Executive Summary: Over the last two months, the Department of Labor’s (DOL) Office of Federal Contract and Compliance Programs (OFCCP) issued seven new directives under the OFCCP’s Acting Director and Deputy Director, Craig Leen. The following is a brief overview of the most important directives:

Directive 2018-03: This requires OFCCP personnel to take into consideration recent U.S. Supreme Court decisions and White House Executive Orders that preserve and protect religious freedom of both business owners and organizations. The directive cites specifically to several Supreme Court rulings, including Masterpiece Cakeshop, Ltd. v. Colo. Civil Rights Comm’n, holding that the government violates the Free Exercise clause when its decisions are premised on hostility to religion or a religious viewpoint. 138 S. Ct. 1719, 1731 (2018). (For an in-depth discussion of this ruling, see U.S. Supreme Court Sides with Wedding Cake Baker in Gay Rights Case Based on Civil Rights Commission's Impermissible “Hostility,” authored by FordHarrison attorneys Nancy Van der Veer Holt, Johanna G. Zelman, and Jenna M. Goldman). In addition, the directive cites Executive Orders 13798 and 13831 (both issued by President Trump), and emphasizes the current Administration’s commitment to maintaining broad protections for religious freedom by ensuring that faith-based organizations have an equal opportunity to compete for federal grants, contracts, programs, and other funding.

Directive 2018-04: This Directive creates a new, narrower category of contractor review that will be included in OFCCP’s scheduling lists beginning in Fiscal Year 2019. Rather than a comprehensive audit covering all three of the enforcement authorities overseen by the OFCCP (EO11246, Section 503 and VEVRAA), certain contractors included in each scheduling list will be subject to a “focused review” of their compliance with only one of the enforcement authorities. The Directive anticipates that the “focused review” will involve (a) a review of relevant policies and hiring and compensation data specific to the enforcement authority being reviewed; and (b) an on-site investigation, including interviews with managers responsible for compliance with the EEO policies at issue and employees affected by those policies. The Directive requires the OFCCP to develop a publicly available standard protocol for the focused reviews prior to the next scheduling list being issued.

Directive 2018-05: This articulates standard procedures for reviewing contractor compensation practices during an OFCCP compliance review, replacing a 2013 directive (DIR 2013-03) that was considered to be flawed in several respects. The Directive’s goal is three-fold: (1) to provide further clarity and transparency to contractors regarding the agency’s approach to conducting audits; (2) to encourage compliance and self-evaluation of compensation practices by contractors; and (3) to improve the consistency and efficiency of the analysis methods utilized during compliance reviews. The directive describes the agency’s practices for determining similarly situated employees, explains the OFCCP’s methods for conducting Pay Analysis Groupings, and elaborates on the agency’s methodologies related to statistical analysis and modeling. The Directive and FAQs provide contractors flexibility relating to how they submit certain types of compensation data when confidentiality concerns exist, such as allowing contractors to provide alphabetic or numeric coding or an index of pay and pay ranges if the contractor has concerns disclosing information such as lists of employee names or reasons for terminations. In addition, the Directive provides clarification on how the OFCCP will analyze disparate treatment and disparate impact cases. This Directive will be useful for contractors to review prior to conducting their annual compensation evaluations.

Directive 2018-07: Coming on the heels of Director Leen’s August 3, 2018, announcement that the OFCCP intends to audit contractors who do not certify their affirmative action programs (AAPs) with the General Services Administration (GSA), this Directive establishes a program to verify that every contractor is complying with its AAP obligations. Initially, the process will entail the OFCCP’s review of a contractor’s certification, followed by potential compliance checks. Additionally, the OFCCP envisions the addition of a criterion in the neutral scheduling process that increases the likelihood of compliance reviews for contractors who have failed to certify their compliance with AAP requirements. The Directive foreshadows that the OFCCP could eventually require annual submission of contractor AAPs for review. (For more information on the affirmative action certification audit announcement, see U.S. DOL Plans to Review Contractor Affirmative Action Certification, authored by FordHarrison Attorneys Nancy Van der Veer Holt, Bari L. Goldstein, Linda Cavanna-Wilk, and Jaime B. Wamble).

Directive 2018-09: This Directive announces the OFCCP’s anticipated implementation of an Ombud Service through the national OFCCP office, with cooperation from regional and district offices. The purpose of the service is to create a new position within the OFCCP, the “Ombud,” who will serve as a contact for federal contractors and subcontractors seeking to raise concerns or suggestions about the OFCCP. The Directive recognizes that contractors have expressed concern that raising issues with the Agency could lead to retribution, but it does not contain any statements or assurances detailing how the Ombud Service will protect the confidentiality of those contractors that raise concerns through the new program. Therefore, until the OFCCP releases the details of the program, it is difficult to predict how useful a service it will be.

The Bottom Line: Covered federal contractors should review these Directives to ensure they understand their ongoing obligations as well as new and future programs and requirements.