Category Archives: OFCCP

OFCCP Publishes Final Rule Prohibiting Numerous Forms of Sex Bias

The Office of Federal Contract Compliance Programs (“OFCCP”) has issued revisions to the long-standing sex discrimination rules for federal contractors and published the Final Rule in the Federal Register on June 15.  The Final Rule goes into effect on August 15, 2016.

The Final Rule addresses compensation discrimination, pregnancy accommodations, discrimination based on gender identity, and sex stereotypes.

Compensation Discrimination: The Final Rule prohibits discriminatory wages, but specifies that OFCCP will use a case-by-case approach in evaluating the pay practices during an audit.  OFCCP opted not to adopt a prior iteration that would have required contractors to pay equal wages to similarly-situated employees, but instead is requiring fair pay for comparable work.  Therefore, compensation differences stemming from neutral factors, such as tenure, are likely permitted.

Pregnancy Accommodations: The Final Rule is consistent with the 1978 Pregnancy Discrimination Act, which prohibits sex bias on the basis of pregnancy, childbirth, or related medical conditions.  The Final Rule requires contractors to provide accommodations to pregnant employees that are comparable to accommodations that would be provided to disabled employees.  Some examples of potential pregnancy accommodations are more frequent bathroom/hydration breaks and light-duty assignments.

Transgender Bias: The Final Rule reiterates the 2014 rule that discrimination based on gender identity is prohibited.  The Final Rule clarifies that contractors must allow employees to use bathrooms and other segregated specific facilities that are consistent with their gender identity.  The rule does not address how contractors in states requiring bathroom usage to correlate with biological sex, such as North Carolina, are to handle the competing directives.  The Final Rule also requires contractors to provide equal fringe benefits regardless of gender identity.  OFCCP is explicit that excluding medical coverage for an employee’s gender transition will be deemed facially discriminatory.  Recognizing that changes to benefit plans may take time, OFCCP said that it will consider contractors’ good faith progress on this front in determining whether an enforcement action is appropriate.

Sex Stereotypes: The Final Rule prohibits sex stereotyping.  Sex stereotyping includes judging an employee based on his/her conformance to sex-based appearance norms.  Sex stereotyping also encompasses making employment decisions based on stereotypes of “proper roles” of males/females with regard to caregiving.  OFCCP cites studies showing that mothers are less likely to be hired and are typically paid less than non-mothers, so prohibits decisions on account of one’s caregiver role.  The Final Rule also prohibits limiting roles to a specific sex; however, includes a narrow carve-out where sex is a bona fide occupational qualification because it is “reasonably necessary to the normal operation” of a “particular business or enterprise.”

Contractors should review their policies to ensure compliance with the Final Rule prior to the August 15 effective date.

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Filed under Affirmative Action Plan (AAP), Discrimination, OFCCP, Office of Federal Contract Compliance Programs

OFCCP Issues Final Rule Promoting Pay Transparency

On September 10, 2015, the Office of Federal Contract Compliance Programs (“OFCCP”) issued the Final Rule (RIN 1250-AA06) on pay transparency, which goes into effect on January 11, 2016.  The Final Rule implements Executive Order 13665, signed by President Obama signed on April 8, 2014, and stems from the Lilly Ledbetter Fair Pay Act.  OFCCP’s press release explains the rationale for the Final Rule is that pay secrecy policies foster the gender pay gap; if individuals do not realize that they are underpaid, then they cannot address the disparity.  OFCCP states that the pay gap for females remains at 23 cents for every dollar earned by males.  OFCCP also cites a pay gap for minorities.

The Final Rule prohibits federal contractors and subcontractors with government contracts in excess of $10,000 from terminating or otherwise discriminating against employees for discussing, disclosing, or inquiring about their own pay or co-workers’ pay. The Final Rule also protects pay discussions by job applicants.  Employees and job applicants who believe that they have been discriminated against for discussing, disclosing, or inquiring about pay may file discrimination complaints with OFCCP.

The Final Rule contains an exception for where the employee makes the disclosure of pay information based on information obtained in the course of performing his or her essential job functions.  For example, an employee in the human resources department may not disclose employee salaries under the guise of the Final Rule.  Likewise, the Final Rule contains an exception for action taken against an employee pursuant to a workplace rule that does not prohibit compensation discussions.  For example, if an employee violates a policy regarding timeliness, the employer may enforce the policy even if the employee was late in beginning his or her shift because he or she was discussing pay with other employees.

Contractors and subcontractors must incorporate this new non-discrimination requirement into the EEO clause in covered contracts and subcontracts, handbooks, and application materials.

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Filed under Affirmative Action Plan (AAP), Compensation, Department of Labor, OFCCP, Office of Federal Contract Compliance Programs

OFCCP Revises the VEVRAA Hiring Benchmark

The Office of Federal Contract Compliance Programs (the “OFCCP”) recently reduced the VEVRAA hiring benchmark for protected veterans from 7.2% to 7.0%. The hiring benchmark is intended to reflect the percentage of veterans in the civilian workforce across the country. The OFCCP reduced the hiring benchmark in response to the 2014 year-end data of the Bureau of Labor Statistics.

Federal contractors and subcontractors opting to use the hiring benchmark for their 2015 affirmative action plans should now use this revised benchmark, regardless of where in the country their establishments are located. Federal contractors and subcontractors may still opt to instead use the OFCCP’s five factor method to develop an individualized hiring benchmark.

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Filed under Affirmative Action Plan (AAP), OFCCP, Office of Federal Contract Compliance Programs, Veterans

OFCCP Proposes New Sex Discrimination Guidelines for Contractors and Subcontractors

On January 28, 2015, the Office of Federal Contract Compliance Programs (“OFCCP”) announced proposed changes to its sex discrimination guidelines (“Guidelines”).  The current Guidelines set forth the interpretations and guidelines for implementing the nondiscrimination and affirmative action requirements related to sex under Executive Order 11246.  The Guidelines have not been updated since 1970.  According to OFCCP, the proposed changes to the Guidelines will not impose any new obligations on federal contractors and subcontractors, but merely “align[s] OFCCP’s regulations with [the current law and interpretations under] Title VII of the Civil Rights Act of 1964, as interpreted by courts and the Equal Employment Opportunity Commission.”

The notice of proposed rulemaking addresses various issues, including pay, sexual harassment, failure to provide workplace accommodations for pregnancy and gender identity, and family caregiving.  The highlights of the proposed Guidelines include:

  • Adverse treatment of an employee because of gender-stereotyped assumptions about family caretaking responsibilities is discrimination;
  • Leave for childcare must be available to men on the same terms as it is available to women;
  • Contractors must provide workplace accommodations to women affected by pregnancy, childbirth, and related conditions, ranging from extra bathroom breaks to light-duty assignments;
  • Compensation discrimination can result from job segregation or classification on the basis of gender, not just unequal pay for equal work;
  • Contractors must provide equal benefits and equal contributions for both males and females participating in fringe-benefit plans;
  • The Guidelines now include explicit prohibition of both quid pro quo and hostile work environment sexual harassment and encourage contractors to develop and implement procedures to “ensure an environment in which all employees feel safe …[and] are not harassed because of sex”;
  • Adverse treatment of employees because they do not conform to gender norms and expectations about appearance, attire, and behavior is unlawful sex discrimination; and
  • Discrimination based on an individual’s gender identity is unlawful sex discrimination.

OFCCP has included a new page containing FAQs and other resources related to changes proposed to the Guidelines.  The proposed Guidelines are expected to be published in the Federal Register on January 30, 2015.  Assuming it is published on that date, interested parties will have until March 31, 2015 to provide comments.

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Filed under Department of Labor, OFCCP

OFCCP Publishes New FAQs on the Collection of Self-Identification Information for Protected Veterans

On January 20, 2015, the Office of Federal Contract Compliance Programs (“OFCCP”) published two Frequently Asked Questions (“FAQs”) addressing what self-identification information contractors are required to solicit from protected veterans during the post-offer stage of the application process.  Specifically, in light of the new VETS-4212 Form that does not require information on the specific protected veteran categories, OFCCP considered whether, contractors must continue to solicit information about the specific protected veteran category or categories that an applicant falls into during the post-offer stage, or whether contractors can more broadly invite applicants to self-identity as protected veterans.  OFCCP decided that contractors need not collect such category-specific data during the post-offer stage:

[S]ince the new VETS-4212 report no longer requires contractors to provide this information by the individual protected veteran categories, contractors are not required to invite self-identification by category in order to comply with VEVRAA’s post-offer invitation requirement.  Rather, contractors need only invite those offered a job to indicate whether they are protected veterans under any of the VEVRAA categories.

This marks a change from the previous post-offer requirement.  The underlying self-identification requirements come from OFCCP’s current regulations, issued on March 24, 2014, which require contractors to invite applicants to voluntarily self-identify their protected veteran status during both the pre-offer and post-offer stages of the application process.  For the pre-offer stage, contractors are not required to invite applicants to self-identify their specific protected veteran categories.  There is no change to this requirement. At the post offer stage, which includes the period after candidates receive offers of employment but before they began working, contractors were required to invite applicants to self-identify the specific category or categories of protected veteran to which they belong, which includes recently separated veterans, disabled veterans, Armed Forces service medal veterans, and active duty wartime or campaign badge veterans.

Until now, the reason for the category-specific data at the post-offer stage was needed to complete the Veterans Employment and Training Services (“VETS”) VETS-100A Form. However, in September 2014, after OFCCP’s veteran regulations had gone into effect, VETS released a new VETS-4212 Form to replace the VETS-100A form.  Under the new VETS-4212 form, contractors are only required to report aggregate data on the number of protected veterans rather than the specific categories of protected veterans.  On this basis, OFCCP reasoned in the new FAQs that contractors are no longer required to solicit information about the specific categories of protected veterans.

OFCCP, however, stated that contractors may still solicit such information.  In deciding whether to continue soliciting the specific protected veteran categories from applicants at the post-offer stage, contractors should weigh the value of this more detailed information with the burden of the additional recordkeeping and the risk of collecting information that is no longer required by OFCCP.

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Filed under Department of Labor, OFCCP, Office of Federal Contract Compliance Programs, Veterans

OFCCP Opens LGBT Final Rules to Limited Notice and Comment While Lawmakers Protest

The Office of Federal Contract Compliance Programs (“OFCCP”) is seeking limited public comment on the information collection requirements (“ICR”) of its Final Rule for LGBT workers amidst protests by members of the Committee on Education and the Workforce of the House of Representatives over its rulemaking process.  OFCCP had initially announced on December 3, 2014 its Final Rule implementing President Obama’s Executive Order 13672, which prohibits discrimination by federal government contractors and subcontractors on the basis of sexual orientation and gender identity.

On December 9, 2014, OFCCP filed a notice in the Federal Register seeking comments on the ICR in accordance with the Paperwork Reduction Act, which requires OFCCP to invite public comment on the burdens and utility of any new information collection requests.  The deadline for comments on the ICR is February 6, 2015.  The Final Rule is slated to become effective on April 8, 2015.

Before the Final Rule was published, the Committee on Education and the Workforce of the House of Representatives, which oversees OFCCP, sent a letter to OFCCP Director Patricia Shiu protesting OFCCP not opening the Final Rule for public comment.  It is unclear at this point as to what if any impact this will have on OFCCP’s Final Rule.

What Is New in the Final Rule

Under the Final Rule, contractors are prohibited from discriminating on the basis of sexual orientation and gender identity.  The new regulations do not define “sexual orientation” or “gender identity”, but OFCCP notes that it uses the same definition used by Equal Employment Opportunity Commission and case law developed under Title VII.   As of the effective date of the Final Rule, OFCCP will investigate complaints of discrimination on basis of sexual orientation and gender identity.

The Final Rule also requires contractors to update some of their technical compliance practices.  The Final Rule modified the Equal Opportunity Clause, which must be flowed-down in all covered subcontracts that are entered or modified on or after the effective date.  Contractors are still permitted to incorporate the Equal Opportunity Clause by reference.  The Final Rule also requires contractors to update their job postings and advertisements to indicate that all qualified applicants will receive consideration for employment without regard to sexual orientation or gender identity in addition to the normal protected categories of race, color, religion, sex, national origin, veteran status, and disability status.

What is Unaffected in the Final

The new regulations do not impact existing affirmative action plan requirements for females and minorities.  Contractors are not obligated to solicit information from applicants or employees pertaining to sexual orientation or gender identity, nor report or analyze such data for applicants and employees.  OFCCP’s Frequently Asked Questions specify that contractors may still choose to ask applicants and employees to voluntarily self-identify their sexual identity or gender identity, unless prohibited by state law.

What Contractors Should Do

Contractors should proactively review and update their job postings, job advertisements, and policies to prohibit discrimination on the basis of sexual orientation and gender identity.  Although the Final Rule does not go into effect until April 8, 2015, OFCCP noted that gender identity is already prohibited by OFCCP’s laws based on their August 2014 directive.  In addition, contractors who flow-down the entire Equal Opportunity Clause in covered subcontracts should update the clause to include the new language.

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Filed under Affirmative Action Plan (AAP), Department of Labor, OFCCP, Office of Federal Contract Compliance Programs

OFCCP Sends New Round of Potential Audit Letters

The Office of Federal Contract Compliance Programs (“OFCCP”) recently sent Corporate Scheduling Announcement Letters (“CSALs”) to 2,500 federal contractor establishments warning of possible audits.  OFCCP sends CSALs to contractors’ specific establishments as a courtesy to let contractors know that certain locations have been identified for potential audit.  CSALs do not mean that the contractor has been selected for an audit, but rather put contractors on notice that their establishments may be audited.  The audit does not actually begin until the contractor receives the Scheduling Letter from OFCCP.

Most OFCCP audits for supply and service contractor establishments are based on the Federal Contractor Selection System (“FCSS”). The FCSS generally releases names of contractors for audits two times per fiscal year.  This latest round of CSALs marks the first release of the FY 2015.  According to OFCCP’s FAQ, 993 distinct companies and 25 industries are represented among the 2,500 establishments on the FY 2015 scheduling list.  This list includes 27 Corporate Management Compliance Evaluations where OFCCP investigates glass ceiling issues.  Contractors can confirm whether one or more of their establishments were mailed CSALs by faxing a written request on company letterhead to OFCCP’s Division of Program Operations at (202) 693-1305.

Because contractors receiving CSALs are scheduled for audits in most cases, contractors receiving these notices should start to review their compliance and prepare for a potential audit as soon as possible. This is particularly important in light of OFCCP’s new Scheduling Letter, which drastically expanded the data required to be submitted to OFCCP at the outset of an audit.  You can learn more about the new Scheduling Letter here.

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Filed under CSAL, Department of Labor, OFCCP, Office of Federal Contract Compliance Programs, Scheduling Letter

OFCCP Releases New Scheduling Letter and Itemized Listing

More than three years after the Office of Federal Contract Compliance Programs (“OFCCP”) sought approval for a new Scheduling Letter and Itemized Listing, OFCCP published a notice in the Federal Register on September 30, 2014 revealing that it had received Office of Management and Budget (“OMB”) approval. Yesterday, OFCCP announced that it would not schedule any supply and service compliance evaluations from October 1, 2014 to October 15, 2014 to allow contractors to “become acquainted with the new letter and itemized listing”, but it plans to start using the new Scheduling Letter and Itemized Listing for all audits scheduled after October 15, 2014.

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Filed under Affirmative Action Plan (AAP), Department of Labor, OFCCP, Office of Federal Contract Compliance Programs, Scheduling Letter

OFCCP Releases Proposed Rule Prohibiting Adverse Action Against Employees and Applicants Discussing Pay

On September 15, 2014, the Office of Federal Contract Compliance Programs (“OFCCP”) released its Notice of Proposed Rulemaking (“Proposed Rule”) implementing President Obama’s Executive Order 13665 (“EO 13665”) banning contractors from taking adverse action against employees and applicants who discuss their pay.  When President Obama signed EO 13665 on April 8, 2014, he instructed OFCCP to issue a proposed rule prohibiting federal contractors from discharging or discriminating against employees or applicants who inquire about, discuss, or disclose their own compensation or compensation of other employees and applicants.  In a Fact Sheet on the Proposed Rule, OFCCP stated that the purpose of the Proposed Rule is to narrow the pay gap disadvantaging women and minorities by allowing them to discuss their pay and know if they are “being underpaid compared to [their] peers.”  OFCCP also believes the Proposed Rule would “reduc[e] pay discrimination and ensur[e] that qualified and productive employees receive fair compensation”, by enabling them to discuss their pay without fear of adverse action.

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Filed under Compensation, Department of Labor, Executive Order, OFCCP

OFCCP Releases Proposal Requiring Contractors to Disclose Compensation Data Annually

On August 6, 2014, the Office of Federal Contract Compliance Programs (“OFCCP”) released a Notice of Proposed Rulemaking requiring federal contractors and subcontractors with 100 or more employees to submit an annual equal pay report. This compensation data tool was published in response to President Obama’s April 8, 2014 Presidential Memorandum calling for proposed regulations to be published within 120 days.

The equal pay report will have a significant impact on federal contractors. According to OFCCP, the equal pay report will “enable OFCCP to direct its enforcement resources toward federal contractors whose summary data suggests potential pay violations, while reducing the likelihood of reviewing companies that are less likely to be out of compliance.” The proposed rule was officially published in the Federal Register on August 8, 2014. There is a 90-day public comment period with comments due by November 6, 2014.

Who Must File

The proposed rule applies to prime contractors and first tier subcontractors (and construction subcontractors of any tier) who are required to file EEO-1 Reports, have more than 100 employees, and have a federal contract, subcontract, or purchase order amounting to $50,000 or more lasting for at least 30 days (including modifications).

OFCCP is also considering covering postsecondary academic institutions that file the IPEDS report with the Department of Education.

Requirements of Equal Pay Report

The NPRM contemplates requiring covered federal contractors to submit an equal pay report that includes the following information:

  • Total number of workers within each EEO-1 job category by race/ethnicity and sex;
  • Total W-2 wages for all workers in each EEO-1 job category broken down by race/ethnicity and gender; and
  • Total hours worked for all employees in each EEO-1 category by race/ethnicity and gender.

No individual employee pay data will be required.

Reporting Method

OFCCP plans to design a web-based portal for covered contractors to report and maintain compensation information. OFCCP indicates that the webportal would be protected by applicable government IT security standards where contractors key in their data electronically or upload their forms into the system using the standard formats provided by OFCCP.

Data May be Basis for Audit Not Sanctions

Data from the proposed equal pay report would not in itself result in any sanction or adverse action against the contractor for compensation discrimination, according to OFCCP. However, OFCCP will use the information to prioritize contractors for compliance evaluations. If OFCCP selects a contractor for a compliance evaluation, that review would cover compensation data beyond what is in the contractor’s equal pay report and would involve a more specific and detailed data request that are typical in an OFCCP compliance evaluation.

Aggregate Data

OFCCP is also considering publishing aggregate information based on pay data collected from the equal pay report, but the data will not be specific to any particular contractor. The data could include ranges or averages by industry, labor market, or other groupings.

Effective Date/Comments

OFCCP is proposing an annual reporting window of January 1 to March 31. The data in this report would be based on W-2 earnings for the prior calendar year (Jan. 1- Dec 31) for all employees included in the contractor’s EEO-1 report for that year, which will generally align with the time period covered under a contractor’s W-2 filings.

Implications

The practice of OFCCP using the equal pay report to target its enforcement efforts could potentially eliminate OFCCP’s current random audit selection process and replace it with a targeted selection process. Despite the potential constitutional concerns, contractors should strongly consider conducting proactive pay equity analyses now, so that any areas of concern can be addressed before data is reported to OFCCP. This should include a total compensation analysis since contractors will need to report total compensation (i.e., all wages contained in the Form W-2) rather than just base salary.

Contractors should also be wary of potential confidentiality issues. Although OFCCP attempted to allay contractors’ confidentiality fears, the data, much like EEO-1 reports, could be turned over to private plaintiff’s attorneys for use in civil litigation. OFCCP believes that the Freedom of Information Act (“FOIA”) would exempt the disclosure of contractor data if it can be shown that (1) the contractor is still in business (2) the data is confidential and sensitive, and (3) the release of data would subject the contractor to commercial harm. For now, it is unclear whether these exemptions would actually shield contractors’ pay data in all cases.

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Filed under Compensation, Department of Labor, OFCCP