OFCCP Directives Will Result in More Audits

Allen Smith, J.D. By Allen Smith, J.D. December 17, 2018
OFCCP Directives Will Result in More Audits

​The Office of Federal Contract Compliance Programs (OFCCP) has issued new directives that will result in speedier audits of federal contractors in 2019 and, thus, more of them.

But employers may not want to move as fast as the agency and should instead be selective about when to fast-track their resolution of audits, legal experts say.

Alissa Horvitz, an attorney with Roffman Horvitz in McLean, Va., said the expected surge in audits will "put a tremendous short-term strain on multi-establishment employers that have only one or two people in charge of their AAPs [affirmative action programs]. Some larger employers that may have scaled back their internal compliance functions in the past should start to ramp up."

Fewer Onsite Audits, More Desk Audits

In one Nov. 30 directive, the agency abandoned the Obama administration's active case enforcement procedures. These procedures had mandated onsite audits for randomly selected contractors, even if there were no indicators of technical violations of discrimination, said Connie Bertram, an attorney with Polsinelli in Washington, D.C. Under the active case enforcement procedures, agency officials hoped that contractors would comply fully with their obligations because there would be a greater risk that they would be fully audited.

The OFCCP believes many federal contractors aren't preparing AAPs, said David Cohen, president of DCI Consulting Group Inc. in Washington, D.C., and he predicted it will go after these contractors in future audits. But, he noted, the total number of audits dwindled under the active case management procedures because full audits are so much more time-consuming than just having so-called desk audits. All audits start with a scheduling letter. In the letter, there are documents that the audited contractor must submit to the OFCCP, such as AAPs. Once the contractor provides the documents to the agency, the OFCCP compliance officer conducts an audit of them from his or her desk (the "desk audit"), rather than onsite, before proceeding to the next step, if any.

Now that the agency has discontinued active case enforcement, it will rely more on desk audits, quickly closing them when there is no evidence of systemic discrimination. "Quickly" is a relative term, though. Under the new directive, desk audits may be resolved in just a few months rather than the years it took to complete audits under active case management procedures.

As a result, HR professionals will see an uptick in audits in the new year, he said. "The good news is if you're in compliance and there's no evidence of systemic discrimination, that audit will be less intense and probably closed" much sooner than audits have been in recent years.

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

Early Resolution Options

Another Nov. 30 directive created early resolution procedures to further accelerate the audit process.

Cohen said this directive has three main takeaways:

  • If there are minor technical issues in a desk audit, the agency now will notify the contractor and, if it's willing to make a change, the audit will be resolved quickly.
  • With alleged violations of nondiscrimination requirements, such as failing to meet record-keeping requirements, at a facility, a contractor could agree to resolve that issue for all facilities. The contractor would provide progress reports to the OFCCP and in exchange, the agency wouldn't conduct an audit of the original facility for five years. But the other facilities would be subject to being audited. "I don't get what the upside is" for contractors from this part of the directive, Cohen said.
  • In a case of alleged discrimination at a facility, a contractor can resolve that issue at all facilities, provide progress reports and get a five-year moratorium on audits for all facilities.

Context Matters

"The OFCCP wants these systemic cases fast-tracked within six months as long as you agree to fix the practice nationwide and agree to monitoring for a five-year period," Cohen noted. "It's a sweet deal, depending on what the issue is," he said. But don't rush into agreeing to early resolution procedures on discrimination issues without weighing the pros and cons and considering when the procedures might benefit contractors, he cautioned.

If the audit concerns a practice that the contractor can change swiftly, it may want to take advantage of early resolution procedures. But if the contractor is being audited for systemic discrimination in how it pays professionals and executives, for example, it would have to provide progress reports to the agency for five years.

In the meantime, the White House might switch parties and this directive could be rescinded, Cohen noted. Then the OFCCP might decide it wants to reopen the matter at other facilities, he said.

In addition, even if there isn't a flip-flop on this directive in the future, there might be a corporatewide review if the agency alleges a breach of the agreement, opening the contractor to substantial risk, said Lauren Hicks, an attorney with Ogletree Deakins in Atlanta. "The early resolution procedures are a creative way for OFCCP to broaden the impact of its investigations," she said.

However, Bertram recommended that federal contractors consider participating in the program if they can expeditiously resolve the agency's concerns, particularly when discrimination is alleged. There nevertheless "are certainly going to be situations where the OFCCP and contractors will be at loggerheads over the methodology or findings of OFCCP, precluding an early resolution," she said.

The terms of the five-year period should be carefully considered and negotiated, she added.

A contractor might consider entering early resolution procedures with the agency even for nondiscrimination cases, said Cheryl Behymer, an attorney with Fisher Phillips in Columbia, S.C. This is particularly true if the contractor already was in the process of or had planned to update its record-keeping database systems. But she said that if the contractor does, it should try to negotiate for a five-year moratorium for all of its facilities. "There is some precedent for this approach based on recent OFCCP resolutions," she stated.

Opinion Letters

In a third directive on Nov. 30, the OFCCP announced it will start issuing opinion letters and create a help desk.

While Hicks said the opinion letters should be useful, she noted that, "One practical concern is that as guidance is more spread out between the regulations, FCCM [Federal Contract Compliance Manual], directives, FAQs, technical assistance guides and now opinion letters, it can be more challenging to remain abreast of OFCCP's expectations."



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