In An Effort to Increase Efficiency And Transparency In The Compliance Audit Process, OFCCP Issues Directive 2018-09
In addition to Directive 2018-09, summarized here, OFCCP issued on September 19, 2018 Directive 2018-08 addressing the OFCCP compliance review process. OFCCP explains that it is the most recent of a series of Directives designed to increase transparency and the quality of compliance reviews, including hosting a series of compliance assistance events, issuing a Directive requiring Pre-Determination Notifications prior to the issuance of Notices of Violation, and publishing OFCCP’s supply and service scheduling methodology. OFCCP states in the Directive that it “extends OFCCP’s transparency initiative to every stage of a compliance evaluation to facilitate consistency of operations, improve efficiency and resolve collaboratively matters during compliance evaluations.”
The Directive announces the following changes to OFCCP’s compliance audit process:
Compliance officers will contact the contractor within fifteen days of sending CSALs so that they can provide technical assistance and support to contractors in responding to them.
OFCCP will provide a 30-day extension to provide supporting data responsive to the CSAL if (1) the contractor requests the extension prior to the initial 30 day due-date; and (2) the contractor timely submits basic AAPs within the initial 30-day period. If these conditions are not satisfied, OFCCP will only allow extensions in “exceptional circumstances.”
The failure to submit timely AAPs or support data will result in the immediately issuance of a procedural Notice to Show Cause. The contract will have an additional 30 days to submit these materials after the issuance of the Notice.
After a compliance officer receives the contractors AAPs and supporting data, he or she will contact the contractor to confirm receipt and start the desk audit promptly, ideally within five days.
The compliance officer will initially review the submission to make certain that it is complete and acceptable. If there are deficiencies the submission, the compliance officer will notify the contractor promptly and provide fifteen days to cure the deficiencies. OFCCP will issue an immediate procedural Notice to Show cause if the deficiencies are not cured.
The compliance officer will then review the submission and contact the contractor to request follow-up information or clarifying information. Compliance officers may not request information beyond the categories listed in the CSAL (e.g., data to refine indicators, employment applications, manager interviews) until after the desk audit has been completed and the conclusion of the desk audit has been recorded in OFCCP’s case management system.
Compliance officers should work to close reviews quickly if there are no indicators of discrimination or other evidence of violations. The Directive states that ideally and in the majority of cases, OFCCP should complete a typical desk audit within 45 days of receiving complete and acceptable AAPs and supporting data.
Prior to an on-site, the compliance officer may request supplemental data to refine indicators and prepare for a potential on-site visit.
Critically, the Directive states that “[s]upplemental information requests must include the basis for the request, be reasonably tailored to the areas of concern, and allow for a reasonable time to respond.”
Prior to an on-site, OFCCP should provide a “high-level summary” of any preliminary indicators of discrimination in the onsite confirmation letter.
Although the Directive does not address the onsite review process, it states that the off-site analysis should begin “immediately” after the onsite is completed and that the OFCCP should maintain regular contact with the contractor (at least every 30 days) to keep it informed of the status of the evaluation. The Directive also does not address the process for reviewing the data and information collected through the desk and on-site review or for determining whether OFCCP should issue a Notice of Violation. However, it addresses new procedures for the conciliation process after the issuance of a Notice of Violation.
The Directive states that OFCCP should take a collaborative process in conciliation, including (1) sharing information and essential source data in electronic format so that contractors can understand and replicate OFCCP’s methodology and findings; (2) share the factors used to calculate back pay; and (3) provide an overview or summary of the anecdotal evidence or non-statistical findings that provide support or context for OFCCP’s statistical analyses. The Directive notes that the Branch of Expert Services and/or the staff of the Office of Solicitor may become involved to facilitate the conciliation process. It also states that OFCCP will work with the contractor to identify innovative remedies, such as apprenticeship programs and proactive corporate-wide solutions.
Contractors and their counsel can draw significant guidance from the Transparency Directive. It is clear that contractors must be prepared to produce immediately their basic AAPs upon the receipt of a CSAL. To ensure that employees responsible for the preparation and implementation of AAPs are notified immediately of the receipt of CSALs, contractors should confirm that OFCCP has accurate contact information for the contractor and each of its establishments or functional units. Also, with these new deadlines, contractors must stay on top of their AAPs, ensuring that they are prepared on time and implemented effectively. Contractors should also confirm that they have the applicant tracking (ATS) and human resources information systems (HRIS) and other databases available that will allow it to pull and analyze hiring, promotion, termination and compensation information that is accurate and includes the categories of information necessary to provide the data requested through CSALs.
The Directive is designed to address contractors’ complaints that many audits taking too long and do not follow the steps required in the compliance manual. Many compliance audits have become seemingly endless, with compliance officers repeatedly requesting follow-up information and data without undertaking an on-site review or notifying contractors of their findings at the end of it. These audits – now referred to by OFCCP – as “aged audits” have become an area of concern for the senior leadership of OFCCP. Although the Directive is designed to address these concerns, it will be important for contractors to hold Compliance Officers to these standards, requesting that they present the findings required by the Directive and that they not request information beyond the CSAL until they have been provided. Similarly, if a contractor receives requests for information and data prior to or in connection with an on-site review, it should request the justification for OFCCP’s requests. Although it is the objective of most contractors to be cooperative during audits, they can certainly request that OFCCP comply with its own compliance review standards without being adversarial.