2018 Proposed Budget Released: DOL’s Budget Cut by $2.5B

President Trump’s budget blueprint dubbed as “America First” was released Thursday, March 16, 2017. The blueprint calls for a $1.15 trillion proposed budget that seeks to provide increased spending for the military and homeland security, while cutting the spending budget for other federal agencies, including the Department of Labor (DOL).

The Department of Labor’s 2018 proposed budget will be $2.5B (20.7%) less than the annualized continuing resolution (CR)[1] for 2017 and calls for the following:

  • The expansion of Reemployment and Eligibility Assessments – an activity by various States’ employment development departments to review the individual’s efforts to seek employment and to provide information on appropriate resources to assist the individual to return to work as quickly as possible.
  • Reduced funding to ineffective and duplicative training grants. This eliminates the Senior Community Service Employment Program (SCSEP) which was found to be ineffective in transitioning low-income unemployed seniors to unsubsidized jobs.
  • Elimination of the Bureau of International Labor Affairs’ largely noncompetitive and unproven grant funding.
  • Closing of Job Corps centers for the disadvantaged youths that do a poor job in educating and preparing students for jobs.
  • Decreased federal support and shifting more funding responsibilities to the States, localities, and employers for job training and employment service.
  • Helping the States to expand apprenticeship programs
  • Elimination of OSHA’s training grants and instead refocus the agency to keeping the workers safe on the job
  • Elimination of less critical technical assistance grants by the Office of Disability and Employment and instead launching an early intervention projects that will allow States to test and evaluate methods that will help persons with disabilities to remain connected to the labor market.

What about the OFCCP?

While the proposed 2018 budget is by no means final until approved by Congress, it nevertheless squelched some speculations on the fate of the Office of Federal Contracts Compliance Programs (OFCCP) under the Trump administration. If nothing else, the proposed budget revealed that the OFCCP is here to stay, will remain a separate agency from the EEOC, and affirmative action programs will still be enforced. However, much like other agencies, it is almost certain that the trickle-down effect of the proposed budget cuts will affect the OFCCP, particularly its request for an $8,693,000 budget increase and the retention of 615 full-time employees (FTEs) as outlined in its 2017 Congressional Budget Justification document. Should this really be an area of interest or concern to anybody besides the OFCCP?

While nobody can be sure of what will happen in the next few months, we can look back at the OFCCP’s budget and operation history and maybe, just maybe, look into our crystal ball to see what the future might hold for the federal contracting community? History shows that the OFCCP operated efficiently in much leaner years: from 2003 thru 2009, its appropriated budget ranged from $78M to $84M and with FTEs ranging from 585 (in 2008) to 749. How did the OFCCP survive with much tighter belt during those lean years? One answer lies in the issuance of the OFCCP’s Active Case Management (ACM) directive in July 2003. Under this directive, compliance officers (COs) were able to expedite audits — allowing them to close audits where no systemic discrimination was found — conduct more compliance evaluations, and direct their focus on organizations where more apparent discrimination occurs. The directive definitely allowed the OFCCP to do more with less and produced more financial settlements at higher dollar amounts.

With the possibility of the trickle-down effect of the proposed budget cuts, it will not be a stretch to think that the OFCCP will once again re-invent itself so it can continue to enforce the provisions of the regulations in the most effective and efficient way. This, not coincidentally, is one of the main thrusts of the new administration: improve “the federal government’s effectiveness, efficiency, cyber security, and accountability.” There is no doubt that everybody in the federal contracting community – prime and sub-contractors, lawyers, consultants, analysts, etc. – can expect another roller coaster ride with the probable changes in the OFCCP. In the meantime, hold onto your seats and stay compliant with the current regulatory requirements.


Helpful Resources:


[1] In December 2016, the Senate passed legislation to fund the federal government until April 28, 2017 to avoid a government shutdown.

Implementation of the New EEO-1 Report is Still Uncertain

In a few weeks, the 2nd quarter of calendar year 2017 will roll in. With the fate of the new EEO-1 Report still uncertain, most contractors are, understandably, getting anxious. Will the EEOC implement the changes or will it table the implementation until further review? Should contractors prepare for the September 30, 2017 filing or will they have more time to prepare for the first deadline of March 31, 2018?

Two weeks after being named as the acting chair of the EEOC, Victoria Lipnic, in her first public comment in February, addressed the requirements for filing the EEO-1 reports under the new regulations. She expressed that there is a need to re-evaluate the costs and benefits of the revised EEO-1 reporting – something that falls directly under the mandate of the Trump administration for all agencies to “rethink the regulations they have on the books.” Although Ms. Lipnic was vocal about her dissenting vote on the modifications, she was also quick to point out that the commission operates by vote, and, therefore, the agency’s current position cannot be altered by only one commissioner.

In addition to filing gender and race data, the new EEO-1 Form requires all employers (private and federal) with 100 or more employees to report summary pay data by gender/race. Employers will be required to indicate the total number of full/part time employees and total hours worked within 12 pay categories for each of the 10 EEO job classifications. Data collected through the EEO-1 report is accessed by the OFCCP for the purposes of establishing their audit list, however, summary pay data for federal contractors and subcontractors will be routed directly to the OFCCP. The EEOC and the OFCCP, in their respective capacities and responsibilities, see the inclusion of pay in the EEO-1 report as an integral tool for more effective and efficient investigations of pay discrimination. The federal contracting community-at-large applauds the efforts but questions the usefulness of 12×10 aggregated pay data for investigation of pay discrimination.

‘Retool and prepare now or wait and see?’, that is the question. Many federal contractors are holding out hope that the Trump administration will eliminate pay data requirements and revert back to the previous EEO-1 reporting requirements.  Many contractors aren’t waiting and, in anticipation of the change, have developed a game plan and/or methodology for structuring their data for submittal. For those who are still holding out hope, it is recommended that you be proactive and at least consider creating a test file to assess your gaps in data.

Steps to creating a test file:

  1. Export from your payroll software or connect with your payroll service provider, payroll or compensation department to retain a list of employees (with employee ID’s), their associated W-2 (Box 1) pay and hours worked for the 2016 calendar year.
  2. Export from your HRIS the requisite demographic data for all employees (as required).
  3. Create a single data file by merging payroll with HRIS employee data files.
  4. Sort pay in ascending order, create a new column and then create and label each employee in accordance with their corresponding EEO-1 report compensation band.
  5. Verify that your data aligns with the EEO-1 report format through Pivot Tables.

Additional factors to consider when compiling total number of hours worked:

  1. How is the organization capturing the actual hours worked for exempt employees
  2. How the reported total hours will affect compensation analysis (i.e., hours worked of part time employees and exempt employees).

Still feeling lost?  Check out the EEOC website, recent EEOC webinar, or contact a Biddle EEO/AA Specialist at staff@biddle.com.

Independent of the changes to the EEO-1 form and requirement of submitting summary pay data, best practices, laws and regulations dictate that contractors should review their compensation system and analyze their data to ensure equal pay and eliminate disparities.


Article co-authored by John Piatt, Director of EEO/AA Client Support & CERT, Biddle Consulting Group, Inc.

Revised Directive 305 for Functional Affirmative Action Programs (FAAPs)

Background:

The regulations at 41 CFR 60-2.1(d)(4) allow supply and service federal contractors to develop affirmative action programs (AAPs) that are based on business units or functions rather than the more common location- or establishment-based AAPs. For some organizations, especially those with business units that function independently from the rest of the organization, having Functional Affirmative Action Plans (FAAPs) make more sense because analysis results and the subsequent development and implementation of action-oriented programs, good faith efforts, and outreach and recruitment are better aligned with the business unit(s). But unlike the location-based AAPs, contractors must first seek the approval of the OFCCP before developing function-based AAPs.

On December 17, 2012, the OFCCP published Directive 305 which outlined the application and approval process for FAAP agreements. This directive superseded all other previously issued FAAP directives. Directive 305, which expired on December 31, 2015, included, among other things, the revised application procedures, an explanation of the required data and documents for OFCCP’s approval determination, and the requirement for an automatic compliance reviews before the expiration of the FAAP agreement.

Recently, the Office of Management and Budget (OMB) approved the revisions to Directive 305. The revised directive became effective on April 28, 2016 and for the OFCCP to use as such through April 30, 2019. This newly published directive does not make Directive 305 obsolete. Rather, it only intends to make some revisions to the procedures and update the requirements set in Directive 305.

Directive 305 Revisions in a Nutshell

Basic Principles of FAA Agreement. The following items were added to this section:

  • Contractors with approved FAAPs must also comply with the requirements of Section 503 of the Rehabilitation Act of 1973, as amended, and the Vietnam Era Veterans Readjustment Act of 1974, as amended (VEVRAA) with regards to written AAPs. Written AAPs for protected veterans and persons with disabilities can either follow the AAP structures developed under EO 11246 (i.e., function-based or a combination of function- and establishment-based structures); or can be developed using the establishment-based methods only. However, the contractor should let the OFCCP know which method will be used to comply with the requirements of Section 503 and VEVRAA during the approval or certification process. The AAP/FAAPs should be made available for review at each of their establishments.
  • Upon OFCCP’s request, contractors are now required to submit information with regards to all formats, including electronic formats, in which records and other information are maintained by the contractor. All documentations on the FAAP agreement should also be submitted to the OFCCP if and when they are requested.
  • All approved FAAPs will undergo at least one (1) compliance evaluation during the three (3) year period of the agreement. Prior to this revision, the renewal of an existing FAAP agreement required a contractor to have had at least two functional units undergo compliance evaluations during the three year span of the agreement.

Requesting for a FAAP Agreement. The following items were deleted, modified, and/or added to this section:

  • The revised directive deleted the sentence: “Requests for functional AAP agreement must be made prior to the notice of commencement of any compliance evaluation.” The directive made clear that if a notice of compliance evaluation was received prior to approval of the FAAP agreement, the OFCCP audit will be conducted under the establishment-based AAP structure. This means that unless the FAAP agreement had been approved, even if the application had been submitted, the AAP subject to the audit will remain as an establishment-based AAP.
  • The term FAAP Unit was replaced by FAAP Branch.
  • Deleted commitments to specific time frames, such as, within 10 days of receipt of written request, OFCCP will provide written acknowledgment; within 30 days of receipt of written request, FAAP Unit will send letter of request for conference. Rather, the revised directive did not include any time commitments as to when contractors can expect acknowledgment of receipt, request for conference, and/or approval of the request.
  • The previous directive requires the FAAP Unit and the contractor’s representative to have a conference to discuss the FAAP(s) request. This was replaced in the revised directive with the phrase, “it may be necessary to meet with the contractor” which denotes that a conference will only happen on an “as needed” basis.
  • In the previous directive, upon approval of the FAAP agreement, the copy of the agreement is required to be forwarded to the contractor. The revised directive now also requires that the forwarded copy be signed by the contractor. However, it was not made clear whether the contractor is required to send the signed copy back to the FAAP Unit.

Updating a FAAP Agreement. The following were added to this section:

  • Annual updates** should now include the employee counts, facility names, and the facility addresses included in each FAAP. Previous directive did not specify that these information need to be included.

**Note: Annual updates are only needed when the previously provided contract has expired or is no longer applicable. Updates can include changes to functional units, managing officials or contacts, and/or changes to the federal contract.

Modifying an Approved FAAP Agreement. The following were added and/or modified to this section:

  • Contractors are now required to notify the OFCCP of the name of the newly merged or acquired company. Previously, the only requirement was to provide the OFCCP an explanation as to reasons and explanations to the request for modifications to the existing FAAP agreement.
  • Contractors must also submit updated information on employee counts, facility names, and facility addresses in each functional unit.
  • Contractors must also submit information on at least one (1) federal contract or subcontract of $50,000 or more. The information should include the federal contracting agency, the contract number, the contract period, and if it is a subcontract, the name of the prime contractor.

Termination of a FAAP Agreement. There are no changes to this section.

For a complete copy of the revised directive, please visit the OFCCP’s website at: https://www.dol.gov/ofccp/regs/compliance/directives/Dir2013_01_Revision1.html

The OFCCP recently announced a webinar to review the revisions of this Directive on May 19, 2016. To register for this webinar, click here.

Additional information on Functional Affirmative Action Programs can be found on the OFCCP’s FAQ page.

Pay Transparency Takes Effect on Monday, January 11

The OFCCP announced that they will be hosting a public webinar for its final rule regarding pay transparency on Monday, January 11, 2016 at 2:00PM EST. The final rule goes into effect on January 11, 2016 and implements Executive Order 13665, which ensures that employees and applicants of federal contractors and subcontractors are able to freely discuss pay without fear of retaliation, which in turn, will promote pay transparency. It also amends EO 11246 by requiring federal contractors to incorporate pay transparency into their existing nondiscrimination provision. The final rule also requires contractors to amend their equal opportunity clause, policy statements, employee handbooks, etc. to include the prescribed nondiscrimination language.

The webinar is a great opportunity for contractors and subcontractors to become familiar with the changes and ensure compliance. During the webinar, the OFCCP will review the final rule, provide hypothetical examples, and answer questions. If you are unable to attend the webinar, BCG will be publishing a blog with the key takeaways from the webinar.

To register for the January 11 webinar, follow the link below:
https://dolevents.webex.com/dolevents/onstage/g.php?MTID=ed75f4ff0dcf77fb3886cf540d39ec598