Welcome to HudsonMann’s OFCCP updates for Q3 2018.  The last few months have seen a flurry of activity from OFCCP and this activity really ramped up after a leadership change in late July when Craig Leen became the acting OFCCP Director.  We’ve had major audit updates, a host of policy directives and proposed changes to the Functional AAP program. As usual, we’ll start with audits.

In September OFCCP added 750 new establishments to their audit scheduling list.  This brings the total number of added audits to 1750 for FY 2018.  OFCCP continues to be very transparent about their selection process and kinds of businesses selected for the scheduling list.  Additionally, OFCCP has taken the unprecedented step of publishing the list of scheduled establishments both for fiscal year 2018 and 2017.  This provides contractors the opportunity to see if they are on the audit list and additional opportunity for audit preparation.  You can view the list on the FOIA reading room section of OFCCP’s website.

OFCCP released seven new policy directives in August and September alone.  Only 9 policy directives were released in the entire 8 years of the Obama administration. This helps illustrate that OFCCP’s current focus is on internal processes and not creating new regulations.  It also shows how active OFCCP is. We’ll summarize three directives in this video, specifically the directives regarding transparency, AAP verification, and compensation.  First up is Transparency in OFCCP Compliance Activities:

OFCCP is seeking to improve their operational consistency and efficiency.  This directive sets a 45-day target to complete most desk audits and promises greater transparency in data requests from the agency. The directive also formalizes OFCCP’s approach to audit scheduling and data collection.  Specifically, it outlines the minimum time frames from a receipt of a Corporate Scheduling Announcement Letter or (CSAL) until an audit submission is due.  Let’s break it down:  the directive states there will be at least a 45-day delay between the issuance of a CSAL and the issuance of a scheduling letter.  Upon receipt of a scheduling letter, contractors have 30 days to submit their AAPs and supplemental data.  That’s a total of at least 75 days from initial notification until the audit is due.  Additionally, OFCCP is offering a 30-day extension upon proffer of the basic AAP if the extension request is made prior to the due date of the audit submission.  That’s up to 105 days!  Now here’s the catch.  OFCCP is fed up with late AAP submissions.  A recent report from the government accountability office estimated that 85% of audits are submitted after their due date.  So if you don’t take advantage of OFCCP’s advance notification and extension opportunities, you will receive an immediate Show Cause notice if your AAP is submitted late.

Next, OFCCP’s AAP Verification Initiative: OFCCP is trying to drive the regulated community towards 100% compliance. This is a common theme running throughout many of their new directives, but perhaps most notable in the directive regarding an annual AAP verification initiative. The AAP verification initiative is intended to help identify companies that aren’t developing their annual affirmative action programs according to the regulations.  If companies are required to certify completion of their AAPs on an annual basis, OFCCP can more quickly target companies that are likely to be out of compliance and increase their chances that those companies are scheduled for a compliance review.  The exact form of this verification process is still in development, so stay tuned.

Finally, let’s talk compensation:  If the new compensation directive makes one thing extremely clear, it’s that OFCCP is not backing down from their focus on compensation discrimination. They are, however, being more transparent on their practice and procedures to compensation. The directive provides detailed insight into the statistical methods and practices that OFCCP uses to review contractor pay systems for equal pay.  And the bottom line is this:  if you don’t provide OFCCP guidance on how they should review your compensation data at the outset of an audit, you should assume they will group your employees by EEO-1 job categories or AAP job groups as a starting place.  In other words, you can’t afford to ignore these groupings.

That’s all for now.  Make sure you follow us on twitter or join our OFCCP updates newsletter for the latest news and trends.  If you want to learn more about affirmative action program compliance, visit hudsonmann.com/training for information on upcoming webinars, online courses, and in-person training options.

Thank you!