August 14, 2018Client Alert

OFCCP Notice of Significant Change in Compliance Review Procedures

On Friday, August 10, the Office of Federal Contract Compliance Programs (OFCCP) issued Directive 2018-04 requiring that a portion of the Fiscal Year 2019 compliance reviews be comprehensive, on-site audits focused on compliance with one of the three authorities the OFCCP enforces – Executive Order 11246, Section 503 of the Rehabilitation Act of 1973 (as amended), and the Vietnam Era Veterans’ Readjustment Assistance Act of 1974 (as amended).

Directive 2018-04 can be found here.

This development was foreshadowed by comments made by OFCCP Acting Director Crain Leen at the annual National Industry Liaison Group (NILG) meeting in Anaheim, California in early August.

The manner and timing of the announcement regarding the new review strategy is consistent with the themes of transparency and consistency stressed by the OFCCP since the change in administrations. While focused reviews have been available to the OFCCP since the August 1997 amendments to the Executive Order 11246 regulations, this type of review has been rarely, if ever, used. In addition to the advance notice that the agency has provided by issuing the Directive now, DIR 2018-04 requires that the OFCCP develop a standard protocol for conducting the focused reviews, and create FAQs about the protocol before the next scheduling list is issued.

Although much remains to be seen as to how many focused reviews will be conducted each year (at the NILG meeting, Acting Director Leen suggested at least 200) and what the focused reviews will encompass, contractors should take a detailed look at the letter and spirit of their compliance with all three of their affirmative action programs with particular attention to their compliance with the programs for individuals with disabilities and protected veterans. In the past, most desk audits have involved a few questions regarding policies related to individuals with disabilities and veterans, and requests for records verifying reasonable accommodations provided and outreach undertaken. In a focused review, a compliance officer will come on-site with the sole task of examining compliance with every portion of the regulations pertaining to just one of the laws. This review likely will include examining documentation showing compliance with each commitment in the relevant AAP, interviewing managers and employees responsible for EEO compliance (such as affirmative action officer, the ADA coordinator, perhaps the FMLA administrator to check leave issues), and interviewing employees, including some protected by the relevant law, to check for policy awareness, training, and compliance. Acting Director Leen also stated, and the Directive confirmed, that the OFCCP at least will likely request data related to hiring and compensation for members of the protected group and undertake statistical analyses where possible. With respect to the focused reviews and other initiatives, Acting Director Leen stated that the OFCCP is looking for “100% compliance” from the contractor community.

The government’s FY 2019 starts on October 1, 2018, which means companies selected for audit in the next round of scheduling may be facing a focused review. Contractors without robust outreach to individuals with disabilities and protected veterans, who do not track reasonable accommodation requests and decisions, and/or who have not rolled out training and other internal programs to make their commitment to EEO for protected veterans and individuals with disabilities well known throughout the workforce, would be well advised to prioritize compliance with Section 503 and VEVRAA.

In the coming weeks and months Michael Best will be issuing alerts discussing the other initiatives outlined by Acting Director Leen to help the agency reach its goals of transparency, certainty, and effectiveness, and addressing any new OFCCP directives, guidance and/or trends.

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