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David Morgan

David Morgan

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David Morgan is blog contributor at DCI Consulting Group, Inc.

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During a recent release of the revised Section 503 and VEVRAA FAQs on the OFCCP website, the agency outlined their interpretation of how non-responses to the invitation to self-identify as an individual with a disability should be treated in an analysis.  As most contractors are aware, under the Section 503 regulations, each covered federal contractor is required to “invite each of its employees to voluntarily inform the contractor whether the employee believes that he or she is an individual with a disability.”  In March 2014, DCI staff members wrote a blog outlining the concerns with non-responses to the disability self-identification form.  DCI is adamant that it would be improper to include those who do not complete the survey as a part of the utilization analysis.

In the recent FAQ release, OFCCP indicated that non-responses should essentially be treated as “no” responses, and should be reflected in the disability utilization analysis totals.  The full FAQ is outlined below:

How should non-responses to the invitation to self-identify as an individual with a disability be treated when conducting the utilization analysis?

The regulations require contractors to conduct an annual utilization analysis to determine the representation of people with disabilities in each job group, or if it has 100 or fewer employees, in its workforce as a whole. To calculate the percentage of a job group (or workforce) that is comprised of people with disabilities contractors should use the same methodology used to calculate the percentage of a job group (or workforce) that is comprised of any other specific demographic group. Specifically, contractors should compare the number of individuals identified as having a disability to the total number of employees in the job group. Non-responses should be counted solely in the job group (or workforce) total, unless the contractor has actual knowledge that a particular non-responsive individual(s) has a disability. The contractor may count as an individual with a disability any individual who it actually knows to have a disability, whether or not the individual chose to self-identify.
http://www.dol.gov/ofccp/regs/compliance/faqs/503_faq.htm#Q49

If OFCCP’s expectation is that non-responses should be treated as “no disability” responses when the actual disability status is unknown, it would be logical to assume that this approach is consistent with how other federal agencies approach non-response information.   DCI investigated how the United States Census Bureau approached non-responses to disability status questions during their assimilation of disability data for the American Community Survey (ACS).  The ACS is a mandatory, ongoing statistical survey reaching over 3.5 million households per year.  It collects information on demographic, economic, social, housing, and financial characteristics.  It is also the source of OFCCP’s mandated disability utilization goal of 7%.

According to a report outlining measurement of disability in the ACS, the Census Bureau handles invalid and missing disability data in the ACS by filling-in those data points with the data points they would expect, based on the general pattern of responses in the survey.  More specifically, respondents who are missing disability data are allocated best guess responses based upon comparisons to similar respondents in terms of age, sex, employment status, and school enrollment status.  Imputation techniques such as this are very common in survey research and serve to address some of the consequences of encountering missing data that we wrote about previously, such as “censoring” where the pattern of “missingness” is closely related to the missing variable—a phenomenon that cannot be ignored, especially when collecting disability-related information in the employment context.  When imputation is not feasible or when a variable has too many missing values, researchers may instead remove missing cases or entire variables from the data.  Alternatively, a researcher may consider a weighting scheme for variables according to the rate of missing data.  It is important to note, however, that OFCCP does not endorse any of these approaches and will expect contractors to essentially treat disability status as a binary outcome (i.e., “yes” or “no”).  We contend that this approach is flawed and may impede the ability of contractors to reasonably assess whether and where impediments exist in their workforce.

Limitations with comparing ACS Survey to employment context

It is clear that the ACS did not simply count non-responses as “not disabled” in their estimates of disabled individuals in the population.  It is also important to note that the ACS, due to its association with the Census Bureau, would likely receive a higher percentage of individuals who would choose to self-identify their disability status than an employer’s voluntary self-identification form.  American citizens are legally obligated to answer all of the questions as a part of the ACS, as accurately as possible, per the relevant laws at Title 18 U.S.C Section 3571 and Section 3559, which amends Title 13 U.S.C. Section 221.  Conversely, the disability self-identification form offered to applicants and employees is considered voluntary and completion of it is not legally mandated.  In light of this difference, it is logical to assume a higher percentage of individuals would opt not to complete the form in a voluntary employment context than individuals that chose not to identify disability status in the ACS.  Depending on which metric is used, there were between 2.6%-5.4% ACS participants who did not identify disability status.  Contractors would likely expect to see a higher percentage not identifying disability status in their Affirmative Action data.

By Joanna Colosimo, Senior Consultant and David Morgan, Senior Consultant, DCI Consulting Group

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OFCCP is charging full steam ahead as their semiannual regulatory agenda forecasts the imminent publication of four Notices of Proposed Rulemaking (NPRMs) which are tremendously important to the contractor community. In their agenda, issued to the public on May 23, OFCCP plans to publish NPRMs to implement President President Obama’s Executive Order (EO) 13665 and the President’s compensation data collection directive, Affirmative Action requirements for construction contractors and subcontractors, and the Sex Discrimination Guidelines.

Executive Order 13665 and Presidential Memorandum on Pay Data Collection

In our previous Alert, we discussed the federal rule-making process and the fact that OFCCP submitted the NPRM for the Pay Data Collection Tool to OMB for initial review on May 5, 2014. According to the agenda, OFCCP plans to have the NPRM for Executive Order (EO) 13665 and the related Presidential Memorandum approved and published in the Federal Register by August and September 2014, respectively.  The regulations surrounding EO 13665 and the Memorandum would prohibit federal contractors from retaliating against employees who discuss their wages with each other AND require federal contractors to submit summary personnel compensation data by race and sex on an annual basis.

Sex Discrimination Guidelines 

Also by September 2014, OFCCP aims to publish a NPRM that would revise the 30-year-old Sex Discrimination Guidelines (41 CFR 60-20). According to the agency, this update will “create sex discrimination regulations that reflect the current state of the law in this area.”

AAP Requirements for Construction Contractors and Subcontractors

OFCCP has set a target of January 2015 to have a NPRM published that would redefine the affirmative action plan requirements for federal and federally assisted construction contractors and subcontractors. In order to ensure construction contractors are addressing areas of underutilization for women and minorities, the NPRM will propose rules in which construction contractors and subcontractors employ a new method for establishing affirmative action placement goals as well as other updates to the current affirmative action requirements that reflect today’s labor market in the construction industry.

The Journey Ahead

Remember that after a proposed rule is published in the Federal Register for the first time, there is a public comment period (typically 60 days) during which contractors can provide feedback to the agency concerning the content and estimated time burden of the proposed rule. Following the comment period, OFCCP will redraft the rule and send it to OMB for a second review. If OMB approves, then the final regulations will be published and become effective shortly thereafter. The passage through these waters may seem precarious and a bit obscure, but we will serve as your outrigger to offer stabilization and guidance along the way. Keep a look out.

 

By Jeffrey Henderson, M.P.S, Analyst and David Morgan, M.S., Senior Consultant at DCI Consulting Group

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Today, April 8, 2014, the White House hosted a press conference in honor of Equal Pay Day.  Equal Pay Day symbolizes how far into 2014 women must work to earn what men earned in 2013, based on national pay averages.  Lilly Ledbetter, the namesake of the Lilly Ledbetter Fair Pay Act that was signed by President Obama in 2009, kicked-off the festivities by speaking about her experiences at Goodyear Tire.

After a speech highlighting the pay gap, President Obama then signed the Executive Order prohibiting federal contractors from retaliating against employees who discuss their pay with each other.  Furthermore, he is issuing a Presidential Memorandum instructing the Secretary of Labor to establish new regulations requiring federal contractors to submit summary compensation data by sex and race.  According to the official White House Blog, this “will help employers take proactive efforts to ensure fair pay for all their employees.” The President further called on Congress to vote “yes” for the Paycheck Fairness Act later this week. Please find the links for the Executive Order, Memo, and Fact Sheet below:

Executive Order

Memo

Fact Sheet

By: Joanna Colosimo, M.A., and David Morgan, M.S., Senior Consultants at DCI Consulting Group

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OFCCP onsite visits had previously been on the decline, and were virtually non-existent as recently as fiscal year end 2013. However, onsite visits appear to be back, and OFCCP is focusing on compensation. This is not surprising given the agency’s compensation enforcement initiative catapulted by Directive 2013-03 (formerly known as Directive 307). The onsite reviews are typically preceded by frequent data requests for compensation variables during the desk audit.

The agency’s purpose as it relates to compensation-focused onsite investigations appears to be two-fold. First, investigators are interested in collecting information for off-site analysis, such that pay analysis groupings (PAGs) can be developed and analyzed using regression analysis. Recall that PAGs are Directive 2013-03 terminology meaning “group[s] of employees (potentially from multiple job titles, units, categories and/or job groups) who are comparable for purposes of the contractor’s pay practices.” This type of onsite information collection may also be accompanied by close examination of positions in the workforce, including verifying that employees are doing work consistent with their job titles and descriptions. Second, investigators are interested in gathering evidence of compensation discrimination that is anecdotal in nature. This is apparent in the Federal Contractor Compliance Manual, which is the OFCCP procedural guide to conducting compliance evaluations, and through our awareness of OFCCP’s desire to schedule numerous manager and employee interviews while onsite.

In addition to the typical pay enforcement approaches that OFCCP has historically taken, the agency continues to examine contractors’ steering practices (i.e., whether or not certain groups of employees are disproportionately placed into certain jobs or families of jobs). It is clear that recent onsite visits are no exception to this enforcement strategy. Although the Department of Labor does not track OFCCP onsite visits in its public enforcement database, it is important to note that they are trending upward and are likely to continue to increase in fiscal year 2014.

by David Morgan and Keli Wilson, Senior Consultants, DCI Consulting Group

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Beginning March 24, 2014, federal contractors will be required to collect disability information from their workforce on an annual basis and use those data to conduct disability utilization analyses. Under the new Section 503 regulations, each covered federal contractor is required to “invite each of its employees to voluntarily inform the contractor whether the employee believes that he or she is an individual with a disability.” As the regulations specifically use the word “invite,” contractors are required only to extend an invitation to an employee, and employees cannot be forced to complete the self-identification form. Therefore, it is highly likely that contractors will have disability status information on only a subset of the workforce. Unlike utilization analysis conducted under EO 11246 in which a contractor has the race/ethnicity and sex of all of its employees (due to a requirement to visually identify race/ethnicity and sex of those who do not disclose such information), utilization analysis under Section 503 will be conducted on partial workforce data.

 

A further wrinkle pertains to the response options that may be chosen if an individual chooses to complete the self-identification. Instead of having only two options (yes/no), those choosing to complete the form have three response options:

  • YES, I HAVE A DISABILITY (or previously had a disability)
  • NO, I DON’T HAVE A DISABILITY
  • I DON’T WISH TO ANSWER

Below are some basic questions to consider before reading the rest of this blog to get you thinking about some self-identification challenges with the new disability form and process.

  1. What percent of the workforce will accept the invitation to self-identify? (We are estimating that, depending upon the industry, it will range from 10% – 40%.)
  2. Are the employees who complete the self-identification form more likely to be disabled or non-disabled? (We project that they are more likely to be disabled.)
  3. How should employees who do not self-identify be treated in the utilization analysis? (We and OFCCP remove them from the applicant adverse impact analysis.)
  4. For analysis purposes, should employees choosing “I don’t wish to answer” be treated differently from those who do not complete the form?

Now that your mind is sufficiently exercised, let’s discuss why data collected using OFCCP’s prescribed Voluntary Self-Identification of Disability form may pose considerable analytic difficulty for federal contractors trying to conduct disability utilization analyses.

 

OFCCP has set a 7% goal against which federal contractors will be expected to compare the percentage of their workforces that are disabled. As noted earlier, there are two issues with conducting utilization analyses based on the disability data to be collected that may limit the reliability of the percentages calculated by federal contractors:

  1. A portion of the workforce will not complete the form (i.e., survey non-response)
  2. A portion of those responding will select ‘I DON’T WISH TO ANSWER’ (referred to as IDWTA)

Assumptions made about the types of employees choosing not to complete the form and the types of employees selecting the IDWTA will influence the utilization statistics observed and the conclusions about whether goals are met. In the following illustration, we simulate different types of response patterns to highlight the different conclusions at which one may arrive depending on what one assumes about missing and IDWTA data and how those data are treated in the calculation of utilization percentages.

 

Baseline Simulation Data

 

As a basis for our illustration, we present a hypothetical contractor establishment with 1,000 employees in the Professionals job group. Of the 1,000 employees in this job group, 926 do not have a disability and 74 do have a disability.

 

Ideal Utilization Analysis

 

In an ideal world (presumably, the one which OFCCP envisions), 100% of the workforce responds to the invitation to voluntarily self-identify in either the affirmative [YES, I HAVE A DISABILITY (or previously had a disability)] or the negative [NO, I DON’T HAVE A DISABILITY]. In such a case, 926 of the employees in the job group would indicate they do not have a disability and 74 would indicate that they do have a disability (or have had one in the past). Thus, our utilization analysis would show that 7.4% of the total job group has identified as having or having had a disability. The 7.4% figure can be meaningfully compared to the 7% utilization goal to conclude that the contractor is exceeding that goal.

 

Scenario

-100% response rate

-0% choose IDWTA

Disability Status

No Response

Calculation

Utilization %

Yes

No

IDWTA

Scenario 1: Ideal World

74

926

0

0

74/1000

7.40%

 

What a straightforward, potentially useful analysis! Let’s now consider some more realistic scenarios.

 

Utilization Analysis with “I DON’T WISH TO ANSWER”

 

It is unlikely that all individuals providing a response will wish to self-identify as either disabled or not disabled. In fact, that is the precise reason for the IDWTA option provided on the self-identification form. The fact that individuals may not want to self-identify is consequential to the calculation of utilization, as how such individuals are treated in the analysis will influence the utilization percentage.

 

Imagine a scenario in which 20% of those who are disabled and 20% of those who are not disabled choose the IDWTA option. Utilization percentages look very different depending on whether employees not wishing to identify are included in the denominator of the utilization calculation or excluded from the analysis. We present the two different utilization scenarios below.

 

Scenario

-100% response rate

-20% of disabled choose IDWTA

-20% of non-disabled choose IDWTA)

Disability Status

No Response

Calculation

Utilization %

Yes

No

IDWTA

Scenario 2: IDWTA included

59

741

200

0

59/1000

5.90%

Scenario 3: IDWTA excluded from analysis

59

741

200

0

59/800

7.40%

 

As is clear, if those choosing the IDWTA option are assumed to not be disabled and are included in the denominator of the calculation, the utilization percentage falls well short of the 7% goal (which we know is also well below the actual utilization in the hypothetical job group).

 

The issue of how to treat those who do not wish to identify becomes even more complicated if we do not assume that equal percentages of disabled employees and non-disabled employees choose the IDWTA option. For example, it is possible that a higher percentage of individuals with disabilities choose the IDWTA option compared to those without disabilities.

 

Imagine a scenario in which 20% of those who are disabled choose the IDWTA option, but only 10% of those who are not disabled choose the IDWTA option. As shown below, if such a case were to occur using our example data, the utilization percentage would fall short of OFCCP’s goal regardless of whether the denominator included the individuals not wishing to identify.

 

Scenario

-100% response rate

-20% of disabled choose IDWTA

-10% of non-disabled choose IDWTA

Disability Status

No Response

Calculation

Utilization %

Yes

No

IDWTA

Scenario 4: IDWTA included

59

834

107

0

59/1000

5.90%

Scenario 5: IDWTA excluded from analysis

59

834

107

0

59/893

6.61%

 

Utilization Analysis with Survey Non-Response

 

To make the scenario even more realistic, and substantially more complex, consider the fact that a portion of the employees in the job group will choose not to complete the form. Because this is a voluntary invitation, it is unlikely that all employees will provide a response to the survey. This means that our utilization analysis will not only be affected by the number of individuals choosing the IDWTA option, but also by those not providing any response. Again, the treatment of such individuals in the analysis will influence the utilization percentage.

 

To illustrate, assume that the survey yields a 40% response rate. In other words, 600 individuals do not complete the survey, and there are 400 individuals falling into one of the three response categories. Also assume that the ‘non-responders’ are found equally in the individuals with disabilities and non-disabled groups. Last, assume that of those deciding to provide a response, 20% of both individuals with disabilities and those who are non-disabled choose the IDWTA option (as in Scenario 2 and Scenario 3). As shown in the table below, one would arrive at three very different conclusions, depending on who was included in the denominator of the utilization analysis. Scenario 8 is the only case in which one would correctly conclude that the contractor meets the 7% utilization goal set by OFCCP. Calculations under Scenario 6, in which those who didn’t respond and those who chose the IDWTA option are assumed to be non-disabled and are included in the denominator, erroneously suggest that the contractor has a long way to go to meet the 7% goal.

 

Scenario

-40% of disabled and non-disabled respond

-20% of disabled responders choose IDWTA

-20% of non-disabled responders choose IDWTA

Disability Status

No Response

Calculation

Utilization %

Yes

No

IDWTA

Scenario 6: IDWTA & Non-Responders included

24

296

80

600

24/1000

2.40%

Scenario 7: Non-Responders excluded from analysis

24

296

80

600

24/400

6.00%

Scenario 8: IDWTA & Non-Responders excluded from analysis

24

296

80

600

24/320

7.50%

 

As with the case of those who choose the IDWTA, it is unlikely that there will be equal percentages of disabled and non-disabled individuals choosing not to respond. More likely is the scenario in which a certain percentage of disabled individuals choose not to respond, a certain percentage of non-disabled individuals choose not to respond, and those percentages are not equal to one another. Such a case coupled with the unlikelihood of equal percentages of disabled and non-disabled individuals choosing the IDWTA option make the analyses all the more complicated.

 

As a final illustration, assume the survey yields a 40% response rate overall, but that the 40% response rate is produced by 39% of non-disabled responding (total of 361 responding) and 53% of disabled responding (total of 39 responding). Further assume, as in Scenarios 4 and 5, 20% of the disabled responders choose IDWTA (8 choose IDWTA), whereas only 10% of the non-disabled responders choose IDWTA (36 choose IDWTA). The table outlining Scenario 9 through 11 highlight the VERY different utilization percentages calculated, depending on who is included in the denominator of the calculation. Only Scenario 10 shows a realistic approximation of the true job group utilization outlined in Scenario 1. Scenario 9 shows substantial under-utilization and Scenario 11 shows substantial over-utilization. Thus, it should be clear that realities surrounding non-response and IDWTA choices will have material influence on the utilization percentages.

 

Scenario

-53% of disabled  respond

-39% of non-disabled respond

-20% of disabled responders choose IDWTA

-10% of non-disabled responders choose IDWTA

Disability Status

No Response

Calculation

Utilization %

Yes

No

IDWTA

Scenario 9: IDWTA & Non-Responders included

31

325

44

600

31/1000

3.10%

Scenario 10: Non-Responders excluded from analysis

31

325

44

600

31/400

7.75%

Scenario 11: IDWTA & Non-Responders excluded from analysis

31

325

44

600

31/356

8.71%

 

To our knowledge, OFCCP has not yet published guidance on how they will conduct the analysis. DCI is adamant that it would be improper to include those who do not wish to identify in the denominator without accounting for the fact that many of them are likely disabled. Similarly, DCI is also adamant that it would be improper to include those who do not complete the survey in the denominator without accounting for the fact that many of them are likely disabled. A more reasonable option may be assuming that the percentages of disabled/non-disabled in the IDWTA and non-response categories match the percentages observed based on the affirmative and negative responses. Alternatively, it may be appropriate to (a) assume that the IDWTA and non-response samples comprise a percentage disabled equal to OFCCP’s goal of 7% and (b) calculate overall job group percentages based on that estimate.

 

In closing, until OFCCP shares guidance on appropriately conducting a utilization analysis based on the Voluntary Self-Identification of Disability form, it is recommended that contractors conduct such an analysis based solely on the data collected that indicate the affirmative [YES, I HAVE A DISABILITY (or previously had a disability)] and negative [NO, I DON’T HAVE A DISABILITY]. Stay tuned for formal DCI recommendation on how to best address the issues presented here.

 

by Jana Garman, M.A., Associate Consultant; Kayo Sady, Ph.D., Senior Consultant; and David Cohen, President, DCI Consulting Group

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The year 2013 has been anything but quiet on the OFCCP enforcement front for the federal contracting community. Contractors have certainly been kept on high alert over the past 12 months with the release of the final regulations for protected veterans and individuals with disabilities, the new Federal Contractor Compliance Manual (FCCM), Directive 307 (which has been re-numbered as Directive 2013-03), and a 16-day government shutdown. As we approach the end of 2013, here is a look back at some of the most prominent cases, as well as updated OFCCP enforcement data.

According to the US Department of Labor’s enforcement data, OFCCP compliance evaluations have resulted in a total of 96 financial settlements for FY2013. Allegations of hiring discrimination, which comprised approximately 42% of the financial settlements, were the most common. Of the hiring cases, 30 of the 40 settlements (75%) were coded as “systemic” discrimination. Compensation cases (19%) were the second most common financial settlements, followed closely by accommodation cases (18%). Cases involving promotion (2%) and termination (1%) made up only a small fraction of financial settlements.

The year has also brought about some interesting cases that federal contractors should be familiar with. Here is a brief summary of some of the more interesting OFCCP cases for FY2013.

Goodwill Industries of Southern California (April 2013) and ResCare Homecare (August 2013)

The year included several cases that focused on non-traditional victims of discrimination. The OFCCP made allegations that Goodwill’s selection process systemically discriminated against men, favoring female applicants for entry-level positions. Goodwill agreed to pay $130,970 in back wages and make 18 job offers to qualified men as part of a conciliation agreement. Similarly, OFCCP made allegations of systemic hiring discrimination against ResCare Homecare in a case involving 77 male applicants who were rejected for in-home care positions. ResCare agreed to pay $92,059 in back pay and interest to the alleged victims. In a press release, OFCCP stated that after contacting a sample of ResCare clients, support was not found for ResCare’s claim that female clients preferred female caregivers.

Tufts Associated Health Plans (July 2013)

Tufts agreed to pay $372,739 to 12 Asian, Hispanic, and African American workers following an investigation by OFCCP. The agreement settles allegations that the Massachusetts-based federal contractor retaliated against employees that OFCCP had determined were victims of discrimination in an earlier investigation. This settlement follows a prior May 2009 settlement related to alleged discriminatory hiring practices, in which Tufts agreed to hire minority applicants as customer service representatives. On March 10, 2010, OFCCP received a complaint of discrimination from an individual hired under that agreement, alleging he had been terminated due to his OFCCP class membership status. A follow-up OFCCP investigation of this claim resulted in the identification of 12 affected class members, according to the agency. In addition to the monetary settlement, the company will also provide equal employment opportunity training to its managers.

VF Jeanswear Limited (August 2013)

In what was arguably one of the most significant rulings of the year, an Administrative Law Judge (ALJ) ruled against OFCCP in its allegations that the VF Jeanswear hiring process resulted in disparate impact against non-Asian applicants. The ALJ ruled in favor of VF and stated that “non-Asian” is neither a race nor an ethnic group. Ultimately, this ruling indicated that aggregating total minority for the purpose of disparity analyses is not appropriate or acceptable.

Medtronic Interventional Vascular Inc. (September 2013)

In the first systemic compensation case filed under Directive 2013-03, Medtronic agreed to pay $290,000 in back pay and interest to 78 entry-level Hispanic workers. OFCCP alleged that disparities beginning in April 2008 between Hispanic and white senior production associates served as evidence of systemic pay discrimination.

Baltimore Gas and Electric Co. (September 2013)

OFCCP alleged systemic hiring discrimination against Baltimore Gas and Electric (BGE), who agreed to pay $350,000 in financial remedies to 58 black applicants. The alleged victims were rejected for positions within three utility trainee job categories between 2007 and 2008. The President and CEO of BGE stated that the disparity stemmed from a prior heavy reliance on employee referrals for these job categories (among others). The company also claimed that it had already implemented a number of improvements to the hiring process by the onset of the 2009 audit.

by Rachel Gabbard, M.A., HR Analyst and David Morgan, Senior Consultant, DCI Consulting Group

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In light of the recent settlement with G&K, DCI is noting trends in current OFCCP audits related to personnel steering issues. G&K Services Co. settled claims of hiring discrimination with the OFCCP earlier this month, including $265,983 in back pay for 59 women. As indicated by the OFCCP press release, the conciliation agreement between G&K and the OFCCP specified that G&K steered females into lower-paying positions, regardless of their qualifications. Interestingly, the OFCCP asserted that in addition to steering females to lower paying positions, G&K was also discriminating against male applicants in the hiring process.

Importantly, in 2012, OFCCP officials discussed enforcement of contractors’ steering practices with respect to disproportionately placing protected groups of applicants or employees into specific jobs. It was subsequently not surprising that Directive 307 (re-numbered on 9/16/2013 as Directive 2013-03) encouraged compliance officers to look at trends that may result in the practice of systemically steering employees who are members of a protected class toward lower paying jobs. Moreover, the recently revised Federal Contract Compliance Manual (FCCM), in the context of corporate management compliance evaluations (CMCEs), indicates that during the onsite review, compliance officers should review personnel files and conduct interviews, to ensure any concentrated race/gender groups in certain positions is not a result of “steering” those groups before or after hiring.

DCI has noted that in recent audits, OFCCP compliance officers are requesting comprehensive items such as several years’ worth of applicant flow logs, as well as exhaustive, multi-factor compensation variables. Applicant flow data may be requested even if a statistical indicator is not flagged in the audit submission documents. Furthermore, compensation data includes items such as starting salary and related previous experience data, which are often difficult data points for contractors to uncover. For example, most contractors do not have years of related previous experience readily available in their HRIS system for the entire workforce. In some circumstances, contractors are being asked to obtain paper copies of applications and code prior related experience, for example, even if prior related experience is irrelevant to compensation in some groups.

OFCCP compliance officers are also examining shift assignments or job openings that are related to any positions available, to determine if steering could be a problem. Contractors should avoid pitfalls of posting jobs that include “any position”. Using defined requisition systems where applicants choose the jobs and shifts to apply to may help with avoiding potential steering issues.

by David Morgan, M.S., Senior Consultant and Joanna Colosimo, M.A., Senior Consultant, DCI Consulting Group

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The US Department of Labor makes enforcement data collected by the OFCCP searchable to the public. Although the recent government shutdown has prevented the agency from updating the database to include settlements through the end of the federal fiscal year, the FY2013 data reveal some interesting trends. Overall, there are similar enforcement patterns relative to FY2012 data.

OFCCP’s public enforcement data list a total of 76 financial settlements. The most common settlements (42%) involved allegations of hiring discrimination, and three of those cases were related specifically to testing/selection. Compensation settlements made up the next highest percentage (24%) of OFCCP settlements, with 18 total settlements. A more detailed breakdown of financial agreements is as follows:

  • 32 hiring cases (24 were “systemic,” 3 of which were related to testing/selection)
  • 18 compensation cases (only 1 was coded as “systemic”)
  • 10 accommodation cases (only 1 was coded as “systemic”)
  • 2 promotion cases
  • 1 termination case

Interestingly, the Pacific region had the highest number of hiring cases (9), with the Midwest and Southwest regions tied for a close second (7 each). As for cases related to compensation/salary, the Southeast region appeared to have the most settlements (8). The Southeast region also produced the most settlements related to accommodation (6). Although a few large FY2013 settlements are not yet included in the public enforcement database, the addition of those cases is not likely to change the general enforcement trends listed above.

by David Cohen, President, and David Morgan, M.S., Senior Consultant, DCI Consulting Group

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On August 27, 2013 Vice President Biden and The U.S. Department of Labor announced two final rules which aim to improve hiring and employment of individuals with disabilities and veterans. Section 503 of the Rehabilitation Act of 1973, prohibits federal contractors and subcontractors from discriminating in employment against individuals with disabilities. Section 503 requires federal and subcontractors to take affirmative action to recruit, hire promote, and retain individuals with disabilities (IWDs). The Vietnam Era Veterans Readjustment Assistance Act (VEVRAA) prohibits federal contractors and subcontractors from discriminating in employment against protected veterans. VEVRAA requires federal contractors and subcontractors to take affirmative action to recruit, hire, promote, and retain protected veterans.

On April 26th, 2011, OFCCP published a Notice of Propose Rulemaking (NPRM) inviting comments for a rule that would strengthen affirmative action obligations concerning protected veterans; later in the year on December 9th, 2011, OFCCP published an NPRM that would also strengthen the provisions in section 503 and proposed new requirements such as setting a utilization goal of seven percent. The proposed rules were published in the Federal Register, to notify the public and to provide an opportunity to submit comments. The 60-day comment period (which was extended by 14 days for Section 503, as a result of a request by the US House of Representatives Committee on Education and the Workforce to extend the comment period, to allow the contractor community to review the 200-page document in detail) allowed stakeholders to comment on the rules, including addressing a number of concerns with the proposed changes. Some important concerns expressed by the public were in fact considered in drafting the final rules. The list below includes initially proposed requirements that did not make it into in the final rules. Specifically, contractors will NOT have to:

  • Establish three linkage agreements
  • Reproduce the entire EO clause in contracts
  • Include specific, prescribed topics in training
  • Annually review personnel policies (this was “yearly,” but is now “periodically” required)
  • Ask individuals with a disability and disabled veterans about accommodations (this is optional)
  • Annually review every job for physical and mental job qualifications (this was “yearly,” but is now “periodically” required)
  • Consider individuals with a disability and protected veterans for all other jobs (originally, the requirement was that contractors “must” consider those individuals, but the new wording is “should”)
  • Justify selection decisions any time an individual with disability or protected veteran is not selected
  • Develop a 2% sub-goal for severely disabled
  • Collect referral and ratio of priority referral data
  • Maintain records for 5 years (the requirement is 3 years in the final rules)

by Yesenia Avila, M.P.S., HR Analyst and David Morgan, M.S., Senior Consultant, DCI Consulting Group

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Art recently described a pay equity ruling that was declined for review by the Supreme Court. At the heart of the ruling was the difference between pay equity under Title VII versus the Equal Pay Act. We thought a follow up blog on the matter would be useful, and also link the issue to Executive Order 11246 enforcement.

Title VII of the Civil Rights Act (CRA) of 1964, as amended, prohibits discrimination based on race, color, religion, sex, or national origin, which is administered and enforced by the Equal Employment Opportunity Commission (EEOC). Similarly, Executive Order (EO) 11246—which is enforced by the Office of Federal Contract Compliance Programs (OFCCP)—prohibits federal contractors and subcontractors from discriminating in employment decisions (including pay decisions) on the basis of race, color, religion, sex, or national origin, and also requires contractors to take affirmative action to ensure that equal opportunity is provided in all aspects of their employment.

Relatedly, the Equal Pay Act of 1963 (EPA) prohibits sex-based wage discrimination between men and women in the same establishment who perform jobs that require substantially equal skill, effort, and responsibility under similar working conditions (29 CFR 206). The EEOC administers and enforces the Equal Pay Act. Contrary to the provisions outlined in Title VII of the Civil Rights Act (1964, 1991), the provisions of the Equal Pay Act do not require anecdotal evidence of discrimination, because intent is not necessary.

In light of the recent OFCCP Directive 307, it is important to note that OFCCP relies on Title VII principles to enforce EO 11246. This includes aligning investigations of pay discrimination with Title VII (not the EPA) principles, in which the agency compares the pay of protected groups covered by the EO. Title VII case law principles for pay enforcement require a higher threshold for identifying pay disparities than the EPA. Title VII principles for pay enforcement include some of the following attributes: ensuring employees are similarly situated when conducting analyses, using anecdotal evidence to prove discrimination, and using statistical methodologies to control for legitimate factors related to compensation.

Importantly, however, the Title VII principle of comparing similarly situated employees from protected groups via similarly situated employee groupings (SSEGs)—which was also required by the now rescinded 2006 Compensation Standards and Voluntary Guidelines—is no longer being used by OFCCP. As mentioned previously, Directive 307 has replaced the SSEG requirement with “pay analysis groupings,” which are undefined (and by default potentially broader) groupings of which the agency now relies during its reviews of contractors’ compensation practices. It will be interesting to see how this issue plays out in audits. Stay tuned.

by David Morgan, M.S., Senior Consultant and Joanna Colosimo, M.A., Senior Consultant, DCI Consulting Group

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Michael Aamodt, Principal Consultant at DCI Consulting Group, wrote an article featured in SIOP’s TIP publication, January 2017.

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Fiscal Year 2018 Budget Proposes Merger of OFCCP and EEOC

The Department of Labor’s Fiscal Year 2018 (FY2018) budget proposal was released today, May 23, 2017.  The budget outlines the initiatives and priorities of the new administration, and as predicted by DCI, recommends merging the Office of Federal Contract Compliance Programs (OFCCP) and Equal Employment Opportunity Commission (EEOC) by the end of FY2018.

The proposed budget indicates that the consolidation will provide efficiencies and oversight.  Additionally, the proposed budget allots $88 million for OFCCP, a decrease of $17.3 million from Fiscal Year 2017.  The main cut to the budget appears to be headcount, with a proposed 440 full-time equivalent (FTE) headcount, a reduction from 571 FTEs.  Some other interesting items that have

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