OFCCP Compliance Evaluations: General Overview

Most federal government contractors must comply with nondiscrimination and Equal Employment Opportunity (EEO) laws and should be prepared for the U.S. Department of Labor’s Office of Federal Contract Compliance Programs (“OFCCP”) to evaluate whether your business is in compliance.  OFCCP’s compliance evaluations can take many forms, as OFCCP uses an array of investigative procedures varying in scope and breadth, to determine if federal contractors and subcontractors comply with the EEO laws that fall with OFCCP’s purview.  This article will walk through the basics of a contractor’s legal obligations and provide a glimpse of the typical evaluation process, so that you won’t get caught off-guard when OFCCP contacts you to schedule a visit.  If you do get that call from OFCCP (more accurately, that letter), Ward & Berry’s Compliance group can support you through the process.

Your Obligations As a Federal Contractor

The first question is the most basic: what do you need to do to successfully get through an OFCCP compliance evaluation?  In other words, what will OFCCP be checking for?  OFCCP administers and enforces three EEO laws.  The first is Executive Order (EO) 11246, as amended, which prohibits discrimination and requires affirmative action for all applicants and employees to ensure EEO without regard to race, color, sex, sexual orientation, gender identity, religion, and national origin.  In addition, this law prohibits contractors from discharging or otherwise discriminating against applicants or employees who inquire about, discuss, or disclose their compensation or that of others, subject to certain limitations. EO 11246 applies when a company has federal contracts or subcontracts exceeding $10,000 or that will accumulate to more than $10,000 in any 12-month period.

Second, OFCCP enforces Section 503 of the Rehabilitation Act of 1973.  This law prohibits discrimination and requires affirmative action in all employment practices for qualified individuals with disabilities. A disability is defined as a physical or mental impairment that substantially limits one or more major life activities of such individual, a record of such an impairment, or being regarded as having such an impairment. Section 503 applies when a company has a federal supply, services, or direct construction contracts or subcontracts exceeding $15,000.

Finally, OFCCP will check that you are in compliance with the Vietnam Era Veterans’ Readjustment Assistance Act of 1974, as amended (VEVRAA), which prohibits discrimination and requires affirmative action in all employment practices for “covered veterans.” “Covered veteran” means disabled veterans, recently separated veterans, active-duty wartime or campaign badge veterans, and Armed Forces service medal veterans. Similar to Section 503, VEVRAA applies to a company with federal supply, services, or direct (i.e., not federally-assisted) construction contract or subcontract of $150,000 or more.

Whether small and large, all federal contractors holding the requisite contract values are subject to these baseline requirements; and some contractors may have additional obligations.  For example, contractors that meet certain dollar thresholds (e.g., a contract of $50,000 or more for EO 11246 and Section 503; a contract of $150,000 or more for VEVRAA) and have at least 50 employees, must develop, maintain, and implement a written Affirmative Action Program (“AAP”).  An AAP is a management plan for ensuring that covered federal contractors are providing applicants and employees with equal employment opportunity.  An AAP documents the organizational structure, demographic composition of the workforce, and policies, practices and procedures that the company will use to make sure that qualified applicants and employees are receiving an equal opportunity to apply and compete for jobs, promotions, training and other employment opportunities.

How to Meet Your Obligations In Practice

As discussed above, these laws do not just prohibit discrimination, but also require “affirmative action” by every federal contractor to ensure that discrimination does not occur.  This includes, among other things, the AAP that is required for contractors of a certain size.  In practice, this means that federal contractors must take several concrete steps including, but not limited to:

• Recordkeeping, including annually collecting, maintaining, and analyzing personnel activity data on the basis of race, sex, disability status, and veteran status. Personnel activity data includes, but is not limited to, hiring, assignments, rates of pay or other compensation, promotions, training, transfers, layoffs or terminations, recalls from layoffs, and demotions.
• Incorporating the required clause(s) into subcontracts and purchase orders.
• Posting the EEO poster and other required notices and supplements at their establishment and online if an online application system exists.
• Inserting the EEO tag line into job advertisements. When posting open positions, contractors must include an EEO tagline that states it is an Equal Opportunity Employer (or “EOE”) and that minorities, women, veterans, individuals with disabilities, and others are encouraged to apply. OFCCP has approved abbreviate references to the protected groups, e.g., “EOE including disability/vet” is an acceptable tagline for a contractor complying with all three laws.
• Taking specific, documented actions to attain the aspirational 7 percent utilization goal by job group or workforce, depending on the contractor’s size, for qualified individuals with disabilities.
• Inviting applicants and employees to voluntarily self-identify as qualified individuals with disabilities or protected veterans.
• Conducting periodic reviews of all physical and mental job qualifications to ensure that qualified individuals with disabilities are not eliminated from consideration on the basis of disability, maintaining documentation on the results of the reviews as well as any corrective actions taken, and removing job qualifications that are not job related and consistent with business necessity.
• Providing reasonable accommodation to qualified individuals with disabilities and disabled veterans, upon request, unless the accommodation would cause an undue hardship.
• Providing reasonable accommodation to qualified individuals with disabilities and disabled veterans, upon request, unless the accommodation would cause an undue hardship.
• Listing all employment openings with the appropriate state or local employment service delivery systems (e.g., state and local employment and career agencies, state job banks, and local One-Stop Career Centers). Generally, contractors must send their job listings to the Employment Service Delivery System (ESDS) where the job openings occur. However, this VEVRAA requirement gives contractors other listing options when jobs are 100 percent telework or remote.

General Process of an OFCCP Compliance Evaluation

OFCCP primarily monitors compliance with these EEO laws and their corresponding affirmative action requirements, through compliance evaluations. OFCCP generally chooses the contractors that it will evaluate at random, though it also considers complaints filed by individuals alleging EEO violations against companies.  A compliance evaluation generally involves an OFCCP compliance officer examining the contractor’s employment practices and AAPs; however, the precise method that OFCCP employs can differ in scope and depth.  For a discussion of those different types of evaluations, check out Ward & Berry’s GovConLaw article on the subject.

Generally, the process begins when OFCCP sends the company an official scheduling letter, which provides a timeline for the evaluation and informs the company of the type of evaluation to be performed and the documentation to be collected and prepared for OFCCP’s review.  Usually, but not always, OFCCP will send the contractor a preliminary Corporate Scheduling Announcement Letter (“CSAL”), which is a courtesy letter telling the contractor that it should expect an official scheduling letter within the next 45 days.

Once a contractor receives its scheduling letter, the contractor has a certain number of days (30 days for the most common type of evaluation, the compliance review ) to submit the required documentation to OFCCP for review.  Once you submit your documentation, the office will analyze the data, make subsequent requests for additional information as necessary, and assess whether there are any indicators of potential discrimination.  You will need to respond to all requests in a timely manner and be prepared to address any follow-up questions should they arise.  If OFCCP is performing a compliance review, the contractor should also prepare for an on-site review, which OFCCP may perform to ensure that the contractor is not only writing policies, but implementing and adhering to those policies.  As mentioned above, OFCCP uses a variety of investigative procedures which have their own timelines and required documents (e.g., in a focused review OFCCP will only examine a specific employment practice or a contractor’s compliance with one specific law).

Now, what happens when the evaluation is complete?  If OFCCP finds no violations, it will issue a closure letter, known as a Letter of Compliance, which officially ends the evaluation.  Conversely, if OFCCP does find violations, then it typically initiates negotiations with the company, with an eye towards entering a Conciliation Agreement (“CA”).  Conciliation discussions may involve various methods of communication, including the exchange of letters and emails, telephone conferences and in-person meetings. If these negotiations are successful, OFCCP will document the terms of the settlement in a formal CA. If OFCCP determines that the contractor failed to agree to a reasonable settlement, failed to do so in a timely fashion or failed to negotiate in good faith, OFCCP may recommend the case for enforcement, which can occur through administrative or judicial proceedings.  Whatever the final outcome, OFCCP has 45 days to amend its findings, though that occurs infrequently.  In most cases, after closure, a business will not be audited again for two years.  Finally, note that OFCCP issued a Final Rule on November 10, 2020 which lays out the specific procedures that OFCCP uses to resolve potential discrimination and other material EEO violations.

References:
U.S. Dep’t of Labor, Office of Fed. Contract Compliance Programs, At-A-Glance (Aug. 2019).
U.S. Dep’t of Labor, Office of Fed. Contract Compliance Programs, Small Federal Contractor Technical Assistance Guide (Dec. 2020).
U.S. Dep’t of Labor, Office of Fed. Contract Compliance Programs, What Federal Contractors Can Expect (Apr. 2018).