The Past and Future of OFCCP
The Past and Future of OFCCP
I’m writing this article on November 9, the day after the 2016 presidential election. I had planned to write a somewhat different article for The OFCCP Digest, but with the election of Donald Trump, the regulatory environment is almost certain to change in very dramatic ways in the coming years. Thus, I’m going to provide some thoughts on what has occurred in the affirmative action realm in the last few years, and what we may see beginning in 2017.

The Obama Years: A Time of Change at OFCCP

The last eight years have been a time of tremendous change for the U.S. Department of Labor’s Office of Federal Contract Compliance Programs (OFCCP). Since the start of the Obama administration, the priorities for OFCCP shifted dramatically and in somewhat unexpected directions. We have seen an unprecedented level of new and revised regulations at OFCCP since 2013, including regulations that first became effective in 2016. There have also been major changes in the way OFCCP conducts affirmative action compliance reviews. These changes have resulted in a significant decrease in the number of compliance reviews completed in the last two years, but a significant increase in the burden on organizations going through a compliance review.

One of the unexpected shifts in priorities at OFCCP involved protected veterans and individuals with disabilities. While OFCCP has been responsible for enforcing laws that provide protections for these groups since the 1970s, the agency generally showed little interest in these two groups until 2009. In 2009, the agency made a very conscious decision to shift much of its focus to these two groups. This new focus culminated in revised regulations regarding protected veterans and individuals with disabilities that became effective in March of 2014. Two years later, many organizations are still working towards full implementation of these revised regulations.

Another shift in priorities that was clearly announced by OFCCP, but has been little understood by federal contractors and subcontractors, involves good faith efforts. At the Industry Liaison Group national conference in July of 2011, OFCCP Director Patricia Shiu stated that “Affirmative action can no longer be measured by good faith efforts.” Compliance reviews by the agency have reflected this idea that the agency expects results when organizations are carrying out their affirmative action obligations. This shift is most evident in the agency’s revised regulations regarding protected veterans and individuals with disabilities, where the phrase “good faith efforts” does not appear anywhere.

A new priority for OFCCP has involved sexual orientation and gender identity. In 2015, new regulations became effective that prohibit discrimination by federal contractors and subcontractors based on sexual orientation and gender identity. OFCCP subsequently released a directive indicating that gender identity discrimination is a form of sex discrimination. The agency’s sex discrimination regulations that became effective in 2016 reiterated the idea that gender identity discrimination is a form of sex discrimination.

An area that has been important to OFCCP for some time, but that has received increased emphasis during the Obama administration, has been compensation discrimination. In 2013, OFCCP withdrew previous guidance that it had issued regarding compensation, and replaced this guidance with a directive making it clear that the agency had wide latitude in investigating any and all forms of compensation discrimination. Many OFCCP compliance reviews during the last eight years have included an in-depth look at compensation policies, practices, and decisions. In order to facilitate the process of investigating compensation discrimination, OFCCP changed the documents sent at the start of an affirmative action compliance review to include a request for individualized compensation data on all employees at the facility under review.

Changes Continued During 2016

After a number of years of major changes, there was some thought that OFCCP might be winding down during 2016. However, this proved to be inaccurate, as the agency aggressively pursued new and continuing initiatives, including the search for compensation discrimination. There were also two sets of regulations that became effective during 2016, both of which involved compensation.

In January of 2016, regulations regarding prohibitions on pay secrecy policies became effective. These regulations prohibit federal contractors and subcontractors from taking action against applicants or employees because of discussions about pay. The regulations also include a provision requiring that specific language regarding pay secrecy must be made available to applicants and employees and must be included in employee handbooks.

In August of 2016, OFCCP’s revisions to its sex discrimination regulations became effective. The agency’s sex discrimination regulations had undergone no significant revision since the 1970s and were desperately in need of updating. A number of the provisions in the revised sex discrimination regulations simply brought these regulations into conformity with long-standing law. Among provisions of this type were the following:

  • The revised regulations make it clear that sexual harassment is a prohibited form of sex discrimination.

  • The revised regulations prohibit federal contractors and subcontractors from discriminating against applicants or employees on the basis of pregnancy, childbirth, or related medical conditions.

  • The revised regulations prohibit federal contractors and subcontractors from discriminating against applicants or employees on the basis of sex-based stereotypes.
The revised sex discrimination regulations also formally incorporated a number of recent court cases and OFCCP policies.

  • The revised regulations incorporated the provisions of Young v. United Parcel Service, a Supreme Court decision regarding accommodation for conditions associated with pregnancy.

  • The revised regulations prohibit federal contractors and subcontractors from discriminating against applicants or employees on the basis of gender identity.

  • Perhaps most significantly, the revised regulations incorporated many of the provisions of OFCCP’s 2013 directive regarding compensation discrimination into a formal regulation. This means that the agency’s approach to compensation is now a matter of law rather than guidance for compliance officers.
Another action involving OFCCP occurred in September of 2016, when the Equal Employment Opportunity Commission (EEOC) announced that in 2018, it would begin collecting compensation information as part of the EEO-1 report. OFCCP had released proposed regulations regarding the annual collection of compensation data from federal contractors and subcontractors in August of 2014. However, the agency abandoned these regulations when EEOC decided that it would collect compensation data from organizations with 100 or more employees. EEOC has indicated that it will be sharing the compensation data it collects with OFCCP, and OFCCP has suggested that it may use this data as part of the process that selects organizations for compliance reviews.

What Will Happen to OFCCP?

The Obama administration has used OFCCP to forward a number of initiatives of great interest to the administration, including pay equity for women, protections for members of the LGBT communities, and increased access to employment for veterans and individuals with disabilities. With the election of Donald Trump, no one can say with any certainty what will happen to these initiatives. In fact, it is unclear what the nature and role of OFCCP will be during a Trump administration.

While there has already been some discussion that the affirmative action laws might be withdrawn and that OFCCP might be dismantled during a Trump administration, this seems unlikely. President Trump can rescind Executive Order 11246, which requires affirmative action for various classes including minorities and women, and thus significantly diminish the affirmative action obligations of federal contractors and subcontractors. However, the affirmative action laws regarding protected veterans and individuals with disabilities were passed by Congress and thus would require legislative action in order to repeal these laws. It seems unlikely that Congress will be looking to alienate either veterans or individuals with disabilities by repealing the protections for these two groups.
If President Trump holds to his positions that he intends to reduce regulations and cut government spending, OFCCP may be facing major budget cuts in the coming years.
A much more serious possibility is that funding for OFCCP may be significantly reduced in a Trump administration. Both houses of Congress have strongly expressed their dissatisfaction with the way that OFCCP has conducted itself recently, and both houses of Congress have considered major cuts to OFCCP’s funding during the last two fiscal years. If President Trump holds to his positions that he intends to reduce regulations and cut government spending, OFCCP may be facing major budget cuts in the coming years.

In regard to regulatory reform, it seems likely that a Trump administration will seek to repeal some of the regulations that various units within the Department of Labor such as OFCCP have implemented in the last few years. OFCCP’s new regulations regarding sexual orientation and gender identity, its regulations regarding pay secrecy, and its revised sex discrimination regulations all may be in jeopardy under a Trump administration.

One recent change that is almost certain to be met with resistance from a Trump administration is EEOC’s decision to collect compensation data as part of a revised EEO-1 report. Unlike OFCCP, EEOC is not an executive agency that reports directly to the President. Thus, the President is not in a position to make the kind of immediate changes to EEOC policy or practice the way the President can make such changes to OFCCP policy or practice. However, the President can easily impact the operations of EEOC through the budget process by working with Congress to deny the agency the funding necessary to implement new or changed programs.

What Should Federal Contractors and Subcontractors Do?

In articles I have written for The OFCCP Digest, I have often tried to provide advice on actions that federal contractors and subcontractors should take in regard to new regulations, policies, and initiatives at OFCCP. With Donald Trump’s pending arrival at the White House, it is much more difficult to provide any kind of concrete advice. A Hillary Clinton administration would almost surely have extended and expanded upon actions taken at OFCCP during the last eight years. A Trump administration will almost surely have the opposite effect, but it is unclear the exact direction this administration will take.

Here are some of the basic actions federal contractors and subcontractors may want to consider during this time of transition:

  • Continue to implement at least the basic provisions in the federal affirmative action regulations. It may be a number of months, and perhaps more than a year, before we see the Trump administration making significant changes at OFCCP. Until that time, OFCCP will continue to carry out its current mandates and initiatives. We have no idea how many compliance reviews OFCCP will conduct in the next twelve months. What we do know is that until the agency receives new instructions, compliance reviews will continue to be in-depth investigations of an organization’s ability to show results from their implementation of the affirmative action regulations.

  • Determine how recent regulatory initiatives will be implemented. Some of the recent regulatory changes at OFCCP, and the recent revision to the EEO-1 report, may never be implemented by these agencies. However, organizations should have a “game plan” in place to determine how they would handle these changes, just in case the Trump administration turns its attention to other matters besides OFCCP regulations and EEOC initiatives.

  • Pay careful attention to what comes out of the White House. It always makes sense to read and review both the proclamations issued by a presidential administration and the formal actions taken by the administration. A statement by President Trump such as “All recent regulations will be put on hold” will have no effect on recent OFCCP or EEOC initiatives until there is formal action in that regard. Conversely, an executive order by President Trump that withdraws one of President Obama’s executive orders, such as the executive order on sexual orientation and gender identity, would have a profound effect on OFCCP. Press releases and public announcements by an administration can give us a sense of where the administration may be headed. However, it takes formal action by an administration before requirements on individuals or organizations may be implemented or removed.
Many of us had hoped that 2017 might be a relatively quiet year on the regulatory front. Instead, it will be another year of uncertainty and potentially another year of profound change.

Please note: Nothing in this article is intended as legal advice or as a substitute for any professional advice about your organization's particular circumstances. All original materials copyright © HR Analytical Services Inc. 2016