OFCCP Update: What? So What? Now What?

1. OFCCP Update: What? So What? Now What? Lynn A. Clements, Director, Regulatory Affairs Berkshire Associates Inc. Ohio ILG November 2018

2. Lynn A. Clements800.882.8904, ext. 1246lynnc@berkshireassociates.com As Director of Regulatory Affairs for Berkshire Associates Inc., Lynn A. Clements, Esq. oversees Berkshire’s audit defense practice, helping clients defend more than one hundred OFCCP compliance reviews each of the past several years. Previously, Lynn served as Acting Director/Deputy Director of the Policy Division of OFCCP, as a senior policy advisor to the Vice Chair and Legal Counsel at the EEOC, and as a shareholder at a management-side law firm where she advised clients on the full range of employment issues, including large-scale class discrimination investigations. A frequent speaker to HR professionals of all levels, Lynn has testified before Congress on EEO and pay equity issues and regularly assists industry organizations, including SHRM and CUPA-HR, in understanding and responding to regulatory proposals. Lynn is a faculty member of The Institute for Workplace Equality, a non-profit employer association organization that provides expert-level affirmative action and equal employment opportunity training. She is currently Secretary for the Baltimore Industry Liaison Group (BILG) and serves on the U.S. Chamber of Commerce Washington Corporate Representatives Committee. Lynn graduated summacum laude with a B.S. and B.A from Wilkes University. She earned her J.D. cum laude from Georgetown University. 2

3. Introduction This presentation was prepared by Berkshire for participants’ educational use. Participants should consult with their Berkshire consultant or legal counsel before implementing any strategies or actions discussed in this presentation and should not consider this presentation, or related materials, to be legal advice.

4. Agenda • Changes in OFCCP Leadership • OFCCP Priorities • The New Directives and What They Mean forContractors During Compliance Reviews • What’s Next?

5. New Leadership at OFCCP • Director Ondray Harris left the agency August 2018 • Craig Leen immediately became Acting Director • Current Leadership Team • Marika Litras – Acting Deputy Director • Kelley Smith – Chief of Staff • Lissette Geán – Special Assistant • Harvey Fort – Acting Director of Policy • Tina Williams – Acting Director of DPO • Javaid Kaiser – Acting Director of DMAP

6. New Leadership Priorities • The Four Pillars • Transparency • Certainty • Efficiency • Recognition This Photo by Unknown Author is licensed under CC BY

7. Contractor Bill of Rights:What?

8. Contractor Bill of Rights:So What and Now What? • Echoes message of transparency • Provided in response to GAO Report and Stakeholders Town Hall meetings • Important because it resets expectations for contractor and agency interactions BUT did not direct any specific policy or enforcement changes

9. Religious Exemption Directive:What?

10. Religious Exemption Directive:So What and Now What? • Focused on protecting religious organizations covered by Executive Order 11246, not on individuals’ personal religious beliefs • Does not overturn Obama order that contractors not discriminate on the basis of sexual orientation or gender identity • Proposed regulations expected Dec 2018 • OFCCP continues to look at contractors’ religious accommodation requests during compliance reviews

11. Compensation Directive:What?

12. Compensation Directive: So What? • This is a SIGNIFICANT development; worth a close read by all contractors • Directive promises more transparency regarding OFCCP analyses, but not as many changes to how OFCCP will analyze pay as contractors had hoped • Makes clear pay equity remains an enforcement focus for OFCCP

13. Compensation Directive: So What? • Pay Groupings are here to stay—will still group “comparable” not similarly-situated employees • Directive emphasizes using groupings that “mirror” contractor’s compensation system • OFCCP generally will first analyze pay by job group or EEO category otherwise • Wide latitude to disregard if groupings are not “reasonable,” too small, or cannot be verified under written polices • Will typically control for title or grade, but will not group that way

14. Compensation Directive: So What? • Sets forth detailed technical description of how agency will evaluate raw wage differences • Examine base pay and total compensation separately • Examine impact of race and gender separately in initial analysis • Control for organizational differences like division, business unit, product line, and location • Control for employee-based variables • Time-based variables separately • Education and performance • Experience if provided or age as a proxy • Full-time or exempt status

15. Compensation Directive: So What? • Will rely on a multiple linear regression analysis • Convert salary to natural log so salary differences are reported as percentages • May square tenure terms, but not initially • Will test all variables for correlation and neutrality • May group some variables together for analysis (PHD and Masters analyzed together rather than independently)

16. Compensation Directive: Now What? • Already seeing impact in compliance reviews • Review your job structures and compensation hierarchies to determine if OFCCP will accept them as reasonable pay groupings • Update written policies to make sure your job pay system can be verified by the OFCCP • Proactive pay analyses critically important

17. Transparent Review Process:What?

18. Transparent Review Process:So What? • This is a SIGNIFICANT change to compliance review process • Detailed summary of how compliance reviews should proceed • Contact contractor within 15 days of sending Scheduling Letter • Begin review in five days; close most desk audits in 45 days • Only ask for more information to “fulfill or clarify” data requested by Scheduling Letter during desk audit • Supplemental data requests must include basis for the request, be reasonably tailored, and allow for a reasonable response time • Share more information with contractors during conciliation

19. Transparent Review Process:Now What? • FCCM being updated • Submit best possible response to Scheduling Letter • Expect compliance reviews to move faster, but this is a two way street . . . so OFCCP will expect contractors to timely respond • Ask more questions of your compliance officer—they should be able to explain the basis for each request

20. FY 2018 Scheduling Lists • First list of 1,000 establishments released March 19, 2018 • Second list of 750 establishments released Sept. 7, 2018 • All lists are now publicly available on OFCCP’s FOIA site at https://www.dol.gov/ofccp/foia/foialibrary/index.html • Still scheduling from first list; scheduling from second list has begun • No focused reviews on either list

21. New Policy on Extension Requests • Extensions for basic AAPs will only be granted in extraordinary circumstances • 30–day extension for supporting data if extension is requested prior to the initial 30–day due date and contractor timely submits “basic AAPs” • Failure to timely submit AAPs and/or supporting will result in an immediate Notice to Show Cause • Applies to compliance reviews scheduled on or after September 7, 2018 

22. How is all of this change playing out in compliance reviews . . . • Compliance reviews are generally moving faster • Initial questions are generally limited to Scheduling Letter clarifications • More transparency about requests for additional information by agency

23. How is all of this change playing out in compliance reviews . . . • Focus on efforts to meet placement goals • Technical compliance questions continue – trend towards more paper • Still focused on understanding adverse impact indicators, but requests are not as broad • Not as much change as contractors hoped in the compensation discrimination area

24. What is on the Horizon

25. Focused Reviews: What?

26. Focused Reviews:So What? • This is a MAJOR change • Portion of all reviews in FY 2019 will be focused reviews under EO 11246, VEVRAA, and Section 503 • Focused reviews will include • Onsite visit • Interviews with managers and employees • Evaluation of hiring and compensation data, including for IWDs and Vets

27. Focused ReviewsNow What? • Confirm compliance with new Section 503 and VEVRAA requirements • Review data metrics over multiple year period • Trace life cycle of IWD and Vet hires – where are your weak spots? • Review policies that may impact IWD and Vets • Accommodation process and training

28. Contractor Verification Program:What?

29. Contractor Verification Program:So What? • Not yet in place so little current impact; long-term impact could be significant • OFCCP seeking way to verify that all covered contractors are preparing timely annual AAPs • Would use data to schedule contractors for audits • May eventually include annual certification requirement

30. Contractor Verification Program:Now What? • Develop a plan to more timely complete annual AAPs • Confirm all required entities are preparing AAPs • Check System for Award Management (SAM) certification

31. Ombud Directive:What? So What? Now What?

32. Contractor Recognition Program:What? So What? Now What?

33. Thank you for attending! Questions?

34. Contact us For more information about any of the updates covered in this presentation, please contact me at: lynnc@berkshireassociates.com 800.882.8904, ext. 1246 For additional resources, and to subscribe to Berkshire’s blog, please visit: www.berkshireassociates.com/besource