OFCCP Transparency and Federal Contractor Compliance Readiness

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For several years now, I have been conducting an ongoing study of OFCCP statistics and the impact on the contractor community. The most recent results are based upon the review and analyses of OFCCP closed compliance activity between FY 2014 through FY 2018 (as reported as of 7/21/2018) and do not address the compliance readiness of the entire federal contractor community who may have an open OFCCP compliance activity (evaluation or complaint investigation) or are not under review by the OFCCP. The source of data relied upon for the study include the raw data from the DOL Enforcement Database and OFCCP by the Numbers.
 

OFCCP Transparency

In 2010, the U.S. Department of Labor released the DOL Enforcement Database and subsequent has released a number of areas to the public that in the past, the only way such information was available was for such parties to submit a written request through the Freedom of Information Act (FOIA). Today, much of this information is available online to the public. Most recently OFCCP released the Corporate Scheduling Announcement Letter (CSAL) Lists and Scheduling List available on OFCCP's website unless such information falls within one of the nine exemptions and three exclusions contained in the statute.
 
  • DOL's Enforcement Database is where enforcement statistics from several DOL agencies can be viewed. The website is better accessed with Chrome rather than Internet Explorer. This site aims to make the enforcement data, collected by DOL agencies in the exercise of their mission, accessible and searchable, using common search criteria, by the public. At the time of this writing, and has been discovered over the past several years, this site may go through periods where it is not accessible.

  • OFCCP Class Member Locator identifies contractors by name, city, and state, the job titles included as part of the settlement, the affected group(s) at issue, the deadline for contacting the OFCCP, and allows website visitors to read a redacted copy of the Conciliation Agreement including the settlement amount as well as the President/CEO or other designated individual that entered into the agreement on behalf of the company with the OFCCP.

  • FOIA Reading Room is where OFCCP makes available to the public such things as Conciliation Agreements that involve some form of financial liability and/or Consent Decrees and most recently OFCCP CSAL and Scheduling Lists. Note, there may be such settlements that may not yet be available in the FOIA Reading Room.

  • OFCCP by the Numbers is where OFCCP statistics regarding monetary relief, the number of employees receiving monetary relief, job opportunities, salary adjustments and the scope of OFCCP compliance activities can be viewed.
 

Findings

OFCCP statistics tell us contractors are not prepared and in fact there is an increase in the percentage of contractors being found in non-compliance. What we found is that in approximately 17.3% of all closed compliance activities (compliance evaluations and complaint investigations), contractors are found in non-compliance with one or more obligations. The percentage of Supply and Service contractors being found in non-compliance is at an all-time high based on statistics through the FY 3rd quarter at 30% as compared to 11.4% being found in non-compliance in FY 2014. The construction industry by far has the highest rate of overall non-compliance ranging from 51.9% in FY 2018 (as reported as of 7/21/2018) to 76.4% in FY 2014.

Discrimination findings are found in less than 3% of all closed compliance evaluations and complaint investigations. We noted that discrimination findings are on the rise since FY 2015, with pay discrimination being found in 21.7% (FY 2015) – 40.4% (FY 2017) of all discrimination findings. Other forms of discrimination including hiring, promotion, termination, accommodation and harassment were found in 59.6% (FY 2017) – 78.2% (FY 2015) of all discrimination findings.

Monetary settlements were at the highest in FY 2017 at $23,910,884, with the lowest number of class members at 11,653. As part of our study, we have reached out to OFCCP for an explanation on how the monetary settlement in FY 2017, were calculated. Over the years, OFCCP has periodically included annualized salary for not only alleged victims of discrimination but also have included annualized salary in situations where the contractor was cited with a lack of good faith effort or where there were placements where the contractor was previously found to have inadequate Action Oriented Programs to recruit in areas where there was an obligation to do so. We continue to wait for a response from the OFCCP.

The highest percentage of groups affected by OFCCP's alleged findings of discrimination include, in the following order: Blacks – 27.9% (FY 2017) and 63.6% (FY 2015); Females – 17.7% (FY 2016) and 33.4% (FY 2018); Other (Males and/or Whites) – 4.2% (FY 2015) and 30.7% (FY 2016); Asians – 0.8% (FY 2016) and 22.9% (FY 2017); Hispanics less than 1% (FY 2015) and 6.0% (FY 2014); Native American Indians, Protected Veterans and Individuals with Disabilities less than 1% in any given fiscal year. For full details see Figure 8.
 
  • Figure 1: Results of OFCCP overall closed compliance activities (compliance evaluations and complaint investigations) between FY 2014 and FY 2018, as reported as of July 21, 2018.
The period of this review shows OFCCP concluded 9,872 compliance evaluations and 598 complaint investigations. A more detailed analysis of this FY 2014 through FY 2018 (as reported as of July 21, 2018), Long-Term Trends (FY 2018 as compared to FY 2014), and Short-Term Trends (FY 2018 as compared to FY 2017) show the percentage of Conciliation Agreements and Financial Agreements are on the rise.
 
  • Figure 2: OFCCP Compliance Evaluation Outcome Trends between FY 2014 and FY 2018, as reported as of July 21, 2018.
A review of the case closures during the period of this study shows the SWARM Region had the highest percentage of Notice of Compliance (88%); the Mid-Atlantic Region had the highest percentage of Conciliation Agreements (20%); and the SWARM Region had the highest percentage of Financial Agreements (3%). All regions had Consent Decrees except the Mid-Atlantic Region. Consent Decrees were less than one percent in any one region.
 
  • Figure 3: Regional breakdown of types of case closures by region
 

Industries

Do all industries face the same challenges? Absolutely not! As we take a deeper dive by industry, we must recognize that the construction industry is by far the industry most challenged by OFCCP requirements, due in part because of the requirements and persons usually responsible for the affirmative action steps of that industry are typically outside of HR. The study shows the NAICS1 Industry Codes affected in Figure 3. Of the 9,872 closed compliance evaluations, there were 139 or 1.4% that either had no industry classification or an invalid NAICS code assigned that are not included in Figure 4.
 
  • Figure 4: Industries Most Affected by OFCCP
 

Violations most challenging for Federal contractors/subcontractors

The study shows Federal contractors and subcontractors continue to have some of the same technical challenges as found in earlier years: Recordkeeping, Recruitment, Written AAP, Past Performance, Compliance Other (formerly known as Denial of Access, changed in 2013), as well as allegations of discrimination in compensation (pay), hiring, placement, promotion, termination, and harassment.
 
  • Figure 5: Percentage of violation type between FY 2014 and FY 2018, as reported as of July 21, 2018.
 

What technical violations affect what industries?

Not all industries are found to have the same level of challenges. The number 1 violation seen for most industries is Recordkeeping, except for the Construction, Real Estate and Rental and Leasing, and Educational Services - Other Technical & Trade Schools, where Recruitment is the number 1 violation.
 
  • Figure 6: Percentage of technical violations by industry
 

What discrimination violations affect what industries?

Every industry listed in Figure 7, has been cited with one or more forms of discrimination, except the following industries who have had no findings of discrimination: 1) Mining, Quarrying, Oil, and Gas Extraction; 2) Educational Services – Other Technical & Trade Schools; and 3) Arts, Entertainment and Recreation.
 
  • Figure 7: Percentage of discrimination violations by industry



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  • Figure 8: Class Members affected by OFCCP's discrimination findings
 

Summary

OFCCP statistics tell us contractors are not prepared and in fact there is an increase in the percentage of contractors being found in non-compliance in technical violations and in discrimination findings. Based upon a review of OFCCP Statistics between FY 2014 and FY 2018 (as reported as of 7/21/2018), the data tells us that in approximately 18.1% of the closed compliance evaluations, organizations were not prepared. Recordkeeping and Recruitment continue to be among the top two violations most cited.

OFCCP has defined non-compliance as a contractor's failure to adhere to the conditions set out in the contract's equal opportunity clauses and/or the regulations implementing those clauses (41 CFR Chapter 60) and/or failure to correct violations. When a contractor is found in violation of one or more of OFCCP regulations, the contractor must enter into a Conciliation Agreement to resolve technical violations and where discrimination is alleged, in instances where the contractor is unable to refute OFCCP's findings, the organization will be required to enter into a Conciliation Agreement with a financial component, otherwise known as a Financial Agreement, to resolve the violations. In cases where the OFCCP and the contractor are unable to resolve the violations (technical and/or discrimination) OFCCP will seek enforcement that may result in a Consent Decree. The ultimate sanction that can be imposed is debarment. When an organization is debarred, the organization is prohibited from doing business with anyone who has a Federal contract or subcontract.

The Government Accounting Office (GAO) Report of September 2016, states that in 2015 almost 85% of the federal contractors selected for a Supply and Service Compliance Evaluation were not prepared and failed to submit their affirmative action programs within the 30 days required by the regulations. Since January 2018, OFCCP has issued a number of Directives in response to the recommendations made in the GAO report with more guidance forthcoming from the OFCCP in the areas of: Focused Reviews, Contractor Recognition Program, Affirmative Action Program Verification Initiative, etc. This is a reminder that OFCCP regulations call for contractors to submit a Program Summary (41 CFR §60-2.31), that has never been implemented.
 

Commitments made when entering into a Federal contract or subcontract

When entering into a Federal contract or subcontract, such contractors agree to:
 
  • Not discriminate and take affirmative action
  • Develop written affirmative action programs within 120 days once the contractor meets the regulatory requirements2
  • Submit Reports, e.g., EEO-1 Reports, VETS 4212 Reports, as applicable
  • Maintain records
  • Use EEO tagline in all solicitations for employees
  • Allow OFCCP Access
  • Comply with the regulatory requirements under Executive Order 11246, Section 503 and VEVRAA
Further, the Company agreed to the EEO Clause in Government Contracts:
 
  • To "provide for the implementation of equal employment opportunity and the affirmative action program by assigning responsibility and accountability to an official of the organization. Depending upon the size of the contractor, this may be the official's sole responsibility. He or she must have the authority, resources, support of and access to top management to ensure the effective implementation of the affirmative action program." (41 CFR § 60-2.17(a)).
  • That "an official of the contractor shall be assigned responsibility for implementation of the contractor's affirmative action activities under this part. His or her identity should appear on all internal and external communications regarding the company's affirmative action program. This official shall be given necessary senior management support and staff to manage the implementation of this program." (41 CFR § 60-300.44(i) and 41 CFR § 60-741.44(i)).
Since Recordkeeping and Outreach/Recruitment continue to be among the top two violations, following are things that could trigger such violations.
 

What could trigger one or more recordkeeping violations? Incomplete and/or non-existent records, as it relates to, but not limited to:

  • Current and prior year affirmative action programs
  • Recruitment/Outreach efforts and results
  • Job advertisements and job listings with the state
  • Applications, resumes, and all expressions of interest
  • Internal resume databases
  • Interview notes
  • Tests and tests results
  • Adverse impact evaluations
  • Validation studies, as appropriate
  • Hires, promotions, terminations, etc.
  • Documentation supporting rates of pay or other terms of compensation
  • Race/ethnicity, gender, disability and veteran status
  • Personnel or employment records
  • All records associated with reasonable accommodations
  • Evaluation on the effectiveness of outreach/recruitment efforts
  • Actions taken to correct problem areas identified, etc.
Where adequate records are not maintained, enforcement agencies such as OFCCP can infer wrongdoing, which can include allegations of discrimination.
 

What could trigger an outreach/recruitment violation? Incomplete and/or non-existent records, as it relates to, but not limited to:

  • Failure to list job with the local employment service delivery system
  • Lack of adequate outreach efforts or documentation to support efforts directed to organizations capable of referring the demographic group and skills being sought
  • Action Oriented Programs inadequate or were not implemented to achieve placement goals for females, minorities, particular-minority groups; utilization goals for individuals with disabilities and/or hiring benchmarks for protected veterans
  • Lack of progress despite having opportunities
Affirmative action programs (AAPs) are more than a paperwork exercise! Organizations should not wait until they receive a CSAL or scheduling letter from the OFCCP to review and implement their AAPs. The AAP and associated statistical analysis tell a lot about an organization e.g., demographics of the workforce, where demographic groups are and where they are not, the demographics of the organization's historical employment decisions to include recruiting efforts, who is hired and not hired, promotions, terminations, compensation practices, etc. The purpose for doing the AAPs is not just for OFCCP, but to provide the organization an opportunity to effectively manage their EEO and affirmative action obligations and take steps to correct areas of concern, e.g., underutilization, compensation disparities, selection decision disparities. Having a disparity of any type does not automatically mean discrimination has occurred but warrants further investigation to determine the cause and the effect.

As the saying goes, what is not measured, cannot be managed!

1. The North American Industry Classification System or NAICS is used by business and government to classify business to classify business establishments according to type of economic activity (process of production) in Canada, Mexico, and the United States of America.
2. Executive Order 11246, as amended and Section 503 of the Rehabilitation Act of 1973, as amended - $50,000 contract and 50 or more employees; Vietnam Era Veterans Readjustment Assistance Act of 1974, as amended (VEVRAA) - $150,000 contract and 50 employees.