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Compliance with OFCCP in a New Era: Audit Trends, Policy Updates, and Jurisdiction Regulations

Gain insights into the latest OFCCP audit trends, policy updates, and jurisdiction regulations. Learn how to ensure compliance and avoid hiring and compensation discrimination.

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Compliance with OFCCP in a New Era: Audit Trends, Policy Updates, and Jurisdiction Regulations

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  1. Affirmative Action Compliance inA New OFCCP Era Allen Hudson, SHRM-CP, PHR Chief Operating Officer - HudsonMann

  2. Session Agenda OFCCP Audit Stats & Trends Policy Updates Your Questions OFCCP Jurisdiction & Regulations

  3. OFCCP Jurisdiction & Regulations Part 1

  4. Office of Federal Contract Compliance Programs (OFCCP): Enforces and monitors Affirmative Action Programs of Federal Contractors.

  5. Executive Order 11246 • Applies to Federal contractors and subcontractors • Prohibits discrimination based on: Race, Color, Religion, Sex, and National Origin • Enforced by OFCCP

  6. Rehabilitation Act of 1973 • Applies only to the Federal government and Federal contractors with contracts of $10,000 or more per year • Prohibits discrimination based on physical or mental disabilities • Requires the employer to make reasonable accommodation for a disability unless it can prove that would cause undue hardship to the company

  7. Vietnam Era Veterans’ Readjustment Assistance Act of 1974 • Applies to Federal contractors and subcontractors • Must provide equal opportunity and affirmative action for protected veterans

  8. Magic Numbers For Federal Contractors

  9. $10,000 in Federal contracts or subcontracts non-discriminationrequirements apply

  10. 50employees & $50,000 in Federal contracts or subcontracts written AAPsare required

  11. locations with 50+ employees need a separate AAP

  12. ThreeAffirmative Action Plans are created: Women and Minorities Veterans Individuals with Disabilities

  13. Types of Contractors • Supply and service • Financial institutions • Construction contractors

  14. “Therefore, financial institutions with federal share and deposit insurance are considered to be federal contractors.” www.dol.gov/ofccp

  15. Audit Trends and Focus Areas Part 2

  16. OFCCP By the Numbers Source: www.dol.gov/ofccp/BTN/index.html

  17. Source: OFCCP Enforcement Database

  18. 812 Compliance Reviews Fiscal Year 2018 79% 14% 120 644 0% 5.9% Conciliation Agreements Notice of Compliance Source: OFCCP Enforcement Database 0 48 Consent Decree Financial Agreements

  19. FY 2018 monetary relief $16.4M

  20. Recent Financial Settlements • $600K hiring settlement across four locations; back pay to: • 565 female applicants • 755 African American applicants • $200K pay settlement to 37 women • $5M in back pay to 305 females and 15 African American executives • $2.9M in back pay to women and African Americans

  21. Source: OFCCP Enforcement Database

  22. OFCCP Violations by Type (FY 2010-2018) Source: OFCCP Enforcement Database

  23. Audits added to scheduling list 3500 March 2019

  24. Scheduling Methodology • 3500 CSALs • 2,345 Establishment Reviews • 500 Section 503 Focused Reviews • 500 Compliance Checks • 83 CMCEs • 72 FAAP Reviews • Focus on Industries with Highest Discrimination Rates • Agriculture • Manufacturing • Wholesale Trade

  25. Scheduling Methodology continued • Priority for larger establishments • No more than 15 from same parent company • up from 10 in 2018 methodology • No more than 2 FAAPs from same company • Did not include establishments reviewed in last 2 years • “Release – 1” language again

  26. Enforcement Changes • Extension requests – need to proffer AAP • What is basic AAP? • 45-day desk audits • Memorandum Of Understanding with NILG • What Federal Contractors Can Expect document

  27. Focused Reviews • On-site, comprehensive review on one authority • Interviews with employees and managers • Hiring and compensation data • Accommodations requests • Replacing quality control audits • Director Leen has passion for disability inclusion • Effective for audits scheduled in FY 2019

  28. Compliance Checks • Different Scheduling Letter • Abbreviated Itemized Listing: • AAP results for preceding year • Examples of job advertisements including mandatory job listing • Examples of accommodations for individuals with disabilities Option to provide documents onsite or offsite

  29. Audit Trends and Focus Areas • Adverse Impact in Hiring • Compensation and Pay Equity • Job Steering • Outreach • Recordkeeping

  30. of discrimination findings are from hiring discrimination 70% FY 2018

  31. Case Study – Beverage Distributor • Consent decree for $175,000 • Alleged hiring discrimination against black applicants • Violations included: • - failing to keep complete & accurate records • - failing to evaluate selection procedures

  32. Avoiding Hiring Discrimination • Solid job descriptions • Consistent hiring process • Use disposition codes • Annual adverse impact analysis • Validate all assessments and tests

  33. of discrimination findings are from compensation issues 30% FY 2018

  34. Compensation Trends • Compensation Interviews: • 20 minutes – 3 hours long • Detailed, repetitive questions on pay policies and procedures Pay Analysis Groups

  35. Compensation Interview Questions • Does your company have written guidelines on compensation administration? • Who determines the starting salary for a new employee? • Are there annual performance increases? • How do you ensure fair pay? • Do you provide training on compensation administration?

  36. Complaint Investigations • New electronic filing form and system • $50K settlement from disability complaint • $19,600 average monetary relief (FY 2007-FY 2016) • 79 Investigations FY 2017 Q1-Q3 (4 with monetary relief)

  37. job steering settlement amount $1.8M FY 2015

  38. Job Steering Case Study • 444 women steered into “light-duty” jobs with lower wages • Adverse impact in hiring on males, African-Americans and Caucasians • Settlement from reviews at nine separate facilities

  39. Avoiding Steering Issues • Require applicants to apply for specific positions • Document applicant choice • Defined application process

  40. Outreach & Documentation Violations • Ensure mandatory job listings are occurring • Document specific outreach towards women, minorities, veterans and individuals with disabilities • Maintain 3 years’ of employment and recruitment data

  41. How Do You Minimize Potential Liability? • Follow a formal application process • Utilize disposition codes • Avoid “informal” expressions of interest • Set up an active consideration period • Don’t accept applications for “any opening” • Posting temp to hire opportunities • Review employee referral selection process • Set and utilize minimum qualifications – track outcomes • Review testing validation

  42. Regulatory Updates Part 3

  43. Recent Directives https://dol.gov/ofccp/regs/compliance/directives/dirindex.htm

  44. Contractor Recognition Program • Drive toward 100% compliance • Under development: • Recognition for implementable best or model practices • Contractor mentoring program • Collaboration initiatives • For “innovative thought leaders among their peers for achieving diverse and inclusive workplaces.” • Some discussion of moratorium on all audits for winners

  45. Transparency in OFCCP Compliance Activities • Operational consistency and efficiency • 45-day scheduling delay after CSAL issuance • 15 days after scheduling letter, make contact & offer technical assistance • 30 day extension available • Requested before due date • Proffer of AAP • Immediate Show Cause for untimely submissions • Need not result in conciliation agreement (as in past) • 45-day desk audit for majority of cases • Request for information not on itemized listing should only come after desk audit has been completed & conclusion recorded in OFCCP’s systems • Greater transparency in on-site and other data requests

  46. On the Horizon • New Functional AAP Program Updates • Construction Contractors: • Compliance Check Scheduling Letters • Revised Technical Assistance Guide • Higher Education Technical Assistance Guide

  47. Your questions Part 4

  48. Thank you! Allen Hudson ahudson@hudsonmann.com 843-884-5557

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