OFCCP Wants to Expand its Reach for More Data Upfront in Audits: Your 3-Step Action Plan to Prepare for the Changes

Every few years, OFCCP is required to seek reapproval of its “compliance review scheduling letter” and “specified list” — the documents sent to federal contractors to let them know their organization is being audited and inform them of the information. which is requested by OFCCP. for its compliance evaluation. But this year’s proposed changes to the scheduling letter are unfortunately far from routine. They aim to greatly expand the scope of the data you will need to provide – and significantly speed up the time you need to hand over information. The good news is that this change is currently only a proposal. The bad news is that comments on the revisions must be submitted by January 20, 2023, and time is running out if you want input. What should you do about this significant impending change?

What this looming potential change means for federal contractors

If the revisions are implemented, the burden on federal contractors to respond to an initial inquiry — within 30 days — will increase dramatically. Below are some of the key proposed changes.

• Contractors will need to explain what steps you have taken to evaluate the effectiveness of “action-oriented” programs and document how you have addressed any deficiencies.
• You will be required to document your “policies and practices regarding all employment recruitment, selection and hiring mechanisms, including the use of artificial intelligence, algorithms, automated systems or other technology-based selection procedures.”
• You will also need to identify promotions as “competitive” or “non-competitive”.
• You will need to submit compensation data for the previous year in addition to the requirement for the current year. (Yes, this proposed change would mean that you would have to provide two years of reimbursement data with your first submission.)
• Factors in compensation that were previously optional (education, experience, time in current position) will be required – and will need to be submitted by the first 30-day deadline.
• Contractors will need to explain the statistical methods used to examine your compensation data and provide additional details on internal compensation reviews.
• You will need to include compensation for temporary employees – including those provided by staffing agencies.
• Educational institutions and other contractors that have “campus-like settings” will have additional reporting burdens. You will be required to provide an audit response for all workplaces in either the city or state of the facility for which notice of audit was actually given. For example, if a campus hospital is selected for an audit, the academic institution will be required to submit responses for the hospital, the university associated with the hospital, as well as all other campuses nationwide.
• Academic institutions will be required to submit copies of your Integrated Postsecondary Education Data System (IPEDS) Human Resources Survey Component Data Collection Reports.

What you should do to prepare for potential changes

Some of the proposed changes are simply extensions of obligations that already exist, but others may require extensive overhaul. For example, if OFCCP mandates that the submission of pay data include education, many federal contractors will scramble to include data points in systems that do not currently exist.

However, there are several “best practice” recommendations that we recommend federal contractors begin implementing now to put yourself in the best possible position if these changes are adopted.

1. Document the effectiveness of outreach programs, at least annually, and develop strategies and/or alternatives for any deficiencies identified.
2. Develop policies and practices related to the use of artificial intelligence.
3. Distinguish “competitive promotions” from “non-competitive promotions” in the annual adverse impact assessment.

You may also want to consider upgrading your Human Resources Information System (HRIS) to include all factors that affect compensation, including, but not limited to, education and previous work experience. To the extent that such factors explain pay, your affirmative action attorney will want to include them in the analysis model when conducting the annual compensation review.

How Fisher Phillips Responds

Our team of attorneys is developing comments to submit in response to OFCCP’s proposed rulemaking. If you have any input to provide or questions about the process, please do not hesitate to reach out to your Fisher Phillips attorney, the author of this Insight, or any attorney in the Affirmative Action and Federal Contract Compliance group. We will continue to monitor developments from the OFCCP, so be sure to subscribe to Fisher Phillips’ Insight system to get the most up-to-date information straight to your inbox.