Practical Ways to Comply With the OFCCP's New Audit Scheduling Letter

PRACTICAL WAYS TO COMPLY WITH THE OFCCP’S

NEW AUDIT SCHEDULING LETTER

NOVEMBER 19, 2014

Candee J. Chambers, SPHR, CAAP VP - Compliance & Partnerships Direct Employers Association 9002 N. Purdue Road, Suite 100 Indianapolis, IN 46268 Phone: (317) 874-9052

John C. Fox, Esq. Fox, Wang & Morgan P.C. 315 University Avenue Los Gatos, CA 95030 Phone: (408) 844-2350

© 2014 Fox, Wang & Morgan P.C.

AGENDA

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Welcome Introduction……………………………………….. Candee Chambers

OFCCP’s New Scheduling Letter………………………….. Candee Chambers

OFCCP’s New Scheduling Letter (Con’t)…………………………. John C. Fox

Questions and Answers re OFCCP’s New Scheduling Letter…………... ALL

ABBREVIATION KEY

Ø  DOL = U.S. Department of Labor Ø  Ees = Employees Ø  EO = Executive Order Ø  FR = Federal Register Ø  IL = Itemized Listing Ø  K = Contract Ø  Kor = Contractor Ø  LGBT = Lesbian, Gay, Bisexual,

Transgender Ø  LVER = Local Veterans Employment

Representative (“Vets Rep”) Ø  SDR = Supplemental Data Request

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NEW OFCCP SCHEDULING LETTER

How timely is this webinar? Ø  OFCCP about to send 2,500 CSAL letters

(“Corporate Scheduling Announcement Letter”: which some law firms and HR companies incorrectly refer to as “Courtesy Scheduling Announcement Letters”)

Ø  New OFCCP 13 question FAQs now on OFCCP’s website titled: “Scheduling Letter Itemized Listing ITEM 19 Compensation Data”

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NEW SCHEDULING LETTER (CON’T.)

Ø  After 3 years of waiting, Pat Shiu gets her new audit Scheduling Letter for Supply and Service contractors

Ø  After 35 years, OFCCP gets one of its fondest hopes: individual employee-level compensation data on day 31 of the audit -  OFCCP has been getting comprehensive employee

level comp data during Desk Audits since June 6, 2010 (see secret OFCCP Directive 289)

•  Now, OFCCP will get employee-level comp data automatically in every Supply and Service Audit at the start

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NEW SCHEDULING LETTER (CON’T.)

BIG ITEMS IN NEW ITEMIZED LISTING:

Ø  Applies to all Supply & Service audits, including:

•  University audits •  Corporate Management Compliance Evaluations (CMCE =

“Glass Ceiling” HQ audits) •  Functional Affirmative Action Plan (“FAAP”) audits

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NEW SCHEDULING LETTER (CON’T.)

BIG ITEMS IN NEW ITEMIZED LISTING (con’t.):

Ø  Two new documents:

-  OFCCP audit Scheduling Letter for Supply & Service Compliance Evaluations

-  Itemized Listing, attached to Scheduling Letter, has doubled from 11 document demands (i.e. “11 paragraphs”) to 22 paragraphs

Ø  EFFECTIVE AS OF October 15, 2014 Ø  OMB has approved to/thru September 30,

2017 7

NEW SCHEDULING LETTER (CON’T.)

Ø  Let’s now look at the new Letter and new Itemized Listing

-  Architecture:

•  Letter demands AAPs for “establishment” OFCCP has selected to audit

•  Itemized Listing demands documents associated with particular employment transactions at that “establishment”

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NEW OFCCP ITEMIZED LISTING

EO 11246 CHANGES: Ø  Demands “[d]ata on your employment activity

(applicants, hires, promotions, and terminations)… .” -  Clarifies it seeks only data (not analyses) -  Refers to “applicants” (not mere expressions of

interest) -  Does not define hires (but you may include

rejected “offers”) -  OFCCP now demands to know your definition(s)

of promotion 9

NEW OFCCP ITEMIZED LISTING (CON’T.)

EO 11246 CHANGES (con’t.): -  Does not define terminations (you should supply only

involuntary terminations = to allow review of “adverse action”) •  Note: OFCCP may also request all terminations you

believe voluntary via SDR

-  Allows submission by “Job Group” or “Job Title” however, you should be forming Job Groups narrowly = “similarly situated employees”

-  BTW , why are narrow Job Groups important?

-  OFCCP now uses AAP information to claim unlawful employment discrimination: i.e.

•  Applicants v. Hires •  Compensation Analyses 10

ENTIRELY NEW SECTION ON 503:

Ø  “Results of the evaluation of the effectiveness of outreach and recruitment efforts… .”

Ø  “Documentation of all actions … taken to comply with the audit and reporting system requirements… .”

Ø  “Documentation of” new data metrics requirement.

Ø  “The utilization analysis… .”

Ø  “Copy of reasonable accommodation policies, and documentation of any accommodation requests received and their resolution, if any.” 11

NEW OFCCP ITEMIZED LISTING (CON’T.)

ENTIRELY NEW SECTION ON 503 (con’t.):

Ø  “… most recent assessment of … personnel processes … the date …, any actions taken or changes made …, and the date of the next scheduled assessment.”

Ø  “… most recent assessment of physical and mental qualifications, … including the date …, any actions taken or changes made …, and the date of the next scheduled assessment.”

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NEW OFCCP ITEMIZED LISTING (CON’T.)

ENTIRELY NEW SECTION ON VEVRAA: Ø  “Results of the evaluation of the effectiveness of outreach and

recruitment efforts … .”

Ø  “Documentation of all actions taken to comply with the audit and reporting system requirements … .”

Ø  “Documentation of” data metrics.

Ø  “Documentation of the hiring benchmark adopted, … .”

Ø  “… most recent assessment of … personnel processes, … including … date …, any actions taken or changes made …, and the date of the next scheduled assessment.”

Ø  “… most recent assessment of physical and mental qualifications, …, including … date …, any actions taken or changes made …, and the date of the next scheduled assessment.”

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NEW OFCCP ITEMIZED LISTING (CON’T.)

PARAGRAPH 19 COMPENSATION DATA DEMANDS

Item #19 is mirror image of previous nettlesome Supplemental Data Requests

OFCCP Now Demands:

1.  Employee-level compensation data

2.  Optional compensation info (you have an election to make: see below)

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Must produce: Employee-level compensation data

Ø  All “employees” =

• Full-time

• Part-time

• Contract

• Day Labor and

• Temporary Workers

Ø  Not Independent Kors

• What is an “employee in OFCCP” parlance? ─  Use “common law” definition 15

¶ 19 COMP DATA DEMANDS (CON’T.)

Must produce: Ee-level compensation data (con’t.)

Ø  As of date of AAP Workforce Analysis

• Can you capture data from back then?

• Should you just run a comp report to have ready “just in case” you get audited?

• No “6-month update” obligation like “progress on goals” and as to Disparity Analyses (for Hires/Promotions/Terminations)

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¶ 19 COMP DATA DEMANDS (CON’T.)

Must produce: Ee-level compensation data (con’t.)

Ø  Name

Ø  Gender and race/ethnicity

Ø  Date of hire

Ø  Job title

Ø  EEO-1 Category

Ø  Job Group

---------------------------------------------------------

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¶ 19 COMP DATA DEMANDS (CON’T.)

Must produce: Ee-level compensation data (con’t.)

Ø  Actual compensation

•  Base salary or wage rate

•  Typical weekly hours (if paid hourly)

Ø  Locality pay, if any

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¶ 19 COMP DATA DEMANDS (CON’T.)

Other compensation data Item #19 requires you must include:

Ø  Bonuses

Ø  Incentives

Ø  Commissions

Ø  Merit increases

Ø  Overtime

OFCCP allows you to report the above data lumped together with base salary or wage rate, but asks you to exercise your discretion to identify these forms of compensation separately for each employee (such data “should be identified separately for each employee”) (emphasis added)

Ø  So, OFCCP requires you to produce the data, but the form of production is up to you

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¶ 19 COMP DATA DEMANDS (CON’T.)

OFCCP would also like you to provide, in your discretion:

Ø  “Policies related to compensation”

Ø  “Particularly those that explain the factors and reasoning used to determine compensation”

You need neither create written policies you do not have, nor produce to OFCCP (in response to the Itemized Listing) those policies you may have written and have lying “on the shelf”

Ø  (“…policies related to compensation *** should also be included in the submission…”). (emphasis added) 20

¶ 19 COMP DATA DEMANDS (CON’T.)

•  “should ≠ “shall” or “must”

•  “should” is hortatory

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¶ 19 COMP DATA DEMANDS (CON’T.)

Ø  If you have policies, hopefully they speak to what counts in compensation discrimination analyses: Pay “decisions,” like:

•  Starting Pay •  Promotional pay increases •  Commissions (if any)

Ø  No need to write new policies

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¶ 19 COMP DATA DEMANDS (CON’T.)

Optional information you may provide (not required):

Ø  Information “on factors used to determine compensation, such as education, experience, duty location, performance ratings, department or function, (and salary level/band/range/grade).”

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¶ 19 COMP DATA DEMANDS (CON’T.)

Pros and Cons of Submitting Optional Information

Con:

Ø  More cost burden to you

Ø  Could confuse OFCCP and beg more inquiry

Pro:

Ø  Could explain away any pay discrepancies

Ø  Could avoid on-site

�  See BofA case decision 24

¶ 19 COMP DATA DEMANDS (CON’T.)

Basic employee level data required by Item #19

Ø  See exemplar Kor response to Paragraph 19 (next page)

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¶ 19 COMP DATA DEMANDS (CON’T.)

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¶ 19 COMP DATA DEMANDS (CON’T.)

Employee ID Number

Compensation as of AAP Workforce Analysis Date (i.e. actual base salary or

hourly rate)

Gender Race/

Ethnicity Hire Date Job Title

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¶ 19 COMP DATA DEMANDS (CON’T.)

Job Group EEO-1 Category Hours Worked in a Typical Workweek

(If Paid Hourly)

Bonus (If Applicable)

Incentive Pay (If Applicable)

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¶ 19 COMP DATA DEMANDS (CON’T.)

Locality Pay (If Applicable)

Commissions (If Applicable)

Overtime (If Applicable)

Education (Optional)

Prior Experience (Optional)

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¶ 19 COMP DATA DEMANDS (CON’T.)

Duty Location

(Optional)

Performance Ratings (Optional)

Department or Function (Optional)

Salary Level/Band/Range/Grade

(Optional)

The Footnote 5 Issue: Ø  The IL calls for all “race/ethnicity” data to be reported, and

defines that term to mean: �  African-American/Black �  Asian/Pacific Islander �  Hispanic �  American Indian/Alaskan Native �  White

Ø  Pursuant to OFCCP Directive 283, August 14, 2008, Kors may also report by 6 or 7 race/ethnicities, including �  Native Hawaiian; and/or �  Two or More Races 30

MISCELLANEOUS ISSUES

FINALE:

“If any of the requested information is computerized, you must submit it in an electronic format that is complete, readable, and usable. (emphasis added) Please use caution when submitting large electronic files. Check with the OFCCP Compliance Officer and your system administrator to ensure adherence to administrative and system guidelines.”

−  FTP sites on the horizon? −  Thumb drive sales to increase −  Burn a CD?

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MISCELLANEOUS ISSUES (CON’T.)

“We estimate that the average time required to complete this information collection is 27.9 hours per response, including the time for evaluating instructions, searching existing data needed, and completing and evaluating the collection of information.”

ENJOY! 32

MISCELLANEOUS ISSUES (CON’T.)

QUESTIONS?

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THANK YOU

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