An Update on OFCCP Enforcement and Regulatory Changes. DCI Consulting Group, Inc I Street, NW Washington, D.C

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1 An Update on OFCCP Enforcement and Regulatory Changes DCI Consulting Group, Inc I Street, NW Washington, D.C

2 OFCCP Major Initiatives Bush in 8 Years Internet Applicant Regulations Compensation Standards and Guidelines Active Case Management Directive FAAP Directive Obama in 3+ Years ACE Directive (Released December 2010) FAAP Directive (Released June 2011) Federal Contract Compliance Manual New Compensation Standards Compensation Data Collection Tool Revised Section 503 Regulations Revised Construction Regulations Revised Sex Discrimination Guidelines Revised 4212 Veteran Regulations New Scheduling Letter 2

3 OFCCP Under Obama Major emphasis on pay equity Increased focus on affirmative action issues Minorities, Females, Disabled and Veterans An attempt to completely revamp ALL rules and regulations Continued focus on systemic discrimination Hiring and Compensation Sub-racial/ethnic group analyses Including individual discrimination 3

4 Hiring Cases OFCCP continues to change the way in which it conducts adverse impact analysis in regard to who is the highest selected OFCCP is now focusing on who is the preferred class Sole reliance on statistical significance testing OFCCP comments (Note To Reviewer)in the proposed scheduling letter changes Presenting data for minorities in the aggregate is useful for the utilization analyses and goal setting components of the contractor s affirmative action programs. However, to determine whether the contractor has discriminatory employment practices requires analyzing data by sex, and by separate racial or ethnic groups. 4

5 Statistical Significance Testing # Applicants # Selections Selection Rates Practical Measures Statistical Test Males Females Males Females Total Males Females Impact Ratio Diff in rates SD (Z) test ,000 1, ,200 1,200 1,188 1, ,000 10,000 9,900 9, , ,000 99,000 98, ,000,000 1,000, , ,

6 Fedex Ground Settlement April OFCCP announced a multi-establishment settlement with Fedex Ground During a series of regularly scheduled reviews, OFCCP compliance officers found evidence that FedEx's hiring processes and selection procedures violated Executive Order by discriminating on the bases of sex, race and/or national origin against specific groups identified at 23 facilities in 15 states. The affected workers include men and women as well as African-American, Caucasian and Native American job seekers, as well as job seekers of Hispanic and Asian descent. The reviews also uncovered extensive violations of the executive order's record-keeping requirements. Under the terms of the conciliation agreement, the companies will pay a total of $3 million in back wages and interest to 21,635 applicants who were rejected for entry-level package handler and parcel assistant positions at 22 FedEx Ground facilities and one FedEx SmartPost facility. FedEx also has agreed to extend job offers to 1,703 of the affected workers as positions become available. The 21,635 rejected job seekers represent one of the largest classes of victims of any case in OFCCP's history. 6

7 A Review of OFCCP s Public Enforcement Database 7

8 A Comparison Across Administrations Closure Letter Conciliation Agreement Consent Decree Financial Remedy Total # % # % # % # % # % Bush administration data (FY ) 18, , , Obama administration data (FY ) 10, , , Total 28, , ,

9 Enforcement Over Time 9

10 Findings of Discrimination 10

11 2011 Enforcement by Region 11

12 Technical Violations 2008 Conciliation Agreements and Consent Decrees Total 624 out of (60%) record keeping 165 (26%) outreach and recruitment 2011 Conciliation Agreements and Consent Decrees Total 1109 out of (58%) outreach and recruitment 376 (26%) record keeping 12

13 OFCCP and Compensation 13

14 OFCCP s First Budget Increase in funding and staff Increase from $85 to $109 million Increase from 585 to 798 FTE Increase in enforcement (DOL Proposed Budget) Given the complexities of new procedures outlined in the two federal register notices Interpreting Nondiscrimination (Standards) and Voluntary Guidelines for Requirements of Executive Order (guidelines), OFCCP needs to place additional emphasis on outreach and training, as well as improving the various approaches and investigative techniques used to evaluate compensation. In addition, the program increase will also support litigation to amplify enforcement activities by funding external experts to verify OFCCP s allegations and assessments to solidify its commitment to strong enforcement. 14

15 Notice of Violation Under what conditions will OFCCP issue a Notice Of Violation (NOV) under the Standards? OFCCP will issue an NOV, alleging systemic compensation discrimination, only in two situations. First, in unusual cases, OFCCP may issue an NOV based only on anecdotal evidence, if such evidence presents a pattern or practice of compensation discrimination. The second, and more typical, situation includes statistical analysis and usually anecdotal evidence, and requires that OFCCP follow these steps prior to issuing an NOV: 1. Creating the SSEGs from job descriptions, and employee interviews; 2. Conducting a multiple regression analysis on each SSEG (or a pooled analysis in certain cases); and 3. Finding a disparity that is significant at the level of two (2.0) or more standard deviations or equivalent measures of statistical significance, based on measures of statistical significance that are generally accepted in the statistics profession. It will be the standard practice to issue a Predetermination Notice prior to issuing an NOV and to discuss with the contractor the nature of the findings to provide it with the opportunity to raise issues with the analyses. 15

16 Compensation Standards January 3, OFCCP submitted a notice of proposed rescission to the compensation standards and guidelines to OMB To date, OMB has not approved the rescission OFCCP appears to be operating in a manner in which the standards have been approved 16

17 2011 Settlement Summary The majority of settlements did not include a formal allegation of discrimination. Instead, the settlement was worded OFCCP identified one person paid less than similarly situated others. or some females were compensated at a lesser rate than males Most settlements had between 1 and 3 victims One settlement did not list a protected class. Person X made less than others 2 settlements appeared to collect financial remedies for men No real clear patterns with regard to Industry Type of job (Laborer, Operative, Clerical, Professional, Sales) Copyright 2012 The Center for Corporate Equality 17

18 Proposed Scheduling Letter The newly proposed scheduling significant increases the amount of data that would be submitted at the desk audit stage 12. Employee level compensation data for all employees (including but not limited to full-time, part-time, contract, per diem or day labor, temporary) as of February 1st (i.e., the data as it existed on the most recent February 1st date). Provide gender and race/ethnicity information and hire date for each employee by job title, EEO-1 Category and job group, preferably in a single file. Provide all requested data electronically via or computer disc in Excel or PDF format, if available. a) For all employees, compensation includes base salary, wage rate, and hours worked. Other compensation or adjustments to salary such as bonuses, incentives, commissions, merit increases, locality pay or overtime should be identified separately for each employee. b) You may provide any additional data on factors used to determine employee compensation, such as education, past experience, duty location, performance ratings, department or function, and salary level/band/range/grade. c) Documentation and policies related to compensation practices of the contractor should also be included in the submission, particularly those that explain the factors and reasoning used to determine compensation.41 CFR (b)(3) and (d). 18

19 A Storm is Brewing: OFCCP s Proposed Regulatory Changes 19

20 OFCCP Proposed Regulatory Changes Proposed and In Process (Obama s First Term) New Compensation Standards Revised Disability Regulations Revised Protected Veteran Regulations Federal Contract Compliance Manual Proposed and In Process (Obama s Second Term?) Compensation Data Collection Tool ANPRM Construction Industry NPRM Sex Discrimination Guidelines NPRM Revised Audit Letter 20

21 My Predictions OFCCP will pass the 4212 Veteran regulations this summer 50/50 on whether or not the 503 regulations pass prior to the election OFCCP will announce a large compensation settlement in FY2012 There is a potential for another congressional hearing 21