Fox & Wang Discussed Recent Significant OFCCP Developments
“This is the most unusual administration I’ve observed having been in Washington for 30 years and being a political appointee running OFCCP in an earlier life,” attorney John C. Fox of Fox, Wang & Morgan P.C. observed in his introduction to his presentation made with fellow law partner Jay J. Wang. “Whether Democrat or Republican administration, we have not seen an administration like this one. It is a totally unique creature that is still evolving and taking root.”
Wrecking Balls & Magic 8 Balls
There are two ways to make policy, one is to rescind what has gone before (“wrecking ball policy” approach) and the other is to build new policies, John explained. Usually what happens with wrecking ball approaches to policy is that those typically happen very quickly in a new political administration. “What’s very odd and unusual in this administration is that it is still bringing out the wrecking ball as recently as two weeks ago at OFCCP. It was not just on day one,” Fox noted.
John referred to a recent DirectEmployers WIR report which explained how OFCCP had rescinded four Trump Administration audit policies in its March 31 Directive 2022-02 regarding “Effective Compliance Evaluations and Enforcement.” [See the April 4, 2002 WIR “OFCCP Released The ‘Wrecking Ball’ On Most Of The Remaining Trump Administration Policies and Procedures Of Significance”] Although the agency removed Directives that had provided for transparency in negotiations and audits, the new Directives did not reveal what OFCCP would do to replace these policies. This action ushered in a new period of what John described as “darkness for contractors.” Rather than having set procedures of what to do in a given situation, OFCCP will “keep to themselves what they want to decide case-by-case,” he said. John added that using Magic 8 balls to predict OFCCP’s thinking and rationales in discrimination claims is about as good as you are going to get in OFCCP audits going forward.
The good news is that the agency is only accusing about a few dozen contractors each year of unlawful discrimination because they are only doing about one thousand audits per year, John explained. The bad news is that contractors must watch what OFCCP does and not what is said in Washington these days because the White House measures success by how much media attention any program gets, rather than the number of audits and the amount of backpay collected.
Audits Will Be Picking Up
“Let me warn you now that [while we have seen thus far the Biden Administration making OFCCP policy primarily by breaking down what the Trump administration had built], that is not going to be what we see in the future,” Jay said. Moreover, while the downward trend in the number of audits will continue initially, they “are going to pick up and they will pick up exponentially,” he added.
John pointed out that, with the advent of the new electronic contractor portal [See the December 6, 2021 WIR for background], the OFCCP will be building a new audit database. They are going to audit from the information in the portal and will at some point no longer use the algorithms in the EEO-1 Survey file that they have used since 1982, he said. John also noted that this change is going to alter which companies get audited and how frequently.
Compensation Discrimination & “Pay Equity”
“Four administrations in a row now have all featured as their primary policy objective compensation discrimination,” John explained, “but they have not found very much.” Nevertheless, the OFCCP “is using both old means and new means” to attempt to unearth compensation discrimination “because of the wage gap that exists in American society,” Jay noted.
Pointing to the agency’s March 15 Directive 2022-02 on Pay Equity Audits, Jay explained that the term “pay equity” has not been clarified. He referenced John’s recent two-part WIR blog on how this directive raises more questions than it answers. Given that OFCCP has always had the authority to investigate discrimination, does the agency “mean some form of affirmative action to make up for past discrimination?” Jay queried. In any event, the two practical effects from this OFCCP Directive are that OFCCP now believes it can: (1) request more documents and information during audits related to pay issues; and (2) obtain attorney-client privileged information. However, “that is not going to fly,” Jay said, because the case law is very clear how difficult it is to breach the attorney-client privilege or the attorney work product doctrine.
