OFCCP Announces Voluntary Enterprise-Wide Review Program
On February 13, 2019, the OFCCP issued Directive 2019-04, which provides the framework for the agency’s new Voluntary Enterprise-Wide Review Program (VERP).
The program is designed to incentivize federal contractors to complete voluntary compliance evaluations. It is part of a broader effort by OFCCP to find innovative ways to ensure that federal contractors comply with equal employment opportunity laws company-wide. While the requirements for the program have not yet been finalized, VERP is worth monitoring because it may prove to be a useful vehicle for contractors with strong, corporate-wide diversity and inclusion programs to obtain certainty and avoid random audits through OFCCP’s neutral compliance evaluation selection process.
Although the directive does not provide the final details of the program, it provides a framework of what federal contractors can expect. OFCCP will conduct compliance reviews of the contractor’s headquarters location as well as a sample or subset of establishments. Contractors will be required to demonstrate that they meet established criteria that not only basic compliance with OFCCP’s requirements, but also a demonstrated commitment to and application of successful equal employment opportunity programs on a corporate‐wide basis.
The promise of the program to contractors is that if a contractor is accepted into VERP, OFCCP will enter into an agreement that removes the contractor from OFCCP’s neutral scheduling process for the duration of the agreement. VERP will recognize two tiers of contractors. Contractors that are found to be OFCCP compliant will be removed from OFCCP’s list for random compliance evaluations for a period of three (3) years. Top‐performing contractors with model corporate‐wide diversity and inclusion programs will be receive five (5) years of relief from random compliance evaluations. The directive promises individualized compliance assistance to contractors in VERP’s second tier to assist them in becoming top performers.
Applicants who are not accepted into the program will return to the pool of contractors that OFCCP may schedule for compliance evaluations through OFCCP’s neutral selection process. The directive states that OFCCP will not automatically place rejected applicants on a scheduling list for a compliance evaluation. That being said, contractors should not expect OFCCP to ignore perceived violations identified during the VERP application process, so it is critical for contractors who seek to take advantage of VERP to rigorously self-audit their compliance with the assistance of experienced counsel prior to submitting an application.
This new program presents federal contractors with a significant cost-saving opportunity, particularly for those contractors with multiple establishments. Contractors with strong diversity and inclusion programs can potentially achieve cost-stability and predictability by submitting to a single audit through the VERP process, rather than being selected multiple times through OFCCP’s neutral selection criteria for separate audits at different establishments.
OFCCP plans to begin accepting applications from federal contractors in fiscal year 2020. Polsinelli will keep the contractor community updated as OFCCP releases additional details about the VERP process.