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White House’s FY 2018 budget proposal calls for steep OFCCP funding decrease, merger into EEOC prior to FY 2019

May 24th, 2017  |  Cynthia L. Hackerott

The White House’s FY 2018 budget proposal calls for a $17 million decrease in OFCCP funding and merger of the agency into the EEOC by the end of FY 2018. As for other FY 2018 actions, the budget proposal focuses heavily on compliance assistance, pay discrimination, and construction contractor compliance. In the budget proposal, released on May 23, 2017, the Trump Administration proposes $88 million in funding for the OFCCP, down from the current $105 million funding level. This funding level would include 440 full-time equivalent (FTE) employees, down from the current FY 2017 estimate of 571 FTEs. On top of reducing the overall number of FTEs, the agency would consider reducing the number of its field office locations.

Regarding the proposed merger, the Appendix section for the proposed DOL budget, at page 749, states: “The 2018 Budget proposes merging OFCCP into the Equal Employment Opportunity Commission (EEOC), creating one agency to combat employment discrimination. OFCCP and EEOC will work collaboratively to coordinate this transition to the EEOC by the end of FY 2018. This builds on the existing tradition of operational coordination between the two agencies. The transition of OFCCP and integration of these two agencies will reduce operational redundancies, promote efficiencies, improve services to citizens, and strengthen civil rights enforcement.”

Priorities. According to the DOL’s budget justification for the OFCCP, the budget request will enable the OFCCP to focus on the following priorities:

• Work collaboratively with the EEOC to develop and implement a plan to merge OFCCP into the EEOC by the end of FY 2018.

• Continue its focus on combating pay discrimination through intensive contractor compliance assistance aimed at educating contractors about their contractual obligations, supporting their voluntary compliance with those obligations, and conducting high quality compliance evaluations.

• Continue its focus on larger federal and federally-assisted construction projects that have the potential to employ large numbers of diverse workers.

The OFCCP anticipates that about 35 percent of its discrimination conciliation agreements will address systemic pay discrimination violations, and that at least 50 percent of construction compliance evaluations will be associated with large, high impact construction projects; this number reflects an increase from the 35 percent set in FY 2017.

Skilled Regional Centers. The proposed budget allows for the OFCCP to continue with its plaint to establish two Skilled Regional Centers located in the Pacific (San Francisco) and Northeast (New York) regions. These centers would have highly skilled and specialized compliance officers capable of handling various large, complex compliance evaluations in specific industries, such as financial services or information technology. In addition, they would reduce the need for a network of field area and district offices.

Merger plan. The merger plan calls for the OFCCP and the EEOC to establish a transition workgroup to strategically plan and implement the transition process throughout FY 2018. The proposed transfer of operations would touch upon every aspect of OFCCP’s operations including compliance evaluations, compliance assistance, policy, training, stakeholder outreach and education, personnel, contracting and procurement, and information technology.

Under the budget proposal, the OFCCP would focus much of its policy-related actions and activities on supporting the agency merger process in FY 2018. This includes policy and guidance development, stakeholder engagement (e.g., compliance assistance that support contractor voluntary compliance, and communication), and compliance officer training and education. These work priorities, slated to begin in FY 2018 include:

• Drafting and reviewing legislative proposals amending VEVRAA and Section 503 of the Rehab Act;

• Drafting and reviewing a new Executive Order amending EO 11246;

• Undertaking and/or assisting with the rulemaking required to implement the transfer of authority under Section 503, VEVRAA, and EO 11246;

• Finalizing the restructuring of its compliance officer training program;

• Assessing, in coordination with EEOC, a variety of policy and training requirements, such as investigator training programs;

• Developing a plan for integrating OFCCP’s Help Desk functions and EEOC’s system;

• Working with GAO and/or OIG to close-out pending audits and audit recommendations;

• Identifying, merging, and/or eliminating redundant information technology and procurement systems and/or contracts; and

• Creating an effective stakeholder communications strategy that can be used before and during the merger.

Of the OFCCP policy priorities that are not directly related to legally executing the transfer of enforcement authority, finalizing the training program’s framework and completing the Federal Contractor Compliance Manual are the most important, the DOL budget justification states.

The DOL’s press statement on the budget proposal does not mention the OFCCP at all.

Experts predict broad opposition to proposed merger. Both business groups and civil rights groups will strongly oppose the proposed merger, according to experts in the area.

“Not often have we seen such unanimity among civil rights groups, employee advocates, and business groups who are lining up to vocally oppose this proposal,” Mickey Silberman, a Principal in the Denver, Colorado, office of Jackson Lewis P.C. told Employment Law Daily in a May 23rd interview. Considering that the Republicans currently control the House and Senate the policy optics on this proposed merger are “wholly unfavorable,” he said. Prior to the release of the budget, the business community caught wind of the merger proposal and have already had significant discussions among themselves as to the matter, and are “squarely opposed” to it, Silberman reports.

Likewise, in an OFCCP update webinar presented by the National Employment Law Institute (NELI) on May 18, 2017, attorney and former OFCCP official John C. Fox stated that most business leaders support the OFCCP’s mission, even while they may criticize its practices in carrying out that mission. Accordingly, the White House will be “stunned” as to how many Republican CEOs will vouch for the OFCCP. “CEOs want the OFCCP to be efficient, focused, and professionally run, not killed,” he said.

The administration frames this proposed merger as an action that would reduce the federal budget, but the actual budget savings would not be significant, Silberman pointed out. The EEOC’s FY 2018 budget has not been reduced, and a merger of the two agencies would call for an increase to the EEOC’s FY 2019 budget. Even if the post-merger EEOC’s FY 2019 budget were increased by half of the $88 million allocated for the OFCCP in FY 2018, that $44 million dollar in savings “would be less than a drop in the bucket,” he noted.

Fear of “super EEO enforcement agency.” The White House also asserts that the merger will reduce compliance costs and burdens on business, but it will actually have the opposite effect, according to Silberman. Among the employer community, there has been a “quickly growing realization” that the proposed merger could result in a “super EEO enforcement agency” empowered by broader jurisdiction and the ability to impose greater remedies for non-compliance, he said. Because the interests of business would not be well-served, groups such as the U.S. Chamber of Commerce and the Institute for Workplace Equality will oppose this proposal, he added.

Required Congressional actions unlikely. Among the issues with merging the two agencies is the fact that the EEOC doesn’t have statutory authority to enforce EO 11246, VEVRAA or Section 503 of the Rehab Act. While the non-discrimination requirements of the laws enforced by the OFCCP largely overlap with the those of the laws enforced by the EEOC, whether the affirmative action areas that are unique to OFCCP enforcement will stay within the DOL, be transferred to the EEOC, or be eliminated entirely, is still an issue, Fox explained in the webinar. Any of these options would require some Congressional action as well as the President amending EO 11246, he pointed out. Currently, the EEOC does not have the authority to do many things that the OFCCP has, including bringing administrative actions to debar federal contractors.

As mentioned above, the DOL’s budget justification as to the OFCCP does call on the agency to draft and review: (1) legislative proposals to amend VEVRAA and Section 503; and (2) a new Executive Order amending EO 11246. In addition, the agency would need to draft/revise its EO 11246, VEVRAA, and Section 503 regulations to implement the transfer of authority. Notably, the budget proposal is silent on whether these changes to the laws enforced by the OFCCP and their implementing regulations would eliminate the affirmative action component of the OFCCP’s enforcement mission.

In the face of strong business community opposition to the proposal, the Republicans in the House and Senate are not likely to support the proposal, and thus, Congress will not undertake the necessary actions to effectuate the merger, Silberman predicts. It will be an “unpleasant surprise” for this administration to learn that business community is lined up in opposition to this plan, he stated.

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