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Congressmen address utility of OFCCP enforcement burdens in House HELP subcommittee hearing

Are the compliance obligations placed on federal contractors by the Labor Department’s Office of Federal Contract Compliance Programs (OFCCP) unduly burdensome or are they appropriate and necessary to combat discrimination? That question was the focus of an April 18, 2012 hearing by the U.S. House of Representative’s Committee on Education and the Workforce’s Subcommittee on Health, Employment, Labor and Pensions (HELP). Phil Roe (R-TN), the HELP Subcommittee Chairman led the hearing in which Congressman Dennis Kucinich (D-OH) served as Ranking Member.

Compliance burdens. In his remarks, Chairman Roe suggested that the current and pending compliance obligations imposed by the OFCCP are so burdensome that many companies would choose to forgo government contracts in order to avoid these obligations, a concern that was echoed in the testimony of Alissa Horvitz, Shareholder with Littler Mendelson, P.C. in Washington, D.C. “Several of my clients have terminated their relationship with the federal government when their contracts ended and others are making the decision not to get into the relationship with the government because of the immense start-up costs, burdens, hurdles and compliance barriers that OFCCP has placed in their path,” Horvitz testified.

Asserting that more companies would be willing to contract with the federal government if they could be exempted from these “onerous provisions,” Horvitz suggested that “the dollar threshold to impose affirmative action plan obligations should be raised from the current threshold of $50,000 to a tiered approach based on contract value starting at $250,000, and the implementation time before OFCCP can select the company for an audit should be extended from its current 120 days to 12 months, if not longer.” This change “would drive up competition and drive down taxpayer costs,” she claimed.

OFCCP compliance obligations “create significant burdens and barriers to efficiency and impose a level of expense of time and money that is far in excess of what is necessary to accomplish effective affirmative action,” testified Dana Bottenfield, Director of Human Resources Information Systems at St. Jude Children’s Research Hospital in Memphis, Tennessee. St. Jude, a non-profit organization, prepares, pursuant to OFCCP regulations, one annual Affirmative Action Program (AAP) to cover its 3,700 employees. It receives more than 30,000 applications annually and hires about 600 employees each year. For the current AAP year, Bottenfield estimated that St. Jude employees would spend 500 hours on affirmative action duties that are in addition to their day-to-day affirmative action duties at an estimated cost of $58,000. “If our institution is audited, then another 200 to 400 hours can be added to this effort,” she said. Moreover, the necessary infrastructure, including software and document storage systems, must exist and continue to be maintained.

Under the current regulatory framework, according to Bottenfield, “[i]f St. Jude is not employing enough minorities and women in a job category, it may appear that we are discriminating; if we devise a strategy to eliminate this discrepancy, but we are too successful in our efforts – essentially meaning now we have hired too many women and minorities — then we may appear to be engaged in reverse discrimination. The standards require that we have the perfect mix of gender and racial groups for every job category. It is an impossible standard to meet, not to mention that the data elements used to conduct the analysis are crude and incomplete.” The OFCCP compliance process “is all “’stick;” and no “’carrot,’” according to Bottenfield. “Our team is not focused on providing a fair and diverse workplace, but instead surviving our next audit,” she reported.

Regulatory proposal regarding workers with disabilities. One primary area of focus in the hearing was the OFCCP’s proposal that would require federal contractors (and subcontractors) to set a 7 percent hiring goal for workers with disabilities and would impose increased data collection, recordkeeping, recruitment, training and policy dissemination requirements. The OFCCP’s Notice of Proposed Rulemaking (NPRM) containing these and other proposed amendments to its regulations implementing Sec. 503 of the Rehabilitation Act of 1973 was published in the Federal Register on December 9, 2011 (76 FR 77056-77105). In his prepared remarks, Jeffrey A. Norris, President of Equal Employment Advisory Council (EEAC) in Washington, D.C., testified that, shortly after the proposal was published, the EEAC, the U.S. Chamber of Commerce (Chamber) and the Center for Corporate Equality (CCE) conducted a survey, to which 108 major federal contractors responded, to learn what contractors estimated the proposal’s anticipated burdens and utility to be. He noted that the OFCCP estimated the cost of implementing the disability proposal to be $80.1 million. The EEAC, Chamber & CCE survey, however, showed that contractors estimated that the actual implementation costs to be at least $2 billion in the initial year — more than 30 times the agency estimate — and at least $1.5 billion annually thereafter. Norris reported that the survey also found a “consistent pattern of substantial discrepancies between the OFCCP’s burden and cost estimates and those of major federal contractors” that “raises serious concerns over whether OFCCP has performed an adequate assessment of the likely impact of its proposals.”

Representative Todd Rokita (R-IN) asked Norris if this proposal was consistent with the ADA. Norris responded that the proposal was “very inconsistent” with the underlying philosophy of the ADA, which according to Norris, is to minimize an individual’s disability and generally keep disability status as a private matter except in context of identifying any reasonable accommodations that may be necessary to perform job duties. What the OFCCP’s proposal does, Norris maintained, is to “feature” an individual’s disability.

Under the proposal, contractors would be required to extend three types of invitations to self-identify, one to job seekers “pre-offer” and two “post-offer.” A contractor would be required to extend the first post-offer invitation after it extends an offer of employment but before the applicant begins his/her job duties. Contractors would also be required to annually survey employees to provide them with the opportunity to voluntarily and anonymously self-identify, thus creating a second post-offer invitation requirement. Norris pointed out that, as a result, the proposal would require contractors to ask employees to self-identify as often as three times in one year. Both Representative Rokita and Chairman Roe suggested that this requirement would violate the general prohibition, contained in the ADA and Sec. 503, against pre-offer disability-related inquiries. [CCH note: Some experts assert this requirement would not violate either statute because the ADA and Sec. 503 regulations permit the contractor to conduct a pre-offer inquiry into disability status if it is made pursuant to a federal, state or local law requiring affirmative action for individuals with disabilities.] Apparently agreeing with the concerns of Rokita and Roe, Norris said that this requirement “raises the prospect that companies will only be able to comply with the OFCCP’s regulations at the expense of violating the ADA.” Rokita commented that this proposal appeared to be a situation of “the right hand not knowing, or more offensively, not caring, what left hand is doing” and “asking business, the engine of our economy, to try and interpret all of that.”

Benefits of OFCCP enforcement. “The key role that the OFCCP has played in improving the economic security for what workers and their families cannot be overstated,” testified Fatima Goss Graves, Vice President for Education and Employment National Women’s Law Center in Washington, D.C. The OFCCP is not limited to merely responding to complaints, she said; rather it is empowered to proactively address discrimination “by bringing systemic investigations, conducting compliance reviews of selected contractors, and providing guidance to contractors on affirmatively promoting equal opportunity in the workplace.”

In response to Congressman Kucinich’s question inquiring if the OFCCP’s Sec. 503 regulatory proposal would address the employment gap for people with disabilities, Graves said, “there is no doubt that it would make a real difference” because “history has shown that these won’t happen on its own.” The employment gap for people with disabilities is almost two times what it is for the non-disabled, she said.

Congressman Kucinich also voiced his support for the OFCCP’s proposal to revise the regulations at 41 CFR Parts 60-250 and 60-300 that implement the Vietnam Era Veterans Readjustment Assistance Act (VEVRAA). This NPRM was published in the Federal Register on April 26, 2011 (76 FR 23358-23425), and the comment period ended on July 11, 2011. The proposed changes would require contractors, for the first time ever, to establish annual hiring benchmarks (i.e. numerical targets) to assist in measuring the effectiveness of their affirmative action efforts, and it would increase data collection requirement on job referrals, applicants and hires. According to Kucinich, if these pending regulations are not put in force, “we’re looking at less opportunities for veterans.” It is not asking too much for contractors, who are benefitting from veterans efforts, “to jump through a few extra hoops,” he said.

Addressing Norris, Kucinich stated that many companies have submitted comments in support of the OFCCP’s pending regulatory proposals. “Where you point to concerns, these companies see benefits,” Kucinich commented.

Representative Robert C. “Bobby” Scott (D-VA) suggested that no one would know about many instances of discrimination if companies were not required to keep records and if enforcement was solely based on complaints of discrimination rather than including audits which can reveal discrimination unbeknownst to its victims. “If we don’t do this in government contracts, what chance would there be that the culture would change?” he asked.

Along those same lines, Dale E. Kildee (D-MI) emphasized that there has to be some cost and government knowledge involved to protected workers.

Congressman John Tierney (D-MA) suggested that the time to hold committee hearings should be after the proposals take effect, so that the actual impact could be addressed. He noted that stakeholders had an opportunity to express their concerns via the notice and comment process.

Representative Congressman Rush Holt (D-NJ) commented that it is not that the hearing was premature, but that it was focused on the wrong issues. He said the focus should not be directed toward getting “government out of our hair” but rather on how can we understand better what is going on in employment practices. Relying on the good faith of employers is not good enough, according to Holt. Achieving equal employment opportunity requires recordkeeping to determine the extent of the problem. “That is the role that we have given for the OFCCP,” he said.