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In keeping with their promise of “full-scale, aggressive enforcement” efforts, the Department of Labor’s Office of Federal Contract Compliance Programs (OFCCP) has implemented a new Active Case Enforcement (ACE) directive that strengthens their compliance evaluation process.  The most significant change is that every 25th audit now will include an on-site review, even in the absence of indicators of non-compliance or discrimination.  Additionally, every compliance review will undergo a full desk audit.  This directive is effective for all compliance evaluations started on or after 1/1/2011.

Federal contractors should be prepared for longer, more in-depth desk audits focusing on all aspects of compliance.  Outreach efforts towards veterans and individuals with disabilities, job postings requirements, compensation discrimination and the accessibility of online application systems are areas of increasing importance for OFCCP.  The directive also specifies that at the beginning of a compliance review, the OFCCP will contact the Equal Employment Opportunity Commission (EEOC) as well as state and local fair employment agencies to “determine the nature, status and outcome of any complaints that have been filed against the contractor at the establishment under review.”

OFCCP is in the process of expanding its focus “to include findings of non-compliance with the laws administered by the Department of Labor’s Veterans’ Employment & Training Services (VETS), Occupational Safety and Health Administration (OSHA) and Wage and Hour Division (WHD).”  ACE also calls for each compliance officer “to review the contractor’s compliance history for the past three years” using the OFCCP’s internal database to see if there are any patterns of non-compliance.

All on-site audits under ACE will include a review of the contractor’s compliance with Executive Order 13496.  Federal contractors and subcontractors should review their contracts and subcontracts to ascertain whether they fall under those regulations.

The new ACE procedures replace the formerly used Active Case Management (ACM) system which governed compliance reviews from 2003 – 2010.  ACM limited OFCCP’s focus to cases of systemic discrimination involving 10 or more affected employees.  It only called for full desk audits every 25th review and on-site visits every 50th.  The ACE directive states that “ACM proved to be of limited utility in that it did not allow OFCCP to effectively use all of its investigative tools.”

Amid all of these changes to the compliance review process, a few things remain unchanged.  The Federal Contractor Scheduling System (FCSS) will still be used to select which establishments will be reviewed and the order of the audits.  At the end of the compliance review, contractors will still have the same 24 month exception period in which that establishment will not be audited again.

The ACE directive can be viewed on OFCCP’s website:  http://www.dol.gov/ofccp/regs/compliance/directives/dir295.htm Frequently asked questions are available at:  http://www.dol.gov/ofccp/regs/compliance/faqs/ACE_faqs.htm

OFCCP recently published their budget request for FY 2012 which outlines their goals for the coming year as well as the funding they want to reach those goals.  The proposed budget of $109,010,000 represents a $3.6 million increase over the requested budget for FY 2011.  It also provides for the hiring of an additional 13 full-time employees.

OFCCP has made it clear that eliminating compensation discrimination will be a major priority in FY 2010.  With the proposed rescission of their former compensation guidelines and a new compensation data collection tool in the works, this should come as no surprise to the Federal contracting community.

What is notable is that OFCCP is planning to increase the scope of their compensation focus.  $3.5 million and 11 employees will be allocated towards their new initiative to identify workers misclassified as independent contractors.  This is part of a larger initiative within the Department of Labor that will cost $46 million.  Citing this as an issue in several compliance evaluations, OFCCP states that “Federal contractors who are seeking to skirt the requirements of E.O. 11246 may misclassify their employees as [independent] contractors in order to make the composition of their workforce appear more diverse or to mask discriminatory employment practices.”  OFCCP will develop their investigation process for this misclassification issue during FY 2012 and use the fourth quarter to “establish a baseline measurement of the impact of this initiative.”

The budget request also gives some hints on what the new compensation collection data tool may look like:

“OFCCP plans to develop and implement a web-based compensation data collection tool that would enable the agency to identify indicators of pay disparity among federal contractors.”

Additional details indicate that the tool would collect compensation data from 70,000-110,000 contractors and would likely array the data by job group.  OFCCP is also envisioning more technological improvements at the agency including a “secure compliant web portal” where AAP data would be collected from Federal contractors.

Fiscal Year 2010 OFCCP Enforcement Results

In FY 2010, OFCCP completed 4,960 compliance evaluations; up from 4,000 in FY 2009 and representing the most compliance evaluations since FY 2004.  A 32% increase in the number of audits ending in conciliation agreements brought the total to 919 compared to 694 in FY 2009.  The amount of financial recoveries rose from around $9M to $9.75M, even though the number of workers recompensed dropped from 21,839 in FY 2009 to 12,397 in FY 2010.

The estimated number of compliance evaluations for FY 2011 is lower at 3,500, but is targeted to increase to 3,675 in FY 2012.  OFCCP says that this decrease is “critical to implementing the fundamental changes to OFCCP’s new, comprehensive and multi-faceted enforcement strategy.”  Read: fewer, more in-depth compliance evaluations with more on-site visits. The recently released Active Case Enforcement directive will govern this strategy.

Functional AAPs are Coming Back

A recent webchat regarding the 2012 budget revealed that a revamped functional AAP unit is in the works.  OFCCP Director Patricia Shiu indicated that a new directive is forthcoming that will outline a new process for contractors to request approval for functional AAPs and by which they will be evaluated for compliance.

To view the budget request visit:  http://www.dol.gov/dol/budget/2012/PDF/CBJ-2012-V2-04.pdf

From OFCCP:

GREEN BAY, Wis. — Federal contractor Green Bay Dressed Beef LLC will pay $1.65 million in back wages, interest and benefits to 970 women who were subjected to systemic discrimination by the company. The settlement follows an investigation by the U.S. Department of Labor’s Office of Federal Contract Compliance Programs, which found that the women were rejected for general laborer positions at the company’s Green Bay plant in 2006 and 2007.

“This is the 21st century in the United States of America. There is no such thing as a “man’s job,’” said Secretary of Labor Hilda L. Solis. “I am pleased that my department has been able to work out a resolution with Green Bay Dressed Beef, and that the settlement not only compensates the victims of discrimination but also provides jobs for many of these women.”

In addition to financial compensation, the beef supplier will extend a total of 248 offers of employment to affected women as positions become available. The company already has hired more than 60 of the women in the original class.

During a scheduled compliance review, OFCCP determined that the company had violated Executive Order 11246, which prohibits federal contractors from discriminating on the basis of gender in their employment practices. Under the terms of the conciliation agreement worked out between the Labor Department and the contractor, the $1.65 million will be divided among the affected women who return timely notifications. The company also has agreed to undertake extensive self-monitoring and corrective measures to ensure that all employment practices fully comply with the law and will immediately correct any discriminatory practices.

Two of Green Bay Dressed Beef’s largest clients are the U.S. Department of Agriculture and the U.S. Department of Defense — as one of the largest suppliers of beef products for the federal school lunch program and one of the leading providers of beef products to American military personnel worldwide.

In addition to Executive Order 11246, OFCCP’s legal authority exists under Section 503 of the Rehabilitation Act of 1973 and the Vietnam Era Veterans’ Readjustment Assistance Act of 1974. As amended, these three laws hold those who do business with the federal government, both contractors and subcontractors, to the fair and reasonable standard that they not discriminate in employment on the basis of gender, race, color, religion, national origin, disability or status as a protected veteran. For general information, call OFCCP’s toll-free helpline at 800-397-6251. Additional information is also available at http://www.dol.gov/ofccp.