OFCCP’s Shiu Discusses Tenure, Agency’s Next Steps

From labor disputes cases to labor and employment publications, for your research, you’ll find solutions on Bloomberg Law®. Protect your clients by developing strategies based on Litigation...

By Jay-Anne B. Casuga

Nov. 4 — Federal contractors shouldn’t expect much immediate change from the Labor Department’s Office of Federal Contract Compliance Programs following Director Patricia A. Shiu’s departure, but compliance reviews focusing on the finance and technology industries as well as “paperless” audits could be on tap for the next administration.

“Nothing is changing for now,” Shiu told Bloomberg BNA in a Nov. 3 interview. “I would say: stay the course until the labor secretary selects a new director.”

Shiu will step down Nov. 6 after more than seven years of service with the OFCCP, which is tasked with enforcing federal contractors’ affirmative action and nondiscrimination obligations for minorities, women, individuals with disabilities and military veterans.

“It’s been a tremendous honor to work in the Obama administration,” Shiu said. “The Labor Department has done some incredible work and I’m so glad to have been a small part of it.”

Thomas M. Dowd, a current OFCCP deputy director, will be the agency’s acting director until a permanent replacement is named after the election.

Shiu said she believes the OFCCP began to “transform the foundation, scope and quality” of its enforcement efforts under her tenure, and anticipates that it will continue to do so after she departs.

“Tom and the team are going to do an excellent job continuing the agency’s work,” she said.

That work includes ongoing implementation of five rules that were finalized since 2009 when Shiu joined the agency, as well as deeper dives into contractor data and records--especially pay data--during compliance audits to uncover and eradicate discrimination.

Future Focus on Finance, Technology Industries?

The upcoming OFCCP administration potentially could conduct large, complex audits of contractors in specific industries, such as financial services or information technology.

In its fiscal year 2017 budget justification, the OFCCP discussed plans to establish two “skilled regional centers,” one in San Francisco and one in New York.

If these centers are funded, they would offer a “new and more efficient way to support high-quality enforcement, provide targeted compliance assistance to contractors and increase the number of large, complex discrimination investigations,” Shiu said.

They will focus on industries that have a high concentration of contractors, such as finance, banking and technology, she said. They also will be staffed with “well-trained compliance officers” and will handle compliance evaluations across OFCCP districts and regions.

Shiu said Congress hasn’t yet acted on the budget request. The DOL and other federal agencies currently operate under a continuing resolution that expires in December.

Move Toward Paperless Audits

Additionally, the OFCCP may continue exploring web- or cloud-based technology to one day achieve nearly paperless contractor audits.

Such technology could eventually be used to update case files while conducting onsite reviews, to improve collaboration among district offices when the OFCCP audits multiple facilities of the same contractor or to simplify how contractors submit their affirmative action program and support data, Shiu said.

“We need and want to move in this direction in the future,” she said. “This is certainly something the next administration may want to consider.”

And what’s on Shiu’s agenda after she departs the agency?

She said she’s considering her options, but for now will take time off and spend it with her family. Eventually, Shiu said she would like to focus her attention on the broader issues of diversity and inclusion to promote employee satisfaction at the workplace and achieve enhanced productivity.

Shiu’s Regulatory Legacy

The OFCCP under Shiu arguably will be best known for its comprehensive regulatory reform.

Under rules that went into effect in 2014, contractors for the first time must adopt hiring goals for disabled individuals and benchmarks for covered military veterans, as well as adhere to a number of new data collection, outreach and recruitment obligations for those protected groups.

They also must comply with updated sex discrimination rules that, among other things, address pay bias, pregnancy accommodations, sex stereotypes and family caregiver bias. And contractors can’t implement pay secrecy policies,

“Our policy work has really breathed new life into outdated regulations that had not been updated for decades,” Shiu said. “Our current regulations are designed to address challenges in the contemporary workplace.”

Shiu said she’s proud of the OFCCP team and its national and regional leaders who worked together to reach those regulatory achievements. “The magnitude and depth of this work does not happen alone,” she said.

Most Proud of LGBT Rule

Each regulation is important, Shiu said, but she noted that she’s personally most proud of the OFCCP’s final rule that extended workplace discrimination protections based on sexual orientation and gender identity under Executive Order 11,246.

That issue has been at the forefront in recent years as courts grapple with whether another federal law, Title VII of the 1964 Civil Rights Act, protects LGBT workers.

President Barack Obama extended that protection to federal contractor employees in a 2014 executive order. And the OFCCP later finalized a rule to implement that order.

Shiu called the rule “groundbreaking.”

“It was something I was hoping, before I even took this job, might happen,” Shiu said.

Pay Data Tool a ‘Crowning’ Achievement

Shiu also highlighted collaboration between the OFCCP and other worker protection agencies during her tenure, including the Equal Employment Opportunity Commission, the Justice Department and the National Labor Relations Board.

She called the EEOC’s revised employer information report, or EEO-1 report, a “crowning collaborative achievement” among the agencies and stakeholders, including the business community.

The OFCCP had worked on a federal contractor pay data collection tool for several years--a controversial proposal that proponents said would help the agency combat pay discrimination and lessen the wage gap, while opponents contended it would unduly burden contractors.

That proposal eventually became part of an updated EEO-1 report that requires employers, including federal contractors, to provide summary pay data grouped by sex, race and ethnicity.

The OFCCP “really listened to, read and took seriously” comments from employers, who are “critical to the success of equal employment opportunity,” Shiu said. “We came up with what I believe is a much better approach.”

EEO-1 Pay Data to Schedule Audits

The OFCCP will use the pay data from the EEO-1 report to improve its neutral process for scheduling contractors for audits, Shiu said.

The data will allow the agency to focus on industries or contractors with indicators of possible pay disparities, she said, as combating systemic pay bias will continue to be a top enforcement priority for the OFCCP.

“We’re very serious about this,” Shiu said, noting that the number of OFCCP cases addressing systemic pay bias has gone from under 5 percent to 35 percent in fiscal year 2016.

She added that the agency obtained nearly $6 million in financial remedies for more than 3,000 workers who were paid unfairly.

Responding to Criticisms

During Shiu’s tenure, some employer advocates and Republican lawmakers have been critical of the OFCCP, with some accusing the agency of burdensome regulatory overreach.

“I can say unequivocally that we have made every effort to minimize the burden on contractors without sacrificing the importance of the regulations themselves and the goals they intend to achieve,” Shiu said in response.

She cited the EEO-1 report as an example of how the OFCCP worked with the EEOC to reduce contractor burdens by not requiring two separate pay data collections.

Critics also have voiced concerns about the OFCCP’s more comprehensive compliance reviews under Shiu. Some view the agency’s approach as inefficient in that it leads to lengthy audits of fewer contractor facilities and lower monetary recoveries.

But Shiu said the opposite is true with respect to financial remedies.

She acknowledged that the OFCCP completed just over 1,800 reviews in fiscal year 2016, the fewest number in a decade. However, the agency “remedied as many victims of discrimination as it had in prior years, on average, with half the cases,” she said.

Also in fiscal 2016, the OFCCP obtained more than $10.5 million in financial remedies for those individuals, Shiu said. That’s nearly double the $6 million obtained in fiscal 2015 with one-third fewer cases, and nearly as much as the $12 million obtained in fiscal 2014 with half as many cases, she said.

Shiu further added that comprehensive audits allow the OFCCP to fulfill its obligations under Section 503 of the Rehabilitation Act and the Vietnam Era Veterans’ Readjustment Assistance Act to protect individuals with disabilities and veterans. Violations under those laws don’t generally involve systemic, classwide cases.

“We still have a duty to look and make sure people with disabilities and vetarans are protected in the workplace just like everybody else that we protect,” Shiu said. “And I believe in being thorough.”

In response to other critics who have contended that the OFCCP hasn’t been operated effectively outside of rulemaking, Shiu said people who don’t work at the OFCCP “don’t necessarily know about all the improvements we’ve made in managing this agency.”

“We basically started from the ground up, and I believe it is a much better run agency than ever before in recent history,” she said.

To contact the reporter on this story: Jay-Anne B. Casuga in Washington at jcasuga@bna.com

To contact the editors responsible for this story: Peggy Aulino at maulino@bna.com; Terence Hyland at thyland@bna.com

Copyright © 2016 The Bureau of National Affairs, Inc. All Rights Reserved.

Request Labor & Employment on Bloomberg Law