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OFCCP Has Fresh Chance to Improve Diversity, Compensation Enforcement

Feb. 10, 2021, 9:01 AM

With every change of administration comes the opportunity to look back at what has worked well in the past and build on that, but also take a hard and critical look at what has not worked so well, and make course corrections.

Perhaps nowhere in the labor and employment realm is a new administration as poised to do so as with the Office of Federal Contract Compliance Programs (OFCCP), the agency charged with ensuring that federal contractors meet their responsibilities with regard to affirmative action and nondiscrimination in employment.

Biden’s Diversity Efforts

On his first day in office, President Joe Biden took an important step in publicly stating his administration’s commitment to diversity and inclusion in the federal workforce and rescinded former President Donald Trump’s Executive Order 13950. That order, which had become known as the “diversity executive order,” sought to limit federal contractors from discussing “divisive” topics such as “stereotyping” or “scapegoating” on the basis of race or sex in workplace trainings on issues of diversity and inclusion. The order left federal contractors scrambling to understand its meaning and purpose.

As contractors grappled with the new order, a “hotline” for employee complaints went up within a week at the OFCCP, leaving many contractors confused as to what they were to do or how this was going to be enforced. We are not sure we have seen an executive order create more confusion than this one.

The order was enjoined in December by a federal court, but President Biden’s rescission sent an important signal to contractors. Equally important is what was adopted in its place—Executive Order 13985, which sets forth the administration’s policy that “the Federal Government should pursue a comprehensive approach to advancing equity for all, including people of color and others who have been historically underserved, marginalized, and adversely affected by persistent poverty and inequality.”

In our own experience working with many different diversity programs, this has long been the goal of all of them.

If there was any “upside” to Trump’s order, it was the focus it put on employers’ diversity, equity, and inclusion (DE&I) training materials. It gave many companies the extra push they needed to review and ensure that the materials they were using were truly the best they could be. As we now move forward under the new executive order, we can do it mindful that to have a successful DE&I program, everyone needs to feel valued and respected.

Consistent Approach on Compensation

It has been reported that OFCCP in the Biden administration will focus more on enforcement matters than in previous years. Jenny Yang, appointed Jan. 21 to head the OFCCP, takes over an agency that has struggled to find its footing with compensation analysis after several high-profile losses.

Contractors have longed for consistency with the agency, but that has historically not always been the case. Instead, we have been left with region-by-region, auditor-by-auditor, methods in reviewing compensation and transaction data. Although a hallmark of former Director Craig Leen’s time was transparency, the contractor community has struggled with auditors not understanding compensation and statistical analyses. As a result, companies would often settle a matter because it was just too expensive to keep fighting.

We urge OFCCP to take a different approach and offer up a few ways that Yang could help ease the burden on contractors and in the end, hopefully, yield more successful reviews. Yang served as the chair of the Equal Employment Opportunity Commission under President Obama, and has long been a champion and advocate of workplace equality, most notably in areas concerning compensation and pay equity.

As EEOC chair, she implemented and oversaw administration of the EEO-1’s “component 2,” collecting, for the first time, detailed information from employers as to employee compensation broken out by race, ethnicity, and gender. The EEOC efforts were subject to significant criticism, including the burden on employers and the perceived lack of utility of the data collected.

Compensation data is one area where OFCCP will have the opportunity to look at prior efforts and adjust accordingly. A National Academy of Sciences (NAS) panel is about to begin a review of the EEOC’s pay data collection and potentially make recommendations for improvement. Yang would do well to give thoughtful consideration to the NAS conclusions.

‘Wish List’

With the above in mind, here is our “wish list” for OFCCP:

  • Training and consistency—give the auditors the tools and education they need to understand the appropriate way to look at compensation and transactions as well as understanding what the data does and does not tell them.
  • Stop requesting additional years of data when there are no indicators of discrimination. Requesting thousands of printed applications particularly in the midst of a pandemic when layoffs are occurring and there are no indicators of underlying discrimination, is counterproductive and wastes scant agency resources.
  • Spread the love—the same sites are routinely audited every three years even though they have excellent compliance records. We would urge OFCCP to review its selection criteria for audits, and respectfully suggest that it may be time to look at a new selection tool.
  • Work with contractors to come up with innovative approaches, including long-term ones, to increase the representation of women and minorities in the workforce. Such approaches include bringing together employers, activist and third-party organizations to accomplish common goals.

We are certain the contractor community—long committed to equity and nondiscrimination in the workplace—stands ready to assist.

This column does not necessarily reflect the opinion of The Bureau of National Affairs, Inc. or its owners.

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Author Information

Chris Gokturk is a principal at Littler Mendelson P.C. who counsels clients in understanding and mitigating affirmative action and systemic discrimination risks.

James A. Paretti Jr. is a shareholder at Littler Mendelson P.C. and a member of the firm’s Workplace Policy Institute.