One Thousand Federal Contractors Get Labor Dept. Audit Notice

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By Porter Wells

“Audits are coming.”

That’s the message from the Department of Labor’s Office of Federal Contract Compliance Programs. The office mailed 1,000 Corporate Scheduling Announcement Letters to federal contractor establishments, the agency said in an update to its website. The mail drop kicks off a new round of compliance evaluations and comes on the heels of last week’s stakeholder listening sessions with the office’s new director, Ondray Harris. Companies receiving the letters weren’t identified.

The announcement letters are a courtesy heads-up to contractor establishments, letting them know they’ve been selected by the Federal Contractor Selection System to be evaluated for compliance with federal equal employment opportunity laws. The office isn’t required by law to provide notice ahead of the scheduling letters that officially begin individual audits. Receipt of a CSAL letter should, however, encourage a contracting establishment to review its compliance with the federal laws enforced by the OFCCP before the scheduling letter officially arrives.

The OFCCP has in recent months faced concerns of uneven expectations and a lack of transparency. Past announcement letters and subsequent compliance evaluations lagged during the presidential transition, during which the office was led by career official Tom Dowd.

“A CSAL is a gift of time. It’s time for employers to self-audit their EEO compliance and ensure that their affirmative action plans are ‘audit ready,’” said Mickey Silberman, chair of the Affirmative Action and Pay Equity Practice at Fortney & Scott LLC and co-chair of the Institute for Workplace Equality in Washington, D.C. “Given the OFCCP’s recent, intense focus on compensation, employers are well-advised to prioritize their review of pay practices in preparation for the evaluation to come.”

New Establishment Evaluation Caps

The OFCCP directed Bloomberg Law’s request for comment to the updated CSAL FAQ page. Savvy practitioners may notice that caps on the number of establishments the OFCCP will audit have been added to the top of the FAQ page—information not included in its previous versions.

Specifically, the OFCCP has decided that no more than 10 establishments of a single contractor be included in the scheduling list, that no more than four establishments of a single contractor be placed in a single district office, and that no establishment with an audit closed in the last five years be placed on the scheduling list.

The OFCCP isn’t restricted by law in the number of establishments it may evaluate.

The George W. Bush administration voluntarily capped the establishments of a single contractor the OFCCP would evaluate at 25. The Obama administration removed caps entirely, leading to disputes with contractors that believed the office was targeting them for multiple audits. The new, lower caps are, therefore, a deliberate choice on the office’s part.

The self-imposed restrictions are an encouraging sign for federal contractors, Silberman said. Given that the CSAL list is an indication of how the OFCCP intends to distribute its resources, the voluntary caps suggest the office is taking steps to “balance the burden for employers, distribute limited enforcement resources more broadly across the contractor community, and grant a reprieve to employers who have recently closed successful audits.”

‘Still in the Business of Enforcement’

Worker advocates told Bloomberg Law last year that they hoped the OFCCP would remain committed in 2018 to the issues of affirmative action in employment and compensation equity.

One thousand CSALs distributed nationwide is a “reminder that the new administration is still in the business of enforcing the law,” said Matt Nusbaum, senior counsel at the Center for Workplace Compliance in Washington, D.C.

The office annually evaluates between 1 percent and 2 percent of about 200,000 federal contractor facilities to confirm and enforce compliance with three federal equal employment opportunity laws: Executive Order 11,246, Section 503 of the Rehabilitation Act, and Section 4212 of the Vietnam Era Veterans’ Readjustment Assistance Act.

Contractors should take advantage of the courtesy letter by reviewing their hiring and compensation data for any red flags and preparing answers and explanations in preparation for an audit, Nusbaum told Bloomberg Law. “If you haven’t gone through your data with a fine-toothed comb, you’re leaving yourself open for an unexpected, unbudgeted settlement,” he said.

The OFCCP will begin mailing scheduling letters to contractor facilities on March 19.

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