Preparing for a construction audit by the OFCCP is about to get a lot more tedious. The agency announced in February that it intends to overhaul the audit Scheduling Letter and Itemized Listing for construction contractors and submitted draft documents for public comment. Little public comment was received, and the agency is now ready to ask OMB for approval of the final drafts.
Most things from the OFCCP’s original proposal have survived, though there is one notable exception. The original proposal would have reinstated “Form CC-257,” a monthly utilization report that construction contractors used to have to submit until the information collection was suspended back in 1995. All references to Form CC-257 have been unceremoniously dropped from the OFCCP’s submission to OMB. So, take that bit of good news and let it sustain you as we summarize the changes that probably are coming.
Precisely when OMB will approve the OFCCP’s revisions is anyone’s guess. There is a chance that they will send the proposal back to the OFCCP for revision, but that is rare. If you want to submit comments, you may do so here. The deadline is Wednesday, July 17, 2024.
Non-construction Construction Audits
I think I understand what is going on here. The OFCCP uses data from federal procurement databases when compiling audit lists. That data includes contract “type.” And, apparently, all contracts associated with a prime construction contract are coded as “construction” contracts, whether or not they involve any actual construction. So, in the federal database, there are non-construction contracts coded as “construction.”
That is a problem for the OFCCP because it means they often schedule construction audits for contractors that do not employ tradespeople. And the construction audit letter only requests information regarding workers in the construction trades.
For complicated legal reasons, the agency can’t just switch the audit type from construction to supply-and-service, and I’ll bet dimes to dollars that their new case management platform does not allow Investigators to close these audits administratively (like they used to). So, the OFCCP has been going ahead with construction audits opened against supply-and-service contractors, leading to all kinds of ridiculously frustrating conversations.
The OFCCP has found a solution to this. Rather than fix the system, they are simply adding employees that are “involved in supervision, inspection, and other onsite functions incidental to the actual construction.” That appears to be broad enough to encompass the engineering firm, for example, that designs a particular feature, but does not actually build it.
This is not a good solution. Unfortunately, the only good solution is the one the OFCCP refuses to take up—revising the long-outdated construction regulations. It is simply absurd that construction contractors are still being held to goals and timetables established in the 1970’s. And it is deplorable that the agency continues to try to fix things through information collection requests. Do the hard work, OFCCP, and provide construction contractors with reasonable, meaningful, and current regulation.
Compensation
Compensation discrimination is still a primary area of focus for the OFCCP and that is reflected in the revised audit letter. The agency has heroically avoided referring to a “pay equity” mandate that they don’t have (a problem they seem to have on the supply-and-service side of the house) but are signaling that they intend to take deeper dives into the compensation data in construction audits.
To that end, they are requesting more and more detailed compensation data. Specifically, they are adding job titles to the request, which will allow the agency to run more refined compensation analyses by job title and/or their own job groupings.
The new audit letter also adds bonus pay, in addition to regular and overtime hours.
Regarding hours, the OFCCP also wants you to do some math for them. The current scheduling letter requests pay rates and hours worked, leaving the pay earned to the agency to calculate. The revised letter will require contractors to provide rate, hours, and pay received.
Finally, the new audit letter expands the request for compensation data to employes “involved in the supervision, inspection, and other on-site functions incidental to the actual construction.”
Impact Ratio Analyses?
The current audit letter requires construction contractors to submit employment transaction data for applicants, hires, promotions, recalls, and terminations. The revised letter will add “layoffs” to that list and add employee job title and transaction dates to the request (hire date, promotion date, etc.).
Traditionally, the OFCCP has examined employment activity in construction audits by trade. Gathering information on job titles would allow the agency to run IRAs on the job title level, rather than trade. If that is in fact how they intend to start running IRAs in audits, they are under no obligation to tell you, though. Kind of like they do for compensation; they can simply run every permutation they can think of and come after you with whatever sticks to the wall.
So, should construction contractors start running IRAs by job title? This author thinks so, particularly in an audit situation. Should they stop running IRAs by trade? Absolutely not. Either avenue appears to be an open road for the OFCCP.
The revised audit letter also requires construction contractors to identify “all tests and selection procedures used in the hiring process, including technology-based tests and selection procedures (e.g., artificial intelligence, algorithms, automated systems), as well as any other non-technology-based tests and selection procedures (e.g., written tests, work simulations, structured interview questions” (emphasis in the original). And they want evidence that these things were validated, if necessary, in accordance with the Uniform Guidelines. So, rather than wait to see if there is any evidence of adverse impact requiring validation, the agency wants you to just show all your cards.
The revised audit letter adds a new paragraph that is somewhat confusing. It demands evidence that the contractor “monitored” to “ensure that seniority practices, job classifications, work assignments and other personnel practices did not have a discriminatory effect.” This new paragraph immediately follows the one demanding test validation information and a citation to the Uniform Guidelines.
However, the agency is not suggesting that you run IRAs on things like seniority practices. I mean, if you can figure out a way to do that, great—go for it. But those things do not lend themselves to Uniform Guidelines monitoring. The agency does want to see some evidence that the contractor is looking at those issues, though. What that entails is anyone’s guess, which should provide contractors with some elbow room to define the contours of this new requirement for themselves.
Finally, note that the request for employment transaction data is extended in the revised audit letter to include employees “involved in the supervision, inspection, and other on-site functions incidental to the actual construction.”
Personally Identifiable Information
The current audit letter notes that 41 C.F.R. § 60-1.20(f) allows contractors to withhold “personally identifiable information” in their audit submissions, including names, reasons for termination, and pay data. Contractors are allowed by regulation to “code” or “index” such data, and the OFCCP can view the “uncoded” data if and when they come on site for the audit. The revised audit letter omits that reference entirely, though the underlying regulations have not changed.
This is disappointing.
The OFCCP regularly forgets this regulatory provision in audits and often demands names and contact information for current and former employees as a matter of course. So, it is not surprising that the agency wants to scrub reference to that provision from the Scheduling Letter. But doing so is a bad look for a federal law enforcement agency that regularly accuses the contractors it regulates with “gaming the system” and “hiding the ball.”
There are rules, OFCCP, and all are expected to play by them. Contractors should be reminded of this provision in the legal instrument that serves as an administrative subpoena. The agency deserves to have every request for personally identifiable information met with a firm, “No,” and a citation to 41 C.F.R. § 60-1.20(f). If you want it, come on-site and get it.
Miscellany
The OFCCP has had it about up to here with going through your paper submissions and they really want you to knock it off. The revised audit letter follows revisions to the supply-and-service audit letter and demands documents and data electronically. And by “electronically,” they mean in a manipulable spreadsheet format. Transaction data, compensation data, and anything else that is appropriately displayed in a spreadsheet should be submitted that way. Everything else they want in an electronic format, not printed-out (so, PDF files).
The OFCCP is also adding an option for the audit letter itself to be delivered by email with a read receipt requested. Some people have opined that the audit does not “officially” begin until the contractor receives a hard-copy audit letter via certified mail, but that is simply not true. The OFCCP has traditionally sent audit letters certified mail because: a) the Postal Service is still the primary way people send physical documents; and b) certified mail requires someone to sign for the package, giving the OFCCP the date they need to start the audit clock. Email with read receipt accomplishes all the same things just fine, and for good or ill the agency has finally discovered the Internet, so here we are.
Somewhat interestingly the agency added a rather prominent admonishment on page 2 of the revised Scheduling Letter. The revised letter will let you know in no uncertain terms that the OFCCP can “initiate enforcement proceedings if you fail to submit the Affirmative Action Programs (AAPs) and Itemized Listing Information within 30 calendar days of your receipt of this letter.” If you think you need an extension, you are encouraged to contact your Investigator, but they are loath to provide them outside of truly extenuating circumstances.
What the OFCCP fails to mention is that for them to “initiate enforcement proceedings,” they first must issue a “Notice to Show Cause,” which gives you 30 days to either “cure” the problem (send your audit submission) or explain why they shouldn’t take you to court. The only caveat is that they don’t send that notice to you; they send it to your CEO. But as long as your CEO doesn’t mind getting a grumpy letter from the Department of Labor, you can grant yourself an additional 30 days even if the OFCCP refuses your extension request. It’s not the best way to kick off your audit, but something to keep in mind if you’re just requesting a few extra weeks and the OFCCP is being mean about it.
Finally, there seems to be some confusion out there as to whether or not contractors are required to provide the OFCCP with their disability utilization analysis and any resulting action plans in an audit. In short, they absolutely are, and the OFCCP is clarifying that in frankly rather oblique ways. With regard to veterans, there actually is no veteran benchmark analysis requirement, but the OFCCP wants to see any resulting action plans, nonetheless.
Looking Ahead
The final, revised audit letter is now being reviewed by OMB, which is primarily concerned with making sure that the “information collection” conforms to the law and is not overly burdensome on contractors. Barring any stunning revelations, OMB is likely to approve the OFCCP’s revisions sometime this year. When is impossible to determine more specifically than that, but when it happens, the whole world will tell you about it, including us.
If you have any questions about this or any other OFCCP-related matter, feel free to contact us here at BCGi@Biddle.com.