ManagementAlert

On May 12, 2011, the Office of Federal Contract Compliance Programs (OFCCP) published for public comment a Notice

announcing its intent to modify the scheduling letter and itemized listing of required data that accompanies it, which are used

to initiate every compliance evaluation of supply and service federal contractors and subcontractors. The Notice is available

online here. OFCCP’s current scheduling letter and itemized listing will expire on September 30, 2011. OFCCP needs

approval from the Office of Management & Budget (OMB) to modify its scheduling letter and itemized listing.

While the Notice provides virtually no detail on the proposed changes, a comparison of the proposed scheduling letter and

itemized listing to the current versions uncovers a number of significant proposed changes. In addition to affecting the

complexity of OFCCP audits from the outset, the changes also may affect the way federal contractors and subcontractors

must develop portions of their annual affirmative action programs and maintain their human resources information systems.

The proposed documents are available here.

Leave Policies, Religious Accommodations and Employee Handbooks

New Item 8 of the proposed itemized listing requests “Copies of your employment leave policies including, but not limited

to, policies related to implementing the Family and Medical Leave Act, pregnancy leave, and accommodations for religious

observances and practices.” It further directs contractors to provide copies of employee handbooks or policy manuals if the

requested policies are contained therein.

Note that OFCCP does not have authority to enforce the FMLA. However, its request for FMLA policies may indicate an

intent to coordinate with the Wage and Hour Division (WHD) of the Department of Labor, which does have FMLA enforcement

authority, or the Equal Employment Opportunity Commission (EEOC), which has indicated recent interest in various types of

leave, including leave available to caregivers. It appears that WHD and EEOC may be leveraging OFCCP’s broad authority to

audit employment-related policies to find employers against whom they may file enforcement actions.

Employment Activity Data

OFCCP proposes to add requirements to current Item 10 (proposed Item 11) related to applicants, hires, promotions and

terminations as follows:

• Contractors will be required to submit data by job group and job title; the current itemized listing allows the contractor to

choose one or the other;

• May17,2011

OFCCP Seeks To Require Contractors To Produce Additional Information During All Audits

Management Alert

• Applicant, hire, promotion and termination data must be provided by particular race/ethnicity group (specifically, African-

American/Black, Asian/Pacific Islander, Hispanic, American Indian/Native Alaskan, and White) instead of just minorities

and non-minorities;

• Contractors will be required to provide the gender and particular race/ethnicity composition of the “actual pool of

candidates who applied or were considered for promotion,” which will require contractors to modify their internal

promotions policies and processes, including their internal applicant tracking technology, to allow them to identify

specific pools. It also will require adequate training for managers and human resources professionals involved in the

competitive promotion process to accurately record the pool of employees considered for each competitive promotion

opportunity; and

• Contractors will be required to provide the gender and particular race/ethnicity composition of the “actual pool of

candidates who were considered for terminations,” which will require contractors to identify all employees for whom

termination was considered but not effectuated during the preceding twelve months, as well as identifying whether

terminations were voluntary or involuntary. This proposed change has particular implications for reductions in force

and other group terminations. For the first time in the arena of OFCCP compliance, it will be essential for contractors

to record the pool of employees considered for any reduction in force. Just as a proper applicant tracking system

ties pools of applicants to particular job requisitions, employers should review their internal systems for tracking

terminations to ensure that the discrete pool of employees considered for termination are “tied” to a particular termination

“requisition.” Because many employers’ HRIS systems do not currently have this functionality, contractors and their HRIS

or applicant tracking vendors may need to explore methods for designing, implementing and training on the use of such

a tool.

Additional Compensation Data

Also significant is OFCCP’s proposed change to current Item 11 (proposed Item 12), concerning the initial compensation

data submission. Proposed Item 12 seeks the following (in Excel format, if available): (a) “employee level compensation

data;” (b) data broken down by particular race/ethnicity group rather than for minorities as a whole; (c) gender and particular

race/ethnicity data for each employee by job title, EEO-1 category and job group in a single file; and (d) hire dates for

all employees. Compensation data must include base salary, wage rate and hours worked, and bonuses, incentives,

commissions, merit increases, locality pay and/or overtime should be identified separately for each employee. Contractors

are invited to produce data on factors used to determine employee compensation, such as education, past experience,

duty location, performance ratings, department or function, and salary level/band/range/grade; and they must produce

documentation and policies related to compensation practices, especially those used to explain the factors and reasons for

compensation decisions.

This will require every contractor to provide significantly more compensation information to OFCCP than current practice,

including most of the information OFCCP requests if the current initial data submission shows indicators of potential, alleged

compensation discrimination.

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Support Data for Section 503 and VEVRAA

Finally, OFCCP seeks data related to veterans, including VETS-100A reports for the past three years, and disabled

individuals, including copies of accommodation policies and records of accommodations actually provided by the contractor.

What Contractors Should Do Now

OFCCP takes the implausible position (without explanation) that the revised scheduling letter and itemized listing will reduce

the overall burden on contractors. It is certain, however, that the extensive, additional data sought by OFCCP at the outset of

a desk audit will affect federal contractors and subcontractors in significant ways. Among other things, the proposed revised

itemized listing would require contractors to track information not currently recorded and design and implement new human

resources information technology.

OFCCP’s effort to seek approval for the proposed changes to the scheduling letter signals that it finally is seeking appropriate

permissions from OMB to broaden its request for information during audits. There is some controversy regarding whether

OFCCP’s routine requests for such information during the desk audit phase, without evidence of a compliance issue, are

appropriate.

Because of the impact and importance of these proposed changes, contractors and subcontractors should consider

submitting comments to the Notice, providing OFCCP and OMB with practical information about, among other things, the

increased burdens that would be imposed by the revised itemized listing. Seyfarth Shaw will submit comments, and we

welcome your thoughts and observations if you would like them to be reflected in our comments, with or without attribution.

If you have any questions about this Management Alert, submitting comments to OFCCP, or anything else related to affirmative

action compliance, please contact the Seyfarth attorney with whom you work or any attorney on our OFCCP & Affirmative Action

Compliance Team.