February 1, 2023

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OFCCP Proposes Major Alterations to Compliance Evaluation Scheduling Letter and Itemized Listing

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In late November, the U.S. Office of Labor’s Workplace of Federal Contract Compliance Systems (OFCCP) submitted a ask for to the Workplace of Administration and Funds (OMB) for reauthorization of its compliance critique scheduling letter and accompanying itemized listing, i.e., the documents that initiate OFCCP audits. The proposed alterations, which OFCCP maintains will greater facilitate its assessment of contractor establishments, would considerably raise the first reaction load on contractors chosen for audit in a range of locations. The changes also reflect OFCCP’s ongoing heightened target on enforcement practically two decades into the Biden administration, particularly with regard to contractor compensation, staff choice decisions, and outreach and recruitment. This Inform summarizes the essential proposed variations and the affect on contractors.

Expanded Compensation Submission

The proposed revisions to the itemized listing considerably increase the payment-linked information and information that contractors would be needed to present at the outset of an audit, as follows:

Prior Year Compensation Info

At this time, contractors are demanded only to offer existing yr payment data. The revised itemized listing would also demand submission of prior yr payment details. In its Justification for the adjustments, OFCCP notes that when the agency has the authority to evaluate work activity info covering the two a long time preceding the initiation of the compliance assessment, its present exercise is to ask for this details only immediately after a desk audit reveals a opportunity disparity. The agency perceives the present practice as an “inefficient” approach and asserts that “reviewing a lot more information through the desk audit will permit OFCCP to greater discover no matter whether there is systemic pay discrimination taking place at a contractor’s workforce and whether the potential discrimination was ongoing prior to the initially snapshot.”

Compensation Details for Staffing Agency Workforce

The proposed revisions would have to have contractors to give two years of payment information for “temporary employees, together with those people offered by staffing companies” (emphasis included). This would also include things like details with regards to factors that impact compensation of these employees. This growth should be of problem to contractors who use momentary staffing companies to increase their workforce, specifically since in a lot of (if not most) conditions, contractors do not determine compensation for staffing company workforce and might not even know the wage fees for these kinds of workers.

Expanded Payment Factor Details and Supporting Documentation

The itemized listing would be expanded to establish supplemental payment elements and supporting documentation for contractors to deliver with their initial submission. Amid the things that contractors would now be expected to deliver the agency are expanded aspects made use of to establish personnel compensation (such as instruction, expertise, area and time in latest placement) as very well as policies that define and reveal payment methods, listing as illustrations “policies, advice, or trainings regarding preliminary compensation selections, payment changes, the use of salary history in setting shell out, position architecture, wage calibration, income benchmarking, payment review and approval.”

Proof of Compliance with Obligation to Assess Compensation

In a prior Inform, we talked about OFCCP’s revised Directive 2022-01, which dealt with contractors’ obligation to comply with 41 CFR 60-2.17(b)(3) and its need that contractors carry out an once-a-year in-depth assessment of their payment programs, and involved a checklist of the minimum documentation the company would demand from contractors to display compliance. The revised itemized listing would need contractors to create that documentation at the outset of an OFCCP audit.

Augmented Personnel Activity Facts Requests

OFCCP also proposes to accumulate expanded knowledge from contractors relating to personnel action, in distinct promotions and terminations. This suggests a obvious change from the company utilizing large-amount data at the outset of the audit to determine possible locations for comply with-up relating to personnel exercise, to conducting a “deep dive” investigation from the get started. If OMB approves this expansion, contractors would be necessary to, amid other items: (1) split out aggressive and noncompetitive promotions (whose definitions OFCCP invites the community to comment on) (2) offer staff-degree promotion details, like race/ethnicity, gender, previous and present-day supervisors, previous and recent compensation, section and occupation title and (3) worker-amount termination info, which include race/ethnicity, gender and termination cause.

Enhanced Documentation of Outreach and Recruitment Efforts

If adopted, the up to date itemized listing also would involve contractors to present substantial documentation about their outreach and recruitment attempts to people today with disabilities and safeguarded veterans, as very well as documentation of actions to tackle any dedication that those people outreach and recruitment attempts have been not successful. These specifications would be in addition to the present-day itemized listing necessity to post the contractor’s demanded assessment of the effectiveness of these efforts.

New Requests for Employment Procedures

OFCCP also is inquiring OMB to approve its new requests for employment paperwork, most notably to include things like:

  • Guidelines about recruiting, screening and hiring, “including the use of artificial intelligence, algorithms, automated techniques or other know-how-dependent range procedures”
  • Employment policies about EEO, anti-harassment and complaint treatments and
  • Agreements (e.g., arbitration agreements) that “impact employees’ equivalent prospect rights and criticism procedures.”

The ask for for procedures relating to the use of AI and other engineering-based mostly collection processes is specifically noteworthy, however not astonishing provided OFCCP Director Jenny R. Yang’s previous statements creating clear that contractors’ use of AI would be a aim for the company going ahead.

Several AAP Submission for Contractors with Many AAPs in Campus-like Options

The proposed revised scheduling letter would have to have contractors, like write-up-secondary establishments, with a “campus-like” placing to submit the information for all affirmative motion plans (AAPs) preserved by the contractor for institutions situated in the metropolis and point out recognized in the scheduling letter. Capturing many institutions in campus configurations in just one audit has long been an OFCCP goal, but latest OFCCP restrictions arguably do not support these kinds of an expansion of audit scope.

What This Signify for Contractors

General, OFCCP’s substantial overhaul of its scheduling letter and itemized listing for the initially time in several years highlights the agency’s significantly aggressive enforcement posture and signals a return (which quite a few contractors by now have experienced) to a more granular/deep-dive method to most OFCCP audits that was frequent in the Obama administration but experienced abated fairly in the course of the Trump administration.

If permitted, the new scheduling letter and itemized listing will represent a sizeable enhance in the original response load on contractors picked by OFCCP for audit. Contractors have only 30 days to post documents and data responsive to the scheduling letter and itemized listing, and as we mentioned in a prior Notify, the agency no more time is supplying deadline extensions, absent “extraordinary situations.” Appropriately, it will be even a lot more crucial for contractors to guarantee that they keep up-to-date with their affirmative motion compliance obligations, which include the servicing and preparation of any required documentation that will require to be submitted to OFCCP at the outset of an audit.

Lastly, contractors should note that they have until eventually January 20, 2023, to post responses to OFCCP’s proposed improvements to the scheduling letter and itemized listing.

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