Review Affirmative Action Plans in Response to Audit Letters

Refresher training also recommended

Allen Smith, J.D. By Allen Smith, J.D. February 21, 2018
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Review Affirmative Action Plans in Response to Audit Letters

Federal contractors that got an advance audit notice from the Office of Federal Contract Compliance Programs (OFCCP) should prepare for top-to-bottom OFCCP reviews of their affirmative action plans by conducting self-audits.

First, contractors need to find out if they have received the advance notices that there will be random audits, called corporate scheduling announcement letters (CSALs). The letters—1,000 of them—were sent on Feb. 1 to individual establishments of contractors, not to their corporate headquarters, and sometimes do not end up in HR's hands. HR can e-mail the OFCCP to find out if a CSAL was randomly sent to one of its establishments at OFCCP-DPO-Scheduling@dol.gov.

Then, employers should be on the lookout for audit scheduling letters from the OFCCP, starting March 19. Employers will have 30 days from the date scheduling letters are received to submit their affirmative action plans to the OFCCP. The OFCCP then will conduct a desk audit (a review of the materials) and either close the case or perform an onsite review.

"Organizations that receive CSALs should ensure that their affirmative action plans are complete, current and accurate," said Bill Osterndorf, president of HR Analytical Services in Hales Corners, Wis.

"Simply copying over the same action plan from year to year is a signal that the contractor is not being thoughtful," said Alissa Horvitz, an attorney with Roffman Horvitz in McLean, Va.

[SHRM members-only toolkit: Managing Federal Contractor Affirmative Action Programs]

Self-Audits

If statistical indicators show disparities in hiring or promotion, contractors should conduct more-focused reviews on those areas and resolve the problems before the OFCCP conducts a desk audit, said David Cohen, founder and president of DCI Consulting in Washington, D.C. "The worst thing to do is nothing."

This is also an excellent time for federal contractors that will be audited to conduct an internal compensation self-audit under attorney-client privilege, said Cheryl Behymer, an attorney with Fisher & Phillips in Columbia, S.C.

Check and recheck your data, as the OFCCP will scrutinize it closely, she noted. For example, during an audit, the OFCCP will conduct a data integrity check where it compares the prior year's affirmative action plan roster number, adds the hires and subtracts the terminations in the subsequent 12 months. Then it sees if the result matches the number of employees listed in the current year's roster. It's not uncommon to find disparities, which should be addressed prior to running any statistical analyses, she noted. "Good quality data is critical to accurate reports," she stated.

Horvitz added, "It is disastrous for a company in an audit to be telling OFCCP months down the road, 'Oh, sorry, we didn't proof our initial data submission carefully. We made all these mistakes. Here is new data.' "

If an entity is more than six months into the plan year when it receives the scheduling letter, it also must provide data for at least the first six months of the current affirmative action plan year. This may be the case if a contractor's affirmative action plan year starts mid-year rather than at the start of a calendar year. So, if a contractor is providing the OFCCP with data from July 1, 2016, to June 30, 2017, it also would be required to provide data from July 1, 2017, to Feb. 28, 2018, if it receives the letter in March, Horvitz explained.

Refresher Training

Line up affirmative action refresher training for hiring managers and members of senior management and highlight OFCCP's current priorities during compliance reviews, Osterndorf said. Currently, these priorities include recruitment of protected veterans and individuals with disabilities and the prevention of compensation discrimination against employees of any race, ethnicity or gender.

Refresher training does not need to include an extensive review of every section of an affirmative action plan, he said. It also should not focus on affirmative action placement goals established for minorities and women. "Placement goals are one small part of an organization's overall affirmative action responsibilities, and placement goals for minorities and females are typically not a major focus area during OFCCP compliance reviews," Osterndorf stated.

Horvitz said that refresher training should include:

  • Going over the OFCCP's actual audit scheduling letter paragraph by paragraph to emphasize what the contractor's responsibilities are.
  • Emphasizing the critical importance of record-keeping in the selection process.
  • Noting strategies for investigating adverse impact analyses.
  • Explaining how to respond to the results of the analyses.

Contractors should not tell managers they must hire individuals from a particular category, Behymer said. That would "mean using an illegal quota and making a decision based on a discriminatory reason, regardless of how well-meaning it may be," she said.

Letters Sent in Error

Some CSALs may have been sent to some contractors in error, Cohen noted.

Mickey Silberman, an attorney with Fortney & Scott in Denver, said that the OFCCP has announced significant modifications to its past audit selection protocols, including a limit of 10 establishments of a single employer being audited in this round of scheduling letters. Also, no more than four establishments of a single employer may receive audit scheduling letters out of a single OFCCP district office.

In addition, the OFCCP expanded the prior two-year grace period from being audited to a policy that no establishment with a compliance review closed in the past five years will be audited.

It's an encouraging sign that the new OFCCP leadership is seeking to balance the burden on employers in meeting their affirmative action obligations with the agency's enforcement mission, he said.

 

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