Attorneys Say Aggressive OFCCP Means Increased Obligations

With an emphasis on practical strategies to improve productivity and performance, and limit potential liabilities, Bulletin to Management™ concisely analyzes new developments in employment and human resources management.

By Lydell C. Bridgeford  

 

Recent efforts by the Labor Department's Office of Federal Contract Compliance Programs to bring more disabled individuals and veterans into the workforce are laudable goals, but the way the agency hopes to achieve those goals will be particularly onerous for federal contractors, a management-side attorney told a May 10 symposium sponsored by the law firm Crowell & Moring.

The new focus is reflected in the agency's proposed rules to amend the Vietnam Era Veterans' Readjustment Assistance Act and Section 503 of the Rehabilitation Act, Rebecca Springer, who practices labor and employment law with the firm, explained during a panel discussion on labor and employment issues facing the federal contracting sector.

More Data, Benchmarks Proposed

The Section 503 proposal in part calls for federal contractors to establish a 7 percent national utilization goal for each job group in a contractor's workforce regarding hiring people with disabilities (62 BTM 393, 12/13/11). It also seeks to establish new data collection requirements for recordkeeping, job listing, and outreach efforts.

The VEVRAA proposal intends to strengthen federal contractors' obligations to hire specified categories of protected military veterans (62 BTM 137, 5/3/11). The proposed regulation requires federal contractors to increase their data collection obligations and establish hiring benchmarks to measure the effectiveness of their affirmative action efforts regarding protected veterans.

In order for federal contractors to establish hiring benchmarks for veterans, OFCCP will provide federal contractors with data reflecting the representation of veterans in their community.

Once the federal contractor sets benchmarking goals, it will have to make a concerted effort to achieve those goals. “If you don't reach those goals, then you will have to add additional outreach to veterans organizations to try to increase the number of veterans in your workforce,” explained Springer.

Springer said she expects these rules to be finalized before the end of 2012. As a result, federal contractors will see substantial increases in their obligations, she observed. “It's a huge change from what we have seen in the past.”

Scrutinizing Compensation Data

Kris Meade, a partner and co-chair of Crowell & Moring's labor and employment group, said he couldn't recall a time when he had “seen such an ambitious regulatory agenda” coming out of OFCCP.

He discussed OFCCP's revised compliance evaluation scheduling letter and itemized listing, which is under review by the Office of Management and Budget. Under the proposed revisions, the agency intends to expand its requests for employment activity and compensation data from federal contractors at the outset of scheduled compliance evaluations (62 BTM 155, 5/17/11).

According to Meade, the current scheduling letter has been in place for about 25 years. If the proposed scheduling letter is approved by OMB, contractors will be required to provide individualized compensation data for each employee at the establishment.

For instance, if OFCCP decides to audit the company's headquarters, then the establishment would have to provide compensation data, including basis pay, bonuses, and other forms of pay relating to each employee located at those offices. This might also include the chief executive officer.

“At the end of the day, however, we think that we can resist providing the CEO's compensation data,” Meade said. “The argument is that there is no employee who is 'similarly situated' to the CEO in terms of job duties and responsibilities. Therefore, there is no one to whom one might compare his or her salary and no reason to disclose his or her salary.”

Is Compensation Data Safe?

Providing OFCCP with detailed and comprehensive compensation data raises some concerns, Meade said.

“We know your competitors would like to have information” on your compensation practices, Meade said. Reservations about the treatment of compensation data in relation to requests under the Freedom of Information Act are legitimate concerns, he added.

Meade also said OFCCP might not have in place the checks and balances to safeguard the data.

Under the revised scheduling letter and itemized list, OFCCP will be able to run a number of “compensation analyses that can be quite sophisticated in identifying areas of disparities between men and women and minorities and non-minorities,” Meade said.

This data will be submitted on an individualized racial subgroup basis, which means employers will have to identify each employee's race and gender. The revised scheduling letter will allow the OFCCP to do many more analyses at the start of an audit, he added.

“All of this is happening against a backdrop of increased enforcement efforts,” he said. OFCCP has added almost 200 new compliance officers.

Moreover, “we are seeing quite a different enforcement stance by the agency these days in terms of its willingness to cooperate with us and a willingness to narrow down document and data requests,” Meade said. “It is a very changed landscape from a couple of years ago, and we anticipate seeing more changes going forward.”

By Lydell C. Bridgeford