I Get That All the Time! Frequently Asked Questions About OFCCP Audits

Frequently Asked Questions (FAQs):

Audits September 10, 2014

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Biddle Consulting Group, Inc. 193 Blue Ravine, Suite 270 Folsom, CA 95630 916.294.4250 www.biddle.com | www.bcginstitute.org Nina Le-Tse Dan Kuang, Ph.D. [email protected] [email protected]

Contact Information

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mailto:[email protected]

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• OFCCP: New Regulations/Executive Orders & Update

• Frequently Asked Questions

• Compensation

• Highest Selection Rate

• Adverse Impact in Hiring

• Data reconciliation

• Promotions

• Individuals with Disabilities and Protected Veterans

• OFCCP Audit Request

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Agenda

Copyright (c) 2014 Biddle Consulting Group, Inc

• New Regulations for individuals with disabilities (IWDs) and protected veterans published Sept. 24, 2013.

• Systems must be ready to track by March 24, 2014.

• Subpart C may be postponed until the expiration of the current AAP cycle.

• Reports are required in the next reporting cycle following one year of data collection.

• 7.2% Hiring benchmark for protected veterans.

• 7% Utilization goal for individuals with disabilities.

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Year of Action: Recent Regulations & EO


• February 2014

• President Obama signed an EO 13658 establishing a new minimum wage for federal contractors and subcontractors. • $7.25 $10.10/hour increase will be effective January 1, 2015.

• Every year after, the Secretary of Labor may update the minimum wage.

• Must be published at least 90 days before the new minimum wage increase.

• April 2014 • President Obama signed an Executive Order prohibits federal contractors

from retaliating against employees who choose to disclose their compensation.

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• July 21, 2014

• President Obama signed Executive Order 11478 amending EO 11246 to add protection for sexual orientation and gender identity. • Prohibited federal contractors from discrimination on the basis of

race, color, religion, sex, sexual orientation, gender identity, or national origin.

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• Compensation • Highlighted as a priority in President Obama’s January 28, 2014 State of

the Union. • Dedicated funding in the amount of $1.1 million and 10 additional

FTEs (OFCCP) in FY15 budget justification to support efforts in narrowing pay gap.

• On April 2014 • President Obama tasked the Secretary of Labor within 120 days to

propose the requirement of collecting compensation data from federal contractors and subcontractors. • Will be required to submit to the DOL a summary data of your

compensation which will include sex and race, and W2 data. • Compensation Data Tool

• NPRM was published on August 6, 2014 for public opinion.

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OFCCP Update


• Corporate Scheduling Announcement Letters (CSALs) • Sent out semi-annually. • Latest batch was sent July 16th 2014.

• OFCCP Audit Techniques • Active Case Enforcement (ACE Directive) – Currently used.

• Broader scope in conducting audits. • Continues to look at systemic discrimination, but also looks at areas

that are minor/not substantial.

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OFCCP Update


Frequently Asked Questions During

Audits


General Questions

• An advanced notice from the OFCCP that your location may be selected for an OFCCP audit.

• This courtesy letter will be sent to the physical location and not the corporate office.

• Yes, OFCCP had sent confidential letter to contractors to let them know that the information submitted during audits are confidential from public consumption.

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What is a Corporate Scheduling Announcement Letter (CSAL)?


Is audit data protected from Freedom of Information Act (FOIA) requests?

Compensation

• A focus aimed at narrowing the wage gap

• Civil Rights Act of 1964 (Title VII)

• Equal Pay Act 1963

• Lily Ledbetter Fair Pay Act of 2009

• Directive 307 (February 28, 2013)

• President Obama’s Executive Order (April 8, 2014)

• Compensation Data Collection Tool

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Why does the OFCCP focus on Compensation?


Compensation

• Yes!

• OFCCP is entitled to ask for comp data by job group/pay grade. Therefore, you are required to comply and submit the compensation report in the manner that has been requested.

• OFCCP typically would like the data/report in an Excel format.

• Contractors should re-emphasize that employees do not compensate at this level but by how your organization compensate employees (e.g., job title, etc.).

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We submitted our compensation data by job title and we were asked to resubmit the data by job group, pay grade, or EEO category. Do we need to comply with the request?


Compensation

• We recommend our clients to provide what is readily available in the HRIS.

• Examples of some additional items requested for compensation data: • Starting salary • Current pay grade/pay band • Job family • Function/business unit • Performance ratings for the past two years • Merit increase for the last two years • Shift differential, Bonus, Incentive Pay, Overtime wage rate in separate column • Market Value • Prior experience • History of individual employee’s compensation

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OFCCP is requesting the compensation data for all employees with overwhelming additional factors that directly impact comp. Stating that there were unexplained differences in average compensation. Do we have to provide all of the items listed on the letter?


Highest Selection Rate

• Correct, the group with the highest selection rate must be at least 2% of the applicant pool.

• CFR 60-3.15A(2)(a) and UGESP Q&A # 16

“Q16. Should adverse impact determinations be made for all groups regardless of their size?

A. No. Section 15A(2) calls for annual adverse impact determinations to be made for each group which constitutes either 2% or more of the total labor force in the relevant labor area, or 2% of more of the applicable workforce. Thus, impact determinations should be made for any employment decision for each group which constitutes 2% or more of the labor force in the relevant labor area. For hiring, such determination should also be made for groups which constitute more than 2% of the applicants; and for promotions, determinations should also be made for those groups which constitute at least 2% of the user's workforce.”

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For adverse impact, should we only use the group with the highest selection rate only if the said group is at least two (2) percent of the overall applicant pool/workforce?


Adverse Impact

• Technically, according to “internet applicant definition,” applicants who declined offer should be included.

• Individual Submits Expression of Interest.

• Contractor Considers Individual for a Particular Position.

• Individual Possesses Basic Qualifications.

• Individual Does NOT Self-Eliminate Before Offer is Made.

• However, you can also argue that they withdrew from the selection process when they declined the offer.

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Can I exclude applicants who declined offer?


Adverse Impact

• Analyses must reflect reality!

• Conduct analysis (adverse impact) by job title.

• Only if the selection process is distinct and separate for each job title within the impacted job group.

• Conduct step analysis (documentation/disposition code is the key):

• Title VII of 1964/1991 Civil Rights Act

• An unlawful employment practice based on disparate impact is established under this title only if a complaining party demonstrates that a respondent uses a particular employment practice that causes a disparate impact . . .

• Translation: Employers must be able to identify who took/passed/failed each step within a selection process.

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Adverse impact exist in the hiring analysis by job group. What is our next step?


Previous Job Group Analysis

• We have experienced OFCCP conducting two analyses based on the previous employees’ count.

1) They use the previous incumbents to do basic math.

2) Use as a proxy pool for termination and promotion from to conduct

adverse impact analyses.

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OFCCP requests the previous job group analysis (previous employee count) for all job groups within the audited location. What will they do with the requested information?

Hires, Terms, Promos

This Year’s WF

Last Year’s WF


Promotions

• This is a very interesting question. The OFCCP may request this information for several different reasons.

• If there is any competitive promotion within the submitted data. If there is, you will need to produce the competitive promotion along with the applicant pool for those promotions.

• The actual available/eligible pool for promotions.

• Ensure that your HRIS is capable of identifying competitive promotions versus noncompetitive promotions. Especially with the new regulations (VEVRAA/503) you are required to report on all personnel activities (e.g., competitive promotion, non competitive promotion, transfer, etc.).

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OFCCP requested the applicant pool for promotion. How do we comply to this request?


New Regulations (Protected Veterans/503)

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If we were to receive a scheduling (audit) letter right now, what do we have to provide regarding the new regulations?


• Remember, the first AAP is the transition year

• If your AAP is still current after March 24th, there will be no changes

• HOWEVER we’ve seen additional requests for contracts, letters to vendors, etc…(technical changes in subpart A).

• If your AAP has expired on or after March 24th, ensure your narrative are updated (e.g., policy statement, internal audit and reporting, etc.) .

• Be prepared to provide evidence of self-ID (IWDs & Protected Veterans) along with any technical changes.

• In the initial OFCCP submittal, only provide what is requested in the audit letter. The Compliance Officer will make requests for any additional information that is needed to aid in their investigation.



• Contractors can ID if the disability is obvious and known. • http://www.dol.gov/ofccp/regs/compliance/faqs/503_faq.htm#Q49 • How should non-responses to the invitation to self-identify as an individual with a

disability be treated when conducting the utilization analysis? o The regulations require contractors to conduct an annual utilization analysis to determine the

representation of people with disabilities in each job group, or if it has 100 or fewer employees, in its workforce as a whole. To calculate the percentage of a job group (or workforce) that is comprised of people with disabilities contractors should use the same methodology used to calculate the percentage of a job group (or workforce) that is comprised of any other specific demographic group. Specifically, contractors should compare the number of individuals identified as having a disability to the total number of employees in the job group. Non-responses should be counted solely in the job group (or workforce) total, unless the contractor has actual knowledge that a particular non-responsive individual(s) has a disability. The contractor may count as an individual with a disability any individual who it actually knows to have a disability, whether or not the individual chose to self-identify.

If the applicant (pre-offer and post-offer) does not self ID as an IWD but the HR Dept learns that the individual has a qualified disability during the employment relationship, can the company document the employee as an IWD?

http://www.dol.gov/ofccp/regs/compliance/faqs/503_faq.htm




• The VETS departments confirmed that these individuals should not be counted in any individual classification. They will only be counted in the total column, as well as the Max Number. In other words, they will be treated as a non-veteran.

When a new hire/employee marks “I am a protected veteran, but I choose not to self-identify the classifications to which I belong”, where are they represented on the VETS100a report?


OFCCP Requests During Audit


• Resubmit compensation data to include job groups or pay bands; include any other factors used by the federal contractor to determine pay

• Compensation factors and data from the time each employee started work (up to 10 years in some cases)

• Job Group Analysis from previous year

• Copy of contractor’s FMLA policy

• Copy of filed EEO-1 reports

• Copy of VETS-100/100A reports

• Copy of EO Clause in contracts and purchase orders, verbatim, and in bold text

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OFFCP Requests During Audit


• Copy of contractor’s policy regarding background checks

• EEOC recently changed its policy on use of criminal history in the selection process

• Copies of job postings for all positions that were listed with the state workforce agency, job bank or with the local employment service delivery system

• Copies of all job vacancy announcements or other documentation showing proof of external dissemination of policy, outreach and positive recruitment of veterans, disabled veterans, recently separated veterans, or Armed Forces service medal veterans

• List of accommodation requested, who requested them, and the decisions on the request

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• Some CO’s started sending out confidentiality letters to contractors

• Some CO’s are asking for mid year employee file

• At least in one region: CO’s are instructed to ask for the same data/information for all audited locations within the same organization

• OFCCP is looking to consolidate audits from an organization to a single CO

• Background information regarding the audited location (when was it acquired, how many employees were laid-off due to acquisition, etc.)

• Proof of outreach, recruitment, and supporting data for job groups with only 1 hire but observed to have very few applicants

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• Additional Compensation Factors (i.e. time in job, performance reviews, full- time/part time status, tenure or non-tenure faculty)

• Workforce Analysis with salary range included

• Explanation of Job Groupings and how they were created

• Prior year’s employees across all Job Groups

• Explanation of reasons why current incumbents don’t match transaction data

• Personnel Handbook, Employee Handbook, Compensation Handbook, Faculty/ Non-Faculty Handbook

• Blank copy of job application or a copy from the website

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• Copy of invitation to Self-ID, including: • Protected Veterans • Individuals with Disabilities • Race • Gender

• Evidence of outreach and recruitment efforts for protected veterans and individuals with disabilities

• Submission of self-monitoring reports (i.e. adverse impact and compensation analyses)

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Recruiting & HR

I Get That All the Time! Frequently Asked Questions About OFCCP Audits