Beware of What You Sign – The Dangers of Conciliation Agreements
September 18, 2013
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You have just finished a difficult OFCCP compliance review that appeared to be interminable. Numerous scenarios could have occurred during the way, but the end result is OFCCP issuing a notice of violations (NOV) and a conciliation agreement (CA). As frustrating as it is, many contractors can expect to receive a CA, especially if they failed to post their job openings with the state employment service or failed to conduct outreach for veterans and individuals with disabilities. The issuance of CAs has risen from 18.1% in 2010 to 26.3% in 2011, and 32.8% in 2012. As OFCCP is closing out its current fiscal year, it may be motivated to increase its closure numbers by the end of September by pressuring contractors to sign last minute CAs.

You may be somewhat relieved that the review is almost over. You and your senior management team may be prone to sign the first document received from OFCCP to speed up the closure of the review, but you should be prudent in your actions. STOP! Read the NOV and CA line-by-line to ensure that you:
  • Agree with the violations,
  • Comprehend what is required of you,
  • Understand what you have to provide in your reporting, and
  • Vet all of the organizations listed.
The NOV and CA is not set in stone and you can negotiate the terms. Most OFCCP Assistant District Directors/District Directors (ADD/DD) will make changes in order to speed up the closure on their end, assuming that the change request is reasonable.

We have seen several iterations of the cover letter that is sent by the DD along with the NOV/CA and even though many of them clearly communicate that the contractor should review the attached documents, all have the five day return statement. To the novice, this may appear that if the CA is not returned within five days, the review will not conclude. Be forewarned, this does not mean that the CA has to be signed and returned within five days. It means that it should be signed and returned within five days only if you agree with the contents. There is time for review and room for negotiation of changes.

The following are a few variations of what we have seen in the cover letter. The first one appears to be clear, but the second one puts pressure on the contractor to sign within five days.

"It is recommended that you review the enclosed Conciliation Agreement. If you are in agreement with the terms of the Conciliation Agreement, please return the signed and dated original copy to our office within five (5) days from receipt of this correspondence."

"We are enclosing, for your study and signature, a Conciliation Agreement which identifies the problem areas encountered during the compliance review process and also sets forth the remedies to correct this matter. You can conclude this matter by returning an executed copy with your signature to this office within five (5) days from the receipt of this Conciliation Agreement."


The above statements have come a long way from one that we found from a 1996 CA which stated "It is our sincere desire to avoid enforcement proceedings. Therefore, it is suggested that you review, sign and return the original copy of the attached Conciliation Agreement by July 31, 1996."

Breakdown of the CA

Part I - General Provisions. You may not like them but they are what they are – standard boilerplate language.

Part II - Specific Provisions. Study these with a fine tooth comb as they are specific to your review. In most cases, these will not be a surprise; however, the way in which the remedy is written may not be clear.

Part III – Reporting. This is the crux of the CA and the section that you need to live with for the next one to two years, so make sure that you understand everything that you are agreeing to provide to the OFCCP in your reporting.

It is not unusual for us to get a call from a contractor asking for assistance in responding to their CA even though we did not prepare their AAPs. Since we were not involved upfront, we have to deal with the NOV and CA as written. We have seen so many CAs that include language that is unclear or very restrictive that it is hard to know how to respond.

Do you recognize any of the following problematic language? The verbiage has been pulled from actual executed CAs.
  1. "Documentation to show that XYZ Company extended an invitation for applicants to self-identify as an individual with a disability, disabled veteran, recently separated veteran, or other veteran." We all know that we should not be asking applicants about disability! At least not yet!

  2. "Documentation to show that XYZ Company notified its subcontractors (including vendors) with 50 or more employees and a current contract or purchase order totaling $50,000 or more of their obligation to develop an Affirmative Action Program." Contractors are required to inform subcontractors of their obligations but they are not required to first determine if the subcontractor meets the requirements of the regulations.

  3. "The first report shall be due thirteen (13) months after the effective date of this Agreement and shall cover the twelve (12) month period of time beginning the effective date of this Agreement and shall be mailed within thirty (30) days after the close of the first twelve (12) month period." Huh! Does that mean the report shall cover 12 months after the contractor signed it or after receipt of the final copy with all signatures? Those dates can vary greatly. Get specific dates.

  4. "A roster of all veterans hired during the reporting period, name of applicant, date of application, job title applied for, job requisition applied for (or equivalent document), address of applicant, phone number of applicant, date of hire, recruiting source that referred the individual (if applicable), and the start date of each hired applicant." Is this hire activity or applicant flow activity?

  5. "XYZ Company will utilize at least the following organizations to assist in obtaining external applicants for employment opportunities. Copies of correspondence submitted to each organization identified in Part II of this Conciliation Agreement." This may be fine if these organizations actually provide this service.
Take control of the audit and DO NOT SIGN the CA until you have fully vetted the agreement. The following are actual stories showing what happened after signing the CA. In the last instance, the contractor did not take the CA seriously.

Horror Story #1 for the novice contractor

We had a company contact us to assist in their reporting and the company did not have 50 or more employees. They misunderstood OFCCP's request and provided a list of all employees who had ever been on their payroll regardless of whether they were currently working. Since the contractor signed the CA, we had to provide the OFCCP with a report (and proof) that the company had less than 50 employees during each reporting period. OFCCP never acknowledged the notices and never supplied the contractor with a closure notice. Also, the company never received a signed fully executed copy of the CA but they still had to comply with the reporting requirement.

Horror Story #2 with a happy ending

The contractor contacted us for help after they received the scheduling letter and had already supplied the office with information. The Southwest Rocky Mountain OFCCP office initiated the compliance review but the company only had a handful of employees working in the region. The contractor initially contacted us to help them develop an AAP for that area. After discussions with the SW Rocky Mountain office, they would not administratively close out the review until we provided them with proof that the contractor had included the employees in this area in their corporate AAP, which was located in the Mid-Atlantic region. The CO reviewed and commented on the plan but did administratively close out the review.

Horror Story #3 with a large payout

In 2012, Houston-based government contractor, JacintoPort agreed to pay $219,000 in back wages and interest to 69 African-American and Caucasian applicants, plus make 17 job offers – more than five years after its compliance review was resolved.

In 2006, JacintoPort signed a conciliation agreement that required it to provide the OFCCP with periodic reports of its hiring activity. In reviewing those progress reports, OFCCP investigators found that the company was giving preferential treatment to Latino applicants and systematically discriminating against African-Americans and Caucasians seeking longshoreman jobs. These reports resulted in the monetary settlement to rejected applicants, along with obligations to revamp the company's hiring practices.

The moral of this story?

Signing an OFCCP conciliation agreement may end a compliance review but it does not end a contractor's obligation to carefully monitor its hiring practices—and the data provided to the OFCCP.