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OFCCP Proposes Rulemaking to Codify Compliance Evaluation Procedures

On December 30, 2019, OFCCP issued a Notice of Proposed Rulemaking on Nondiscrimination Obligations of Federal Contractors and Subcontractors: Procedures to Resolve Potential Employment Discrimination.  The proposed rulemaking codifies aspects of several of OFCCP 2018 directives, including Directive Nos. 2018-01 (Use of Predetermination Notices), 2018-05 (Analysis of Contractor Compensation Practices During a Compliance Evaluation), and 2018-08 (Transparency in OFCCP Compliance Activities).

Perhaps most importantly for contractors, the proposed regulation elaborates on the statement in OFCCP’s Directive 2018-05 concerning compensation reviews that “OFCCP will be less likely to pursue a matter where the statistical data are not corroborated by non-statistical evidence of discrimination unless the statistical evidence is exceptionally strong.” The proposed rulemaking adds specificity to this statement, clarifying that in the absence of non-statistical evidence, OFCCP will issue a Predetermination Notice (PDN) only where the statistical evidence is significant at a confidence level of 99% or higher, equating to three or more standard deviations. This appears to be a positive development for contractors, as OFCCP currently pursues compensation audits based solely on alleged statistically-significant disparities falling below this threshold.

The proposed rulemaking also defines statistical and non-statistical evidence. The definition of statistical evidence echoes the focus in OFCCP’s recent directives of “controlling for the major, measurable parameters and variables used by employers” in making compensation and selection decisions. The definition identifies several exemplary control factors that OFCCP may consider, including performance evaluations, years of experience or service, and location.  This may provide additional weight to contractors’ arguments that OFCCP must consider contractor’s control factors in its compliance evaluation analyses. 

The proposed rulemaking defines non-statistical evidence to include testimony about workplace bias, non-statistical cohort analyses, testimony about individuals being denied or given misleading information about employment practices, testimony about subjective or discretionary decision-making, and other anecdotal evidence. Overall, this specificity about the types of non-statistical evidence OFCCP will rely upon is beneficial to contractors.  However, the focus on discretionary elements in compensation systems as evidence of discrimination is problematic as the U.S. Supreme Court has held that giving managers discretion in making employment decisions is not inherently discriminatory.

Finally, the proposed regulations will codify OFCCP’s current practice, described in Directive 2018-01, of using of PDNs and Notices of Violation when a compliance review shows preliminary findings of discrimination. Noticeably absent from the proposed regulations, however, is Directive 2018-05’s pledge that OFCCP will attach to the PDN the individual-level data necessary for the contractor to replicate OFCCP’s statistical analyses.

Contractors should welcome OFCCP’s effort to formalize these aspects of its Directives into regulations.  Contractors will have until January 29, 2020 to comment on the proposed regulations.

© Polsinelli PC, Polsinelli LLP in CaliforniaNational Law Review, Volume IX, Number 364

TRENDING LEGAL ANALYSIS


About this Author

Conne Bertram Government Contract Lawyer Polsinelli Law Firm
Shareholder

Connie focuses her practice on whistleblower, trade secrets, government contractors and employee mobility counseling and litigation. She frequently conducts confidential internal investigations involving executive-level employees, including alleged fraud, theft or misuse of company data, trade secrets, sexual harassment and code of conduct violations. She routinely counsels, investigates and litigates restrictive covenant and trade secrets disputes between employers and former employees.

Connie has defended complex whistleblower, trade secrets and restrictive...

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Jack Blum Polsinelli Employment Attorney
Associate

Jack Blum is an associate in the firm’s Employment Disputes, Litigation, and Arbitration practice, where he represents employers in connection with a wide range of employment law issues. Jack has extensive experience in defending employers against claims by their employees in federal and state courts, as well as before government agencies like the EEOC, Department of Labor, and state human rights commissions. Jack aggressively defends his client’s personnel practices and decisions while not losing sight of their underlying business goals and objectives. Jack represents clients in all aspects of complex employment litigation and has advised and defended employer clients regarding a wide variety of employee claims, including:

• Employment discrimination, harassment, and retaliation
• Wage and hour
• Employment contract disputes
• Independent contractor/employee misclassification audits 
• Tort claims arising out of the employment relationship

Jack also has extensive experience representing parties in litigation arising from employee mobility, including claims involving non-competition, non-solicitation, and confidentiality agreements as well as the misappropriation of trade secrets. Significantly, Jack has experience in both prosecuting and defending these claims and is, therefore, able to offer clients a well-rounded assessment of their options and courses of action. Jack also has experience redressing employee data breaches under the Computer Fraud and Abuse Act.

Jack also has a background in employment counseling, where he has worked closely with in-house counsel, human resources personnel, and business executives to craft personnel policies that meet the client’s business requirements while complying with applicable laws. Jack has particular experience in assisting clients with issues relating to employee/independent contractor classifications, and regularly advises clients regarding the defensibility of classifications, drafts independent contractor agreements to provide the strongest possible arguments in support of the classification, and defends misclassification claims asserted by employees and government agencies. Jack also walks clients through sensitive personnel actions to reduce the potential for litigation or at least best position the client in the event that litigation is inevitable. Jack draws heavily upon this counseling experience in representing clients in litigation.

During law school, Jack served as a legal intern in the U.S. Securities and Exchange Commission’s Office of the Inspector General where he contributed to several high-profile internal investigations, and also interned with the Maryland Attorney General’s Office.

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