On August 3, the Office of Federal Contract Compliance Programs (OFCCP) published its final Pre-Enforcement Notice and Conciliation Procedures rule in the Federal Register.  It will go into effect on September 5, 2023.  OFCCP will host an informational session regarding the rule on September 5, 2023.

OFCCP issued this final rule after collecting comments on proposed changes to the enforcement process from the public and interested stakeholders.  However, the public’s comments resulted in little change to OFCCP’s initial proposed rule. 

So, what’s in the final rule?

• New enforcement procedures and factual showings.  The final rule modifies the  Nondiscrimination Obligations of Federal Contractors and Subcontractors: Procedures to Resolve Potential Employment Discrimination rule published in 2020.
• “Quantitative” and “qualitative” evidence requirements.  The 2020 rule required OFCCP provide “quantitative” and “qualitative” evidence to support either a preliminary finding of discrimination or a finding of discrimination in a Notice of Violation and defined those terms.  The final rule eliminates the requirement for these factual showings — giving the Agency more flexibility on what basis to bring its cases.
• Use of practical significance.  The final rule removes the requirement for OFCCP to demonstrate practical significance prior to issuing a Predetermination Notice (PDN).
• Sharing statistical models and variables.  The final rule removes the 2020 rule requirement that “upon the contractor’s request, OFCCP must provide the model and variables used in any statistical analysis and an explanation for why any variable proposed by the contractor was excluded from that analysis.” 
• “Preliminary findings of potential discrimination.”  In a change from its initial proposal, the final rule shifts the appropriate standard to issue a Predetermination Notice from “indicators of discrimination” to a “preliminary finding of discrimination.”  While OFCCP’s Summary of the Final Rule accompanying the final rule suggests this is a clarification, the change addresses concerns that OFCCP may prematurely issue a Predetermination Notice before an audit is advanced enough to identify likely discrimination.
• 15-day response time.  The 2020 rule permits contractors thirty days to respond to a Predetermination Notice, but the final rule reduces this window to only 15-days.  Even so, the final rule permits additional time to respond when “good cause” exists for the extension.
• Additional violations.  The final rule allows OFCCP to add violations in a subsequent Notice of Violation without amending the Pretermination Notice, and in a subsequent Show Cause Notice without amending the Notice of Violation.
• Use of Notice to Show Cause.  The final rule allows OFCCP to skip a Predetermination Notice or Notice of Violation to issue a Show Cause Notice directly when a contractor denies the Agency’s access to facilities or refuses to provide information during a compliance evaluation.

Despite these changes, OFCCP’s Summary of the Final Rule accompanying the final rule commits to:

1. “Describe the preliminary findings of potential discrimination and any other potential violations to enable the contractor to understand OFCCP’s position and provide a substantive response,”
2. “[U]tilize the concept of practical significance where appropriate, along with statistical significance, and all other evidence gathered in the review, as part of a holistic approach that applies the case law and statistical techniques as they evolve to the compliance evaluations it investigates, conciliates, and refers for enforcement.”
3. “[E]xplain its statistical analysis in sufficient detail for the contractor to replicate the analysis and assess the merits of the agency’s findings. OFCCP will also continue to explain its rationale for excluding otherwise reasonable variables from its analysis.”
4. “Provide contractors an opportunity to conciliate additional violations identified in the Show Cause Notice” that are omitted from a Predetermination Notice, and
5. Protect due process by other “legal guardrails.”

In sum, the final rule restores additional flexibility to OFCCP in how to investigate and pursue cases—and removes the certainty for contractors from the 2020 rule.  In a larger context, this follows OFCCP’s commitment to increased enforcement under this administration. 

We will monitor how OFCCP interprets these new requirements once they are in effect.