An Insider's View of Negotiation with OFCCP

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Most OFCCP allegations are resolved through negotiation. Negotiations at the agency level usually end in a signed conciliation agreement. The purpose of this article is to walk you through the negotiation process in case you find yourself considering this option for resolving matters with OFCCP.



Why conciliate?

  • You agree with OFCCP that you are in violation of the law. [Rare to get such a concession. Some technical violations are conceded, but even in the case of clear technical violations, some companies seek non-admissions clauses (statements indicating that the company denies committing any violations) in their agreements. OFCCP does not favor non-admissions clauses in technical violations.]

  • You calculate that the cost of conciliation will be significantly lower than the cost of litigation even if you prevail. Even winning your case with OFCCP can be expensive as can prolonged compliance evaluations.

  • You would rather spend your time and energy correcting the processes that led to the allegations than fighting with OFCCP.

  • You are aware that you have other as yet unidentified compliance issues and you want to minimize the length of time OFCCP spends looking you over.

  • Your case has been open for ages, witnesses are no longer available, victims may be hard to find and you just want to get it closed.


Why you may choose not to conciliate?

  • You disagree on principle with the allegation and cannot come to acceptable terms in conciliation.

  • You believe conciliation may set an expensive or expansive precedent that you cannot live with now or in the future.

  • You believe you will either win in litigation or litigation will have virtually the same or less cost than conciliating.

  • You think you might get a better deal from the Office of the Solicitor as the case moves toward litigation or you think that the standard deviations are so low that the Solicitor will not likely go forward with litigation.



What happens if you choose to conciliate?

  • The conciliation process may vary a bit from Region to Region. Some Regions may allow the compliance officer to initiate conciliation discussions. Other Regions will only allow managers, Assistant District Directors or District Directors, to initiate conciliation discussions. Once you receive your Notice of Violations, you are invited to notify the agency, within 5 days usually, whether you are interested in resolving the violations through conciliation.

  • Often OFCCP will hold a meeting to walk you through the negotiation process. In this meeting, OFCCP will explain the general make-whole principles that drive the negotiation process, and they will explain the structure of the conciliation agreement. In general, the first part of the conciliation agreement, called the general provisions, is not open for negotiation with the exception of the inclusion or of a non-admissions clause. The OFCCP Compliance Manual provides language for use if a non-admission's clause is negotiated into the agreement. Do not be surprised if there is not much flexibility in the wording of the non-admissions clause. It usually hews pretty close to the recommended language.

  • The second part of the conciliation agreement, called the specific provisions, provides the first real opportunity to negotiate terms. The third part of the agreement sets out the reporting provisions. These can be negotiated to some degree, but generally do not become the subject of much debate since this section generally pertains to the dates when various reports are due and the required contents of those reports.

  • Usually, the agency will provide a first draft of a conciliation agreement for the contractor to consider. It is possible that the contractor may be allowed to provide a first draft but most contractors would prefer to see what the agency is looking for before responding with a proposed conciliation agreement. If you provide a draft conciliation agreement and it offers more than the agency would have asked for, the agency may not be inclined to inform you of this. It may simply use your offer as the starting point and go upwards. It will definitely let you know if your offer is inadequate.

  • The draft conciliation agreement provided by the agency may or may not include the dollar remedy amount. If the agency is waiting for additional compensation information in order to calculate the remedy or if it has not completed its calculation, it may provide the non-monetary terms so that the negotiations can get underway. Most conciliation agreement language simply tracks the regulatory language and requires you to agree to comply with regulations. These are things you are obligated to do anyway. The critical part of the agreement is the statement of the discrimination violation in the specific provisions and the remedies for correcting the discrimination violation.



What areas are most negotiable?

  • Mitigation: Victims of employment discrimination have a duty to make a reasonable effort to secure comparable employment. The money that could have been earned had the victim made this effort is referred to by the agency as "mitigation." OFCCP used to routinely calculate a mitigation amount and deduct it in calculating its initial offer. Under the current administration, the Regions were instructed not to subtract a mitigation amount from their initial offers. This is because mitigation is an affirmative defense that the Federal Contractor has the obligation to plead and prove. OFCCP will always agree to mitigation where it is legally required to do so, but the Federal Contractor will have to calculate the mitigation amount and provide an acceptable rationale for the figure offered. OFCCP will not include unemployment benefits and the like as part of the mitigation amount. If you were willing to find exactly what each victim earned after not being hired by your company, the agency would have to use these exact amounts. However, given the number of applicants in the usual pattern and practice hiring case, this is too complicated for most contractors to consider and the risk of stirring up more potential problems outweighs the perceived benefits in virtually all cases. Since the remedy is basically an approximation of the loss of back pay for the class, most contractors will devise a mitigation based on what they calculate the class on average would have been able to earn if they made a reasonable effort. The key thing to remember here is that the first offer made by the agency does not subtract anything for mitigation and you can get the agency to make this subtraction in virtually every negotiation. The agency will tend to counter your mitigation offer with a figure based on the minimum wage. This may or may not be reasonable depending on the caliber of jobs that are involved in the violation. Minimum wage may be a reasonable proxy if the jobs at issue were laborer types of jobs but perhaps not if the jobs were high paid professional jobs. If some of the affected class were eventually hired by your company, you have some information on their subsequent earnings and this should factor into the mitigation analysis.

  • Depending on the Region, you may be able to negotiate the figures that form the basis of the violations. These include how many applicants or candidates there were, the calculations of statistical significance and the like. As Regional Director, I did not consider a case ready for conciliation at least at the Regional level unless these underlying figures had already been worked out with the District Office. It is important that you know who is on OFCCP's affected class list, who is on their applicant list, and who they screened out and why. If at any point in the negotiation you become aware of new information concerning the underlying figures, the agency is obligated to consider this new information whether it wants to or not. Violations can only be found where they actually exist. If, for example, you find a box of missing applications for a position which increases the size of the applicant pool and alters the calculations in a way that eliminates the statistically significant disparity, OFCCP will have to consider this new evidence. If it is genuine and not offset by any other factor, OFCCP will have to reconsider the violation. If such a situation occurs, the cases may be back down to the District Office to resolve the data issues if it had elevated to the Regional Office. The result may be either no violation or a different calculation of the violation if the new evidence did not completely eliminate the disparities.

  • You may be able to negotiate the description of the violation. This may include describing the violations as OFCCP's allegations, or using "affected class" instead of "victims." The headings of the conciliation agreement may be less subject to negotiation than the body of those sections. I would routinely avoid changing the heading "violation" because the conciliation agreement is intended to resolve the notice of violations, not the notice of alleged violations, but would allow the descriptor "alleged" in the body of the paragraph. Different Regional Directors may have different comfort levels with various practices. You may want to find conciliation agreements they previously signed to identify the kinds of language they have agreed to in the past.

  • The calculation of back pay is almost always open for negotiation. In fact, it is one of the chief subjects of the conciliation. OFCCP does not tend to open negotiations with its best and final offer, but then, neither do most companies. My philosophy was to try to avoid negotiating how I got to the figure and to concentrate on arriving at a figure that both sides could live with even if they had to justify it to their organizations using different rationales. The methodology is not embodied in the conciliation agreement, only the amount. That said, when making a counteroffer, remember that OFCCP has to be able to justify the offer as being consistent with the principle of "make whole relief" which is intended to put the victim in the position they would have enjoyed in the absence of discrimination. This may make adjustments to the mitigation figure more acceptable than reductions to the back pay figure from the perspective of the agency. In my experience, the Office of the Solicitor was more inclined to negotiate methodology for arriving at the monetary figure. Avoiding these kinds of arguments about methodology worked better for me at the agency level. While I was not too into negotiating methodology, I believe the Federal Contractor has the right to know how the agency arrives at its figures. In negotiations, the Region would not provide its spreadsheets because other sensitive information was on them, but it would provide the figures used to reach the proposed remedy and explain how those figures were used to calculate the remedy. For example, we would explain how we arrived at what a representative affected class member would have earned in the absence of discrimination. The methodology would be explained but not debated. The agency counter offers were generated by changing some of its underlying assumptions and recalculating. Bottom-line: you will be able to get concessions on the initial back pay calculation.

  • Depending on what figures the agency starts with, you may be able to get concessions on the calculation of how long it would have taken the average affected class member to secure comparable employment. This time frame is a period for which no mitigation will be deducted since it is likely that even a reasonably diligent victim would have to restart his or her search for work after you turned them down. You will not likely get any traction by trying to include the job search time that was used by the victim before applying for your job. Contractors tried this a couple of times but the duty to mitigate does not arise until after the discrimination occurs. The negotiation of the time it takes to find comparable employment usually centers around what figures are appropriate to use in calculating this time period. Make sure you understand how the agency arrives at its calculations and see if the assumptions made are the most likely scenario. It is in this that you may find room for negotiation.



What areas are least negotiable?

  • The agency will not negotiate press. Agreements about press coverage or content would be worthless anyway since the agency does not control the press. Such agreements would be bad public policy if they did work.

  • The agency will usually not negotiate the general provisions except the non-admission clauses as noted above.

  • The agency will not negotiate release agreements that are broader than the specific laws covered by the OFCCP and relevant to the violations remedied by the conciliation agreement. Release agreements are agreements that affected class members or victims of discrimination are required to sign in order to share in the remedy. These agreements release the Federal Contractor from any other relief for these same violations under these same laws. Most release agreements are of no practical value since there is no private cause of action under the laws covered by the release but most companies want them anyway.



Negotiation Trends

  • More involvement from the National Office in negotiations. Regions are increasingly required to get approval from the National Office on aspects of negotiations that previously were completely at the discretion of Regional Directors. This has included having to contact the National Office several times during the negotiation process especially in enterprise-wide negotiations.

  • Increased emphasis on uniformity of language which may impact the degree of flexibility the Regions have in negotiating terms of the agreement.

  • Increased involvement of the Office of the Solicitor in negotiations at the agency level.

  • Increased use of outside consultants in the formulation of remedies.

  • Increased involvement of the National Office in the formulation of remedy calculations and policy.

  • Increased involvement of National Office experts in testing and compensation negotiations.

  • A somewhat more adversarial stance seems to be emerging in negotiations.


Conciliation will continue to be the most practical approach to resolving OFCCP Notices of Violation. Understanding the process and the parties involved will go a long way in helping you to secure an outcome that both you and the agency can live with. Before going into negotiations, do your homework, know who will be the deciding official, thoroughly review the allegations, especially the math and the logic, review your own records to see if any new relevant information has become available and think about what the agency will have to be able to justify in order to accept your proposal. Keep these things in mind and you will survive the negotiation process.