Understanding OFCCP s Compliance Evaluation (Through the Federal Contract Compliance Manual)
Contact Information Biddle Consulting Group, Inc. 193 Blue Ravine, Suite 270 Folsom, CA 95630 916.294.4250 www.biddle.com www.bcginstitute.org Marife Ramos, PHR, SHRM-CP(mramos@biddle.com) Criselda Cooper (ccooper@biddle.com) 2
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Agenda What is a Compliance Evaluation? The Selection Process for an Audit Desk Audit (Preparation, Review, Etc.) Recommendations 5
Compliance Evaluations A compliance review (or audit) under the OFCCP s Active Case Enforcement is an evaluation to determine if the contractor maintains nondiscriminatory hiring and employment practices and is taking affirmative action to ensure full compliance with the requirements of EO 11246, VEVRAA, and Section 503 of the Rehabilitation Act. ensures that the contractor does not make employment decisions with regard to race, color, religion, sex, and national origin 6
Compliance Evaluations OFCCP s audit cycle is based on its fiscal year (October 1 thru September 30 of the following year) Typically includes 2 scheduling lists Audits may be scheduled outside the FY First release in FY 2015: o 2500 establishments o 993 distinct companies o 27 Corporate Management Compliance Evaluations (CMCE) 7
Compliance Evaluations The Selection Process Federal Contractor Selection System (FCSS) a neutral selection system that identifies contractors for audit. Federal acquisition and procurement databases EEO-1 reports Dun & Bradstreet data Census data Industry type Employee counts 8
Compliance Evaluations The Selection Process The list is further refined by applying a number of neutral factors, such as Expiration date of the contract Value of the contract Pre-determined limit on the number of audits per contractor per cycle Also removes: FAAPS Under current review Reviewed within last 24 months Under Conciliation Agreement Already included in previous list 9
Compliance Evaluations The Selection Process The OFCCP determines the total number of establishments to be reviewed based on OFCCP s region and district office staffing levels of full time employees (FTE). The final list is sorted using any one of a number of neutral factor (e.g., number of employees at the location, contract value, contract expiration date, etc.) First and 25 th establishment on the list in each district are marked for quality review per the Active Case Enforcement 10
Compliance Evaluations The Selection Process Other reasons for compliance reviews (outside the FCSS): Functional AAP Individual or class complaints Those initiated by the National Office based on alleged violation Pre-awards evaluations Monitoring of conciliation agreements and consent decrees 11
What is the FCCM? Provides procedural and technical guidance on compliance issues based on current agency procedures and processes Provides new and experienced compliance officers (COs) the procedural framework for executing quality and timely compliance evaluations and complaint investigations Provides consistency across the agency Provides contractors and subcontractors more transparency and clarity about basic OFCCP procedures and processes Note: Differences between regions can still occur BUT these differences should be minor and infrequent 12
What the FCCM is NOT/DOES NOT do? Does not establish agency policy o If there are any inconsistencies between the FCCM materials and OFCCP s policies, the OFCCP policies must be followed o Policy guidance, procedures and agency priorities are communicated through directives Does not create new legal rights or requirements Does not change existing legal rights or requirements 13
Three Stages of a Compliance Review Desk Audit Onsite Review Offsite Analysis 14
Principles of Desk Audit Equal Employment Opportunity Affirmative Action Program Inclusion and Acceptability Focus of Desk Audit Workforce Structure, Personnel Policies and Procedures o CO s examine a contractor s personnel policies and procedures to determine if they warrant in-depth investigation such as an onsite review 15
Focus of Desk Audit (cont d) Good Faith Efforts o CO s reviews good faith efforts provided by the contractor to achieve established goals. They are looking for three specific things: Areas where there is a lack of progress toward established goals; Whether further information is needed in any area; and Whether an onsite visit is needed 16
Focus of Desk Audit (cont d) Potential Discrimination o CO s must be aware of the signs of potential discrimination. Examples of signs of potential discrimination: Significant over-representation or under-representation in a particular area of the workforce Adverse Impact 17
Focus of Desk Audit (cont d) Potential Discrimination (cont d) Pay difference that resulted from compensation practices that appeared to be based on race, sex or ethnicity Leave for family care giving indicates that it is applied differently for women and men 18
Standard Compliance Evaluation Report (SCER) A tool used by the COs to document the desk audit A 10-page comprehensive checklist to guide the CO in preparing, conducting, and closing the desk audit It is also used by COs, in whole or in part, in the offsite review of records or in focused review 19
There are 3 main parts of an SCER: Part A: Preparation o General information on the contractor o Contractor s past review history and complaints filed with other agencies (EEOC, OSHA, etc.) Review nature of complaints or problems Individual or class complaint? Part of the workforce/department affected (e.g., clerical, entrylevel, etc.) Is there indication of systemic issues (as revealed by different complaints from different agencies) 20
There are 3 main parts of an SCER: Part A: Preparation (Cont.) o EEO trends in the workforce and organization structure Expanding or contracting? Notably in one particular category? White/Blue collar: gains or losses in one category? Substantial disparity in the representation of a racial/ethnic group? o Initial review of the AAP and support data (complete? acceptable/not acceptable?) 21
Main parts of an SCER (cont.): Part B: Affirmative Action o Summarizes problems with the AAP and the support data o Evaluates the contractor s Good Faith Efforts in relation to the goals o Assessment of contractor s implementation of other AAP obligations: Invitation to self-id Disability-related questions EO Clause (P.O., sub contracts, CBA notifications, etc.) Job advertisement language 22
Main parts of an SCER (cont.): Part C: Problems Identified o Identify the problem(s) Nature Relevant evidence reviewed Actions taken to resolve the problem Was the problem resolved? How? o For unresolved problems, the CO needs to develop for an onsite plan 23
The Desk Audit Process Pre-Desk Audit o Initial contact with the contractor Contractor information - CO must verify the following Name of highest ranking official at the location Legal name of the company Name and e-mail of person responsible for the development and implementation of the AAP Correct mailing address *** for larger organizations: name of corporate CEO, corporate EEO/AA, and corporate mailing address 24
Pre-Desk Audit (cont.) o Initial contact Representation When the contractor indicates that it will be represented by a counsel or a consultant, CO must ask: Written confirmation of the representation Contact information of the representative (name, address, etc.) Scope of representative s authority (does it extend to negotiating settlement, if necessary?) Confirmation if all contacts (e.g., data clarification, making appointments, etc) should be made through representative Confirmation if all correspondence should only be provided to the representative or if copies should also be provided to the contractor 25
Pre-Desk Audit (cont.) o Initial contact Representation (cont) *** Any changes to the representation, including the instructions, must be put in writing *** COs must provide the highest ranking management officials copies of all substantive documents mailed. This will include Notice of Violations, Chow Cause Notice, Conciliation Agreements and other documents required by the FCCM to be mailed by the CO. 26
Pre-Desk Audit (cont.) o Initial contact Circumstances Precluding Evaluation The CO must determine whether there are circumstances that preclude him/her to continue with the compliance evaluations: Lists of parties excluded from federal procurement and nonprocurement programs The contractor has undergone compliance evaluation within the last 24 months The contractor has a FAAP agreement 27
Pre-Desk Audit (cont.) o Preparation and Maintenance of Case Chronological Log COs are required to prepare and maintain a case chronological log (a tracking tool on the progress and status of the compliance evaluation) Event summaries starting with the initial contact with the contractor Documentation of all phone conversations, e-mails, correspondence, and meetings (includes dates, nature of the contact, person contacted and summary of discussion) 28
Pre-Desk Audit (cont.) o Creation and Maintenance of the Case File Generally consists of folders for: SCER Case Chronology Log, Correspondence and Notes Collective Bargaining Agreement and Other Agreements SOL Opinions, JRC Memoranda, Post SCER Update Progress Report and Quality Audit Historical Review Results AAP and AAP Support Data ***Maintaining these files is crucial. If enforcement is needed, the case file is submitted to the Solicitor s Office. 29
Pre-Desk Audit (cont.) o Sending the Scheduling Letter Since Scheduling Letters and Itemized Listing are reauthorized every 3 years, a CO must familiarized themselves with the information and documents being requested in the most recent reauthorized letter Sent to the highest ranking official at the location with a copy sent to the CEO at the corporate office Letters are sent via certified mail with return receipt requested Letters must be signed by the field office official and must include the name and phone number of the CO who will receive the AAP and other supporting data 30
Pre-Desk Audit (cont.) o Follow-up Contact with the Contractor COs must contact the contractor within 15 days of sending the Scheduling Letter to ensure that the contractor understand what are being requested If contractors challenges OFCCP s jurisdiction and CO is unable to establish jurisdiction, the issue is sent to Division of Program Operations Show Cause Notice is issued when jurisdiction is established and contractor continues to dispute 31
Pre-Desk Audit (cont.) o Contacting EEO, VETS, and Other Agencies CO will at start gathering information about the contractor at the same time as the scheduling letter was sent out EEOC and State and Local Fair Employment (FEP) Agencies Inquiry letter is sent out to request information on discrimination complaints. VETS and Other DOL Enforcement Agencies information regarding contractor s compliance with mandatory job listing and annual VETS filing. Information may include contractor s recruitment and hiring practices Wage and Hour Division FMLA violations 32
Pre-Desk Audit (cont.) o Information on EEO Complaints CO will note patterns on the types of complaints and discrimination findings o Relationship of OFCCP Compliance Activities to EEO Litigation or Court Orders CO will determine if pending litigation or court order puts limitations on the compliance evaluation o Review of Community Resource Files Each field office maintains a resource on communities within the areas. This includes local organizations that represents or provides services to the protected group. 33
Pre-Desk Audit (cont.) o Review of Previous Compliance Actions CO must determine if the contractor has compliance evaluation(s) for other locations. CO must contact the other OFCCP supervisor and discuss issues (if any). Important for determining company-wide issues (e.g., a test that was not validated and has adverse impact against a group) Must also review closed case files to determine if there are any issues relevant to the current review. Conciliation agreement Back pay Hires Remedial measures 34
Receipt of the AAP and Support Data For Desk Audit o Contractors must submit the AAP within 30 days from receipt of the scheduling letter Women and Minorities 503 VEVRAA o If not received on a time, CO must contact contractor to determine the status o If still not submitted, CO s supervisor has discretion whether to grant extension and the length of time for the extension 35
Initial Review of the AAP o CO must determine that the submitted AAP is complete and acceptable Inclusion Did the contractor provided all the materials included in the Scheduling Letter and Itemized Listing? Missing Items CO must create a list if every document that the contractor provided, including the date of the request and date the documents was received. Also include any items that the were requested but nor provided by the contractor. Acceptability Are the current AAP and supporting data current, complete and acceptable? If one of the elements is missing, the AAP is deemed unacceptable 36
Audit of Personnel Activity and Impact Ratio Analysis o 4/5 rule is still used to determine if selection rate of one group is 80% less than the selection rate of another group o Uses group with the highest selection rate as the reference group o 80% violation is considered a preliminary indicator only Need for data refinement Further statistical analysis 37
o 80% violation (IRA) Adverse Impact (AI) Determination According to the UGESP, employers with 100 employees or more must: Maintain specific records by job, sex and race to determine whether its selection process have adverse impact on employment opportunities; and Annually analyze the data to determine whether the total selection for each job title had adverse impact Request for AI Determination when CO identifies a group with adverse IRA and the contractor has 100 employee or more, the CO can: Request for AI determinations Request for the AI analysis 38
o 80% violation (IRA) Need for Information on the Selection Process when adverse IRA is present, the CO must request for: Description of the employment selections process in the atissue job If multi component, should include: the description of each step in the selection the data the decision makers criteria and how the criteria used 39
o 80% violation (IRA) Multi Component Selection Processes When there is AI in the total selection process individual components(i.e., steps) must be evaluated for AI Generally, when there is no AI in the total selection process, contractor is not expected to evaluate the individual components and enforcement actions is not needed, except: Individual component has AI and its use is not justified as job related or consistent with business necessity (e.g., height and weight requirements) Complaints alleging that the selection process or a criteria used is discriminatory 40
o Compensation CO will consider other information besides the data Explanation of the contractor s compensation system Policies and practices regarding setting wages at hire, additions to regular pay such as overtime, employee performance, administration of bonuses/commissions, market survey data, CBA, job descriptions, self audit results CO may continue to request for additional compensation data and/or conduct an onsite before final determination of the compliance evaluation 41
o Compensation (cont.) Upon receipt of all compensation data, the CO will conduct an initial analysis which could result to: Closing the Compensation Review there are no indicators of potential compensation discrimination and there in no need for additional information Continuing the Compensation Review - when there is an indication of potential discrimination based on initial desk review. The CO may request for the entire workforce data. 42
o Compensation (cont.) Continuing the Compensation Review (cont) Following are some situations where a CO may find potential issues with compensation and therefore, may request for additional data: Potential compensation discrimination based on summary data Evidence of discrimination on another employment practice Complaints/Anecdotal evidence Data integrity issues To fully understand and interpret the summary data 43
o Compensation (cont.) Upon receipt of all compensation data, the CO will conduct an initial analysis which could result to: Closing the Compensation Review there are no indicators of potential compensation discrimination and there in no need for additional information Continuing the Compensation Review - when there is an indication of potential discrimination based on initial desk review. The CO may request for the entire workforce data. 44
Conclusion of the Desk Audit o No outstanding questions and no violations evaluation is closed at the desk audit stage o Found non-substantive problems CO may close after all issues are resolved o CO must proceed with an on site if contractor: Provided insufficient data Has indicators of potential discrimination, failure to provide complete AAP, and existing complaints; Was identified for a complete compliance review 45
Top 10 Audit Request (2015) 10. Proof of job listings with the State Employment Service Delivery System (ESDS) 9. Proof of proper notifications o o EO Clause Notice to vendors/subcontractors 8. Proof of online accessibility Recommendations o Accommodation policy/process (incl. designated person and contact information) o Link to EEO is Law poster 7. Copies of self ID forms, job announcements, applications o Proper format/categories o BQs, tests, background checks 46
Top 10 Audit Requests in 2015 6. Documentation of review of personnel processes 5. Documentation of review of physical and mental qualifications 4. Documentation of accommodations o o Recommendations Policies (including leave) Logs (including requests, results, supporting documentation) 3. Documentation of Outreach and Recruitment Efforts o Primarily (but not necessarily) for veterans and individuals with a disability o Results of the Evaluation of Effectiveness o Description of activities, name, contact information o What worked well. What didn t. What changes are being made. o Failure to meet a goal/benchmark is not a violation. Failure to try is. Recommendation: Try to get specific information from applicants... 47 Perhaps have recruiters ask as well.
Top 10 Audit Requests in 2015 Recommendations 2. Personnel Activity Data o Including data for all minority groups o OFCCP is primarily running comparisons to the group with the highest rate (ala Uniform Guidelines) o Provide unknowns (OFCCP looking for potential flaws in the process... i.e., a low response rate) o If impact... be prepared to provide detailed applicant data (with dispositions), previous year s job group headcounts, termination logs, promotion reasons, etc. 1. Compensation Data 48
A few other tips to consider: 1. Review data before submission. Ensure that all data are correct and appropriate for the at-issue time frame 2. Perform adverse impact analyses on all transactions. Pay closer attention to the hires analysis. 3. Review compensation data. Conduct pro-active analysis and pro-actively investigate any pressure points. 4. Document and emphasize all EEO Good Things. 5. Prepare a neat and professional AAP. o o Recommendations The personnel in charge of implementation can answer simple questions regarding the Plan(s) The reports are complete and accurate 6. Consider performing a pre-audit mock audit. 7. Are you registering job openings with state agencies? 49
Recommendation Posting Requirements The OFCCP is expecting contractors create active relationships with outreach/recruitment sources Ensure all postings make it to state and local agencies including advocacy groups (enlist 3 rd -party if necessary) Include specific agencies aimed towards women, minorities, veterans, and individuals with disabilities Document postings and ensure they were actionable Best practice: Track referral source to evaluate effectiveness of outreach/recruitment 50
Recommendation Posting Requirements Requires that contractors list job openings with the appropriate employment service delivery system. Employment openings subject to the mandatory job listing requirement include all positions except: Executive and top management positions, Positions that will be filled from within the contractor's organization, and Positions lasting three days or less. Listing with the appropriate employment service delivery system must be done concurrently with a contractor's use of any other recruitment source or effort. 51
A few tips to consider (cont.): Audit Letter and Checklist 8. Reread the regulations. 9. Review and familiarize with the content of the AAP. 10. Know your auditor. 11. Know your auditor s time frame for decisions. 12. Document all conversations with reviewers. 13. GET HELP!!!! 52
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