1. Affirmative Action Compliance in A New OFCCP Era
Allen Hudson, SHRM-CP, PHR
Chief Operating Officer - HudsonMann
Good morning All. Thank you cooper for the introduction and thank all of you who’ve joined us for this first session of our virtual client conference. I’d like to extend special thanks to our team who have worked diligently to plan for and host this conference. Special thanks to Cooper for being our master of ceremonies, Sherry Rest for being the conference chair, and Derek Raucci for handling the technology behind it all.
This is HudsonMann’s 12th client conference and our second virtual one. While we wish we could see all of you in-person today and tomorrow, we hope that the convenience of this format will allow for broader reach and team building in your organizations. We’re going on 25 years in business and are in the midst of planning an in-person client conference that will also mark that anniversary. Thanks to all of you for your business and for trusting us as your Affirmative Action compliance partner.
Without futher ado, let’s discuss A new OFCCP Era.

2. Session Agenda OFCCP Jurisdiction & Regulations
OFCCP Audit Stats & Trends
Policy Updates
Your Questions
My goal in this session is to give you a view of OFCCP’s current state. This includes discussion of leadership and priorities.
Audit trends, of course – what we’re seeing and what the activity level looks like
Regulatory updates – what’s here to stay from the Obama administration and what’s going away
And, I hope, some time for your questions at the end. Please feel free to submit questions as we go as well.

3. OFCCP Jurisdiction & Regulations
Part 1
Let’s start with a discussion of OFCCP’s current status is a year of transition. A new president and administration, a new secretary of labor and new ideas about OFCCP’s role.

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 5

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 5

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 5

8. For Federal Contractors
Magic Numbers
For Federal Contractors

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

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

11. locations with
50+ employees
need a separate AAP

12. Three Affirmative Action Plans are created:
Women and Minorities
Veterans
Individuals with Disabilities
11246/Executive Order plan, 4212 plan, and the Section 503 plan

13. Types of Contractors Supply and service Financial institutions
Construction contractors
Now you may be thinking, we’re just a credit union, we don’t have any federal contracts. Well, the OFCCP sees it a little differently. There are two major ways you can be covered: by being a depository of federal funds or by having NCUA insurance. Used to be a third way – if you issued or paid savings bonds, but the government has centralized so it is less of an issue now.

15. “Therefore, financial institutions with federal share and deposit insurance are considered to be federal contractors.”

16. Audit Trends and Focus Areas
Part 2
So let’s talk data – HudsonMann is, after all, a company full of data lovers!

17. OFCCP By the Numbers Source: www.dol.gov/ofccp/BTN/index.html
OFCCP’s by the numbers page is a good overview of Obama era results. We’ll start here and dive deeper in to some of the figures.
One thing you’ll notice is they don’t tout how many audits they conducted – that’s because OFCCP has abandoned that metric when it comes to budgeting and goal setting. Again, quality over quantity.
Source:

18. 2) OFCCP began to focus more and more on the QUALITY of audits
812 completed so far in FY 2019
In fact, OFCCP has completely eliminated case closure targets from their budget and goal setting processes. That said, we’re still keeping track!
You’ll notice a big dip beginning in FY a few things happened that year:
1) new VEVRAA and SECTION 503 regulations went into effect, this was a learning curve for OFCCP and contractors
2) OFCCP began to focus more and more on the QUALITY of audits
3) Pay investigations became the new priority
Source: OFCCP Enforcement Database

19. 812 Compliance Reviews 644 120 48 Notice of Compliance
Fiscal Year 2018
644
Notice of Compliance
120
Conciliation Agreements
79%
14% 48
Financial Agreements
Consent Decree
5.9% 0%
Decrease in % ending in letters of compliance and increase in both Conciliation agreement and financial agreement percentages.
This means that you have to stay on top of your compliance game even during this time of transition.
Source: OFCCP Enforcement Database

20. $16.4M
FY 2018 monetary relief
This becomes even more clear when you look at OFCCP’s financial remedies thus far…

21. 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

22. Approx 50% of these also have recordkeeping violations (amongst other violations)
Are companies with written AAP or recordkeeping violations more likely to have financial remedies????
Source: OFCCP Enforcement Database

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

24. Audits added to scheduling list
3500
Audits added to scheduling list
These analyses include a utilization analysis for individuals with disabilities with a goal of 7%
March 2019

25. 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

26. 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

27. 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

28. 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

29. 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

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

31. of discrimination findings are from hiring discrimination
70%
of discrimination findings are from hiring discrimination
These analyses include a utilization analysis for individuals with disabilities with a goal of 7%
FY 2018

32. 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
disc

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

34. of discrimination findings are from compensation issues
30%
of discrimination findings are from compensation issues
These analyses include a utilization analysis for individuals with disabilities with a goal of 7%
FY 2018

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

36. 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?

37. 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)

39. job steering settlement amount
These analyses include a utilization analysis for individuals with disabilities with a goal of 7%
FY 2015

40. 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

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

42. 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

43. 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

44. Regulatory Updates Part 3
Unlike recent years, OFCCP doesn’t have much new on their regulatory agenda. The main outstanding issue that Patricia Shiu’s OFCCP didn’t get to was updating construction contractor regulations. It appears at this point that the focus is first on adjusting operations that on adding to regulations.

45. Recent Directives

46. 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

47. 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

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

49. Your questions
Part 4
With our remaining time, we’ll tackle some of the questions that have been submitted.

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