On March 31, 2022, the U.S. Department of Labor's Office of Federal Contract Compliance Programs (OFCCP) published Directive 2022-02 (Effective Compliance Evaluations and Enforcement), which implements significant changes to OFCCP's audit and enforcement processes. OFCCP's issuance of Directive 2022-02 caps off a busy month in which the agency also issued a pay equity directive and proposed regulations that would modify its enforcement process and applicable standards. Directive 2022-02 is effective immediately, and continues OFCCP's shift away from the Trump administration's more contractor-friendly policies and approach to enforcement.
Background
OFCCP administers and enforces various equal employment opportunity laws, and conducts compliance evaluations of federal contractors to ensure they meet their nondiscrimination and affirmative action obligations. Directive 2022-02 specifically addresses compliance evaluations, and states that it "clarifies OFCCP's policies regarding scheduling of contractors for compliance evaluations, including enhancing the agency's neutral scheduling procedures to reach a broader universe of federal contractors and eliminating delays in scheduling" and "describes contractors' obligations to provide timely submission of complete Affirmative Action Programs (AAPs) and support data, supplemental information, and access to employees, applicants, and other witnesses."
Directive 2022-02 rescinds four prior directives issued under former OFCCP Director Craig Leen: the Contractor Recognition Program (Directive 2018-06), Transparency in OFCCP Compliance Activities (Directive 2018-08); Efficiency in Compliance Evaluations (Directive 2020-02); and Certainty of OFCCP Policies and Practices (Directive 2021-02). These directives memorialized Director Leen's so-called "CERT principles"—Certainty, Efficiency, Recognition and Transparency—advanced to improve agency governance and processes, and to ensure federal contractors understood OFCCP's expectations. Directive 2022-02 signals a shift back to an era of fewer self-imposed constraints on OFCCP's enforcement activities.
Key Takeaways from Directive 2022-02
- Contractors will have less advance notice of, and less
time to respond to, audits. The directive rescinds
OFCCP's practice of authorizing an automatic 30-day extension
for submitting affirmative action data (if the contractor submits
narrative AAPs within the initial 30-day period), such as key
compensation, employment activity and other supporting data. Under
the directive, contractors will be granted an extension to submit
supporting data responsive to the itemized listing that accompanies
OFCCP scheduling letters only in specific "extraordinary
circumstances," including: (1) extended medical absences of
key personnel; (2) death in the immediate family of key personnel;
(3) localized or company-specific disaster affecting records
retrieval such as a flood, fire or computer virus; (4) unexpected
military service absence of key personnel; and (5) unexpected
turnover or departure of key affirmative action official.
The directive also eliminates the automatic 45-day scheduling delay after the issuance of a Corporate Scheduling Announcement List (CSAL), which identifies the contractor establishments that will be audited in the coming fiscal year. The directive does state that "OFCCP will continue to provide information about its scheduling methodology" and "will continue to post a CSAL to notify contractors that they are included in OFCCP's scheduling list," both of which were welcome developments for contractors in recent years.
By doing away with the 30-day automatic extension and 45-day post-CSAL scheduling delay, the directive leverages contractors' obligation to certify compliance in the OFCCP Contractor Portal on an annual basis. According to the DOL, "The directive makes clear that when covered contractors use the Contractor Portal to certify compliance with their affirmative action program obligations annually, they are certifying that they have developed and maintained complete programs in compliance with OFCCP requirements." Indeed, the directive touts that OFCCP is "Promoting a proactive approach to compliance where federal contractors actively self-audit employment systems to identify and resolve problems in their employment practices."
- Contractors with multiple establishments under audit
can expect OFCCP to better coordinate across district and regional
offices. Currently, contractors with multiple
establishments under audit deal individually with the regional and
district offices handling the audits, with little coordination
between the audits by OFCCP. The directive states that going
forward, the agency will "Implement[] a coordinated,
cross-regional approach to conducting multi-establishment
compliance reviews" and "coordinate evaluations of common
policies and patterns across establishments" where a
contractor has multiple establishments selected for audit.
- Changes are coming to OFCCP's scheduling
methodology. According to the directive: "OFCCP
is enhancing its neutral scheduling procedures for selecting
federal contractors for compliance evaluations to reach a broader
universe of contractors and subcontractors and to identify those
with greater risk factors for noncompliance with nondiscrimination
and affirmative action requirements." This could be a welcome
development for contractors who seem to find themselves frequently
under audit, but a warning sign for contractors (and, crucially,
subcontractors) who historically have had the good fortune of
avoiding OFCCP scrutiny. While contractors don't yet know what
these changes will be, OFCCP commits to "continue to provide
information about its scheduling methodology to explain how the
agency neutrally selects contractors for a compliance
evaluation."
- Potentially broader scope of requests for supplemental
data in audits. The directive reiterates OFCCP's
policy that the agency may request supplemental data in compliance
evaluations, including for a period of two years preceding the date
of the scheduling letter. While contractors are accustomed to
supplemental requests for documents and information in an OFCCP
audit, the directive also articulates the agency's asserted
right to request data created after the date of
the scheduling letter: "To fully investigate and understand
the scope of potential violations, the agency may also request to
examine records, including employment activity data such as hiring
and compensation data created after the date of the Scheduling
Letter to determine whether the practices in question have ended
and to evaluate whether the practice has continued." Although
OFCCP's right to access such data in audits has been the
subject of administrative proceedings in which OFCCP prevailed, the
right has not been conclusively established (through regulation or
otherwise), and may be a point of contention in audits moving
forward.
The directive also states that OFCCP will "reasonably tailor the request to the areas of concern, allow contractors a reasonable time to respond, and include the basis for the request." This commitment is a silver lining for contractors, and provides a potential tool for them to use in pushing back against agency requests in compliance evaluations that may be overbroad, impose unreasonable deadlines or lack an apparent substantive basis.
What This Means for Contractors
Directive 2022-02 is yet another signal that the Biden administration is taking a more aggressive enforcement posture toward affirmative action compliance. Contractors are expected to be in compliance at all times, and as a result of that compliance, are presumed to not need much advance notice of compliance evaluations or additional time to gather supporting documentation responsive to the itemized listing that accompanies OFCCP scheduling letters. Coupled with the new contractor certification requirement, Directive 2022-02 further emphasizes the importance of ongoing affirmative action compliance for federal contractors, who must be prepared to produce data on a tight deadline and with little advance notice in the event they are selected for audit. Contractors who believe they may need to take steps to get into compliance should consider consulting with counsel sooner rather than later.
For More Information
If you have any questions about this Alert, please contact Christopher D. Durham, Elisabeth Bassani, any of the attorneys in our Employment, Labor, Benefits and Immigration Practice Group or the attorney in the firm with whom you are regularly in contact.
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