As many federal contractors know, the Office of Federal Contract Compliance Programs (OFCCP) begins a compliance evaluation (or audit) by sending to the selected contractor a letter scheduling the audit. The listing of documents that accompanies the letter (the “itemized listing”) sets forth the information and documentation the contractor is required to produce to OFCCP within 30 days of receiving a scheduling letter. Last week—after more than three years’ wait—OFCCP released a revised scheduling letter and itemized listing, which are effective for any audit initiated on or after October 1, 2014. In the itemized listing, OFCCP (i) makes substantial changes to the content and format for reporting compensation data, (ii) expands employment activity data reporting for applicants, hires, promotions, and terminations to include individual race and ethnicity, and (iii) includes documentation of recently-effective requirements under section 503 of the Rehabilitation Act and the Vietnam Era Veterans’ Readjustment Assistance Act of 1974 (VEVRAA). The initial submission of data to OFCCP is now even more important, and the 30-day deadline will be significantly harder to meet.

Below are some of the significant changes made by OFCCP:

  • Employment activity data for applicants, hires, promotions, and terminations must now be reported by individual race and ethnicity, rather than by the “minority” and “non-minority” categories and must include data on applicants for whom race and/or sex is unknown.       Curiously, OFCCP requires that contractors combine the Pacific Islander classification with the Asian classification for reporting purposes. The listing does not include “Native Hawaiian” or “Two Or More Races,” categories and thus does not align with the seven racial categories used in the annual EEO-1 report. Most contractors collect and report data in the format required by the EEO-1 report, and it is not clear if OFCCP will continue to accept data in that format.
  • Among the information that OFCCP requires contractors to produce is a definition of “promotion,” and they must also explain the basis upon which promotion data was compiled. For example, OFCCP has traditionally focused on promotions “from” a job group in analyzing such data. However, many contractors consider some personnel actions within a job group to be a promotion.
  • In a major change from prior aggregate compensation reporting requirements, contractors must submit individualized compensation data as of the date of the workforce analysis in their affirmative action program (AAP). The data required to be submitted includes hire date, job title, EEO-1 category, and job group. “Compensation” is broadly defined to include bonuses, incentives, commissions, merit increases, locality pay, or overtime, which must be reported separately for each employee as well as the hours worked in a typical workweek. Contractors may also provide additional factors used to determine compensation such as education or performance ratings. Interestingly, the listing instructs contractors to include full-time, part-time, contract, per diem or day labor, and temporary employees, many of whom are not typically included in an AAP or required to be reported on the EEO-1 form. Contractors should carefully consider this addition.
  • Contractors are also required to submit compensation policies or other documentation that explains the factors they use to determine compensation.

Additional information requested under section 503 and VEVRAA include the following:

  • the results of the evaluation of the effectiveness of outreach and recruitment efforts for qualified individuals with disabilities and for protected veterans;
  • documentation of all actions that the contractor has taken to comply with audits and reporting systems;
  • documentation of the data collection and three-year       comparisons described in 741.44(k) and 300.44(k) (job openings, jobs filled, number of disabled and protected veteran applicants and hires, and total number of applicants and hires);
  • the utilization analysis evaluating the representation of individuals with disabilities in the contractor’s workforce;
  • documentation of the veterans hiring benchmark that the contractor has adopted;
  • copies of reasonable accommodations policies and requests;
  • an assessment of personnel processes, including the date that the contractor performed the assessment, that the contractor took action, and the date of the next assessment; and
  • an assessment of mental and physical qualifications, including the date of the assessment, actions taken as a result, and the date of the next assessment.

What This Means For Contractors

OFCCP’s new Scheduling Letter and Itemized Listing increase the risk and difficulty of audits for contractors. While experienced contractors and subcontractors may find the increased documentation and reporting obligations easily manageable, we anticipate that some contractors and subcontractors will find these obligations—like those imposed by recent OFCCP directives, rules, and presidential executive orders—burdensome.

Leigh M. Nason is a shareholder in the Columbia office of Ogletree Deakins, and she chairs the firm’s Affirmative Action and OFCCP Compliance Practice Group.


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OFCCP Compliance, Government Contracting, and Reporting

The experienced attorneys in our OFCCP Compliance, Government Contracting, and Reporting Practice Group advise and defend federal contractors and subcontractors on jurisdictional, compliance, and enforcement issues relevant to government contracting, including those involving the Office of Federal Contract Compliance Programs (OFCCP).

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