OFCCP Issues Advance Notice to Federal Contractors of Potential Audit
The United States Department of Labor’s Office of Federal Contract Compliance Programs (“OFCCP”) recently sent 1,000 Corporate Scheduling Announcement Letters (“CSALs”) to 515 federal government contractors. The CSALs provide advance notice that contractor establishments may be audited by the OFCCP during the scheduling cycle, which ends September 30, 2018, to ensure compliance with the contractors’ non-discrimination/affirmative action obligations.
The CSALs were sent on February 1, 2018, to the attention of the Director of Human Resources of the contractor establishments appearing on the FY2018 Scheduling List. Scheduling Letters will be sent to contractor establishments, beginning March 19, 2018, to commence the compliance review process.
According to the OFCCP, the purpose of the CSAL is fourfold:
- To provide personnel at each establishment with at least 45 days’ advance notice to obtain management support for compliance and self-audit efforts;
- To encourage contractors to take advantage of compliance assistance offerings;
- To encourage contractors to focus on self-audit efforts that, if problems are identified and addressed, will save the OFCCP time and resources when doing its review; and
- To help contractors manage/budget the amount of time required for the review. Contractors receiving CSALs should take advantage of the advance notice to ensure their affirmative action programs are in compliance and that any potential issues have been addressed in advance of the audit.
Contractors subject to a compliance review need to be vigilant in responding to the audit. It appears that the OFCCP continues to take a “deep dive” approach, which includes in-depth, time-consuming reviews of contractors’ hiring, compensation, and other employment data for statistical indicators of possible discrimination. In recent years, the number of audits conducted by the OFCCP has dropped, while the enforcement approach has expanded.
According to a report by Bloomberg Law, through the third quarter of FY2017, the number of audits closed by the OFCCP was 915, down from 1,700 the prior year; yet the OFCCP collected $23.1 million in settlements in FY2017 – more than double the prior year when it collected $10.5 million. This should certainly get the attention of all federal government contractors. While the number of audits by the OFCCP has decreased, the costs associated with defending an audit, and the settlement payouts, for contractors have increased.
What Employers Should Do Now
Contractors need to apprise appropriate personnel at each of their facilities to monitor incoming mail for receipt of the CSAL and Scheduling Letter, with forwarding instructions if received.
Contractors that receive a CSAL should take advantage of the advance notice by conducting a self-audit to ensure that their affirmative action programs are in compliance and that any potential issues have been addressed in advance of the audit. Once a Scheduling Letter has been issued, contractors will only have 30 days within which to respond, and the OFCCP has made clear that extensions of time of no more than 15 days will not be given lightly.
Contractors subject to a compliance review need to pay particular attention to their hiring practices and compensation systems. An impact ratio analysis should be performed, examining applicants and hires to determine if there are statistical results pointing to adverse impact and, if so, what the explanation is for the hiring decisions. A compensation analysis should also be conducted, with explanations provided if significant pay disparities exist.
The list of establishments that receive CSALs is generated by the OFCCP’s neutral-based Federal Contractor Selection System. If contractors have concerns about whether or not they received a CSAL at any of their facilities, they may make inquiry about whether an establishment was mailed a CSAL by e-mailing a written request on company letterhead to the Division of Program Operations at [email protected].