OFCCP Year in Review and What to Expect in 2019

Ogletree, Deakins, Nash, Smoak & Stewart, P.C.
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The year 2018 brought increased activity and significant changes to the Office of Federal Contract Compliance Programs (OFCCP), including the appointment of new Director Craig E. Leen and the arrival of 12 new directives.

Below is a brief summary of the directives and other significant initiatives.

Directive 2018-01
(February 27, 2018)
Use of Predetermination Notices
This directive provides a uniform protocol for the use of predetermination notices in individual and systemic discrimination cases.
Directive 2018-02
(May 8, 2018)
TRICARE Subcontractor Enforcement Activities
This directive extends the TRICARE moratorium on enforcement of affirmative action obligations required of TRICARE subcontractors until 2021.
Directive 2018-03
(August 10, 2018)
Executive Order 11246, § 204(c), Religious Exemption
This directive is designed to ensure faith-based organizations can compete for federal grants, contracts, programs, and federal funding opportunities without having to disavow their religious character.
Directive 2018-04
(August 10, 2018)
Focused Reviews of Contractor Compliance
This directive outlines OFCCP’s plans to conduct focused reviews in fiscal year 2019 to evaluate a single protected group in a compliance review, starting with individuals with disabilities.
Directive 2018-05
(August 24, 2018)
Analyses of Contractor Compensation Practices During a Compliance Evaluation
This directive includes revamped guidance on compensation investigation and enforcement, and its accompanying frequently asked questions provide contractors with some insight into how OFCCP may evaluate their compensation data in an audit.
Directive 2018-06
(August 24, 2018)
Contractor Recognition Program
This directive outlines OFCCP’s plan to offer recognition programs for contractors determined to have implemented best or model practices and assisted peers in improving compliance.
Directive 2018-07
(August 24, 2018)
Affirmative Action Program Verification Initiative
This directive aims to ensure contractors are annually preparing and implementing written affirmative action programs (AAPs) by requiring contractors to annually certify they have prepared AAPs and to develop information technology so OFCCP can collect and review AAPs. The directive allows OFCCP to include noncompliant contractors in the neutral audit scheduling process.
Directive 2018-08
(September 19, 2018)
Transparency in OFCCP Compliance Activities
This directive is aimed at increasing agency and audit transparency. OFCCP reserves the right to grant contractors extensions to submit support materials if they timely submit their AAPs. Failure to timely submit AAPs and support data in a desk audit will result in the issuance of a show cause notice.
Directive 2018-09
(September 19, 2018)
OFCCP Ombud Service
This directive creates a new Ombud Service to listen to contractors’ concerns about OFCCP matters and areas for improvement, and to facilitate resolution of issues at the district and regional office levels.
Directive 2019-01
(November 30, 2018)
Compliance Review Procedures
This directive rescinds Directive 2011-01, which required full desk audits, and will help to “shorten full desk audits and conciliate violations more efficiently.” Any contractor establishment audited by OFCCP will not be audited again for 24 months after closure of an audit or acceptance of a final progress report under a conciliation agreement.
Directive 2019-02
(November 30, 2018)
Early Resolution Procedures
The goal of this directive is to resolve supply and service contractors’ audits “at the earliest stage possible” and to work with multi-establishment contractors to develop corporate-wide corrective actions to remedy non-discrimination violations, such as recordkeeping. If early resolution procedures are utilized, OFCCP will not schedule a new compliance evaluation for five years from the date of an Early Resolution Agreement with Corporate-Wide Corrective Action.
Directive 2019-03
(November 30, 2018)
Opinion Letters and Help Desk
This directive is designed to enhance the self-service feature of OFCCP’s Help Desk to make prior responses to inquiries searchable. OFCCP also plans to resume the use of opinion letters to provide guidance to contractors.

In addition to the dozen directives summarized above, OFCCP conducted town hall meetings; issued a contractor “Bill of Rights” (What Contractors Can Expect); entered into a Memorandum of Understanding with the National Industry Liaison Group to help contractors comply with equal employment opportunity requirements; proposed changes to the current Functional AAP Directive 2013-01 (revised April 2016) (functional AAPs (FAAPs) are AAPs for a business function or unit, rather than an establishment) to simplify the process for requesting and maintaining FAAPs and to encourage more contractors to consider FAAPs; issued National Interest Exemptions to ease the requirements for contractors providing California wildfire, Hurricane Florence, Hurricane Michael, and Alaska earthquake relief; and sent out 750 corporate scheduling announcement letters to supply and service contractors, giving them a heads-up of potential audits in fiscal Year 2019.

As a result of the 2018 directives discussed above, as well as Director Leen’s announced plans and initiatives, contractors can expect the following in 2019:

More Audits: Directives 2019-01/Compliance Review Procedure and 2019-02/Early Resolution Procedures should result in speedier audits and more efficient resolution of non-discrimination violations, which should result in more audits. However, do not expect the number to reach 3,500, as previously projected by Director Leen, given the fact that OFCCP staff is shrinking.

Increased Focus on the Disabled: Directive 2018-04/Focused Reviews outlines OFCCP’s plans to begin focused reviews concerning contractor compliance with Section 503 requirements.

Continued Focus on Compensation: Directive 2018-05/Compensation Practices indicates compensation will continue to be the focus of regular desk audits.

Audits for Noncompliant Contractors: Directive 2018-07/AAP Verification indicates contractors that certify noncompliance will be targeted for audits.

Exemptions for Religious Organizations: As a follow-up to Directive 2018-03/Religious Exemption, OFCCP plans to release a notice of proposed rulemaking (NPRM) titled Implementing Legal Requirements Regarding the Equal Opportunity Clause’s Religious-Organization Exemption, the purpose of which is to comply with current law protections for religious organizations so they may better compete for government work.

NPRM on TRICARE: OFCCP has promised another NPRM regarding TRICARE subcontractors and other healthcare providers’ affirmative action obligations to revise 41 C.F.R. Part 60 in order to limit the obligations of TRICARE providers.

More Directives and Creative Initiatives: Contractors can expect a continued stream of new directives and more “out of the box” initiatives from Director Leen in 2019.

All in all, 2018 was a busy year for OFCCP, and contractors can expect more of the same in 2019.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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