OFCCP Regulations Update: Reflections on Director Patricia Shiu’s Departure

By  - 

November 2016 marked the end of Patricia Shiu’s role as director of the U.S. Department of Labor’s Office of Federal Contract Compliance Programs (OFCCP), which is responsible for ensuring that employers who do business with the federal government comply with nondiscrimination laws. Over the last seven years, many changes took place under Shiu’s leadership, including the following:

Executive Order (EO) 11246
On December 9, 2014, a final rule was published which revised regulations implemented under EO 11246, extending protection from discrimination to contractors’ employees based on sexual orientation and gender identity. The final rule went into effect April 8, 2015. Contractors must post the “EEO is the Law” poster supplement until the revised “EEO is the Law” poster is published. Information has yet to be provided on when this will be available.

Patricia Shiu (photo by Center for American Progress/Flickr)

On September 11, 2015, a final rule was published which added protections for both applicants and employees that allow them to discuss, disclose, or inquire about compensation without being discharged or negatively affected. The regulations do, however, refer to exceptions in which disclosure of compensation is not protected. The regulations took effect January 11, 2016, and require covered contractors to include the Pay Transparency notice in existing handbooks, as well as post it in a conspicuous place for applicants and employees to view.

Section 503 of the Rehabilitation Act of 1973
On September 24, 2013, a final rule was published which outlined revisions to Section 503 of the Rehabilitation Act of 1973. These regulations went into effect March 24, 2014, and included a new provision requiring covered contractors to establish a nationwide utilization goal of 7 percent for qualified individuals with disabilities. Covered contractors are now also required to maintain data for three years on the number of individuals with disabilities who apply for jobs with their company and how many of them are hired. In an effort to better alert subcontractors of their obligations, the OFCCP also updated regulations to require prescribed wording for the incorporation of the equal opportunity (EO) clause in subcontracts and purchase orders.

The process for inviting individuals to self-identify was updated; it requires contractors to use the prescribed language the OFCCP has made available to use at the pre- and post-offer phases of the application process. Covered contractors are also now required to survey their workforce every five years using the same form. In addition, the equal employment opportunity (EEO) tagline used in job postings must now state “disabled.”

Vietnam Era Veterans’ Readjustment Assistance Act (VEVRAA)
On September 24, 2013, the OFCCP published a final rule that revised the regulations under VEVRAA, which took effect March 24, 2014. As with the revised regulations under Section 503, covered contractors are obligated to keep records for three years on the number of veterans who apply for jobs with their company, as well as those who are hired. The revisions rescinded the regulations at 41 CFR 60-250 and added the term “protected veteran” when referring to any veteran protected under VEVRAA regulations. The phrase “other protected veteran” was replaced with “active duty wartime or campaign badge veteran.” A self-identification form must also be made available to job applicants at the pre- and post-offer phase of the hiring process, inviting them to voluntarily self-identify their veteran status.

The revised regulations require that contractors either establish annual hiring benchmarks for each affirmative

action plan for protected veterans based on the national percentage of veterans in the civilian labor force — published in the benchmark database — or establish their own benchmarks using criteria outlined in VEVRAA.

Training and regular discussions on affirmative action and EEO issues for managers and human resources personnel are important, as is ensuring that the application process is accessible and free from offensive or inappropriate materials

The OFCCP updated the regulations to require prescribed language for the incorporation of the EO clause in subcontracts and purchase orders, as well as the word “veterans” or “vet” in the EEO tagline in job postings. These also now include details regarding steps to take to comply with the job listing requirements of state and local employment offices.

Sex Discrimination Guidelines
On August 15, 2016, the final rule went into effect that revised outdated sex discrimination guidelines. The revisions cover contractors’ responsibilities regarding treatment of employees on the basis of sex, which includes both men and women. Topics such as pay discrimination, pregnancy, and discrimination due to an employee’s gender identity are covered.

2017 and Beyond
Since Shiu’s departure from the OFCCP, we have seen activity under the Trump administration that affects the federal contractor community. So far, we have witnessed the following:

● Fair Pay and Safe Workplaces (“blacklisting rule”) order rescinded. The goal of this executive order was to increase the likelihood of awards for contracts worth over $500,000 being given only to companies that comply with wage and civil rights laws, as well as workplace laws regarding health and safety standards.

● “Dear Colleague Letter” rescinded and federal protections for transgender students withdrawn. The letter offered guidance from President Barack Obama to schools and colleges receiving federal funding on protections for transgender students, allowing them to use bathrooms that correspond with their gender identity.

● Confirmation that revisions to EO 11246 would remain intact. These changes protect against discrimination based on sexual orientation and gender identity.

● Regulatory freeze that could keep the Equal Employment Opportunity Commission’s (EEOC) pay data requirement from taking effect as planned in March 2018 for EEO-1 reporting, which is required annually of private companies with 100 or more employees, as well as private federal contractors with 50 or more employees and $50,000 or more in federal contracts or subcontracts. It also requires contractors to submit race, ethnicity, and gender information by EEO-1 classification for employees; a change to the EEO-1 report was proposed for filing in 2018 and would require organizations to submit for the first time pay data on employees.

● Proposal to the budget for fiscal year 2018 to merge the OFCCP into the EEOC.

As the contractor community awaits the appointment of the next head of the OFCCP, the agency has been keeping busy and has surprised many federal contractors by mailing out approximately 800 Corporate Announcement Scheduling Letters (CASLs) after several years of not doing so. CASLs are courtesy letters from the OFCCP to contractors, giving notice that their site will be receiving a letter informing them of scheduling for their compliance review.

So, what should federal contractors focus on now, considering the many regulatory changes that have taken place over the last few years and with more changes possibly on the horizon?

One area in which contractors fall short and could focus more attention is record retention. For most contractors, affirmative action programs and supporting documents must be kept for two years. Under VEVRAA and Section 503 of the Rehabilitation Act, record retention is three years for data collection. Regular monitoring of employment practices and performing regular compensation reviews to determine if there are pay equity issues by gender or race is also necessary. Training and regular discussions on affirmative action and EEO issues for managers and human resources personnel are important, as is ensuring that the application process is accessible and free from offensive or inappropriate materials.●

Julia Méndez, SHRM-CP, PHR, CAAP, CDP, CELS, is principal business consultant in the Workforce Compliance and Diversity Solutions Division for PeopleFluent Research Institute. She is also a member of the INSIGHT Into Diversity Editorial Board.