On October 19, 2017, BCGi hosted a webinar on OFCCP audit and audit violations titled OFCCP Audit 101 & OFCCP Audit Violations and Recommended Solutions. During the webinar, the presenters started with the Office of Federal Contract Compliance Programs (OFCCP) audit types and processes as well as twenty-two (22) items in itemized listing from the scheduling letter. It was then followed with common OFCCP audit violations and the corresponding recommended solutions (for a complete list of OFCCP’s enforcement statistics, please visit: http://ogesdw.dol.gov/views/data_catalogs.php). Here are some highlights and takeaways from the webinar:
The OFCCP conducts compliance reviews (or audits) to determine if the contractor maintains nondiscriminatory hiring and employment practices and is taking affirmative action to ensure that the contractor does not make employment decisions with regards to race, color, religion, sex, and national origin. During a compliance review, the OFCCP will have access to the contractors, employment data (i.e., applicants, hires, promotions, terminations, employees, and compensation). Thus, it is vital that all personnel and employment activities are accurately tracked and documented.
The OFCCP utilizes the Federal Contractor Selection System (FCSS) to select establishments for a compliance review. If one of the contractor’s establishments is selected, it has 30 days upon from the receipt of the scheduling letter to submit the AAP and supporting documents to the OFCCP. The compliance officer (CO) then reviews the submitted information and makes a determination if there are any potential issue(s). The CO may request for additional data or clarification if areas of concern are found. A Notice of Compliance is issued if no issue(s) are found and the audit is deemed closed. To better prepare for an OFCCP audit, the contractor can prepare a checklist of the 22-itemized listing and check off each item as it is completed. This way, items that need more time can easily be identified.
According to the OFCCP’s enforcement statistics, there are six frequently cited violations found during a compliance review. Below are some recommended solutions to these common OFCCP violations:
- Recruitment: Job Listings: At a minimum, ALL job openings (including all union jobs) must be listed with the local and state employment agencies with the three exceptions listed below
- Executive and top management positions
- Positions that will be filled internally only
- Positions lasting three days or less
- Recruitment: Outreach/Positive Recruitment: Ensure good relationship is built with the outreach partners. This will make the process faster and easier when requesting referrals for qualified candidates and posting for positions.
- Recruitment: Evaluation of effectiveness of outreach and positive recruitment: Track referral sources from applicants and positive outreach activities to help better evaluate the Â outreach and recruitment efforts. Although it is not required, follow the OFFCP’s Criteria for Evaluation to help evaluate the outreach and recruitment activities.
- Criteria for Evaluation:
- Did the activity attract qualified applicants with disabilities and/or protected veterans?
- Did the activity result in the hiring of qualified individuals with disabilities and/or protected veterans?
- Did the activity expand Contractor’s outreach to individuals with disabilities and/or protected veterans in the community?
- Did the activity increase Contractor’s ability to include individuals with disabilities and/or protected veterans in its workforce?
- Criteria for Evaluation:
- Recordkeeping: Out of all the recordkeeping violations, applicant data is the most vulnerable due to the complexity of tracking the data. Ensuring that data is properly tracked is crucial to avoiding a recordkeeping violation claim. Collecting/retaining proper applicant data has four primary components.
- Having the right system (based on usage, size, volume, features, etc.)
- Properly configuring the system
- Collecting the right data
- Require gender/race to continue application process
- Defining the appropriate disposition codes (must match the selection processes)
- Defining the necessary reports/output files
- Training those who will be using the system (recruiters, hiring managers, etc.)
- Regularly evaluating the system used (do a mock audit)
- If all four of these components are executed correctly, the data can better tell the “story” for each applicant through the selection process (e.g., did not meet basic qualification, phone screened, interviewed, offered, etc.).
- Hiring: Adverse impact in hiring has one of the lowest occurrences of violations cited in OFCCP audits. However, it is one of the most IMPACTFUL. Violations in hiring discrimination can result in back pay and interest to those who were negatively impacted. This payout could be as small as a couple hundred or as large as several millions of dollars. Â Here are some recommended solutions for mitigating the risk of this violation:
- Ensure the accuracy of the data. This means appropriate data is captured and applicants not considered for hires during the at-issue period are excluded. Use the definition of an internet applicant as a guide.
- Analysis should reflect reality – conduct appropriate analysis based on the selection process:
- By job title/requisitions
- Step analysis (practice, procedure, and/or test)
- Ensure that all applicants were appropriately dispositioned and be able to determine when the applicant fell out of the selection process.
- Adverse impact does not necessarily indicate discrimination but in the absence of validation a discrimination claim can be made. Therefore, it is important to ensure:
- The practices, procedures, and tests used during the selection process (e.g., BQ, interview, etc.) are job related and consistent with business necessity
- The job analysis complies with the Federal Uniform Guidelines on Employee Selection Procedures
- The job analysis is current
- Compensation: In the last couple of years, the OFCCP has been focusing on compensation and requesting additional compensation data during an audit. Here are some recommended solutions for compensation violation:
- Begin tracking more data now! (i.e., explanatory factors related to pay decisions)
- Document promotion decisions
- Train the compensation team to make the correct decisions
- Starting pay
- Establish meaningful (perhaps narrow) pay ranges/grades
- Understand the factors that drive pay
- Conduct annual compensation review using statistical and/or non-statistical methods (e.g., regression and cohort)
- Where unexplained differences remain, consider salary adjustments
- Evaluate proposed changes for impact on another group (e.g., a compensation adjustment based on gender might have an adverse affect to race/ethnic status)
As federal contractors, it is required to annually develop an AAP and analyze the organization’s utilization, personnel decisions, and compensation system. Ensure that the analyses contained in the AAP are reviewed and if necessary, potential problem areas found should be investigated. The best thing one can do is to be proactive and not reactive.
If you would like more information on this topic or to find out what upcoming webinars BCGi will be conducting in the future, please check our webpage at www.bcginstitute.org.
Contributing author: Diana Sicari, EEO/AA Analyst II at Biddle Consulting Group, Inc.