OFCCP Publishes New FAQs on Disability and Veteran Rules

The Office of Federal Contract Compliance Programs (“OFCCP”) recently published several new Frequently Asked Questions (“FAQs”) on the newly minted veteran and disability rules to answer lingering questions of contractors, particularly with respect to how to conduct the new data analyses required by these rules.  OFCCP initially published a number of FAQs immediately after the August 27, 2013 release of the final veteran and disability rules.  Since then, it has periodically updated those FAQs to provide guidance to contractors on how to comply with and implement the new rules.  The most recent installments to the FAQs provide some important guidance to contractors.

Counting Veterans Self-Identification

Background on FAQ

The new veteran rules now require contractors to offer applicants an opportunity to identify themselves as protected veterans at both the pre and post-offer stages.  Contractors must use applicant responses to determine whether they have met their annual hiring benchmarks for veterans.  Contractors can establish their hiring benchmarks either by using the national percentage established by OFCCP (currently 8%) or creating their own hiring benchmark using certain criteria identified by OFCCP.

New FAQ

Contractors have been unsure whether they can count an applicant towards the veteran hiring benchmark in situations where the applicant identifies himself as a protected veteran during the pre-offer stage but does not self-identify as a veteran during the post-offer stage.  OFCCP noted in the following FAQ that contractors can count those applicants towards the annual benchmark.  We agree that contractors should be able to assume that applicants correctly identified themselves at the pre-offer stage.

If an individual self-identifies as a protected veteran at the pre-offer stage of the application process, but does not self-identify again at the post-offer stage, may a contractor still count the individual as a protected veteran for purposes of applying the hiring benchmark and performing the required data collection analysis?

Section 60-300.42 of the new VEVRAA regulations requires contractors to invite applicants to self-identify as “protected veterans” at both the pre-offer and post-offer stages of the application process. If an applicant self-identifies as a “protected veteran” at the pre-offer stage but not at the post-offer stage, the contractor may identify the new hire as a “protected veteran” for purposes of compliance with the new VEVRAA regulations.

Jobs Filled

Background on FAQ

The new veteran and disability rules require contractors to conduct various data analyses during their annual affirmative action plan cycles analyzing, among other items, the total number of jobs filled and the total number of job openings.  There has been some confusion on what “jobs filled” means and how that differs from people hired.  OFCCP previously explained that “jobs filled” refers to “all jobs the company filled by any means” including competitive (i.e., hiring) and non-competitive selections (i.e., merit promotions, transfers, and reassignments).

New FAQ

There have been some lingering questions about whether transfers within the same position or automatic promotions would qualify as “jobs filled”.  OFCCP clarified in the following FAQ that jobs filled only included movements into different positions.

Does the number of “jobs filled” include step or ladder movements that are automatically attained upon completion of a stated event, such as time in the job or attainment of a particular certification?

Both competitive and non-competitive movements may qualify as “jobs filled,” so long as the movement is one into a different position, rather than simply a movement within the same position. This will necessarily be a fact-based determination. So, for example, a time-driven salary increase from one “step” to the next within the same position would not be a “job filled,” since there was not any movement into a new position. By contrast, if an apprentice completes a certification program and moves into a journeyman position, then such movement would be a “job filled,” since it is a movement from one position to another.

Hiring Benchmark for Veterans

Background on FAQ

As explained above, the new veteran rules require contractors to create annual hiring benchmarks whereby contractors assess their hiring of veterans in the year preceding their affirmative action plan to determine if they are meeting certain targets.

New FAQ

Many contractors have wondered how the term “hires” would be interpreted and whether it would include promotions.  In the following FAQ, OFCCP affirmed that both internal and external competitive hires would be counted in the annual analyses.

When applying the hiring benchmark, should contractors use the same definition of “hires” that is used for purposes of the data collection analysis required by 60-300.44(k)?

Yes. Since neither the new regulations, nor its preamble, specify a different definition of “hires” for the VEVRAA hiring benchmark, contractors should use the definition of hires that is applicable to the data collection analysis obligation. That definition encompasses those applicants (both internal and external to the contractor) who are hired through a competitive process, including promotions. This will ensure consistency in the interpretations of these key provisions of the new regulations.

Self-Identification of Disability

Background on FAQ

Under the new disability rules, contractors are required to invite their current employees to self-identify as individuals with disabilities.  This must be done once between March 24, 2014 and March 24, 2015 and then once every five years after that.

New FAQ

Many contractors have employees complete information through company portals and intranets, so contractors have naturally wondered whether they can provide the self-identification form to employees in that manner.  OFCCP found in the following FAQ that using such a process was acceptable.

May a contractor fulfill its obligation to invite its current employees to self-identify as having a disability by asking them to sign into an employee portal on the company Intranet?

The Section 503 regulations do not prescribe a particular method that contractors must use to invite its employees to self-identify. Contractors therefore have the flexibility to choose any method or methods that are reasonable and likely to be effective, given its particular circumstances. For example, contractors may choose to inform employees that it is inviting their self-identification in the same manner it uses to disseminate other important workplace notices to its employees. This might be emailing the notice of the survey and the self-identification form, or an Intranet link to the form, to all employees, or it might be prominently posting a notice with a link to the self-identification form on the company Intranet, prominently posting a notice and copies of the form in the employee lounge, or distributing a notice and copies of the form where employees go to sign in or pick up their paycheck.

Utilization Analysis for Disabled

Background on FAQ

On the next affirmative action plan after March 24, 2014, contractors must conduct a utilization analysis to determine the whether 7% of each job group (or for the entire workforce if the contractor has less than 100 employees) is comprised of individuals with disabilities.

New FAQ            

Some contractors have wondered whether they may be able to exclude employees from this analysis if they do not respond to the invitation to identify their disabled status.  Not surprisingly, OFCCP indicated in the following FAQ that employees who did not respond should be counted in the analysis as nondisabled individuals unless the contractor has actual knowledge that those employees are disabled.

How should non-responses to the invitation to self-identify as an individual with a disability be treated when conducting the utilization analysis?

The regulations require contractors to conduct an annual utilization analysis to determine the representation of people with disabilities in each job group, or if it has 100 or fewer employees, in its workforce as a whole. To calculate the percentage of a job group (or workforce) that is comprised of people with disabilities contractors should use the same methodology used to calculate the percentage of a job group (or workforce) that is comprised of any other specific demographic group. Specifically, contractors should compare the number of individuals identified as having a disability to the total number of employees in the job group. Non-responses should be counted solely in the job group (or workforce) total, unless the contractor has actual knowledge that a particular non-responsive individual(s) has a disability. The contractor may count as an individual with a disability any individual who it actually knows to have a disability, whether or not the individual chose to self-identify.

Hiring of Disabled Candidates

In large part due to OFCCP’s repeated emphasis that contractors must take affirmative action to hire and promote individuals with disabilities in accordance with the new disability rules, contractors have wondered whether they could reject disabled candidates who met the basic or minimum qualifications for the position but were not the best candidates.  Although OFCCP correctly stated that contractors are only to hire the best qualified candidates for the position, in the following FAQ they underscored the importance of contractors having adequate and proper documentation to show why they selected a certain candidate over a minimally qualified individual with a disability.

Under the new regulations, must a contractor hire an individual with a disability who is not the best qualified but who meets the minimum requirements of the job for the purposes of affirmative action?

No. The Section 503 regulations do not require contractors to hire an individual who is not qualified for the position being sought. Nor do they require contractors to hire a less qualified candidate instead of the best qualified candidate for the purposes of affirmative action. However, it would not violate Section 503 for a contractor to select a person with a disability over a candidate without a disability who was equally or better qualified, so long as that selection was not based on a prohibited factor such as race, gender or ethnicity.

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Filed under Affirmative Action Plan (AAP), Disability Discrimination and Accommodation, OFCCP, Veterans

OFCCP Announces Timeline for Issuing Proposed Rules on President Obama’s Compensation Agenda

The Office of Federal Contract Compliance Programs (“OFCCP”) plans to issue proposed rules implementing President Obama’s recent executive actions on the compensation practices of federal contractors. As we reported last month, President Obama took two executive actions to further his pay equity agenda: (1) he signed Executive Order 13665 prohibiting federal contractors from discriminating and retaliating against employees or applicants for discussing their compensation with one another; and (2) he issued a memorandum (“Memorandum”) directing OFCCP to publish regulations requiring federal contractors and subcontractors to submit pay data by race and gender for their employees.

According to the Department of Labor’s spring 2014 regulatory agenda, OFCCP intends to publish its proposed rules on the Memorandum in August 2014 and the proposed rules under EO 13665 in September 2014. OFCCP also revealed that it was pushing back dates for two key regulatory changes, presumably to accommodate the presidential mandate for OFCCP to publish rules on EO 13665 and the Memorandum. In its 2014 regulatory agenda for the year, OFCCP indicated that it would be issuing proposed rules on its regulations for construction contractors in April 2014 and on its Sex Discrimination Guidelines in May 2014. Now, OFCCP has announced that it will not be issuing the proposed updates to the Sex Discrimination Guidelines until September 2014 and moved the date for the proposed overhaul of its regulations for construction contractors until January 2015.

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Filed under Department of Labor, OFCCP

President Obama Takes Executive Action Reinforcing the Regulatory Agenda on Investigating Federal Contractors’ Compensation Practices

In recognition of National Pay Equity Day, President Obama took two executive actions on April 8, 2014 to continue his pay equity agenda: (1) President Obama signed Executive Order on Non-Retaliation for Disclosure of Compensation Information (“Executive Order”) amending Executive Order 11246 to prohibit federal contractors from discriminating or retaliating against employees or applicants for discussing their compensation with one another; and (2) President Obama issued a memorandum directing the Department of Labor (“DOL”) to publish regulations requiring federal contractors and subcontractors to submit pay data, by race and gender, for their employees (“Compensation Memorandum”). These executive actions, along with President Obama’s Executive Order to increase the minimum wage for employees working on federal contracts, mark another significant step in this Administration’s push for increasing enforcement and oversight over federal contractors’ compensation practices.

Executive Order

The Executive Order mandates that federal contractors cannot “discharge or in any manner discriminate against” employees and applicants who have “inquired about, discussed, or disclosed” their own or another employee’s or applicant’s compensation information. The Executive Order explains that the reason for this change is that it will “enhance the ability of Federal contractors and their employees to detect and remediate unlawful discriminatory practices, which will contribute to a more efficient market in Federal contracting.”

The Executive Order excludes from this protection unauthorized disclosures by employees who learn of the compensation information as part of their essential job functions (e.g., HR and compensation managers) unless (1) they are disclosing compensation information to someone who already has access to that information; or (2) they are disclosing that in response to a formal complaint or charge in furtherance of an investigation. DOL will be required to issue regulations implementing this requirement by September 15, 2014.

Compensation Memorandum

The Compensation Memorandum is premised on a claim that the pay gap between men and women is a direct result of a “lack of sufficiently robust and reliable data on employee compensation.” It directs DOL to propose regulations requiring federal contractors and subcontractors to submit data on the compensation paid to their employees, including data by sex and race.

When creating the proposed regulations, the Executive Order instructs DOL to consider:

  • “maximiz[ing] efficiency and effectiveness” by focusing efforts on contractors where the reported data shows pay violations;
  • using the data to “encourage greater voluntary compliance” with compensation laws by federal contractors and “analyz[ing] industry trends”;
  • minimizing the burden on federal contractors, particularly small businesses; and
  • “avoid[ing] new record-keeping requirements” by relying on “existing reporting frameworks to collect the summary data.”

Despite DOL’s announcement in its current regulatory agenda that OFCCP planned to publish a Notice of Proposed Rulemaking (“NPRM”) on the compensation data collection tool in January 2014, no proposal has yet been published. The Presidential Memorandum will expedite the publication of NPRM because it directs the DOL to propose regulations by August 6, 2014.

Impact on Federal Contractors

The Executive Order prohibiting discrimination and retaliation against employees and applicants does not change much for federal contractors. Sections 7 and 8 of the National Labor Relations Act already provide employees and applicants the right to discuss their compensation information.

The effect of the Compensation Memorandum’s requirement that contractors to disclose their compensation information could be significant, but the precise impact will depend on the details of the regulations. As of now, it is unclear whether OFCCP will develop new or additional compensation reporting requirements and how OFCCP will use the compensation tool to store and analyze compensation data.

We expect OFCCP to continue to ratchet-up its investigation of contractors’ compensation information during audits. This means that contractors should be vigilant about reviewing their compensation practices now and proactively addressing pay disparities before an audit. Now is the time for contractors to consider undertaking pay equity studies and reviews of their compensation policies and practices under the protection of the attorney-client privilege.

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Filed under Compensation, Department of Labor, OFCCP

OFCCP’s Final Rules for Veterans and Disabled Become Effective

On March 24, 2014, the Office of Federal Contract Compliance Programs’ (“OFCCP’s”) final rules for individuals with disabilities under Section 503 of the Rehabilitation Act and for veterans under the Vietnam Era Veterans’ Readjustment Assistance Act (“VEVRAA”) went into effect. There are two effective dates under the final rules:

  • The requirements that are not specific to affirmative action plans must be implemented by March 24, 2014; and
  • The affirmative action plan requirements under Subpart C in the final rules must be in place by the contractor’s next affirmative action plan cycle following March 24, 2014.  This means, if a contractor’s affirmative action plan begins on January 1 every year, the contractor would not have to implement the affirmative action plan requirements until January 1, 2015.

Our previous alert on these new rules explains in detail the requirements flowing from these rules and the timing of those changes.

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Filed under OFCCP, Rehabilitation Act, Veterans

OFCCP Corrects Proposed Changes to Its Complaint Form

On February 19, 2014, OFCCP published a correction to its notice seeking comments on its form for individuals to file discrimination and retaliation complaints.  The complaint form, which is designated as Form CC-4, requests information from individuals making complaints of discrimination and retaliation against federal contractors and subcontractors, including whether the complainant believes the contractor has discriminated or retaliated against others.  OFCCP has shown an increasing interest in pursuing individual complaints of discrimination and retaliation over the last few years, and these proposed changes suggests that it plans to continue the trend.

The original notice published in the Federal Register on February 5, 2014 provided a slightly revised version of the Form CC-4 and sought comments on:

  • Whether the proposed collection of information is useful or necessary for OFCCP to perform its functions;
  • Whether OFCCP accurately estimated the burden of collecting this information; 
  • Whether any improvements needed to be made to the quality, utility and clarity of the information requested in the form; and
  • How to minimize the burden on those who are completing the form, such as permitting electronic submissions.

 In the correction notice, OFCCP made several revisions to its notice and proposed complaint form, including:

  • Revising the statement in the notice that incorrectly indicated that the proposed complaint form was currently available on OFCCP’s website; and
  • Updating several fields that were left blank in the proposed complaint form, including the three fields located in the left-hand column and the third and bottom rows of the form.

 Interested parties will still have until April 7, 2014 to submit comments on the proposed complaint form.

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Filed under Department of Labor, Discrimination, OFCCP

Cargill Agrees to Pay $2.2 Million to Settle Hiring Discrimination Charges By OFCCP

On January 22, 2014, the Office of Federal Contract Compliance Programs (“OFCCP”) announced that it was settling a case with Cargill Meat Solutions (“Cargill”) for $2.2 million relating to allegations of hiring discrimination based on race and gender.  The settlement stemmed from OFCCP’s investigation of multiple Cargill facilities between 2005 and 2009.  During these reviews, OFCCP alleged that Cargill’s hiring practices for production jobs at several of its facilities discriminated against 2,959 females, African-American, Hispanic, and Caucasian applicants.  OFCCP also allegedly found a number of record-keeping violations at Cargill.

In addition to paying $2,236,218 in back wages, Cargill also agreed to extend job offers to 354 former applicants who were rejected for positions and to undertake extensive self-monitoring measures to ensure full compliance with OFCCP’s laws.

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Filed under Department of Labor, Discrimination, OFCCP

OFCCP Receives Final Approval of New Voluntary Self-Identification Form for the Disabled

On January 22, 2014, the Office of Management and Budget (“OMB”) approved the Office of Federal Contract Compliance Program’s (“OFCCP’s”) new self-identification form for individuals with disabilities.  According to OFCCP’s new regulations under Section 503 of the Rehabilitation Act (“Disability Regulations”), federal contractors and subcontractors will be required to use this new form to offer all applicants and employees an opportunity to self-identify as individuals with disabilities. 

After receiving thoughtful comments from the contractor community, there were number of improvements that were made to proposed version.  For example, the final form now includes a section for applicants to indicate that they do not have a disability and allows candidates to identify their name and the date the form was completed.  Significantly, however, the form still asks individuals to disclose if they “ever had a disability.”  This is problematic because this may increase the number of candidates who self-identify as disabled thereby (1) increasing the chance of there being statistically significant adverse impact on unselected applicants who self-identified as disabled; and (2) increasing contractors exposure to failure to hire claims under the “regarded as” prong of the ADA because employers will be on notice that these candidates are disabled.

Despite some of the lingering concerns with the form, contractors must prepare to put this in place by their first affirmative action plan cycle following the March 24, 2014 effective date of the Disability Regulations.  Contractors will be required to use this exact form without modification, but they can create an electronically fillable copy of the form that displays the OMB number and expiration date, contains the text of the form without alteration, use a sans-serif font (such as Arial or Calibri), and at least 11-pitch font size (with the exception of the footnote and burden statement, which must be at least 10-pitch in size).  Contractors will also be required to provide this form to applicants both pre and post-offer, and the form must be provided to employees at least once every five years.

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Filed under Affirmative Action Plan (AAP), Department of Labor, Discrimination, OFCCP, Rehabilitation Act