Friday, September 11, 2020: OFCCP’s Latest Audit List Has Many New Twists!
Without fanfare, OFCCP updated its Freedom Of Information Act (FOIA) Library webpage to include the latest Corporate Scheduling Announcement List (CSAL) announcing 2450 audits involving seven (7) different kinds of audits, including three new types of audits OFCCP has not previously deployed. To reacquaint you with these types of audits, we have embedded a hyperlink to the OFCCP form of audit Scheduling Letter for each audit type (to the extent that OFCCP has an audit Scheduling Letter in place for that type of audit) when we FIRST mention that type of audit below (we knew you wanted to punish yourself; like looking at a train wreck through fingers closed over your eyes!)
OFCCP has changed several critical triggers in its audit selection methodology:
- Ushering in a new era of remote audits, OFCCP District Offices (DOs) anywhere in that DO’s region or anywhere in the country could audit a contractor and not necessarily the OFCCP DO closest to the contractor’s physical location, as described below;
- No longer can it be said that OFCCP selects audits by AAP Establishment. OFCCP’s new audit methodology expands the definition of the term “establishment” for audit selection purposes (not for AAP development purposes, of course: that would have to proceed by formal OFCCP Rulemaking) as to Universities and as to Supply and Service “AAP Establishments” collocated at the same address. Universities/colleges with separate AAP Establishments in the same city will now all be part of the same audit, but with several exceptions noted below. As to Supply & Service contractors, OFCCP will audit all AAP establishments collocated at the same address and not just one of the collocated, but functionally separate, AAP Establishments. For construction contractors, OFCCP will audit all of a contractor’s contracts at the same construction project if there is more than one contract.
- FAAP audits of contractor establishments not part of the FAAP Unit OFCCP has approved are exempt from audit if the non-FAAP AAP Establishment employs 99 or fewer employees;
- OFCCP for the first time established two Corporate Scheduling Announcement Lists: one for Supply & Service Contractors, including FAAP contractors and Universities/Colleges and a separate List of Construction Contractors;
- Size matters again. While the decision as to which AAP Establishments to audit within OFCCP’s approximately almost 200,000 AAP Establishment list is random, the particular type of audit assigned to any particular AAP Establishment identified for audit is now a function of the size of the AAP Establishment’s employee headcount relative to other AAP Establishments within each District Office’s geographic area of responsibility (or Regional Office’s area of responsibility in certain cases noted below);
- The larger headcount AAP Establishments within a DO’s geographical area of responsibility were first awarded (regular) Compliance Evaluations up to the limit of the number of Compliance Evaluations the OFCCP National Office had pre-determined for that DO;
- Ratcheting down, the next largest headcount AAP Establishments available for audit within a DO’s geographical area of responsibility below the headcount of those AAP Establishments earlier awarded Compliance Evaluations were then awarded Promotion Focused Reviews up to the limit of the number of Promotion Focused Reviews the OFCCP National Office had pre-determined for that DO. NOTE: No OFCCP audit Scheduling Letter yet exists for this form of Compliance Evaluation;
- The smallest of the “big:” The next largest headcount AAP Establishments within a DO’s geographical area of responsibility were then awarded Compliance Checks to the limit of the number of Compliance Checks the OFCCP National Office had pre-determined for that DO.
- Small size matters again. Changing it up so that not just the larger AAP Establishments shared in OFCCP Compliance Evaluations, OFCCP then assigned to those AAP Establishments with the smallest headcounts within a DO’s geographical area of responsibility Accommodation Focused Reviews up to the limit of the number of Accommodation Focused Reviews the OFCCP National Office had pre-determined for that DO. NOTE: No OFCCP audit Scheduling Letter yet exists for this form of Compliance Evaluation;
- Finally, ratcheting up, OFCCP then assigned to those AAP Establishments with the next smaller headcounts within a DO’s geographical area of responsibility Section 503 Focused Reviews up to the limit of the number of Section 503 Focused Reviews the OFCCP National Office had pre-determined for that DO.
Nitty Gritty Detials (for the gluttons of punishment!)
OFCCP Director Craig Leen reported last week that the new List would be coming out “very soon.” As promised, the new Lists include higher education audits (not seen in the last three years) as well as construction contractors (not seen in the last two years). In addition, new to the mix of its investigation types (as OFCCP has previously warned are coming) are Accommodation Focused Reviews, Promotion Focused Reviews, and construction industry “Compliance Checks”(Direct and Federally-Assisted). The Agency has yet to reveal the details of what precise information and documents these Reviews will seek to access. However, we do know that the Accommodation Reviews will include both religious accommodations and accommodations for Individuals with Disabilities.
OFCCP has promised to define “promotions.” Given the listening session last week on Promotion Focused Reviews, there are many other areas of concern the Agency must consider.
As noted above, for the first time, OFCCP’s Corporate Scheduling Announcement consists of two separate Lists: one for Supply & Service contractors and a second separate List for construction contractors. Here are the breakdowns for each List:
Supply and Service Industries
2250 “Audits” consisting of six different types of audits:
Following its promise and now three-year old tradition of transparency, the Agency released the scheduling methodology for both Lists (i.e., two Methodology memoranda). (OFCCP first published its Scheduling Methodology in 2018 as a result of an OFCCP Listening Session with DirectEmployers Members at OFCCP’s HQ offices and has continued the tradition to date). The Supply and Service Methodology reports that OFCCP began its selection process to determine which companies to audit by first identifying a list for “Release 1” for FY2020. (By labeling it “Release 1,” with no further explanation, OFCCP is implying it may add more names of establishments to be audited as part of these FY2020 CSALs.) OFCCP explained that the selection process started (per the usual) with a list of all active federal contracts from the Federal Procurement Data System–Next Generation (FPDS-NG). OFCCP then both reduced and expanded this list to produce its two FY2020 CSALs. See the methodology for the full breakdown. We describe below some of the significant architectural features which both shrank and grew OFCCP’s Lists.
OFCCP applied these limits to shrink and limit its Scheduling Lists:
- no more than ten Compliance Evaluations (of whatever type) of any parent company,
- no more than five full Compliance Reviews (not including Focused Reviews) of any parent company,
- no more than two functional units of a company with a FAAP agreement,
- no more than two CMCE reviews assigned to any District Office, and
- no more than four university reviews were assigned within any OFCCP region.
Clarifications for Universities and Colleges
OFCCP reviews of whatever type will include all university campuses located in one city.
- OFCCP reviews of whatever type of one campus will not include the university’s other campuses in another city, or its affiliated medical school, and/or its affiliated hospital.
- OFCCP reviews of whatever type will not include university extension programs or services that are located outside of the main campus.
If a university has multiple campuses in different cities, each campus is treated as a separate establishment of the university. Similarly, medical schools and hospitals, if owned by the university, are treated as different establishments for audit purposes.
The Construction Methodology for “Release 1” for FY2020 reports that the List started with construction contracts valued at $10,000 or higher from the US Spending database. OFCCP then created a single record for each contract. OFCCP then dropped out of its audit list those contracts which had expired at the time of their audit selection and contracts valued at less than $50,000. OFCCP then consolidated the contracts of companies with multiple contracts at the same project location. Read the full Construction Methodology for more details.
This detailed methodology comes on the heels of the USDOL Inspector General’s report, heavily criticizing OFCCP’s construction contractor selection methodology. See John Fox’s blog from April of this year, which reported that a scathing USDOL Inspector General (IG) Report revealed that Obama and Trump Administration OFCCP construction programs “did not adequately enforce EEO requirements on federal construction contracts.” The IG recommended “a top-to-bottom overhaul of OFCCP’s construction contractor audit selection protocols and goals program.”
The Coming Remote Work Contexts
OFCCP wants to give all DOs the same diet of audit work by having each DO undertake the same relative proportion of each of the six types of Compliance Evaluations which now exist. There are two circumstances in which OFCCP predicts that DOs will need to undertake audits of contractor AAP Establishments remote form OFCCP’s District Office.
First, because some OFCCP District Offices have only one Corporate or Regional Headquarters in their geographical audit territory, OFCCP will assign some CMCEs from another DO’s geographical territory to complete the other DO’s CMCE docket diet of two CMCE evaluations per CSAL cycle.
Second, there will be circumstances where assignment of audits to the DOs in a Region will leave some intended audits unstaffed (perhaps because a DO shrinks in headcount). In such a case, OFCCP will assign these audits to a Regional “pool” and reassign audits across DO lines to accomplish the work based on available staffing at the time.
Which Establishments are not in OFCCP’s Audit Net?
- Covered federal Government subcontractors are not on OFCCP’s Lists…only prime government contractors listed in the Federal Procurement Data System;
- Establishments of subsidiary corporations which are not signatory to prime government contracts;
- TRICARE Contractors and Subcontractors;
- Establishments of companies with unrelated establishment waivers;
- Those establishments which have ended a Compliance Evaluation within the two years prior to (apparently) July 17, 2020;
- Those AAP Establishments which signed a Conciliation Agreement with OFCCP within the prior two years;
- Those AAP Establishments which signed a Conciliation Agreement with OFCCP and are still in their Progress Reporting Period or are within two years of the end of that Reporting Period;
- Those AAP Establishments which are still filing Progress Reports with OFCCP pursuant to an ERCA (Early Resolution Conciliation Agreement);
- Establishments signatory to prime contracts with fewer than 50 employees in the establishment;
- Establishments employing fewer than 70 employees AND not signatory to prime contracts but covered by OFCCP’s Rules because another establishment within the company signed a covered Government contract binding all establishments in the company to OFCCP’s Rules;
- FAAP contractor AAP Establishments (not part of the FAAP unit OFCCP has approved for FAAP status) with 99 or fewer employees (as noted above)
Clouds on the Contractor Horizon
Guilty by Cross-Association? For both of these September 2020 CSALs, the methodology reports that “the agency continues to focus its scheduling efforts on those contractors that may be more likely to violate OFCCP’s laws.” With these two Lists, OFCCP is now seeking to validate a new audit selection protocol it has NOT deployed with this CSAL. Nonetheless, OFCCP is building a database to see if OFCCP might find a high correlation between violators of other federal employment laws predictive of which companies might also be violators of the statutes and Rules OFCCP enforces (much like a “construct validity” test protocol).
OFCCP is now testing out a page taken out of the Obama Administration’s audit playbook. That playbook began with then US DOL Labor Secretary Hilda Solis’ view that presumed that an employer with violations in one area of employment compliance must be an across-the-board violator of other USDOL statutory enforcement schemes (an enemy, by definition, of all workers and not a violator differentially of only one employment law). To test this “once a violator, always and everywhere a violator” presumption, OFCCP has matched both its Supply & Service and Construction contractor audit selection pools against the enforcement databases of the Occupational Safety and Health Administration (OSHA) and the Wage and Hour Division (WHD).
Specifically, OFCCP reports it has brought into its audit database only for review purposes (so far) the violation histories of covered Government contractors with only non-technical (i.e., substantive) OSHA and Wage-Hour violations in the last five fiscal years. Presumably, OFCCP will, in the coming years, look back and compare how the contractors on its FY2020 CSALS fared as to substantive violations found in OFCCP Compliance Evaluations as compared to the results of substantive violations of Wage-Hour and OSHA law which USDOL’s Wage-Hour Division and OSHA have publicly reported. If there is a high correlation of federal Government contractors subject to OFCCP’s jurisdictions also found to be violating Wage-Hour and/or OSHA Rules, then OFCCP could merely look to the Wage-Hour and/or OSHA audit histories as “bird-dogs” to point to and identify to OFCCP covered Government contractors likely to ALSO be found to be violators of OFCCP’s Rules.
OFCCP distributed the Scheduling Lists to its six Regional Offices and their District Offices based on available human resources (FTEs) as of July 17, 2020.