OFCCP Scheduling Process Aimed at Larger Organizations?

The most recent release of pre-scheduling notices by OFCCP seems to be following certain patterns that were evident in the pre-scheduling notices sent out by OFCCP in late 2012.  It appears both from experience with our clients and from discussions we've had with others that OFCCP is targeting larger organizations.  These larger organizations are receiving a disproportionate number of pre-scheduling notices.  John Fox of Fox, Wang & Morgan has also reported that OFCCP is disproportionately selecting certain industries for review, including the healthcare and manufacturing sectors.

The fact that OFCCP is targeting certain types of companies and certain industries negates the long-standing idea that OFCCP uses a neutral, unbiased tool to select federal contractors and subcontractors for review.  OFCCP's decision to conduct multiple reviews at the sites of larger federal contractors and subcontractors appears to be part of the agency's desire to conduct corporate-wide reviews of certain companies.  While it is unclear whether OFCCP has the right to conduct such corporate-wide reviews, the agency seems to be making adjustments to its scheduling process that are allowing OFCCP to get a broader picture of what happens in certain larger organizations.

The current tool used to select companies for review, the Federal Contractor Selection System (FCSS), uses data from EEO-1 reports, history of compliance reviews, number of discrimination complaints, and various other factors to help OFCCP determine which companies to review.  Some of the factors used by the FCSS and how these factors are weighted is a closely-guarded secret.  While OFCCP states on its website that the FCSS is a "neutral system," the agency's reviews during federal fiscal year 2013 (which started in October of 2012) appear to be anything but random.

Scheduling Letters Associated with Pre-Scheduling Notices Begin to Appear

Well, that didn't take long.

Some of the facilities that received pre-scheduling notices from OFCCP during the first week in April have already received the letter that formally opens an OFCCP review.  While the pre-scheduling notices were supposed to give companies time to prepare for a review, OFCCP appears to be moving forward aggressively with this round of compliance reviews.  (We are even aware of one situation where a company received the letter opening its compliance review BEFORE the company received its pre-scheduling notice.)

This letter that opens a review, referred to as a scheduling letter, and the itemized listing that accompanies the scheduling letter are the same as they've been for some time.  OFCCP's revised scheduling letter and itemized listing that were first published in May of 2011 are still on hold at the Office of Management and Budget.  (You can find a copy of the revised scheduling letter and itemized listing that OFCCP proposes to use on the documents page of our website.)

We expect that companies receiving this round of scheduling letters will be asked to provide extensive compensation data during their compliance reviews.  This round of reviews will be the first under OFCCP's new Directive 307, the directive that instructs OFCCP compliance officers to give expanded attention to the compensation data and practices of federal contractors and subcontractors.  It will be interesting to see how OFCCP implements this directive and what other priorities OFCCP has for federal contractors and subcontractors in this round of reviews.

OFCCP Sends Out Pre-Scheduling Notices

It appears that OFCCP is gearing up for the next set of compliance reviews. We have several clients who have received pre-scheduling notices advising them that they will be undergoing review soon. The pre-scheduling notices we've seen were directed to the specific facility that will be undergoing a review and not to a corporate headquarters location. Federal contractors and subcontractors should be on the lookout for these letters.

This will be an unusual cycle of reviews because of the level of uncertainty at OFCCP over various initiatives (including the proposed veterans and disability regulations) and because of OFCCP's desire to look more extensively into compensation issues.  As noted in a previous post, OFCCP is scheduled to unveil the final version of its revised regulations for veterans and persons with disabilities in April (though we do not believe this is likely to happen).  More importantly, this round of reviews will be the first round under OFCCP's new compensation directive.

It's interesting that OFCCP is sending out pre-scheduling notices to individual facilities.  For several years, OFCCP had issued letters to certain multi-facility employers advising them that one or more facilities would be undergoing an affirmative action compliance review. These letters, called Corporate Scheduling Announcement Letters (CSALs), were generally sent twice a year. While their use had been somewhat unpredictable, CSALs were very helpful to large organizations that could use the CSAL list to plan for compliance reviews.  We'll have to watch to see if OFCCP uses only the single facility pre-scheduling notices during this round of reviews or if there will be traditional CSALs sent to corporate headquarters that provide a list of facilities that will undergo review.

It is worth noting that the current round of pre-scheduling notices, like the CSALs OFCCP had been using, are NOT formal letters opening compliance reviews (i.e. "scheduling letters"). These pre-scheduling notices are just a notification of a likely review. In past years, we've had the following scenarios occur:

• Clients have received a formal scheduling letter within days of receiving a pre-scheduling notice
• Clients have received a formal scheduling letter months after receiving a pre-scheduling notice
• Clients failed to receive a scheduling letter even though they were on a CSAL list suggesting there would be a compliance review

Thus, while the pre-scheduling notice is a useful warning, it doesn't necessarily provide a specific timeline for review.  What the pre-scheduling notice does is put a company on notice that a review is likely to occur.  We encourage any company that receives a pre-scheduling notice to begin preparations for an OFCCP compliance review as soon as possible.  If you need assistance in preparing for a review, please contact us.

Where Do We Stand?

The current picture in regard to what’s happening at OFCCP seems to grow murkier all the time.　During 2012, we noticed multiple changes in approach and behavior from the agency.　We also noticed multiple changes in emphasis during affirmative action compliance reviews.　We’d like to use this article to share what we believe is happening at OFCCP, and provide you with an update on the status of several of the agency’s major initiatives.

During 2011, OFCCP released a number of proposals that would have fundamentally changed the agency’s expectations for federal contractors and subcontractors.　These proposals included the following:

Proposed Revisions to Regulations Regarding Veterans - OFCCP has proposed a number of dramatic changes to their regulations regarding veterans.　 Among these proposed changes are requirements to:

• survey applicants for veteran status
• establish "linkage agreements" with multiple veterans recruitment sources
• establish some form of placement goals for veterans, and
• collect five (5) years of data regarding the recruitment of veterans.　

What Should Your Company Submit to OFCCP at the Start of a Compliance Review?

This article originally appeared in the October 2012 edition of the LocalJobNetwork "OFCCP Digest." 

Your company has received that dreaded letter from the U.S. Department of Labor's Office of Federal Contract Compliance Programs (OFCCP) indicating that your company has been scheduled for an affirmative action compliance review. After the initial panic has subsided, it is time to consider what you will send to OFCCP in order to comply with the requests in the scheduling letter and itemized listing you've received.

While more affirmative action compliance reviews by OFCCP are now ending in conciliation agreements than was the case in the past, there are still plenty of companies that are receiving letters of compliance at the end of their reviews. The decision on what items to send to OFCCP and what items to hold back can be crucial in determining the outcome of an affirmative action compliance review. The 30 days between the time the scheduling letter is received and the time that your company's affirmative action plan is due to OFCCP should be used to make various strategic and tactical choices on what to provide to OFCCP.