The OFCCP’s “Early Resolution Conciliation Agreement” (ERCA) program has been so successful that the agency has revised the Directive that created it, and tightened things up based on the agency’s experience with the program since it was introduced in 2019.
The most talked about change is that the conciliation agreements resulting from the revised program will run for three years, rather than the current five. Note that the OFCCP has treated establishments included in the agreements as being “under audit,” and therefore has applied the traditional 24-month “audit moratorium” after the conclusion of the agreement. So, the original ERCA put the included establishments out of reach for a total of seven years; the OFCCP is scaling that back to a total of five.
Offsetting that somewhat, the new Directive – which now refers to the program as “Expedited Conciliation Procedures” or ECP – provides contractors with a few explicit “bites at the apple” to defend against a discrimination violation throughout the process. One of the few complaints about the early resolution program was that contractors effectively had to admit wrongdoing to take part. The new Directive is much more explicit that the ERCA can be abandoned if the OFCCP’s initial findings do not hold up, so agreeing to the process does not necessarily mean there will be violations.
Specifically, the District Office is directed to conduct additional investigation “to ensure it is confident of any findings before offering expedited conciliation.” This is before the contractor is notified that an ERCA might be on the table, though, so the contractor does not have an opportunity to plead its case in the early stages. But once the contractor agrees to participate, they are allowed to provide additional information and, if discrimination indicators are eliminated, the Investigator is instructed to resolve any outstanding non-discrimination violations with the ERCA, or otherwise close the audit with a closure letter.
The original program also provided that the OFCCP would propose financial remedies, and the contractor could then negotiate from the agency’s starting point. The new Directive allows the OFCCP to request the contractor propose the financial remedy and set the starting point for negotiations instead. Based on the surrounding language in the Directive, this appears to be directed at compensation discrimination remedies.
The new procedures also outline tight timeframes for negotiating any early resolutions. The OFCCP Investigator is to discuss the potential for expedited conciliation with district and regional office management within 14 days of concluding the desk audit, with exchanges between the contractor and OFCCP typically occurring at 14-day intervals. The Directive also states that ERCA negotiations will last no longer than 60 days. If the OFCCP and contractor cannot reach agreement, or if the contractor fails to negotiate in good faith, OFCCP will discontinue ERCA negotiations.
Overall, the new Directive 2024-01 is not radically different from the previous Directive 2019-02. The “carrot” used to encourage participation is smaller in terms of the resulting audit moratorium, but bigger in that agreeing to take part is not necessarily an agreement to settle.
And to give credit where credit is due, the OFCCP has long dreamed of enterprise-wide audits, but rather than release the bull into the China shop, the agency has instead developed programs like the Early Resolution Procedures, now the Expedited Conciliation Procedures. They have worked to encourage the contracting community to want broader reviews and left the decision up to the contractor whether or not to participate. This way, we can all see the benefits (and drawbacks) of a potential multi-establishment or even enterprise-wide review and chart the path forward together.
Looking Ahead
At the recently concluded National Industry Liaison Group (NILG) conference in Orlando, Florida, the OFCCP repeatedly touted the success of the ERCA program and the new Directive, indicating that the program is here to stay. They also committed to updating the Federal Contract Compliance Manual (FCCM), the agency’s manual used to train-up Compliance Investigators, to reflect the new Directive. In the meantime, the Directive supersedes relevant passages in the FCCM.
For more about what happened at the NILG, join our upcoming webinar on August 8th at 1:00pm (ET). Lynn Clements, Matt Nusbaum and Rick Holt will break down the biggest takeaways from this year’s conference. What topics dominated the discussions? What caught us by surprise? And what are the top compliance items you should focus on for the rest of 2024?
To read the full Directive, go to the OFCCP’s website here.
And, of course, if you have questions about this or any other OFCCP-related matter, feel free to drop us a line at BCGi@Biddle.com.
