The U.S. Department of Labor’s Office of Federal Contract Compliance Programs (OFCCP) has been issuing policies suggesting more aggressive tactics as well as more pervasive monitoring of federal contractors and subcontractors. Here are four things that federal contractors should know.
1. The affirmative action verification deadline is next week – June 30, 2022
Supply and service contractors and subcontractors for the federal government who meet the designated jurisdictional thresholds for creating Affirmative Action Plans (AAP) must certify that they have developed and maintained their plan by June 30, 2022. Federal contractors can register via the OFCCP’s online Contractor Portal. New contractors have 120 days to develop their AAPs and must register and certify compliance within 90 days of developing their AAP. After the initial certification year, the OFCCP will set a date by which existing contractors must renew their annual certification. If you have not yet certified your compliance or prepared an AAP, you should do so now.
2. OFCCP released the names of federal contractors on its audit list
OFCCP published a new Corporate Scheduling Announcement List for Supply & Service Contractors for fiscal year 2022. The new list includes 400 federal contractors and, for the first time in several years, subcontractors. In another retreat from prior practice, the new list includes numerous employers with 49 or fewer employees. If your company is identified, or you received a Scheduling Letter, you should contact legal counsel to begin preparing to appropriately respond. Importantly, as discussed next, the extensions that were routinely granted for responses have now been rescinded.
3. OFCCP signaled that it will impose tighter timelines and may take a more aggressive stance during audits
On March 31, 2022, OFCCP issued Directive 2022-02, Effective Compliance Evaluations and Enforcement. The directive repeals four Trump-era directives that gave contractors more notice of OFCCP investigations and more transparency into how the investigations were conducted and the results derived. The new directive imposes a more stringent set of rules. Here are some key changes associated with Directive 2022-02:
- The 45-day delay between OFCCP publishing its scheduling list for contractors and auditing those contractors is rescinded. As a result, the entities identified on the scheduling list mentioned above may be subject to audits immediately.
- The automatic 30-day extension for contractors to produce whatever data is initially requested by the agency is repealed, except in “extraordinary circumstances,” which is narrowly defined.
- It is up to the discretion of the investigator whether to share source data so that contractors can assess OFCCP’s statistical findings and instruction.
- OFCCP may request personal contact information for former employees, including Social Security Numbers. In addition, it asserts that the employer has no right to be present for interviews of former employees.
Contractors should be prepared for tougher timelines and more scrutiny from the OFCCP during audits, which makes preparation all the more critical.
4. OFCCP may seek a contractor’s privileged pay audits
Contractors have been required to conduct reviews of their compensation practices for many years. Indeed, affirmative action regulations require that federal contractors evaluate their compensation systems to determine whether there are any gender-, race-, or ethnicity-based disparities. During compliance evaluations, OFCCP may seek the results of internal pay analysis. If the analysis was subject to the attorney-client privilege, contractors have typically objected on those grounds. In Directive 2022-01, OFCCP explains that although federal contractors retain counsel to assist with the preparation of the pay audit, federal contractors must make available to OFCCP documentation of their compliance. Consequently, contractors cannot withhold pay audits by invoking attorney-client privilege or work product protections. Contractors should confer with counsel on a strategy for responding to requests for privileged analyses and for strategy when performing such analyses in the future.
Buchanan’s coordinated team of labor & employment attorneys can help advise federal contractors on how to prepare for increased scrutiny from OFCCP following these changes.