Transparency Central to Federal Contractor Watchdog’s New Order

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By Porter Wells

The Labor Department office that enforces federal contractor compliance with anti-discrimination laws is seeking to be more transparent with contractors during the audit process.

A new internal directive by the Office of Federal Contract Compliance Programs requires compliance officers to issue preliminary violation notices to an audited facility if the review uncovers indications of discrimination. The notice was posted on the OFCCP website March 14.

The directive is intended to increase agency transparency and improve communication with the federal contractor facilities the OFCCP audits.

“We are very pleased to see this directive rolled out” early in Director Ondray Harris’ tenure, Matt Nusbaum told Bloomberg Law. He serves as senior counsel at the Center for Workplace Compliance in Washington.

Harris’ preview of the directive at CWC’s members-only policy conference last week was well-received by attending employers, Nusbaum said.

What’s New?

Directive 2018-01 reinterprets a section of the Federal Contract Compliance Manual that had allowed, but not required, compliance officers to issue initial notices of discrimination findings to an audited facility. As of Feb. 27, 2018, all OFCCP compliance officers who discover evidence of discrimination during an audit must send to the contractor a predetermination notice (PDN) outlining the findings and allowing time for a response.

Only if a contractor doesn’t satisfactorily explain the data discrepancies may the compliance officer then issue a notice of violation. A notice of violation is a letter that officially informs a contractor that a compliance officer found discrimination during the audit and orders corrective action.

The OFCCP had developed a habit of going straight to issuing NOVs over the last several years, according to management-side sources.

It’s important that contractors have at least one opportunity to rebut allegations of discrimination, Nusbaum told Bloomberg Law.

“Receiving a NOV signals to a contractor that the time to discuss if a violation has occurred has passed,” he said. The OFCCP expects to move to conciliation and settlement after issuing an NOV, leaving contractors with little room to contest the agency’s findings.

‘A Big Step’

Regional offices had discretion on the use of PDNs prior to Directive 2018-01. That regional discretion “is no longer permitted,” the directive says.

A lack of regional uniformity has been the biggest concern for federal contractors—especially those with nationwide facilities, said Candee Chambers, executive director of DirectEmployers in Indianapolis.

“The OFCCP has been saying for a while now that it wants to increase transparency, that it wants to work with the contractor community, so this is a big step towards reaching that goal if it’s followed by the compliance officers on the ground,” Chambers said.

Harris took over political leadership of the agency in the last weeks of 2017. But the rest of the office is made up of career officials trying to do their job with a shrinking staff and a tighter budget, Chambers added, so Harris will have to make his decisions and expectations very clear for his compliance officers.

The directive signals that the office is aiming for a more collaborative audit process after years of issuing notices of violations without any discussion with an audited facility, Nusbaum said.

Optimism

“Transparency, providing the contractor with the information and rationale regarding potential findings of discrimination, and nationwide consistency are laudable goals,” Shirley Wilcher told Bloomberg Law. Wilcher is the director of the American Association for Access, Equity, and Diversity. She also previously served as OFCCP deputy assistant secretary.

Wilcher flagged the directive’s mandate to send all draft PDNs to the OFCCP’s national office as an issue to watch. “It is hoped that there is a way to expedite the review process to avoid a bottleneck and further delay case closures,” she said.

The OFCCP didn’t immediately provide Bloomberg Law with a comment on the directive.

The OFCCP annually audits 1 percent to 2 percent of about 200,000 federal contractor facilities. It uses data analysis to determine if a contractor-employer has run afoul of 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.

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