Impact of the 2009 Corporate Scheduling Announcement Letter

by Christi Anthony
Consultant, Biddle Consulting Group

Federal contractors across the country have now likely received their copy of the Spring 2009 Corporate Scheduling Announcement Letter (CSAL) from the Office of Federal Contract Compliance Programs (OFCCP). The OFCCP can list up to 25 additional sites per organization on each CSAL. Many contractors who previously experienced little audit activity are seeing dramatic increases in the number of scheduled audits with each CSAL. Preparing well in advance of submission to the OFCCP is critical to ensure a smooth audit year.

Biddle Consulting Group (BCG) has already supported dozens of audits in the 2009 Fiscal Year. Compared to previous years, the Compliance Officers (COs) are clearly looking at Affirmative Action Plans (AAPs) in more detail. The result of a more thorough review of the AAP is a dynamic increase in the number of follow-up requests by the CO. Compliance Officers are asking for more data, subsets of data, and for explanations of the basic plan components such as creation of placement goals, goal attainment, and much more. Contractors should prepare to answer these detailed questions prior to submitting their AAP..

Below is a list of steps that BCG recommends following once a CSAL is received. Depending on the implementation period of the Affirmative Action Plan (AAP), the plan may already be completed. However, if the CSAL is received while preparing the AAP, the steps to preparing for audit submittal are the same as if the plan is already complete.

1. Review the Data: The first and most important step is to review the data that has been used to create the technical reports of the AAP. The OFCCP focuses their review on identifying systemic disparities and, therefore, investigates adverse impact and compensation with a careful eye. Ensuring that all legitimate data refinements have been made is the first step in preparing the AAP. Questions to consider are: “Was the Internet Applicant Rule applied?” “Are the correct compensation values reported?”

2. Critically Evaluate the Technical Reports: Once the data has been deemed as clean as possible, the second step to prepare for an audit submittal is to critically evaluate the AAP reports. Areas of underutilization should be addressed in the narrative, and should have a specific Action Oriented Program that aims to rectify the underrepresentation. Any significant adverse impact should also be investigated thoroughly. The OFCCP seems to be especially interested in adverse impact in the applicant to hire comparisons and sees adverse impact in hiring as “low hanging fruit”. In past years, this type of adverse impact has been the OFCCP’s most significant money maker . Be sure that the correct applicant pool is being used in comparison to hires made during the transaction period. If there is adverse impact in the overall job group, is there a specific title or requisition that is driving those results? If there is significant adverse impact in terminations, be sure to single out voluntary from involuntary terminations. For voluntary terminations, collect and retain letters of resignation. Review exit interviews for those that were involuntarily terminated and be sure that proper procedures were followed. Be especially critical of those job groups that have underutilization, and also show adverse impact against that same group.

3. Analyze Compensation Using an OFCCP-Style Approach: Analyzing compensation in a manner similar to the OFCCP is important to help contractors know what OFCCP may find. Be sure to prepare your compensation report in the manner that best represents your compensation practices as directly requested in the standard desk-audit letter. The OFCCP runs an initial indicator test to identify any potential for the existence of systemic compensation disparities. If the data includes job groupings that have a 5% difference in pay, has at least 10% of the impacted group effected (females, for example), and that group is effected at a rate three times greater than the less-impacted group (males), then the OFCCP is likely going to request additional data. Be aware that the OFCCP has the right to investigate compensation under any terms, and will often investigate individual titles or groups that have a greater than 5% difference in pay, even if the indicator test does not identify an issue.

4. Get Help: Most importantly, if you do not have the resources to help you prepare to submit AAPs for the identified locations, seek help. Careful preparation is the key element to surviving any audit. A lack of preparation can result in a Notice of Violation, and possibly a conciliation agreement which equates to potentially burdensome costs to the contractor. Preparing at the CSAL stage, and prior to receiving a desk-audit letter, will help organizations position themselves for the best chance of closing an audit at the desk-audit stage.

Preparing for an OFCCP compliance evaluation can be an overwhelming task. Following the steps outlined above can help contractors feel comfortable that they are taking the necessary actions in their preparations and presenting their organization to the OFCCP in the best possible light.

Utilizing OFCCP Pre-Award Registry to Check for Audit Closures

While attending a recent ILG meeting, Biddle Consulting Group participated in a discussion about the National Pre-Award Registry found on the OFCCP website. The registry allows companies to search for audits that were closed and the contractor was found to be in compliance. In the link below, there is a search function at the bottom where users can type in a company name and if they have any closed audits within the last two years they will be listed. This can be a handy tool for Federal Contractors since audit status is sometimes unknown. Be aware that not all audits appear on this list. For example, administrative closures and audits that are closed because there are no initial indicators of problem areas MAY NOT appear on the list because the associated closure letter indicates that the audit was closed BUT that the contractor was not issued a letter of compliance.

This Registry can be viewed in one of two formats:

There is a search function that allows users to search the Registry (in ascending or descending order) using the Name of the Contractor Facility; and
Users can download the entire Registry (about 1 Mb) to their computer. Once downloaded, this information can then be imported into any word processor, spreadsheet, or database software package.

See link below:

http://www.dol-esa.gov/preaward/pa_reg.html

BCG Speaking at SHRM National Conference on Adverse Impact

Adverse Impact and the New OFCCP: Analysis Done Right!

Time/Date: Tuesday June 30th 7:00am-8:15am

Presenter: Patrick M. Nooren, Ph.D., Executive Vice President, Biddle Consulting Group, Inc., Folsom, California.

Workplace Application: This session will help you understand the importance of properly analyzing your selection process for adverse impact.
Strategic policy decisions have changed the OFCCP from an organization seeking to advance classical Affirmative Action into an organization seeking to root-out and eliminate systemic disparities in hiring and compensation. This session will update you on the latest analytical strategies for correctly identifying adverse impact and practical ways in which to mitigate potential problem areas.

We look forward to seeing you at the SHRM National Conference this year!

OFCCP budget increases announced for 2010

The Department of Labor has announced their 2010 budget and the OFCCP has been identified to receive an increase of more than $25 million dollars to enhance their already aggressive enforcement strategies. Included in the budget is the addition of more than 200 full time employeees and a new case mamagement system. See the excerpt below for details.

Secretary Hilda L. Solis unveils U.S. Department of Labor’s budget for fiscal year 2010. View the news brief:
http://www.dol.gov/opa/media/press/oasam/OASAM20090489.htm

View the entire budget brief:
http://www.dol.gov/dol/budget/2010/PDF/bib.pdf

Excerpt from the Budget in Brief regarding the OFCCP budget increase:

"The Office of Federal Contract Compliance Programs (OFCCP) has the responsibility of ensuring that employers doing business with the Federal Government comply with the Equal Employment Opportunity (EEO) and affirmative action provisions of their contracts. The OFCCP administers and enforces three EEO programs: Executive Order 11246; Section 503 of the Rehabilitation Act of 1973; and the affirmative action provisions of the Vietnam Era Veterans’ Readjustment Assistance Act of 1974.

The OFCCP carries out its responsibilities by: (1) offering technical assistance to Federal contractors and subcontractors to help them understand the regulatory requirements and review process; (2) conducting compliance evaluations and complaint investigations of Federal contractor and subcontractor personnel policies and procedures; (3) obtaining Conciliation Agreements from contractors and subcontractors who are in violation of regulatory requirements; (4) monitoring contractors and subcontractors progress in fulfilling the terms of their agreements through periodic compliance reports; (5) forming linkage agreements between contractors and Labor Department job training programs to help employers identify and recruit qualified workers and recommend enforcement actions to the Solicitor of Labor.

The FY 2010 budget request includes a program increase of $25,600,000 to fund 213 FTE and a new case management system. The additional FTE will support enforcement and outreach efforts related to compensation. Given the complexities of new procedures outlined in the two federal register notices – Interpreting Nondiscrimnation (Standards) and Voluntary Guidelines for Requirements of Executive Order (guidelines), OFCCP needs to place additional emphasis on outreach and training, as well as improving the various approaches and investigative techniques used to evaluate compensation. In addition, the program increase will also support litigation to amplify enforcement activities by funding external experts to verify OFCCP’s allegations and assessments to solidify its commitment to strong enforcement.
In FY 2008, OFCCP made total financial settlements of $67,510,892 in back pay and annualized salary and benefits for a record 24,508 American workers who had been subjected to unlawful employment discrimination. This marks the fourth consecutive year that OFCCP has posted record enforcement numbers."

BCG to speak at National ILG in Atlanta re: Ricci v. DeStefano testing case

United States Supreme Court is Set to Rule on the Biggest Testing Case Since Griggs v. Duke Power

On April 22, 2009, the U.S. Supreme Court (“USSC”) heard the oral arguments offered by each side in the Ricci v. DeStefano testing case. In this case, 18 candidates (17 Whites and 1 Hispanic), who successfully passed two exams for promotion to Lieutenant and Captain positions, are suing the City of New Haven, Connecticut for refusing to certify the exams and make the promotions because the tests had adverse impact (whites scored higher than African-Americans) and were not justifiably valid. The plaintiffs argued that their rights under Title VII and the 14th Amendment Equal Protection Clause were violated. This summer, we expect the USSC to rule on this very important matter. Dr. Biddle attended the oral arguments at the USSC and will discuss the court’s ruling as well as the implications for federal contractors.

The session will be at 2:30pm on July 29th (Concurrent Session #4).

United States Supreme Court Set to Rule on the Biggest Testing Case Since Griggs v. Duke Power

By Dan A. Biddle, Ph.D
CEO, Biddle Consulting Group

On April 22, 2009, the U.S. Supreme Court (USSC) heard the oral arguments offered by each side in the Ricci v. Destefano testing case. In this case, 18 candidates (17 Whites and 1 Hispanic), who successfully passed two exams for promotion to Lieutenant and Captain positions, are suing the City of New Haven, Connecticut for refusing to certify the exams and make the promotions because the tests had adverse impact (whites scored higher than African-Americans) and were not justifiably valid. The plaintiffs argued that their rights under Title VII and the 14th Amendment Equal Protection Clause were violated.

As with every case that reaches the USSC, this case had a complex history. In the original case, the federal district court granted the defendants’ motion for summary judgment. On appeal, the United States Court of Appeals for the Second Circuit affirmed the lower court’s ruling, reasoning that the City, by refusing to certify the results of the promotional exam, was trying to fulfill its obligations under Title VII (by not moving forward with an invalid test that had adverse impact), and was therefore protected in its actions. By agreeing to hear the case, the USSC is now charged with the difficult task of deciding whether a City can throw out the results of an exam process that they believed (based on a post-administration validity review) would not survive a Title VII validation challenge.

Other critical questions to which the USSC may frame answers include: (1) Do candidates who take a test for a public sector job have a right to expect that the public entity will develop and implement validated selection procedures, regardless of adverse impact? And (2) Will the USSC take this opportunity to redefine “professionally developed tests” as defined in the 8-0 USSC Griggs v. Duke Power Company (401 US 424, 1971) case and allow any test if it is developed professionally to stand regardless of its validity?

To read more of this upcoming article and topic, please click here to subscribe to EEO Insight:

http://www.eeoinsight.com/subscribe.html

Good Faith Initiative for Veterans Employment (G-FIVE)

By Criselda Rivet, EEO Analyst

I recently attended the Northern California ILG meeting where the OFCCP Regional Director from the Pacific Coast, William Smitherman, awarded the G-FIVE Award Nomination Recognition to the following companies:

Kaiser Permanente - Oakland, CA
Kaiser Foundation Hospital – Santa Rosa, CA
Roadway Express – West Sacramento, CA

Each recipient discussed their award-winning programs and how they came to be nominated. Their speech consisted primarily of effective action-oriented programs designed to attract women, minorities, veterans and people with disabilities into their workforce while proactively implementing equal employment opportunity. The efforts of the aforementioned Federal contractors resulted in further diversification of the workforce as well as the recognition of the Office of Federal Contract Compliance (OFCCP).

G-FIVE recognizes companies’ best practices and good faith efforts in the advancement and employment of veterans. It is an incentive given to contractors and subcontractors in hiring more veterans. And it is also one way of strengthening the relationship between the OFCCP and the veterans group.

There are two (2) ways to get the G-FIVE nomination. Both of which have to undergo a full compliance audit (i.e., desk audit, onsite, and offsite).

(1) Self-nomination – contractors and subcontractors may submit a written statement addressing their interest in being considered for the nomination.
(2) Recommendation from the OFCCP Regional Directors to the National Office.

Any contractor or subcontractor who receives the recognition will be audit-free from the OFCCP for three years following the date the recipient receives the rating. Please note, if your organization has multiple locations, only the awarded location is exempt from being audited for three years from the date that the award is granted.

G-FIVE recipients will be recognized on OFCCP’s website and will also receive a certificate of recognition.

For more information about G-FIVE Initiative, please visit the OFFCP website at http://www.dol.gov/esa/ofccp/g_five.htm