Monday, November 21, 2022: OFCCP Proposed Numerous Changes to Its Supply & Service Contractor ICRs, Including City-wide Audits and Promises to Jawbone Contractors to Use of Its Portal to Submit Scheduling Letter & Itemized Listing Responses
OFCCP published a notice in the Federal Register seeking public comments on several changes to its information collection requirements (ICRs) for Supply and Service Contractors in conjunction with its request for Office of Management and Budget’s (OMB) approval to continue the ICRs PURSUANT TO the federal Paperwork Reduction Act. OMB’s current approval for these ICRs expires on April 30, 2023. The proposal includes significant changes to OFCCP’s Scheduling Letter and Itemized Listing – including five new items. However, the notice itself only lists the substantive proposed changes. Details on the changes were revealed in the 31-page Supporting Statement that OFCCP submitted to OMB. The proposed revised Scheduling Letter is available here.
Comments on the proposed changes are due on Tuesday, January 20, 2023, and can be submitted here.
Editorial Note 1: The federal Paperwork Reduction Act is a federal statute independent of the federal Administrative Procedure Act. The Paperwork Reduction Act requires OMB (an arm of the White House) to approve all federal agency data or information collected from 10 or more members of the public to avoid duplication of effort among the federal Executive Branch agencies subject to the President’s control. OMB also undertakes cost-benefit evaluations of whether the number of “burden hours” the agency estimates will impact the public is justified by the objective of the data/information collection.
Editorial Note 2: The informal comments the OMB receives in response to OFCCP Federal Register requests for public comment DO NOT SUFFICE OR REPLACE the need for a federal Executive Branch agency like OFCCP to also publish for formal public “Notice and Comment” PURSUANT TO the federal Administrative Procedure Act (“APA”) any information collection impacting the regulated community. See, The FIRESTONE SYNTHETIC RUBBER & LATEX CO., a division of the Firestone Tire & Rubber Co., and Koppers Company, Inc., Intervenor, v. F. Ray MARSHALL, Secretary of Labor and Weldon J. Rougeau, Director, Office of Federal Contract Compliance Programs, 507 F. Supp. 1330 (1981) [OFCCP is required to publish a formal Rule pursuant to the APA regardless of whether OFCCP intends the Rule to be a “Legislative Rule” carrying the full “binding force and effect of law” as though issued in a statute by the U.S. Congress that the OFCCP intends to require of covered federal Government contractors and enforce against them, or whether the Rule is merely an “Interpretive Rule” OFCCP did not intend to enforce against covered federal Government contractors but rather intended to merely explain one or more of OFCCP’s existing Rules that would have a “substantial impact” on covered federal Government contractors.] See 507 F. Supp. 1334-1336, in particular, in the Firestone decision.
It’s a Texas Two-Step: In either case, whether OFCCP intends a Legislative Rule or merely an Interpretive Rule it must FIRST publish for formal Notice and Comment to the public PURSUANT TO the APA these new requirements it seeks to impose on federal contractors. Then, once it publishes a Final Rule pursuant to the APA, OFCCP needs to THEN seek OMB’s approval of the paperwork impact of its Final APA Rule pursuant to the Paperwork Reduction Act. (For example, in October 1999, OFCCP Director Shirley Wilcher published Final Rules pursuant to the Administrative Procedure Act overhauling OFCCP’s AAP development requirements for Minorities and Women. Later in April 2000, OMB then approved the paperwork impacts expected to occur from OFCCP’s Final AAP Rules and they only THEN became legally effective).
Moreover, OFCCP will be UNABLE to enforce any part of these new requirements should it fail to publish them for formal APA Notice and Comment. Some covered federal Government contractors will simply ignore the purported new requirements should OFCCP seek to enforce them in audits or otherwise. In addition, any attempted OFCCP enforcement of these new requirements will provide proof positive that the agency intended them to be Legislative Rules (necessary for OFCCP to enforce ANY requirement it seeks to impose on federal contractors).
In sum, OFCCP first needs APA Notice and Comment and a “Final Rule,” and thereafter Paperwork Reduction Act final approval from OMB. OFCCP has always followed the law in previous Administrations, with only a few notable lapses in conformity with the APA after the Firestone decision taught OFCCP (40 years ago) the way forward.
Proposed Revisions to the Scheduling Letter
Proposed revisions to the compliance review scheduling letter include:
Page One – email option: Adding in an option for the scheduling letter to be issued via email with a read receipt requested.
Page Two – post-secondary institutions and contractors with “campus-like settings”: OFCCP now seeks to change its historic approach to audit which has been to audit only by “AAP establishment.” Specifically, as to post-secondary institutions and contractors with “campus-like settings” in which the contractor maintains multiple AAPs for the same campus, OFCCP now seeks to require these contractors to submit the requested information for all AAPs for that campus located in that city. OFCCP has already sought to purportedly change its audit rules for post-secondary institutions via a recent Scheduling Methodology. OFCCP would now like to retroactively receive OMB Paperwork Reduction Act authority to so state in its audit Scheduling Letter (which OMB must approve since OFCCP sends it to 10 or more Members of the public).
OFCCP hopes that federal contractors will believe that OMB approval of the agency’s change of its audit paperwork is sufficient to ALSO effectuate OFCCP’s change of this longstanding audit practice and will thus not resist in audits. The change to OFCCP’s proposed new audit Scheduling Letter makes clear that at the outset of a Compliance Review for post-secondary institutions that OFCCP will seek to insist that contractors submit all their AAPs for campuses, schools, programs, buildings, departments, or other parts of the institution located in that city.
With this proposed revised Compliance Review audit Scheduling Letter, OFCCP also seeks to require covered federal Government contractors with campus-like settings, such as hospitals and information technology companies, to similarly produce all AAPs for the campus building(s) located in that city. Collecting all AAPs for a campus provides a more efficient use of agency resources and promotes a broader understanding of an organization’s equal opportunity programs through a holistic review of the campus, OFCCP told OMB. OFCCP acknowledges that contractors may have additional questions on the requirements of post-secondary institutions and contractors with “campus-like settings” and welcomes public comments on what additional guidance OFCCP can provide on this topic.
Page Two – electronic submission: Revising submission instructions to request contractors submit their AAPs and itemized listing information electronically. Contractors will be provided with an email address where they may send information and documents in response to OFCCP audit inquiries. OFCCP reports that it will provide an OFCCP point of contact with instructions to the contractor to contact this POC if the contractor wants to discuss a different electronic submission method. The option to submit via the United States Postal Service (USPS) or via other delivery services is also available.
Page Two – revised enforcement warning: OFCCP proposes to revise existing audit Scheduling Letter language to state that OFCCP may initiate enforcement proceedings if the requested information is not provided within 30 calendar days of the contractor’s receipt of the letter.
Other language changes – The proposed changes would also include: (1) revising all references to “DOL” or “Department of Labor” to state “U.S. Department of Labor;” and (2) making other minor language changes for clarity and renumbering of items to account for additional requirements.
Electronic Scheduling Letter Delivery
Prior to March 2020, OFCCP sent all audit Scheduling Letters via USPS Certified Mail. This method allowed for real-time delivery tracking and provided official confirmation of delivery through the return receipt “green card,” the agency noted. Due to the pandemic, in March 2020, all OFCCP personnel were converted to a mandatory full-time telework status, and OFCCP instructed all its field offices to issue all audit Scheduling Letters via e-mail. This practice proved successful and allowed OFCCP to continue scheduling Compliance Reviews despite the remote working conditions, the agency stated. It also provided benefits to the agency since there was no additional cost to print and mail, allowed for quicker delivery and confirmation of receipt, and contributed to the goal of becoming a paperless agency. Because of this success, OFCCP proposes to retain the option to issue audit Scheduling Letters electronically.
Portal Submission
In addition to the option for contractors to submit their documents via email, OFCCP proposes adding an option for contractors to use a different electronic submission method upon request to the applicable OFCCP point of contact. According to the agency, it “currently maintains a secure software platform which allows individuals to transfer files securely. Additionally, OFCCP continues to develop the Contractor Portal functionality, including the ability for contractors to use it for uploading their AAPs.”
OFCCP seeks to expand its Compliance Review audit Scheduling Letter by suggesting it has always required contractors to submit compensation data for “temporary” employees. “Clarification” of this issue, OFCCP suggests, will reduce the number of follow-up requests that OFCCP makes to contractors when conducting Desk Audits and thus improve the efficiency of the agency’s Compliance Evaluations.
Proposed Changes to Itemized Listing
For details on OFCCP’s rationales for the following proposed changes, see OFCCP’s Supporting Statement, pages 11-19 which it submitted to OMB to assist OMB’s consideration of its numerous changes and requested “clarifications.” The proposed revisions to OFCCP’s Itemized Listing (attached to OFCCP audit Scheduling Letters of Supply and Service Contractors and which summons most of the documents OFCCP is authorized to gather during its Desk Audit) include:
Item 4 – OFCCP proposes to expand the scope of Item 4 (to its Itemized Listing) to include all of 41 CFR § 60-2.14. Accordingly, this item, as proposed, would read as follows:
“For each job group, a determination of minority and female availability pursuant to 41 CFR § 60-2.14.”
Item 7 (new item) – OFCCP proposed adding a new item (to its Itemized Listing) requesting a list identifying all action-oriented programs designed to correct any problem areas identified pursuant to 41 CFR § 60-2.17(b).
Editorial Note: This proposal, if contractors follow it, will add substantially to a contractor’s and AAP vendor’s time and costs needed to prepare Affirmative Action Programs for Minorities and Women.
Item 8 (previously Item 7) – OFCCP proposes revising Item 8 (of its Itemized Listing) to provide more specificity on the documentation a contractor must submit regarding their Section 503 outreach and positive recruitment efforts. Specifically, OFCCP proposes to add “The documentation should also indicate whether you believe the totality of your efforts were effective” to the current language.
Editorial Note: This proposal, if contractors follow it, will add substantially to a contractor’s and AAP vendor’s time needed to prepare Affirmative Action Programs for Individuals with a Disability.
Inclusion of the proposed language will result in the following proposed Item 8:
“Documentation of appropriate outreach and positive recruitment activities reasonably designed to effectively recruit qualified individuals with disabilities, and an assessment of the effectiveness of these efforts as provided in 41 CFR § 60-741.44(f). This includes documentation of all activities undertaken to comply with the obligations at 41 CFR § 60-741.44(f), the criteria used to evaluate the effectiveness of each effort, and whether you found each effort to be effective. The documentation should also indicate whether you believe the totality of your efforts were effective. In the event the totality of your efforts were not effective in identifying and recruiting qualified individuals with disabilities, provide detailed documentation describing your actions in implementing and identifying alternative efforts, as provided in 41 CFR § 60-741.44(f)(3).”
Item 11 (previously Item 10) – OFCCP proposes revising Item 11 (of its Itemized Listing) to provide more specificity on the documentation a contractor must submit regarding their Section 503 utilization analyses.
Editorial Note: This proposal, if contractors follow it, will add substantially to a contractor’s and AAP vendor’s time and costs needed to prepare Affirmative Action Programs for Individuals with a Disability.
The current scheduling letter request reads as follows:
“The utilization analysis evaluating the representation of individuals with disabilities in each job group, or, if appropriate, evaluating the representation of individuals with disabilities in the workforce as a whole, as provided in 41 CFR § 60-741.45. If you are six months or more into your current AAP year on the date you receive this listing, please also submit information that reflects current year progress.”
The agency proposed revising this item to the following:
“The utilization analysis evaluating the representation of individuals with disabilities in each job group, or, if appropriate, evaluating the representation of individuals with disabilities in the workforce as a whole, as provided in 41 CFR § 60-741.45. If any underutilization of individuals with disabilities is identified, provide a description of the steps taken to determine whether and where impediments for equal employment opportunity exist in accordance with 41 CFR § 60-741.45(e). Per 41 CFR § 60-741.45(e) and (f), this description shall include your assessment of personnel processes, the effectiveness of your outreach and recruitment efforts, the results of your affirmative action program audit, any other areas that might affect the success of the affirmative action program, and a description of action-oriented programs developed and executed to correct any identified problem areas. Provide this information for the immediately preceding AAP year. If you are six months or more into your current AAP year on the date you receive this listing, provide the information that reflects your progress for at least the first six months of the current AAP year.”
Item 12 (previously Item 11) – OFCCP proposes revising Item 12 (of its Itemized Listing) to provide more specificity on the documentation a contractor must submit regarding their VEVRAA outreach and positive recruitment efforts.
Editorial Note: This proposal, if contractors follow it, will add substantially to a contractor’s and AAP vendor’s time and costs needed to prepare Affirmative Action Programs for Protected Veterans.
Specifically, OFCCP proposes to add “The documentation should also indicate whether you believe the totality of your efforts were effective” to the current language. Inclusion of the proposed language will result in the following proposed Item 12:
“Documentation of appropriate outreach and positive recruitment activities reasonably designed to effectively recruit qualified protected veterans, and an assessment of the effectiveness of these efforts as provided in 41 CFR § 60-300.44(f). This includes documentation of all activities undertaken to comply with the obligations at 41 CFR § 60-300.44(f), the criteria used to evaluate the effectiveness of each effort, and whether you found each effort to be effective. The documentation should also indicate whether you believe the totality of your efforts were effective. In the event the totality of your efforts were not effective in identifying and recruiting qualified protected veterans, provide detailed documentation describing your actions in implementing and identifying alternative efforts, as provided in 41 CFR § 60-300.44(f)(3).”
Item 15 (previously Item 14) – OFCCP proposes to add language to a new Itemized Listing para 15 that would clarify that OFCCP is seeking information regarding the VEVRAA hiring benchmark that the contractor establishment is using for the current AAP year. This is consistent with OFCCP’s current regulatory requirements, but OFCCP is merely adding this language for clarity, the agency stated. This language is in fact, however, moving forward what used to be portions of an On-Site Audit into the Desk Audit portion of OFCCP’s Compliance Review of the contractor’s establishment, as OFCCP On-Site audits are now almost as rare as hen’s teeth.
Item 16 (previously Item 15) – OFCCP proposes to add a request to what would be a newly numbered para 16 (of its Itemized Listing) to require post-secondary institutions to submit copies of their Integrated Postsecondary Education Data System (IPEDS) Human Resources Survey Component data collection reports for the last three years. Post-secondary institutions do not submit EEO-1 Reports to EEOC. The IPEDS is the equivalent of an EEO-1 Report for post-secondary institutions. Having this information from post-secondary institutions at the beginning of a compliance review will allow OFCCP to conduct more efficient analyses, the agency asserted.
Editorial Note: This is an odd request in that there are existing case law decisions allowing employers not to have to put on file with a federal agency that information already available to that agency in another part of the federal government. (And, yes, OFCCP’s existing practice of requesting three-years’ worth of EEO-1 history in audits of Supply and Service contractors also violates that “no duplicative burden rule” – especially odd in that OFCCP is the co-sponsor of the EEO-1 form and has the data physically within the agency.
Item 18 (previously Item 17) – OFCCP proposes minor language changes to what would be a newly numbered para 18 to clarify the applicable AAP periods.
Item 19 (new item) – OFCCP proposes to add a new item (to its Itemized Listing) to be numbered paragraph 19 requesting documentation of a contractor’s policies and practices regarding all employment recruiting, screening and hiring mechanisms, including the use of artificial intelligence, algorithms, automated systems, or other technology-based selection procedures.
Editorial Note: This proposal, if contractors follow it, will add substantially to a contractor’s and AAP vendor’s time and costs needed to prepare Affirmative Action Programs for Minorities and Women. Moreover, this description will likely change at least annually.
These changes, too, seek to move what was part of the On-Site audit into the Desk Audit portion of the audit.
Item 20 (previously Item 18) (promotions & termination types) – OFCCP proposes to make numerous substantive changes to this item.
Editorial Note: This proposal, if contractors follow it, will add substantially to a contractor’s and AAP vendor’s time and costs needed to prepare Affirmative Action Programs for Minorities and Women. Moreover, this description will likely change at least annually.
These changes, too, seek to move what was part of the On-Site audit into the Desk Audit portion of the audit.
Here are OFCCP’s proposed changes and new purported compliance obligations:
- Modifying (newly numbered) Item 20(c) to require contractors to identify whether a promotion is “competitive” or “non-competitive,” as well as including the previous supervisor, current supervisor, previous compensation, and current compensation.
- Adding a requirement to (newly numbered) Item 20(c) for contractors to provide documentation of their established policies and practices related to promotions.
- Modifying (newly numbered) Item 20(d) to require contractors to break down the number of terminations by reason for termination (e.g., retirement, resignation, conduct, etc.) and to provide the gender and race/ethnicity information for each.
- Adding (newly numbered) Item 20(e) to request the total number of employees, by gender and race/ethnicity, as of the start of the immediately preceding AAP year for each job title or job group.
For purposes of this proposed ICR, OFCCP defines a “competitive promotion” as a promotion of a candidate who was considered amongst a pool of other candidates. OFCCP defines a “non-competitive promotion” as a promotion of a candidate who was not considered amongst a pool of other candidates (e.g., “in-line” and “step”) promotions. The agency noted that it is not including its proposed definitions of “competitive promotion” and “non-competitive promotion” within the compliance review scheduling letter. These definitions will be included in future FCCM updates and in an FAQ, available on OFCCP’s website.
Item 21 (previously Item 19) – OFCCP proposes to “update” (meaning to change) its existing employee-level compensation data request to require two (2) snapshots of data. The first snapshot OFCCP hopes for would be an “as of” date of the organizational display or workforce analysis. The second snapshot would be an “as of” date of the prior year’s organizational display or workforce analysis. Under OFCCP’s current Compliance Review audit Scheduling Letter, contractors are required only to provide one compensation snapshot, as of the date of the current organizational display or workforce analysis.
Editorial Note: This proposal, if contractors follow it, will add substantially to a contractor’s and AAP vendor’s time and costs needed to prepare Affirmative Action Programs for Minorities and Women. Moreover, this description will likely change at least annually.
These changes, too, seek to move what was part of the On-Site audit into the Desk Audit portion of the audit.
As to this item, OFCCP also proposes:
- revising (to be a newly numbered) Item 21 to require contractors to include temporary employees in their reports to OFCCP, including those provided by staffing agencies;
- revising (to be a newly numbered) Item 21(b) to list in its report to OFCCP all compensation factors contractors consider in setting compensation for each of its employees; and
- revising (to be a newly numbered) Item 21(c) to require the submission of documentation and policies related to compensation. Also, adding in more details as to what a contractor must submit (e.g., policies, guidance, or trainings regarding initial compensation decisions, compensation adjustments, the use of salary history in setting pay, job architecture, salary calibration, salary benchmarking, compensation review and approval, etc.).
Item 22 (new Item) – OFCCP proposes to add language requiring contractors to submit documentation that the contractor has satisfied its obligation to evaluate its “compensation system(s) to determine whether there are gender-, race-, or ethnicity-based disparities,” as part of the contractor’s “in-depth analyses of its total employment process” required by 41 CFR 60-2.17(b)(3).
Editorial Note: This proposal, if contractors follow it, will add substantially to a contractor’s and AAP vendor’s time and costs needed to prepare Affirmative Action Programs for Minorities and Women. Moreover, this description will likely change at least annually.
These changes, too, seek to move what was part of the On-Site audit into the Desk Audit portion of the audit.
This documentation OFCCP hopes to require must demonstrate at least the following:
- When the compensation analysis was completed;
- The number of employees the compensation analysis included and the number and categories of employees the compensation analysis excluded;
- Which forms of compensation were analyzed and, where applicable, how the different forms of compensation were separated or combined for analysis (e.g., base pay alone, base pay combined with bonuses, etc.);
- That compensation was analyzed by gender, race, and ethnicity; and
- The method of analysis employed by the contractor (e.g., multiple regression analysis, decomposition regression analysis, meta-analytic tests of z-scores, compa-ratio regression analysis, rank-sums tests, career-stall analysis, average pay ratio, cohort analysis, etc.).
Item 23 (previously Item 20) – OFCCP proposes to add language to a newly renumbered Item 23 seeking to require requested information regarding reasonable accommodations to be for the immediately preceding AAP year and that if the contractor is six months or more into its current AAP year when it receives the Itemized Listing, it must provide the information for at least the first six months of the current AAP year.
Item 24 (new Item) – OFCCP proposes to add a new Item 24 to request copies of existing written employment policies concerning equal opportunity, including anti-harassment policies, EEO complaint procedures, and employment agreements, such as arbitration agreements, that impact employees’ equal opportunity rights and complaint processes, in place for the immediately preceding AAP year. If contractors are six months or more into the current AAP year at the time of scheduling, contractors are to provide this information for at least the first six months of the current AAP year.
Editorial Note: This proposal, if contractors follow it, will add to a contractor’s and AAP vendor’s time and costs needed to respond to OFCCP audit Scheduling Letters.
These changes, too, seek to move what was part of the On-Site audit into the Desk Audit portion of the audit.
Item 25 (previously Item 21) – OFCCP proposes to revise Item 25 to provide more specificity on the documentation a contractor must submit regarding its review of personnel processes.
Editorial Note: This proposal, if contractors follow it, will add substantially to a contractor’s and AAP vendor’s time and costs needed to prepare Affirmative Action Program for Protected Veterans. Moreover, this description will likely change at least annually.
These changes, too, seek to move what was part of the On-Site audit into the Desk Audit portion of the audit.
The current compliance review scheduling letter request reads as follows:
“Your most recent assessment of your personnel processes, as required by 41 CFR §§ 60-300.44(b) and 60-741.44(b), including a description of the assessment and any actions taken or changes made as a result of the assessment.”
The agency proposes to revise this item to the following:
“Your most recent assessment of your personnel processes, as required by 41 CFR §§ 60-300.44(b) and 60-741.44(b). This assessment shall include, at a minimum, a description of the assessment, any impediments to equal employment opportunity identified through the assessment, and any actions taken, including modifications made or new processes added, as a result of the assessment.”
OFCCP’s Expectations on Electronic Data Submission
For this ICR, OFCCP wants contractors to submit the requested information in an electronic format. In its Supporting Statement the agency stated:
[W]hen submitting compensation data, the most useful and efficient format to submit is a manipulatable electronic database or spreadsheet. Due to the nature of the analyses conducted in a desk audit, providing PDFs of electronic databases or spreadsheets increases the time it takes for a compliance officer to complete their analyses, and also increases the burden on the contractor by converting already existing electronic files to a PDF format. Specifics on where the information should be submitted to OFCCP will be found in the compliance review scheduling letter the contractor receives initiating a compliance evaluation.
Information technology systems used to comply with data requirements under OFCCP’s regulations should be capable of performing, including but not limited to, the functions listed below.
- Conducting workforce analysis
- Conducting job group analysis
- Facilitating calculation of availability
- Conducting E.O. 11246 utilization analysis
- Calculating placement goals
- Collecting employment activity data related to E.O. 11246, Section 503, and VEVRAA
- Collecting and analyzing compensation data
- Conducting Section 503 utilization analysis
- Analyzing outreach and recruitment
- Tracking voluntary self-identification
- Disseminating EEO policies
- Providing notice to subcontractors and vendors
- Facilitating calculation of VEVRAA benchmarks”
The Federal Register notice, Supporting Statement, and proposed Scheduling Letter are all available to download at: https://www.regulations.gov/docket/OFCCP-2022-0004/document.