Hearing that your company has been chosen for a U.S. Department of Labor compliance audit can put you on high alert. Knowing that you need to submit preliminary review items for that audit can create a pervasive sense of dread.
You typically have about 30 days to button-down your affirmative action program (AAP), resulting in what often feels like a month-long fire drill. During this pre-audit phase, you can expect to sift through supporting materials, analyze employment transactions and compensation data, and prepare to answer a compliance officer’s questions.
In other words, you’re thrust into a sudden rush of activity that could easily stall or at least hamper your company’s typical operations. Instead of letting this pre-submission period derail your workflows, use this time to construct and move through a customized compliance audit checklist.
How can you use this checklist to minimize the risk of compliance violation and the possibility of being sued for alleged discrimination during the hiring process? Below are several pre-audit steps to take and measures to keep in mind.
1. Analyze historical and recent hiring and compensation data.
A compliance officer with the Department of Labor’s Office of Federal Contract Compliance Programs (OFCCP) will look at who you hire, how you hire them, and your salary packages. You’ll need to be able to explain how your business monitors compensation practices, putting special emphasis on the pay analysis groups your company uses. (If you don’t designate pay analysis groups, the compliance officer will construct his or her own groupings that could lead to a discrimination allegation.)
When looking at hires, be sure to clean up any erroneous or absent applicant data. This might include deduping candidate pools and filling in missing information. The more straightforward the data, the easier it will be to pull together accurate impact ratio analyses (IRAs) and walk the compliance officer through your hiring process.
2. Watch for possible adverse IRA hiring for AAP job groups.
If your AAP job groups align with placement goals, you’ll want to home in on any adverse IRA indicators. Let’s say you’ve set a placement goal to hire more female engineers. If your IRA indicates an adverse difference in selection rates for women applicants, a compliance officer may presume you’ve engaged in illegal hiring discrimination.
On the other hand, you may discover that your IRA indicates a meaningful difference in selection rates that does not have a corresponding placement goal. Therefore, your hiring process may not be impacting actual utilization. Regardless, you need to be familiar with these factors to speak openly with your compliance officer about them.
3. Keep the lines of communication open.
You will have exchanges with one — if not several — OFCCP compliance officer(s) during the pre-audit phase. View each touchpoint as a chance to make a positive impression. Compliance officers frequently form their “gut instinct” sense of how audits will go during these early interactions.
Keep the lines open, and don’t disappear for days. Unless you absolutely need one, don’t ask for deadline extensions — a sudden request can make it seem like you’re scrambling to cover up potential discrimination violations. When you appear transparent and calm (as per your pre-submission audit checklist), you exude an air of confidence and, in turn, instill more confidence in the officer examining your case.
4. Fix your compliance posture rather than just technical violations.
Your required AAP poster in the break room fell down. You failed to include an Equal Employment Opportunity (EEO) tagline on a job advertisement. These technical compliance violations may cause momentary embarrassment, but they generally aren’t as big of a deal as you might think. You’ll certainly want to remedy technical deficiencies, but don’t get so hung up on them that you forget to concentrate on the “big money” compliance posture issues.
What are compliance posture concerns? Anything where the remedy involves monetary damages paid to alleged victims of discrimination. If you feel confident that you’re doing everything correctly, you’ll be able to present a proud attitude during the pre-audit and audit phases. Legitimate self-assurance can drive a successful audit — particularly when it’s backed by accurate and organized data.
Getting through a compliance audit without issues starts with some old-fashioned preliminary planning. Spend time constructing a pre-submission compliance audit checklist and systematically tackling each item on it. This approach will set your team up for a better, more cooperative experience — and a better audit overall.
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