A Busy Month at the OFCCP – Update for Government Contractors
The Office of Federal Contract Compliance Programs had an active month, issuing an Opinion Letter, three Frequently Asked Questions (FAQs) documents, and a revised Functional Affirmative Action Plan directive. We summarize these as follows:
Opinion Letter – Pay Analysis Groupings. The July 22, 2019 letter, which is issued pursuant to the OFCCP’s new initiative to provide opinion letters as guidance for the contractor community, responds to a contractor’s inquiry as to whether contractors can work with OFCCP to develop a pay analysis grouping structure that would be accepted as valid in future OFCCP audits. PAGs are composed of groups of employees who are comparable for the purpose of evaluating the contractor’s pay practices.
In the opinion letter, the OFCCP states that, as part of its efforts to work collaboratively with federal contractors, contractors are encouraged to submit their pay analysis groups for review by and to receive feedback from the agency, which would be taken into account in future compliance evaluations. The OFCCP states that it does not, however, provide any guarantees with regard to such future evaluations due to the possibility of material changes to the factors considered by the OFCCP in its initial evaluation.
FAQs. The OFCCP issued three documents addressing the topics of validation tests, the OFCCP’s use of “practical significance” in compliance evaluations, and whether project or freelance workers qualify as employees for purposes of inclusion in an affirmative action program (AAP).
- Validation of Employee Selection Procedures FAQs. The OFCCP provides guidance on what constitutes a valid selection procedure subject to the Uniform Guidelines on Employee Selection Procedures (UGESP).
- Practical Significance in EEO Analysis FAQs. According to the OFCCP, “Practical significance is a conceptual framework for evaluating discrimination cases developed primarily on statistical evidence.” The FAQs provide definitions and measures of practical significance.
- Project-Based or Freelance Workers and the Affirmative Action Program FAQs. Generally, the OFCCP states that workers performing work on a project or freelance basis are typically classified as independent contractors who are not included in an AAP.
FAAP Directive. The OFCCP permits the use of functional or business unit based affirmative action programs, which allows a federal contractor to organize its AAP according to its functional operation, rather than by establishment. In September 2018, the OFCCP proposed revisions to its Directive, which sets forth the application process by which contractors may request permission to develop and use a FAAP, as we discussed in our September 2018 E-Update. The OFCCP has now issued its final FAAP Directive. The revisions to the Directive, which took effect on June 20, 2019, are intended to “improve the application process for FAAP agreements and ease burdens associated with maintaining FAAP agreements.” According to the OFCCP, the key changes to the Directive include:
- OFCCP will no longer consider compliance history when reviewing a request for a new FAAP agreement or termination.
- The agreement term is extended to five years, up from three years.
- There will be a minimum of 36 months between compliance evaluations for a single functional unit. This is 12 months longer than an establishment review.
- Complete FAAP applications will be determined within 60 days. Historically, there was no deadline.
- OFCCP no longer requires that FAAP contractors undergo at least one compliance evaluation during the term of their FAAP agreement.