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New Federal Directives Aim to Ensure Federal Contractors' Compliance with Equal Employment Opportunities

The U.S. Department of Labor's Office of Federal Contract Compliance Programs (OFCCP) has issued a series of new directives over the last few months to ensure federal contractors comply with equal employment opportunity laws corporate-wide, including the Early Resolution Procedures and Voluntary Enterprise-wide Review Program.

Early Resolution Procedures (ERP)

The OFCCP has long held that problems identified at one location are indicative of a systemic or enterprise-wide problem. ERP is designed to promote early and efficient supply-and-service compliance and provide a mechanism to help remedy violations found during compliance evaluations more quickly. Contractors that participate in ERP will not be issued a Pre-Determination Notice (PDN) or Notice of Violation (NOV) and may go directly to conciliation.

Framework and Procedures

Applicability

ERP is applicable to all current OFCCP compliance audits in which a PDN, NOV, or Show Cause Notice (SCN) was not issued as of November 30, 2018.

Under the ERP, there will be three types of violations:

Non-Material Violations

  • During the desk audit, non-material violations such as an incomplete Affirmative Action Program (AAP), and no additional indicators of potential discrimination, lack of good faith efforts or other material non-discrimination violations, will follow current audit procedures.
     
  • Assistance will be provided and a closure letter will be issued.

Material Violations: Non-Discrimination

  • Upon completion of the desk audit, if a contractor has multiple establishments, then OFCCP will attempt to resolve material "non-discrimination" violations (e.g., record keeping, applicant tracking, failure to implement audit and reporting systems, failure to conduct self-analysis) through an Early Resolution Conciliation Agreement (ERCA) with Corporate-Wide Corrective Action.
     
  • The ERCA sets a report monitoring period. The contractor will be required to review all of its remaining establishments for similar violations during that period and will provide progress reports and supporting documentation with specific information.
     
  • If the contractor and OFCCP agree to these terms, OFCCP will not conduct any further compliance review at the original establishment for five years, although it may conduct such review at other establishments.

Material Violations: Discrimination
 

  • Upon completion of the desk audit, the compliance officer must submit the findings to OFCCP's district and regional management within 14 days.
     
  • OFCCP will request additional information and interviews regarding the violation to calculate a monetary remedy. The OFCCP will complete an analysis and if discrimination is still indicated, ERP will be offered, during which the contractor may provide additional information to rebut the findings of discrimination.
     
  • If discrimination violations are eliminated, the compliance officer will work on resolving the non-material violations and will issue a closure letter. If evidence of discrimination remains, the OFCCP will seek to make whole relief for the affected applicants and/or employees.
     
  • The contractor will be required to review other establishments for similar violations and implement corrective action during a five-year progress report-monitoring period. No compliance review will be conducted of the covered establishments during this monitoring period.
     
  • The entire conciliation period is expected to take no more than 60 days, unless an extension is granted.

Takeaway: Contractors should consider taking advantage of ERP to try to resolve potential violations early in the audit process. In addition to conserving resources, a contractor can avoid the disruption of on-site inspections, employee interviews, and responding to extensive document and data requests.

The Voluntary Enterprise-wide Review Program (VERP)

To recognize high-performing federal contractors and those contractors who aspire to reach that level, the OFCCP has issued a new directive that establishes a voluntary enterprise-wide compliance program. Successful participants will receive a three- or five-year audit exception on their AAPs from compliance reviews by the OFCCP.

Framework and Procedures

  • The program consists of two tiers. The top tier will consist of federal contractors with corporate-wide model diversity and inclusion programs who will receive a five-year audit exception. The second tier of contractors will receive individualized compliance assistance to help them become top performers and will receive a three-year audit exception.
     
  • As part of the application process, the OFCCP will conduct compliance reviews of the headquarters location and a subset of other locations. Contractors will have to demonstrate that they are in compliance with OFCCP's basic requirements and have demonstrated commitment and the successful application of Equal Employment Opportunity (EEO) programs throughout the company.
     
  • Contractors will be able to apply to the program electronically beginning October 1, 2019. The OFCCP is expected to provide information on how to apply later this year. Contractors can reapply for the VERP at the end of the five- or three-year audit exception. During their time in the program, contractors must maintain a discrimination-free workforce and have no material violations. Contractors will also have to provide periodic reports to the OFCCP. Contractors who do not qualify for the VERP or who are removed, will be returned to the compliance evaluation pool.

Takeaway: This program likely will only be attractive to federal contractors that are subject to multiple audits due to a large number of establishments, each requiring its own AAP. High-performing federal contractors that would like to participate in VERP are expected to be able to apply in the fiscal year 2020. Before applying, these contractors should ensure that they are in compliance with the OFCCP's affirmative action requirements and have demonstrated a significant commitment to EEO programs.

Copyright © by Ballard Spahr LLP

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About this Author

David Fryman Litigation Labor Employment Attorney
Partner

David S. Fryman is a member of Ballard Spahr's Labor and Employment Group. David represents employers in all types of labor and employment matters, including labor arbitrations, employment discrimination, and wage and hour cases; union representation campaigns and unfair labor practice proceedings; ERISA and employee benefits litigation; restrictive covenant and trade secret cases; and advice and training on a broad range of day-to-day human resource issues.

Representative Matters

  • Tried numerous employment discrimination cases to verdict

    ...
215.864.8105
Nancy Anton Litigation Labor Employment Attorney
Of Counsel

Nancy Anton has more than 20 years of experience advising clients on employment laws in the workplace. A strong and diversified client base—Nancy delivers sound, strategic and practical advice to her clients in the healthcare, financial services and manufacturing industries. She has also worked with clients in transportation, agribusiness, biofuels, gaming, retail, and technology. There is no limit to the industry, size or location of her clients. Her clients are local as well as national and international. She works with private and public companies and government, as well as non-profit organizations.

Nancy has successfully defended clients before state and federal trial and appellate level courts and agencies, including the Department of Labor, Equal Employment Opportunity Commission, and state human rights departments, the Office of Federal Contract Compliance and state and federal Revenue Departments on discrimination, wrongful termination, wage and hour claims, and worker classification and non-compete agreements. She provides on-site training, conducts investigations, and prepares affirmative action plans. She is also heavily involved in performing employment due diligence for private equity clients engaged in mergers and acquisitions.

2018 Representative Matters

Successfully obtained a dismissal from the South Carolina Human Affairs Commission on a race, sex, and retaliation Charge of Discrimination for a plastic products manufacturing industry client 

Successfully obtained a dismissal from the Minnesota Department of Human Rights on a disability and retaliation Charge of Discrimination for a financial services industry client

Successfully obtained a dismissal from the Denver Equal Employment Opportunity Commission on a race and equal pay charge of discrimination for a client that supports the oil industry

Successfully settled a breach of contract and tortious interference with business contract case involving a former employee going to work for a competitor and obtained money damages for a healthcare facility, a portfolio company of one of a private equity client

Won on appeal before the Minnesota Department of Employment and Economic Development, a determination of ineligibility based on employment misconduct regarding unemployment benefits for a former management employee for two different clients: one in the health care supply industry and the other engaged in manufacturing of safety vehicles

Successfully settled a wage and hour action before the California Labor Industrial Commission for a software company client brought by a former employee claiming misclassification of exempt status, and overtime and other compensation due and owing

Successfully settled a charge of discrimination for disability and retaliation before the Minneapolis Equal Employment Opportunity Commission for a health care supply client

Won on appeal before the Minnesota Department of Employment and Economic Development, for a pro bono client, classification of an individual as an independent contractor vs. employee

612.371.3934
Tanya Taylor Labor Employment Litigation Attorney
Associate

Tanya Taylor served as a law clerk to U.S. Senator Patrick Leahy on the Senate Judiciary Committee, where she conducted legal research, attended Judiciary Committee hearings, and prepared memoranda on judicial nominations, national security, and oversight. She was a member of Haiti's national women's soccer team and played professionally for the Boston Breakers of the National Women's Soccer League. She was captain of the UC-Irvine women's soccer team.

Judicial Externship

Hon. Mark S. Wallace, U.S. Bankruptcy Court for the Central District of California, 2014...

424.204.4355