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Political battles in store regarding future of OFCCP, action on EEO-1 Report expected next month, NELI expert says

May 25th, 2017  |  Cynthia L. Hackerott

Any proposed merger of the OFCCP into the EEOC will lead to an enormous political fight, that is going to be “battle royale,” attorney and former OFCCP official John C. Fox predicted during an OFCCP update webinar presented by the National Employment Law Institute (NELI) on May 18, 2017. During the webinar, Fox covered several topics regarding the OFCCP’s current status as well as how the likely demise of the compensation reporting requirement in the EEO-1 Report may occur.

Addressing media speculation that the Trump Administration plans to merge the OFCCP with the EEOC, Fox (President of Fox, Wang & Morgan, P.C. in Los Gatos, California) said “it very much appears” that this is the case, but, as of the day of the webinar, the details regarding the final shape of this plan were still being molded. The merger proposal was anticipated to be included in the White House’s budget proposal for fiscal year (FY) 2018, which on the date of the webinar was  expected to be released on Tuesday, May 23. (WK Note:  The White House did in fact release its FY 2018 budget proposal on May 23, and, as anticipated, the DOL budget detail (Appendix p. 749) and the DOL’s budget justification for the OFCCP does propose merging the OFCCP into the EEOC.)

Among the issues with merging the two agencies is the fact that the EEOC doesn’t have statutory authority to enforce Executive Order (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. 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.

In any event, Fox noted that the discussion of merging the two agencies is not a new thing, indeed, for the past 30 years, the possibility of such as merger has been discussed at the dawn of  every new administration.

Political battles ahead. The decision as to whether the OFCCP will survive lies almost entirely with Secretary of Labor Alexander Acosta, but OMB Director Mick Mulvaney and Attorney General Jeff Sessions will have some input as well, Fox said.

In November 2009, the Obama Administration eliminated the DOL’s Employment Standards Administration (ESA), but maintained the four component agencies previously under the ESA umbrella – the OFCCP, the Wage and Hour Division, the Office of Labor Management Standards and the Office of Workers’ Compensation Programs. Under the previous organizational structure, the Assistant Secretary for the ESA, not the heads of the four sub-agencies, had the authority to report directly to the Secretary of Labor. However, as a result of the 2009 reorganization, the heads of these four now stand-alone agencies report directly to the Secretary of Labor. Accordingly, in Fox’s opinion, anyone nominated to head these agencies must be confirmed by the Senate because they would be “Inferior Officers,” who report directly to Presidential appointees, within the meaning of the “Advise and Consent” clause of the U.S. Constitution.

If there is a confirmation hearing for a nominee to head the OFCCP, it will be politically contentious, Fox predicted, saying it would be a “monstrous battle.” Even if the new OFCCP head can be appointed without the advice and consent of the Senate, it is likely a new director will not be in place until mid-to-late 2017, Fox estimated.

Acosta, who became Labor Secretary on April 28, is moving slowly to install his new team, Fox reported, saying that the Secretary hasn’t started to move any people forward in the nomination process. In any event, Fox anticipates that the administration will decide to leave the position vacant, pending the outcome of any merger proposals as discussed above.

Because “Team Trump” has not yet arrived at the OFCCP to start steering it, the agency is continuing to follow the course it has been since the end of the Obama Administration, Fox stated. Under Interim Acting Director Tom Dowd, audits will continue to be few in number, with the primary focus continuing to be on compensation and failure to hire cases.

Restructuring timeline. On April 12, 2017 OMB Director Mick Mulvaney sent a memo to all federal Executive Branch agencies that lifted President Trump’s previously ordered hiring freeze (January 23 memo), and set forth a plan to reorganize and downsize the federal government. Among other things, Mulvaney instructed the agencies to begin taking immediate action to achieve near-term workforce reductions and cost savings, including planning for funding levels in the President’s FY 2018 Budget Blueprint released on March 16. Director Mulvaney is also looking at the possibility of restructuring by combining common functions from across numerous government departments, Fox said, including the possible merger of the OFCCP into the EEOC.

Pursuant to the April 12 OMB memo, the agencies are required to submit an initial, high-level draft reform plan to the OMB by June 30, 2017, and then submit their detailed restructuring plans by September 2017. Director Mulvaney anticipates publishing his finalized restructuring plan in January of 2018. The plan would then be implemented prior to the start of FY 2019, which means that if a merger of the OFCCP into the EEOC were to occur, it would begin between January 2018 and the fall of that year, Fox explained.

Agency may survive, but continue to dwindle. Even if the OFCCP survives this restructuring process, continued budget reductions will likely require the agency to further downsize its number of personnel and to close offices. With reduced staff and technology advances, onsite audits are only occurring about 5 percent of time at best, Fox observed, adding that the OFCCP doesn’t really need the number of brick and mortar establishments that is currently has throughout the county to function.

Factors weighing in favor of OFCCP survival include the fact that it’s not a “big dollar” agency compared to other DOL agencies, such as the Wage and Hour Division and the Employee Benefits Security Administration, which allows the OFCCP to  “hide in the grass.” Another factor is that most business leaders support the OFCCP’s mission, even while they may criticize its practices in carrying out that mission. The White House will be “stunned” as to how many Republican CEOs will vouch for the OFCCP, according to Fox. “CEOs want the OFCCP to be efficient, focused, and professionally run, not killed,” he said.

Expected withdrawal of compensation reporting addition to EEO-1 form. Meanwhile, whether and how the Trump Administration will withdraw the Obama Administration’s finalized changes to add the collection of summary pay data to the EEO-1 Report is still unsettled. While Fox is convinced that the new administration will do away with this recently-added reporting requirement, how that will occur remains to be seen. While both the OMB and the EEOC have the power to reverse course on the compensation reporting component, Fox notes that its demise will likely come from OMB Director Mulvaney, via his authority under the Paperwork Reduction Act, rather than the EEOC. According to Fox, he has it on good authority that the OMB will issue something regarding this topic next month (June 2017). The main reason the withdrawal isn’t likely to happen via the Commission is that it simply takes time for any President to get all his EEOC Commissioners in place, Fox explained. Given that, if it turns out to be the EEOC, rather than the OMB, who withdraws or revises the added compensation component, this likely won’t happen until the late Fall of 2017.

What should federal contractors do in meantime? Since the first deadline for this revised 2017 EEO-1 Report won’t be until March 31, 2018, contractors can simply sit back and patiently wait for the OMB or the EEOC to take action. Fox recommends that each employer should calculate its last “fail‐safe” day, i.e. the last date it must begin to prepare to report compensation, if the reporting requirement remains. He reports that most of his clients have determined their fail dates as falling in either January or February of 2018. Even if an employer calculates its fail safe date as early as November 2017, there is still time to wait, he notes.

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