Faster Audits in Store for Federal Contractors

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By Paige Smith

Federal contractors can expect a faster examination of their hiring, pay, and other employment processes and will be able to get compliance advice through formal opinion letters, the head of the agency that monitors contracting said Aug. 1.

The efforts are designed in part to clean up a backlog of pending cases, Craig Leen, acting director of the Labor Department’s Office of Federal Contract Compliance Programs, said. The agency audits government contractors to ensure compliance with workplace affirmative action and nondiscrimination laws.

The OFCCP aims to limit to 45 days the time it takes to complete initial “desk audits” of federal contractors, Leen said during a keynote address at the National Industry Liaison Conference in Anaheim, Calif. Desk audits are the first part of a compliance review, which includes an analysis of a contractor’s employment data for statistical indicators of discrimination.

The enforcement agency has an abundance of aged cases. “Many of them have been pending for over five years,” Leen said. Placing a time limit on the desk audit stage will decrease the overall process time.

The agency “can’t just linger” on one case where discrimination doesn’t exist, Leen said. “Our goal is not to have cases that last five, six, seven years.”

History of Delays

A former OFCCP senior official told Bloomberg Law that it could take the agency at least a year or two to resolve the backlogged audits. John Fox, who now practices on the management side in Los Gatos, Calif., said the agency has cases dating back to 2008.

The OFCCP has fielded complaints in the past from contractors about the turnaround time from start to finish of an audit. It takes the agency months to close audits with no violations and almost five years to issue allegations of discrimination against contractors, according to a September 2016 Government Accountability Office report. Lawmakers in 2017 directed the agency to address the findings in that report.

The issue also has cropped up in litigation. JPMorgan Chase & Co. cited the agency’s lengthy audit process before an administrative law judge as a reason to have a pay discrimination case dismissed. The financial institution claimed that the agency waited “more than 1,000 days” before finally issuing a notice of violation, but the ALJ rejected the argument in May.

Opinion Letters Follow Lead of DOL

Opinion letters will be new to the OFCCP but not to other agencies at the Labor Department. Its Wage and Hour Division released several new opinion letters in April, and Leen said he is following in those footsteps.

Opinion letters, bolstered by a specific set of facts, don’t have the ambiguity of general guidance, he said.

“It’s a good opportunity for us to provide more guidance in the field in specific situations,” he said. “It’s as good of a precedent as the facts.”

Alissa Horvitz, an attorney at Roffman Horvitz in McLean, Va., said opinion letters, though well-intentioned, are narrow in scope.

“I would rather see OFCCP focusing its efforts on the revisions to Directive 307 involving compensation, which affect all contractors, than on preparing a response to one company’s request for an interpretive opinion,” she told Bloomberg Law.

Leen said revisions to the controversial compensation directive is still being reviewed.

“You’ll hear from us eventually,” he said.

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