WHAT HAPPENED:

Recently, the Office of Federal Contract Compliance Programs ("OFCCP") published its 2013 regulatory agenda and issued two important directives aimed at reducing discrimination in the workplace. Directive #306, which became effective on January 29, 2013, provides information to employers about the circumstances in which excluding applicants due to their criminal records may violate nondiscrimination obligations. Directive #307, effective February 28, 2013, outlines the procedures that will be used to review contractor compensation systems and practices during a compliance evaluation.

WHAT YOU NEED TO KNOW ABOUT DIRECTIVE #306:

  • Federal contractors and subcontractors should turn to EEOC guidelines regarding the hiring of individuals with criminal records when reviewing their employment practices in compliance with Title VII. Although individuals with criminal records are not a protected group under applicable federal laws, antidiscrimination laws may be implicated when criminal records are being considered.
  • In order for a hiring policy that implicates criminal records to be compliant with EEOC and OFCCP guidelines, an employer must be able to justify that policy as both job related and a business necessity. Three factors are relevant to this determination:
    • The nature and gravity of the offense or conduct
    • The time that has passed since the offense, conduct, or completion of the sentence
    • The nature of the job held or sought
  • The agency also issued new procedures affecting contractors that utilize the Federally-Assisted Workforce System. These procedures require various notices to be sent regarding hiring policies that categorically exclude individuals with criminal records. More information about the required notices can be found here.

WHAT YOU NEED TO KNOW ABOUT DIRECTIVE #307:

  • The OFCCP replaced and revised its enforcement guidance and practices to expand its ability to address compensation discrimination under Executive Order 11246. Under Executive Order 11246 contractors may not discriminate in "rates of pay or other forms of compensation," and must review and monitor their compensation systems to "determine whether there are gender-, race-, or ethnicity-based disparities." The OFCCP rescinded two previous directives, which only addressed pay differences among pools of workers in the same job grouping. With the new directive, the OFCCP is aligning its analysis of pay discrimination with the principles used to enforce Title VII—the federal law against employment discrimination—to expand its ability to investigate a wide variety of forms of pay discrimination.
  • Now, when a contractor is scheduled for a compliance evaluation, the OFCCP will request data and information about the contractor's compensation practices and conduct a desk audit. When reviewing the compensation data, the OFCCP employee will:
    • Conduct a preliminary analysis of the summary data
    • Conduct an analysis of individual employee-level data
    • Determine the approach from a range of investigative and analytical tools
    • Consider all employment practices that may lead to compensation disparities
    • Develop pay analysis groups to test for statistical significance on large groups of employees
    • Investigate systemic, small group, and individual discrimination
    • Review and test factors before accepting the factors for analysis
    • Conduct onsite investigation, offsite analysis, and refinement of the model.
  • The OFCCP may also seek a remedy for compensation discrimination regardless of whether a particular employee realizes he or she is being underpaid.

OFCCP's 2013 REGULATORY AGENDA—FURTHER CHANGES ON THE HORIZON:

The OFCCP also recently published its unified regulatory agenda on the OMB's Office of Information and Regulatory Affairs website. Based upon the unified agenda, the OFCCP is preparing for five major regulatory changes in 2013, including the infamous Section 503 and 4212 regulations. The schedule is as follows:

  1. Section 503 regulation: Scheduled to be finalized in April 2013.
  2. 4212 Protected Veteran regulation: Scheduled to be finalized in April 2013.
  3. Compensation Data Collection Tool: A Notice of Proposed Rulemaking (NPRM) is scheduled to be released in June 2013.
  4. Sex Discrimination Guidelines: NPRM is scheduled to be released in August 2013.
  5. Construction Contractors' regulation: NPRM is scheduled to be released in October 2013.

WHAT YOU NEED TO DO:

Don't be caught unprepared! As its ambitious regulatory agenda indicates, the OFCCP wants to broaden affirmative action coverage and expand the compliance obligations of covered federal government contractors and subcontractors. Significantly, the OFCCP Directives adopt the investigative and procedural requirements and allowances of Title VII. If selected for an audit by the OFCCP, a covered federal contractor should expect a long and intense audit of its hiring, termination, promotion, training, recruiting, compensation, and affirmative action practices. Accordingly, all covered contractors and subcontractors should ensure that they are complying with their affirmative action obligations.