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Key Changes to OFCCP Compliance Evaluation Procedures

- Wednesday, November 26, 2014

Federal contractors selected for auditing by the OFCCP are notified via a Scheduling Letter and an Itemized Listing of the data, analyses and documents they must provide within 30 days. On October 1, 2014, the Office of Management and Budget (OMB) approved the OFCCP’s new Scheduling Letter, Itemized Listing, and Compliance Check Letter. Federal contractors should familiarize themselves with these new requirements.


The Announcement of OMB Approval was published in the Federal Register. As of October 16, 2014, the OFCCP began using the new documents and regulations for compliance reviews of federal contractors. Of the 116,079 contractor establishments, only 3.2% or 3,774 are selected annually for a compliance evaluation, according to documentation (Supplement A) that the OFCCP submitted to the OMB.


The compliance evaluation selection typically occurs twice a year, and establishments are currently selected based on their EEO-1 data, which “underpins [the OFCCP’s] analyses of employment trends and patterns.” The OFCCP anticipates that data collected from the newly proposed Pay Data Collection tool (Equal Pay Report), still at the Notice of Proposed Rulemaking (NPRM) level, will also be used to prioritize a contractor for a compliance evaluation and improve the efficiency and effectiveness of its enforcement program.


Revised Compliance Evaluation Procedures


The new OMB approved OFCCP Recordkeeping and Reporting Requirements--Supply and Service Contractors contains the new Scheduling Letter and Itemized Listing.  One means whereby the OFCCP proposes to increase efficiency through the new procedures is noted in the new scheduling letter. Federal contractors and subcontractors are encouraged to submit their AAPs and other itemized listing data in an electronic format that the OFCCP suggests will save time for the contractor and the agency. In keeping with this focus on data, the OFCCP raises the stakes on data integrity. A noted change to the scheduling letter is that it now states that non-compliance with Federal contractor/subcontractor obligations is evidenced by a contractor’s failure to preserve complete and accurate records, including all personnel and employment records described in the OFCCP regulations, until the compliance evaluation is complete.


After seeing the new listing, which is comprised of 22 items instead of only 11, contractors may be surprised to hear that OFCCP modified its original proposed rule to accommodate concerns that were expressed about the time required to prepare data and reports during the comment period on the NPRM. Between the NPRM and the approved listing, OFCCP amended two requests:


  • • Contractors will be requested to submit employment data by job group or by job title, but will not be required to submit data by both.
  • • The starting and ending dates for the compensation data to be submitted is to be “the [same] date of the workforce analysis [data] in your AAP.”


Much of the new data and documentation requested relates to the adoption of regulations implementing Section 503 of the Rehabilitation Act of 1973 and the Vietnam Era Veterans’ Readjustment Assistance Act of 1974. Contractors are also required to produce compensation data in more detail than before. Nonetheless, OFCCP anticipates that it will take federal contractors less time to prepare for a compliance evaluation than previously, despite the fact that contractors are required to submit additional documentation and data. In order to better understand these revisions and additions, we have summarized key changes below.


The New Itemized Listing - Revisions


Eleven of the requested items are versions of information requested by OFCCP in the earlier iteration of compliance review data and documentation requests (OMB #1215-0072), with a focus on items that are listed in the “Support Data” section. Differences that contractors will see include:


Collective Bargaining Agreement (previously numbered #8, and is now #16)

New language has been added stating the contractor should include information that would implement, explain or elaborate on the collective bargaining agreement.


Employment activity data (previously numbered #10 and is now #18)

These data relate to applicants, hires, promotions, and terminations. Applicant, hire, promotion and termination data must now be broken down within the following five groupings (African-American/Black, Asian/Pacific Islander, Hispanic, American Indian/Alaskan Native, and White). Previously this information was submitted as aggregate minority/nonminority totals.  Applicant data for whom race and/or sex is not known must be included in the data submitted, by either job group or job title. Contractors are to include an explanation of how their organization defines “promotion,” and how the promotions were compiled. In addition, if the definition of promotion is different in different segments of the workforce, the definitions for each segment must also be provided.


Compensation data (previously numbered #11 and is now #19)

For each individual employed, compensation data must be submitted individually. Regarding race/ethnicity, the contractor has the option of submitting it based on the five categories specified in the Itemized listing(i.e, African-American/Black, Asian/Pacific Islander, Hispanic, American Indian/Alaskan Native, and White) or the seven categories of the EEO-1 Report, according to the recently released Scheduling Letter Itemized Listing Item 19 Compensation Data FAQ. The contractor must also indicate the gender of the individual, as well as the hire date, job title, EEO-1 category and job group (in a single file, and electronically, if possible). Previously, the compensation data was aggregated according to salary range, rate, grade, or level, showing total number of employees by race and gender and total compensation by race and gender.


Compensation is defined as base salary and/or wage rate, and hours worked in the typical week. For each individual, bonuses, incentives, commissions, merit increases, locality pay and /or overtime must be included. The previous listing did not include incentives, merit increases, locality pay and/or overtime.  Whereas employee was not defined in the original itemized listing, it is now specified as “including, but not limited to full-time, part-time, contract, per diem or day labor, or temporary” status.  Although the voluntary guidelines for compensation have been rescinded, and the OFCCP will use a variety of methods/procedures to analyze compensation, not just multiple regression, contractors are encouraged to provide additional data on factors used to determine compensation, such as “education, past experience, duty location, performance ratings, department or function, and salary level/band/range/grade.” These are factors that may be included in a multiple regression analysis, because of these factors’ possible explanatory effect on compensation differences. Documentation and policies explaining the contractor’s compensation practices should also be included.


The New Itemized Listing - Additions


Support data:


Reasonable Accommodation (#20): Contractors must submit copies of reasonable accommodation policies and any requests received.


Personnel Processes Assessment & Assessment of Physical and Mental Qualification (#21 and #22): Contractors must include their most recent personnel process assessment and review of physical and mental job qualification standards, the date(s) these assessments were performed, as well as information on any actions taken as a result. This is to ensure that any standards that would screen out qualified individuals with a disability or disabled veterans are job-related and consistent with business necessity.


Section 503 (Individuals with Disabilities) and Section 4212/VEVRAA (Protected Veterans):


Outreach and Recruitment Efforts (#7 and #11): Results of the evaluation of outreach and recruitment efforts to find and recruit protected veterans and individuals with disabilities.


Documentation (#8 and #12): Documentation of actions taken to comply with audit and reporting system requirements for protected veterans and individuals with disabilities.


Data Collection and Analysis (#9 and #13): Documentation of the computations or comparisons used for the previous AAP plan year, plus for an additional six months, if the evaluation request comes more than six months into that plan year.


Utilization of Individuals with Disabilities (#10): Utilization analysis evaluating the representation of individuals with disabilities in each job group, or, in some cases, in the entire workforce. As above, if the evaluation request comes more than six months into the current plan year, data on that six month period, as well as for the previous AAP plan year must be submitted.


Veterans’ Hiring Benchmark (#14): The hiring benchmark is currently 7.2%. Contractors must document if they are using this benchmark, or an explanation of how the benchmark was computed if they used the “five factors” computation. As above, if the evaluation request comes more than six months into the current plan year, data on progress towards that benchmark for that six months period, as well as for the previous AAP plan year must be submitted.


Contact ERS Group's OFCCP Compliance Group for more information.



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