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In response to public comments, OFCCP revises proposal that would require contractors to submit more information during desk audits

October 20th, 2011  |  Cynthia L. Hackerott

The OFCCP has revised its proposed changes that would allow the agency to seek more, and more detailed information from federal contractors during the desk audit phase of compliance evaluations, including information on FMLA, pregnancy leave and religious accommodation policies, more specific demographic information on employment decisions, more precise data for compensation analysis (aggregate data rather than the disaggregate data) and VETS-100/VETS-100A forms. Notice of the revised proposal was published in the September 28, 2011 edition of the Federal Register (76 FR 60083-60084). The revised proposal addresses comments received regarding the OFCCP’s initial proposal issued in May of this year and, in response to those comments, contains several changes to the original proposal.

Federal Register notices. As reported in Employment Law Daily on May 12, 2011, a notice in that day’s edition of the Federal Register (76 FR 27670-27671), indicated that the OFCCP was seeking comments on a proposal to revise its current recordkeeping, reporting and third-party disclosure requirements for federal supply and service (i.e.nonconstruction) contractors, but the Federal Register notice itself does not indicate the content of the proposed revisions. Rather, the content of these revisions is revealed in supporting documentation for the notice provided to the Office of Management and Budget (OMB) by the OFCCP. The proposed revisions to the OFCCP’s scheduling letter, itemized listing and the OFCCP’s supporting statement submitted to the OMB explaining the changes were posted on the Regulations.gov website. Written comments on the May 12 proposal were due on July 11, 2011.

The September 28 Federal Register notice indicates that the earlier proposal has been revised. As with the May 12 notice, the September 28  Federal Register notice itself does not indicate the content of the revised proposal. Rather, the content of these revisions is revealed in supporting documentation for the notice provided to the Office of Management and Budget (OMB) by the OFCCP. A copy of this supporting documentation — including revisions to the proposed scheduling letter, itemized listing, and compliance check letter and the OFCCP’s supporting statement submitted to the OMB explaining the changes — may be obtained by contacting Michel Smyth by telephone at 202-693-4129 or sending an email to DOL_PRA_PUBLIC@dol.gov. They are also posted on the website at http://www.reginfo.gov/public/do/PRAMain.

Public comments. In the supporting documentation for the September 28 revised proposal, the OFCCP stated that it analyzed each of the 20 public comment submissions it received from various contractors, industry organizations and associations, consultants, advocacy and non-profit groups and others in response to the May 12 proposal. In general, six of the commenters supported the OFCCP’s proposed revisions to the scheduling letter and itemized listing and 14 were opposed or critical of the revisions. The majority of the comments focused on the request in the itemized listing for compensation data. The agency reports that it also received generally supportive comments on the proposed revisions to its compliance check letter.  Most of the other comments concerned requests for information related to contractor employment activity, leave policies, and anticipated adjustments that contractors may need to make to their human resources information systems (HRIS). The agency also received comments on the calculation of burden, the collection of documents elaborating on collective bargaining agreements, and the request for supporting documents related to compliance with Section 503 of the Rehabilitation Act and the Vietnam Era Veterans Readjustment Assistance Act (VEVRAA).

After considering these comments, the OFCCP determined that the benefits associated with receiving improved data from contractors and the net reduction of 1.34 hours in the total burden hours spent by contractors in supplying OFCCP with that data were the “best most innovative” and “least burdensome tasks” for achieving the agency’s regulatory goals. In addition, the OFCCP asserts that its assessment found “societal benefits” would result from finalizing the proposed changes to the scheduling letter and itemized listing.  Among them are the:

  •  inclusion of more qualified workers in the nation’s workforce,
  •  ability to provide America’s returning veterans and wounded warriors meaningful employment opportunities as they transition from the military,
  •  opportunity to develop a workforce that reflects the diversity of the nation, and
  •  strengthening of our ability to compete effectively in a global economy based on the diversity and skill of America’s workforce.

The OFCCP did identify a few alternatives to its initial proposal that it believes would be as effective in assessing contractor compliance with their nondiscrimination and affirmative action obligations that are less burdensome. Therefore, the agency made several changes to the original proposal in response to the comments it received. A detailed analysis of the public comments, and the agency’s corresponding responses, is contained in the supporting statement for the September 28 revised proposal.

Revisions to scheduling letter and itemized listing. Once a federal contractor has been selected for an OFCCP audit, the agency sends its standard scheduling letter and corresponding itemized listing requesting the contractor to provide the OFCCP with its affirmative action programs and specified supporting documents and records. The scheduling letter and the contractor’s response to it are known collectively as the “desk audit” phase of a compliance review. If the results of the desk audit reveal “indicators” of potential discrimination or other compliance issues, the OFCCP may dispatch a compliance officer to conduct an on-site review of the contractor.

The itemized listing that accompanies the current OFCCP scheduling letter contains 11 items, and the proposed changes would increase this number to 13 items. The proposed changes to the current version of the itemized listing are the following:

(1) A new item 8: submission of employment policies covering the FMLA, pregnancy leave, and accommodations for religious observances and practices. In the absence of these policies, the OFCCP would accept a contractor’s employee handbook or manual. The OFCCP asserts that receipt of these policies would assist it in better determining the existence of sex or religious discrimination indicators within contractor organizations. Additionally, the policy requirements would enhance the OFCCP’s broad authority under Executive Order 11246 (EO 11246) to prohibit sex and religious discrimination in employment and its share enforcement responsibilities with the EEOC under Title VII. 

The revised proposal provides the option of submitting the manual or handbook, or submitting only relevant pages (including the front cover of the manual or handbook, the table of contents, and those pages with the leave policies). In the supporting statement for the revised proposal, the OFCCP notes that it is not charged with FMLA enforcement. However, the OFCCP maintains that under its existing authority, it can review leave and other personnel policies to determine whether they, as they are applied or by virtue of their absence, have a discriminatory impact on women, minority groups, and others protected by the laws OFCCP enforces.

(2) Changes to new item 9 (current item 8) — the OFCCP proposes to further define “other information” in contractor collective bargaining agreements to clarify for contractors the specific information requested during compliance evaluations. 

(3) Changes to new item 10 (current item 9) — the Affirmative Action Plan (AAP) reporting requirements would be changed from preceding year to immediate preceding year to clarify specific AAP reporting timelines for contractors. 

(4) Changes to new item 11 (current item 10) — the OFCCP proposed to included in this item more specific demographic information related to applicants, hires, promotions, and terminations to eliminate ambiguous minority and non-minority terminology.  In addition, contractors would now be required to submit data by job group and job title, instead of job group or job title in the current scheduling letter. The OFCCP maintains that this change would result in the OFCCP obtaining more accurate reporting data for its analyses related to identifying sex and race discrimination indicators.

In the supporting statement for the revised proposal, the OFCCP states that “obtaining data by job group and job title will decrease a contractor’s ability to mask discrimination by manipulating the data within either job groups or job titles. Moreover, contractors are already required to collect data on applicants, hires, promotions and terminations for each job title by gender, race, and ethnicity.”

“The provision of the data by job group and job title creates a fuller picture of the employment practices of contractors,” the agency also maintains.  “Even where a job title has insufficient data to test for statistical significance, there may be enough data to suggest potential discrimination.  Improved data collection and analysis should reduce the number of requests for additional and more detailed information by OFCCP thus saving time and reducing contractor burden.”

Moreover, to the extent that contractors may be required to adjust HR systems to provide data by job group for separate race or ethnic groups, the OFCCP revised its burden estimates to reflect these start-up costs.

(5) Changes to new item 12 (current item 11) — The changes would require a contractor to submit more precise data for the OFCCP’s compensation analysis. The more precise data is aggregate data rather than the disaggregate data requested in the current scheduling letter.  A submission of aggregated data would allow the OFCCP to perform more specific analyses, and pinpoint possible discrimination based on race or sex. The OFCCP states it will no longer ask for disaggregate compensation data, which required contractors to aggregate the data themselves, thereby increasing their burden. In addition, the disaggregate data was less effective in allowing the OFCCP to analyze compensation, according to the agency.

The supporting statement for the revised proposal notes that among the many concerns regarding this item, are concerns about confidentiality surrounding the production of compensation data. In response, the OFCCP notes that disclosure of information obtained from a contractor will be evaluated pursuant to the public inspection and disclosure provisions of the Freedom of Information Act (FOIA), 5 U.S.C. Section 552, and the Department of Labor’s implementing regulations at 29 CFR Part 70. The OFCCP will also adhere to the requirements of the Privacy Act, as applicable. The agency also noted that it requires that contractors be notified in writing when a FOIA request is made for contractor data. The OFCCP will make no decision to disclose such documents until the contractor has an opportunity to submit objections to the release of the record or data.  Moreover, the OFCCP pointed out that it does not release data obtained during the course of a compliance evaluation until the investigation is complete. Furthermore, if the contractor is concerned with the confidentiality of such information as lists of employee names, reasons for termination, or pay data, then the OFCCP will accept (for purposes of the compliance evaluation) alphabetic or numeric coding or the use of an index of pay and pay ranges, consistent with the ranges assigned to each job group. Finally, in light of privacy concerns raised by commenters, the OFCCP revised this item to include a disclosure/confidentiality statement.

(6) New item 13 — The initial proposed would have required contractors to submit copies of their Veterans’ Employment Reports VETS-100 and/or VETS-100A for the last three years. These documents are required reporting for federal contractors and include information on their hiring on disabled and other protected veterans under VEVRAA. The revised proposal was changed so that it would now require contractors to submit their VETS-100 and/or 100A forms for two years (the current year and the previous year). 

Compliance check letter.  The proposal also includes a revised compliance check scheduling letter, but the specific documents sought in this letter would remain unchanged. A compliance check is a limited purpose evaluation (i.e. perfunctory assessment) of the contractor’s establishment to determine whether the contractor has maintained certain records as required under the OFCCP’s regulations. At the contractor’s option, the documents may be provided either on-site or off-site. In the initial supporting statement, the OFCCP reports that it has not scheduled any compliance checks for fiscal year 2011 and notes that, consequently, the burden hours for compliance checks will be zero.

Increase in burden hours.The supporting statement for the revised proposal details that the OFCCP is requesting OMB approval of 11,949,346 hours in combined recordkeeping, reporting and third party disclosure burden hours for compliance with Executive Order 11246, Section 503 and VEVRAA by non-construction (supply and service) federal contractors (the initial proposal stated 11,174,641 hours for EO 11246 compliance) . This compares with 10,045,984 hours for the last clearance request, an increase of 1,903,362 hours (11 hours per contractor). According to the OFCCP, “[t]his change is primarily due to an increase in the number of supply and service contractor establishments from 99,028 to 171,275 (an addition of 72,247 contractors).  The increase in the number of contractors is the result of OFCCP recalculating data in the Equal Employment Data System, FPDS-NG and Dun & Bradstreet to establish the number of Federal contractor establishments for this Information Collection Request. (The initial proposal reported an increase to 108,288 (an addition of 9,260 contractors) based on data from the Equal Employment Data System.)

In explaining the changes in burden hours listed in the initial supporting statement and in the revised supporting statement, the OFCCP explained that in light of the public comments, the agency worked with its data integrity team to reexamine how the original number of contractors and establishments was developed.  Because of the second data run, the OFCCP states that it initially identified a slightly smaller contractor establishment pool.  After combining the results of the EEO-1 data of 87,013 contractor establishments with 50 or more employees and the FPDS-NG data with 10,518 such establishments, the result was 97,531 establishments. Covered contractors must develop AAPs for all establishments, even those with fewer than 50 employees. By adding those estimated 73,744 establishments to this number, the adjusted total was 171,275 establishments.

Costs. In the revised proposal, the OFCCP also requested approval for $129,663,262 annualized operations and maintenance costs for the revised information collection proposal. This compares with $120,019 for the last clearance request, an increase of $1,793 for each contractor. The increase is due to an increase in one time start-up costs related to the new components of this information collection. Specifically, it accounts for contractors or their human resources service providers/vendors developing additional queries or “views” in their human resource information systems.

In its initial proposal, the OFCCP asserted that there were no capital or start-up costs associated with this collection of information because the information that contractors provide the OFCCP is generally maintained in the normal course of their businesses. The revised cost analysis was made in response to public comments about the possible cost and burden of updating or revising Human Resource Information Systems (HRIS) that cut across several of the proposed changes to the scheduling letter and itemized listing.

The OMB Control Number for this information collection is 1250-0003 and the current requirements expire September 30, 2011. However, existing information collection requirements submitted to the OMB receive a month-to-month extension while they undergo review. New or revised information collection requirements would only take effect after OMB approval.

Written comments on the revised proposal are due on October 28, 2011 and should be submitted to: the Office of Information and Regulatory Affairs, Attn: OMB Desk Officer for the Department of Labor, Office of Federal Contract Compliance Programs (OFCCP), Office of Management and Budget, Room 10235, Washington, DC 20503, Telephone: 202-395-6929/Fax: 202-395-6881 (these are not toll-free numbers), email: OIRA_submission@omb.eop.gov).

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