A Promise of Greater Transparency and Consistency

In recently meeting with the OFCCP’s new leadership, we were pleased to hear that they are committing to increasing transparency and achieving consistency across regional and district offices.

Yesterday, in a significant first step in this direction, OFCCP announced a new Directive providing that OFCCP will no longer issue final findings of a violation before first issuing a Predetermination Notice (PDN) and considering the contractor’s response.

Background

The Office of Federal Contract Compliance Programs (OFCCP) is the federal agency responsible for implementing the affirmative action requirements that apply to government contractors and subcontractors. OFCCP primarily enforces these requirements through compliance reviews (or audits) of selected contractors. If OFCCP determines during an audit that the contractor has engaged in unlawful discrimination, the agency may issue a Notice of Violation and seek monetary damages for the victims of the alleged discrimination.

The PDN is a letter that OFCCP uses to inform federal contractors and subcontractors of the agency’s preliminary findings of employment discrimination toward the conclusion of a compliance review and before issuing a Notice of Violation. A PDN provides the contractor with a clear understanding of the OFCCP’s concerns and gives the contractor an opportunity to directly address those specific concerns by providing additional information. The use of a PDN makes for a more fair and efficient process. By giving contractors notice of its specific concerns, OFCCP is able to ensure that it has a full and complete understanding of the relevant facts before proceeding to conciliation or expensive enforcement proceedings. And by having an opportunity to review the OFCCP’s preliminary findings, contractors are able to make an informed assessment of the OFCCP’s concerns and either address those concerns or begin the process of correcting any deficiencies.

Unfortunately, even though the use of PDNs clearly facilitated the fair and efficient resolution of audit issues, OFCCP had largely abandoned their use in recent years, apparently preferring a strategy of surprise which often left contractors feeling undue pressure to settle vague allegations of discrimination unsupported by specific facts.

Directive 2018-01

Under the new Directive (which has an effective date of February 27, 2018), a PDN must now be issued at the conclusion of every compliance evaluation in which OFCCP believes that the contractor “has not provided adequate explanations to proposed discrimination findings.” The PDN, in the form of a letter from OFCCP to the contractor, will provide the contractor an additional 15 calendar days to rebut OFCCP’s proposed findings that sufficient evidence of discrimination exists.

Recognizing the value of encouraging communication with contractors and providing contractors with an opportunity to respond to preliminary findings prior to OFCCP deciding to issue a Notice of Violation, the Directive provides that use of the PDN is mandatory and that regional and local staff do not have discretion to proceed otherwise.

The Directive also requires that a Solicitor of Labor review each PDN, which should help to address concerns that OFCCP has been taking positions unsupported by applicable law.

What Does this Mean for Me?

Contractors should view the PDN as a significant opportunity to better understand and address OFCCP’s concerns toward the end of an audit.

If you receive a PDN, make sure that is promptly shared with human resources and legal counsel as well as appropriate management. The PDN represents a significant opportunity to resolve the audit without substantial additional expense or adverse publicity and at a time when the agency should still be relatively open to fairly consider additional evidence. Accordingly, a contractor that receives a PDN should be prepared to make the effort to respond to the PDN in a timely manner with its most persuasive evidence.

The new Directive provides that “[a]ny NOV not yet issued [presumably as of February 27, 2018] must be held and a PDN issued in its place to allow contractors an opportunity to respond to the agency’s preliminary findings.” Accordingly, any contractor that receives a Notice of Violation after February 27 without first receiving a PDN should ask that the Notice of Violation be rescinded pending preparation of a PDN and an opportunity to respond.