracking and selection processes: Making sure your records talk, so your employees don’t have to be interviewed

17 Hot Button Issue: Compensation OFCCP’s 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

18 Other Traps Easily Exploited by OFCCP Personnel 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?

19 OFCCP – Hot Button Issues Outreach – 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?

20 Internet applicants, tracking and testing Record keeping LinkedIn and other common job search sites Pre-employment testing Background checks OFCCP – Hot Button Issues

21 Practical Tips to Prepare for an Audit

22 Preparations for Audit – Practical Tips Role of General Counsel’s Office Often not intimately involved prior to audit Recommendation Become more involved in day-to-day program Treat audit enforcement action and proactively manage response Initial decisions may include whether to ask for delay Review of past plan

23 Preparations for Audit – Practical Tips Technical Review of AAP and Related Policies Compliance with regulations Potential exclusions Temporary employees Student workers No definition of “employee”

24 Preparations for Audit – Practical Tips AAP Structure Multiple establishments? Employment Tests Use? Locally validated? Monitoring for Adverse Impact Quarterly – applicants, hires, promotions, and terminations Steps to address areas of adverse impact

25 Preparations for Audit – Practical Tips Self-identification – race and gender (currently) Different obligations for applicants and employees “Decline to state” – gender vs. race Approaches Visual identification if no self-identification?

26 Preparations for Audit – Practical Tips Record-keeping Two years – “personnel records” Tracking down “missing” records Interview notes How capture? What level of detail? Dispositions of candidates The importance of consistency

27 Preparations for Audit – Practical Tips Mock Audits Particularly useful if not audited in last five years Privilege issues Areas of focus – parallel OFCCP areas of interest Interview managers; examine data

28 Preparations for Audit – Practical Tips Compensation Analyses Pay equity studies – academic side Routine practice on many campuses; transparency Regressions – privilege issues again Difficulty identifying and quantifying factors that impact pay – often not in data form

29 Practical Steps: Each Phase of Audit

30 Practical Steps – Each Phase of Audit Receipt of “Pre-Scheduling” Letter Assess readiness – areas of strength and vulnerabilities AAP review Understand your numbers – utilization and adverse impact Compensation analysis – potential pay adjustments Assemble audit response team Interdisciplinary – HR/Affirmative Action/Compensation/Legal Designate leads Develop preliminary themes Educate your client

31 Practical Steps – Each Phase of Audit Receipt of Scheduling Letter Data required More than six months into AAP year? If so, analyze data for AAP year-to-date Deadline for response – 30 days (extensions) Pull compensation data – analyze, assess (and adjust?) Format of response – varying approaches Explain areas of apparent discrepancy – particularly on compensation Confidential/Proprietary Information – password protect Educate your client (again) and OFCCP

32 Practical Steps – Each Phase of Audit Desk Audit Phase Timeline – first contact can be within days or may not be for months Additional data and document requests Unreasonable deadlines – “within three days” Impact of sequestration – travel limits – more done at desk audit Accommodations, lists of employees who have taken leave and whether they returned Charges filed with agencies and any settlements – “employee complaints” Bate number all documents

33 Practical Steps – Each Phase of Audit Desk Audit Phase Develop Rapport with OFCCP Compliance Officer Legal v. HR/affirmative action as point of contact In-house counsel and outside counsel Professional, respectful tone – even if not returned Know when to push back and when to escalate Silence – what then? Low bar for moving from Desk Audit to On-Site Review

34 Practical Steps – Each Phase of Audit On-Site Phase OFCCP team Large numbers Many inexperienced Opening conference OFCCP will present Be proactive – stress themes; inform about campus Document reviews Track all documents provided – if originals Offer to provide as available

35 Practical Steps – Each Phase of Audit On Site Review Preparation – the big and the small Legal Media relations Logistics – where and when Parking? Coffee and cookies – how comfortable do you want them to be? Ask around – colleagues at other institutions may have direct experiences with same team members

36 Practical Steps – Each Phase of Audit On-Site Phase Logistics Offices away from other employees and away from HR Suggest places for lunch – not campus cafeteria Interviews – key areas and key decision-makers HR personnel – recruiting and compensation functions Management personnel Preparing staff and senior administrators Brief on OFCCP and its mission Ensure knowledge of AAP and compliance posture – themes Deposition-like preparation

37 Practical Steps – Each Phase of Audit On-Site Phase Preparing non-management employees No right to be present or have legal counsel present Explain OFCCP and mission Can inform of right to ask to have someone else present Interview statements prepared by OFCCP Often vague or incorrect To correct or not correct? To sign or not to sign? Copies Who has control over the order of interviews?

38 Practical Steps – Each Phase of Audit Audit Closure Compliance – formal and informal closures Conciliation Agreement Negotiation – some parts Reporting period – almost always – 6 months to two years Press release if monetary remedies Not negotiable Often misleading Can prompt private actions

39 Practical Steps – Each Phase of Audit Audit Closure Enforcement Proceedings – if unable or unwilling to resolve Solicitor’s office, not within OFCCP Administrative litigation Before ALJ Some discovery Appeal to Administrative Review Board of DOL Appeal ARB decision to federal courts Opportunities to settle

40 QUESTIONS

41 Always be Prepared: The OFCCP Audit and Enforcement Survival Guide Kris D. MeadeJody Shipper PartnerExecutive Director Crowell & Moring LLPOffice of Equity and Diversity Washington, DCUniversity of Southern California kmeade@crowell.comjshipper@usc.edu 202.624.2854213.740.5086


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